Exam February 2016, questions and answers PDF

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‘The UN Convention on International Sales of Goods (‘the Vienna Convention’ 1980) succeeds in providing a much needed global framework for contracts of international sales of goods.’ Critically discuss this statement. Many consider the Convention for International Sales of Goods (CISG) a success for promulgating a set of legal standards used by many to structure international commercial transactions. This essay will seek to argue that although CISG does have some flaws, it generally provides a common point of reference among various legal regimes of the world and enhances predictability in the resolution of international disputes, as well as negotiations among private parties. This predictability and commonality in commercial transactions contributes to the CISG’s warm reception by the international legal and business community. One reason many consider the CISG a hallmark in international law is its wide acceptance and ratification around the world. The CISG applies to “Contracts of sale of goods between parties whose place of business are in different States” (Article 1(1)(a)). The CISG is widely recognised as the code for international sales law and is implemented into the domestic codes by various states, having been ratified by 85 states. This allows businesses to trade freely removing the ambiguous sphere from the international trade. However, the convention has been criticized. Although the convention is widely accepted, it has not been ratified by all countries. Major trading partners such as the UK, Hong Kong and India have not ratified the convention, preferring the use of its own domestic law. However, although these countries have not ratified the convention, this is not to say that the convention does not have an influence in their national legal systems. In the UK for example, under the EU Rome I Regulation Article 3, it is possible for parties to select the CISG as the applicable law. In which case the English courts would have to interpret and apply the convention. Additionally, there is evidence that UK courts are becoming increasingly influenced by the standards applied under CISG, as courts around the world tend to use other country’s judgements to influence their decisions. This can be evidenced from the case of ProForce Recruit v The Rugby Group where Arden LJ felt that in the future it would be appropriate to consider CISG principles in determining parties intentions The CISG has also be praised due to the areas of law which it covers. The CISG governs the three main areas in commercial law: the formation of contracts (article 14-24), the obligations of the seller and buyer (article 30 and 53), and the remedies of the seller and the buyer (articles 45-65). These provisions often raise issues in commercial transactions, and therefore the CISG covers these providing both a substantive “law of sales” and regulation of certain issues of the general law of contract. However, the Convention has been criticized because although the Conventions effectively tears down international legal borders and addresses many international commercial transactional issues, the CISG is nonetheless limited in scope with respect to the types of commercial transactions that it governs. It is surprising that in the present global economy, this monumental international convention applies only to “contracts for the sales of goods” (Article 1(1)) and, by its own terms, fails to account for the ever-increasing role of service industries and service-related contracts. As a result, the CISG is an inadequate medium for the constantly changing international legal environment and therefore only has limited utility with respect to international transactions. The convention has also been criticized, as it has been argued that its main goal of bringing uniformity to international law of sales has not been achieved. However, I seek to disagree with this as the aim of CISG was to help bring certainty and predictability to international sales. This has undoubtedly been achieved. It would be an almost impossible task to bring uniformity in international sales, and this was recognized by Phillip Hackney who described this aim as merely a utopian idea which is physically impossible to achieve. Therefore, both the convention’s wide acceptance and the areas of law that it covers despite its criticisms undoubtedly helps to add certainty and predictability to international commercial transactions. This can be evidenced from the German Muscles Case, in which it was held that a Swiss business was not in breach of Article 35 for not knowing Germany’s health and safety regulations. As a result, businesses would be more confident and willing to engage in international transactions as they would be certain of what regulations they would be subjected to.

By doing so the convention helps promote the international free trade in business. Certainty and predictability are vital in order for international commercial transactions to succeed as it is essential that parties have a level of understanding of the contractual legal issues which would allow them to structure their business agreements. When transacting business with someone from a foreign country, one need not be aware of all the vagaries of the foreign system, but only the system of law that the whole world transacts business upon. This decreases the legal risk inherent in transacting businesses on an international scare and consequently creates more profitability in international trade (Phillip Hackney). Allowing parties to successfully navigate international commercial waters when they are certain that their agreements will be legally binding and they understand how those agreements will be interpreted, if ever challenged. To apply laws in the international business community successfully, laws and rules must be consistently reliable. The CISG provides this needed reliability for contracts involving the sale of goods. In summary, this essay has argued that although the CISG can be criticised in certain areas. Its overall effect in adding certainty and predictability to international commercial transactions has been achieved and it has therefore provided a much needed global framework in international sales of goods. Although the Convention has not brought perfect uniformity to the international law of sales, this is an impossible goal....