The United Nations Convention on Contracts for the International Sale of Goods

1. Значна частина міжнародного комерційного обміну виконується шляхом обміну товарами на основі укладених контрактів купівлі-продажу.

2. Під час укладення контракту купівлі продажу треба звертати увагу на вибір вирішальної правової системи, тому що різні правові системи можуть по-різному трактувати різноманітні аспекти контракту купівлі-продажу, в тому числі такі важливі питання, як відповідальність за дефекти та визначення моменту часу, в який зобов’язання вважається виконаним і ризик переходить до покупця.

3. Конвенція завжди має пріоритет перед іншими законами та нормами держав-учасниць щодо відносин навколо контракту купівлі-продажу.

4. Сторони контракту мають можливість недвозначно виключити застосування Конвенції в угоді про вирішальну правову систему.

5. Згідно зі Статтею 1 Конвенції, вона застосовується у випадку „коли норми міжнародного приватного права спричиняють застосування права держави-учасниці (згідно з угодою сторін або колізійною нормою)”.

The purchase contract is the most important type of contract used in foreign trade. A substantial portion of international commer­cial exchange is executed via exchange of goods based on signed purchase contracts. Therefore it is necessary to devote major atten­tion to this institute. Legal relations based on a purchase contract, i.e. relations between a seller and a buyer (though relations often occur where more than one person or entity stands on one side of the contract - where additional relationships enter into performance of the purchase contract, such as relationships to insurance companies in association with insuring a shipment or fulfilling obligations, re­lationships to transporters, etc.) are typical legal obligation relation­ships covered explicitly by most legal systems of the world. There­fore here again it is appropriate to consider first the issue of the de­cisive legal system. When signing a purchase contract one must devote careful attention to the choice of the decisive legal system, because different legal systems may treat various matters associated Singapore, Spain, Syria, Sweden, Switzerland, Uganda, Ukraine, with a purchase contract differently, including such important mat­ters as liability for defects and the points in time when the obliga­tion is fulfilled and risk passes to the buyer.

For the purpose of unifying legal coverage, on 11 April, 1980 a treaty was signed in Vienna called the United Nations Convention on Contracts for the International Sale of Goods (hereafter "the Convention''). The Convention took effect on 1 January 1988; most countries of the former "Eastern Block" became parties to it in the first half of the 1990s. Thus, the Convention became one of the most important sets of international provisions in the area of private law. Parties to the Convention are Argentina, Australia, Austria, Bulgaria, Belarus, Canada, Chile, China, the Czech Republic, the Slovak Republic, Denmark, Ecuador, Egypt, Finland, France, Germany, Ghana, Guinea, Iraq, Italy, Yugoslavia, Lesotho, Hungary, Mexico, the Netherlands, Norway, Poland, Romania, Russia, the USA, Venezuela, and Zambia. Additional countries are considering joining the Convention.

The Convention is one of the "direct rules" of private interna­tional law (see the discussion in Chapter II of this publication) and is a component of the legal systems of countries that are party to it. Thus the Convention is always given priority over any other laws and regulations of the countries that are party to it covering rela­tions based on a purchase contract. According to Article 1 of the Convention, it applies in the following cases:

1. "to contracts of sale of goods between parties whose places of business are in different States when the States are Contracting States (i.e. parties to the Convention)".

The Convention takes precedence over other internal legal pre­cepts. This means that if, for example, a business in Ukraine signs a purchase contract with a business in Austria (both countries being parties to the Convention), then the Convention is used for cover­age of their relationships, and not, for example, the commercial codes of Ukraine and Austria. However, the parties to the contract have the possibility of explicitly excluding use of the Convention in an agreement on the decisive legal system.

2. "when the rules of private international law lead to the appli­cation of the law of a Contracting state (by agreement of the parties or a collision rule)".

