Case 1-2: Sei Fujii v. State of CaliforniaUnited States,

Supreme Court of California, 1952

• .• Facts: A California law made land purchased by an alien Japanese,

who was ineligible for citizenship, escheat to the state.• Issues: • (1) Does California’s alien land law violate the UN Charter? • (2) If it does, is the UN Charter automatically applicable? • (3) Does the California law violate the U.S. Constitution?• Holding: • The law violates the UN Charter and the U.S. Constitution. • The UN Charter is not self-executing, but the U.S. Constitution is.• Order: The land does not escheat to California.

Laws

• (1) At the time, there was no U.S.-Japan treaty giving Japanese the right to own land in the U.S.

• (2) The UN Charter requires nations to promote human rights (including nondiscrimination based on national origin).

• (3) Treaties (such as the UN Charter) are part of American law and must be observed.

• (4) Treaties do not supersede inconsistent local laws unless they are self-executing.

• (5) To determine if a treaty is self-executing, one looks at the intent of the parties. That is, for a treaty provision to be operative without the aid of implementing legislation, it must appear that its authors meant to prescribe a rule that, standing alone, would be enforceable in the courts.

• (6) The U.S. Constitution’s Fourteenth Amendment prohibits racial discrimination.

Explanation:

• The UN Charter provisions on human rights set out goals and aspirations, not self-executing provisions. They were not meant to become rules of law. This is in contrast to the rules in the Charter dealing with rights and privileges of the officers and employees of the UN, which signatories are required to observe.

• American states are bound to observe the U.S. Constitution. The California law, which is based on racial discrimination, violates the U.S. Constitution.

• Naturalization (or naturalisation) is the legal act or process by which a non-citizen in a country may acquire citizenship or nationality of that country. It may be done by a statute, without any effort on the part of the individual, or it may involve an application and approval by legal authorities..

• EscheatEscheat /ɨsˈtʃiːt/[1][2][3][4] is a common law doctrine which transfers the property of a person who dies without heirs to the crown or state. It serves to ensure that property is not left in "limbo" without recognized ownership. It originally applied to a number of situations where a legal interest in land was destroyed by operation of law, so that the ownership of the land reverted to the immediately superior feudal lord.

•  Case 1-3,P587

Positive laws

• (Latin: ius positum) are human-made laws that oblige or specify an action. It also describes the establishment of specific rights for an individual or group.

• The concept of positive law is distinct from "natural law", which comprises inherent rights, conferred not by act of legislation but by "God, nature or reason."

Natural law

• is a philosophy that certain rights or values are inherent by virtue of human nature, and universally cognizable through human reason. Historically, natural law refers to the use of reason to analyze both social and personal human nature to deduce binding rules of moral behavior. The law of nature, being determined by nature, is universal.[1]

INTERNATIONAL ECONOMIC LAW

Chapter 2Chapter 2

SalesSales

What is an international sales contract?

• An international sales contract is an agreement between a buyer and seller across national borders. These transactions have local and foreign elements

• Example:

An Aust. company selling coal to steel mill in China

• Growth of international trade &use of internet have facilitated these types of contracts

• Rules of contract formation are not the same throughout the world(p.99 SM)

• Many businesses involve multiple transactions

• Bing Lee imports TiVos from Japan to Aust. Which law governs the transaction?

• Globalisation- business people want a uniform law to apply to their transactions

Going Global

• International contracts must be governed by a legal system

• Normally done by an express clause in contract

• If not courts can decide implied choice

3 basic questions to consider in international dealings

Risks? Exposure to potential liability?

– Which jurisdiction applies in a dispute?

– Which rules will the court apply to resolve a

dispute?

– Can a foreign courts decision be enforced in

the state?

Jurisdiction?

• Local Law (contract)• Foreign Law

( Carriage of Goods by Sea Act)

• International treaties (Vienna Convention)

• All of these need to be considered

• A foreign person may be sued in Courts if they are physically present within the jurisdiction at time the proceedings begins

• Or the Corporation is carrying on business in the state at the time.

International Trade Law

International Conventions

1. Vienna Convention

(CISG) 1980 covers sale of goods

1. Hague Rules

relates to shipping freight contracts

Aust. & many other nations are party to these conventions

Vienna Convention

Aims Provisions-Rules covered

Uniformity of rules of contract

Formation- offer & acceptance

Remove legal barriers int’al trade

Interpretation/risk/conformity/time

Promote development of int’al trade

Obligations of buyer & seller Buyer=pays price

Seller=performance/delivery

Mixture of common law & civil law traditions

Remedies for breach

The sources of international trade law

• International conventions– The UN convention on the limitation of the Int’l sale of goods– The UNIDROIT convention on Agency– The UNCITRAL ,Model law on Procurement of goods,

construction and services 1994

• International customary rules– ICC –International commercial term (INCOTERMS)

• Domestic laws– Relevant international conventions takes priority if the

relevant country ratified and incorporated the convention into the domestic law.

• Application of law for international trade contract– Autonomy of will (Freedom of contract)– The most significant connection– conventions

• The parties to a contract involving foreign interests may choose the law applicable to the settlement of their contract disputes, except as otherwise stipulated by law. If the parties to a contract involving foreign interests have not made a choice, the law of the country to which the contract is most closely connected shall be applied.

• The contracts for Chinese-foreign equity joint ventures, for Chinese-foreign contractual joint ventures and for Chinese-foreign cooperative exploration and development of natural resources to be performed within the territory of the People's Republic of China shall apply the laws of the People's Republic of China.