This applies even in cases where the parties to the contract do not have their place of business in countries that are party to the Convention. Thus, for example, if a purchase contract is signed by a business in the Czech Republic, which is a signatory country, and a business from Portugal, which is not, and a collision rule or agree­ment by the parties refers to the law of the Czech Republic, or if neither of the parties to the contract has its place of business in a signatory country but they agree on use of the legal system, of a sig­natory country as the law of a third country, then the Convention is applied, because it is a component of the chosen legal system.

However, two countries - the Czech Republic and the USA -expressed an objection regarding this second principle of application of the Convention when signing it, meaning they are not bound by it. Thus, if a collision rule or agreement of the parties to a contract regarding the decisive legal system refers to the legal system of the USA where neither of the parties has its place of business in a signa­tory country (for example, in the case of a purchase contract between a business in Portugal and one in Algeria), then what is used is not the Convention but rather provisions of the decisive legal system - applicable provisions of domestic origin.

In matters not covered by the Convention, "general principles" of the Convention and of the legal system chosen by the parties or determined according to collision rules are applied (Article 7). It is necessary to point out that in many cases the existence of the Con­vention is forgotten, and the parties to a contract learn of this only when handling a particular disagreement or dispute. One of the cases where the Convention is not applied is that of "liability of the seller for death or personal injury caused by the goods to any person" (Article 5).

According to the Convention a purchase contract need not be in written form. If a contract is concluded in writing, changes to it still need not be in writing unless this is explicitly provided (Article 29). This is usually contained in the "final provisions" of a contract, but this need not be the case. One must pay attention to this circum­stance as well, because not only in domestic but also in international commercial relations a contract may be changed de facto: for exam­ple, when the seller (supplier) begins delivering to a different place than was agreed upon or was required, and the buyer accepts this once or twice, this may already constitute a de facto change in the contract (by inference).

Notes:

de facto – лат. де-факто, фактично, насправді

Section F

Test

Task 1 Complete the text using the words in the box:

a) assumption of obligations	d) international transactions	g) enforceable promises	j) transfers of merchandise
b) arbit­ration	e) product	h) legal mechanism	k) land
c) agreements	f) building	i) precommercial societies	l) services

Contract law is the ___(1)____ of a business civilization. It will not be found, in any significant degree, in ____(2)___.

A true law of contracts — that is, of ___(3)___ - imp­lies the development of a market economy.

Traditional contract law developed rules and principles controlling the voluntary ____(4)____, regulating the performance of obligations so assumed, and providing sanctions for failure to perform.

The sales contract is universally recognized as the ____(5)_____for conducting trade in goods.

Modern commercial practice relies to a growing extent on _____(6)_____to handle disputes, especially those that arise in _____(7)____.

Most contracts are _____(8)____. It should now be noted that it is by no means true to say that all agreements are contracts.

Contract law may cover agreements relating to ____(9)____, ____(10)____, ____(11)____,____(12)____, and other things tangible.

Task 2 Complete the text using the words in the box:

a) enforceable	d) legal	g) plain language	j) official draft
b) legally binding	e) enforce	h) promise	k) consideration
c) commitment	f) value	i) force majeure	l) exchanges

A contract is a ____(13)____ which the law recognizes as creating a legal obligation of performance. A promise creates such a legal obligation and thereby becomes a contract when the four elements previously stated have occurred. The law of contracts deals largely with identifying the ____(14)____ that can be classified as contracts. _____(15)_____ is the essence of a contract. In addition, the following factors must usually be present for a contract to be valid and _____(16)_____.The transnational business contract between the parties should use _____(17)_____and be as simple, clear, and precise as possible so that the parties can operate under it without outside _____(18)____ help. The contract should be in writing. There should be only one _____(19)____ in only one official language. A contract is _____(20)____ only when each party gives something of ____(21)_____ to the other. This item of value, or ____(22)____,may be money, goods, services or the forbearance (giving up) of a legal right. The law will not ____(23)____ a promise that involves an illegal act. Every contract should have a “____(24)____” clause.

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