• 145. The parties to a contract involving foreign interests may choose the law applicable to settlement of their contractua1 disputes, except as otherwise stipulated by Law.

• If the parties to a contract involving foreign elements have not made a choice, the law of the country to which the contract is most closely connected shall be applied.

•

• l50. The app1ication of foreign laws or international practice in accordance with the provisions of this chapter shall not violate the public interest of the Peop1e’s Republic of China.

PART FOUR SPECIAL PROVISIONS FOR CIVIL PROCEDURE OF CASES INVO-LVING FOREIGN

ELEMENT

• Chapter XXIV General Principles• The provisions of this Part shall be applicable to

civil proceedings within the territory of the People's Republic of China in regard to cases involving foreign element. Where it is not covered by the provisions of this Part, other relevant provisions of this Law shall apply.

•

A. CISG

• United Nations Convention on Contracts for the International Sale of Goods– In effect since January 1, 1988

– Current state parties: 64, including Canada Mexico

China RussiaFrance United States

Germany

Web site: http://www.uncitral.org/

B. COVERAGE OF CISG

• International contracts: buyer and seller must have their places of business in different states.– Both states must be contracting parties to the

convention, or– The rules of private international law must

lead to the application of the law of a contracting state.

• Exception: A contracting state may declare that it will apply the CISG only when the buyer and seller are both from contracting states.

B. COVERAGE OF CISG

• Opting in and out – The parties to a contract may exclude or

modify the CISG’s application by a choice of law clause.

– Whether parties can exclude a domestic law and adopt the CISG in its place depends on the rules of the state where the case is heard.

B. COVERAGE OF CISG

• Merchants: CISG applies only to commercial sales transactions between merchants – CISG Art.1: buyers and sellers must both

have “places of business.”– CISG Art. 2(a): the Convention does not apply

to sales of goods bought for personal, family, or household use.

B. COVERAGE OF CISG

• Subject Matter of CISG: – The formation of contracts.– The remedies available to buyers and sellers.

B. COVERAGE OF CISG

• Subject Matter Not Covered: – The validity of contracts.– The competency of the parties.– The rights of third parties.– Liability for death or personal injury.– Sales to consumers.– Sales of services

B. COVERAGE OF CISG

– Sales commonly subject to special regulation:• Auction sales,• Sales on execution or otherwise by authority of law, • Sales of stocks, shares, investment securities, negotiable

instruments, or money• Sales of ships, vessels, hovercraft, or aircraft, and • Sales of electricity.

C. CISG COMPARED

• General sources of CISG rules: French Civil Code, the French Commercial Code, and similar civil law codes.

C. CISG COMPARED

• Distinctive CISG provisions:– Contract formation(offer /acceptance)– Firm offers– Time of acceptance– Acceptance with additional terms– Definiteness– Formalities– Obligations of the buyer/seller– Remedies

Offer/acceptance

• Withdraw an offer• Revocation of an offer• Rejection an offer• Counter offer• Modified acceptance• Rules for calculating the time of acceptance• Effect of late acceptance• Conclusion of contract

FIRM OFFERS

• Firm Offer is Irrevocable if: – the offeror indicates, whether by stating a

fixed time or otherwise, that it is irrevocable, or

– the offeree acts in reliance on the reasonable belief that it is irrevocable.

• Firm Offer Does Not Have to be: – in writing (as required by the UCC), or– supported by consideration or cause.

TIME OF ACCEPTANCE

• Acceptance is Effective and a contract formed only when the indication of assent reaches the offeror. – Caveat: An offeror may not revoke an offer

once it has been dispatched.– Basis: French Civil Code's receipt rule.

• Compare: UCC provides that an acceptance is effective upon dispatch.

ADDITIONAL TERMS

• Additions, limitations, or other modifications constitute a “counteroffer.” – Caveat: This is so only if—

• the additional or different terms materially alter the terms of the offer, or

• the offeror fails to promptly object to changes that are not material.

ADDITIONAL TERMS

– Material alterations are changes to the following: • Price• Payment• quality and quantity of the goods• place and time of delivery• extent of one party’s liability to the other• settlement of disputes

– Basis: French mirror image rule and UCC § 2-207.

FILANTO, SPA v. CHILEWICH INTERNATIONAL CORP. United States District Court, Southern District of New York, 1992.

• Chilewich had a contract to deliver footwear to Russia. This contract contained an arbitration provision that called for all disputes to be arbitrated in Moscow. Chilewich then engaged Filanto (an Italian corporation) to supply it with footwear that Chilewich had contracted to deliver to Russia. Chilewich’s correspondence to Filanto said that the arbitration provision in the Russian contract was to be part of their contract as well. Filanto supposedly sent Chilewich a counteroffer rejecting the arbitration provision. Chilewich meanwhile proceeded to obtain a letter of credit benefiting Filanto and proceeded as if there was a contract. Filanto, however, signed a contract on August 7 that contained this provision, although it said in its cover letter that it was not bound by the provision. When a dispute arose and Filanto sued in a US court, Chilewich invoked the arbitration provision and asked the court to dismiss Filanto’s suit.

• ISSUE: (1) Was the August 7 reply a counteroffer? (2) If it was, was there a contract anyway based on unobjected-to performance?

• LAW: A reply that purports to be an acceptance but contains material additions, limitations, or modifications are a rejection of the offer and a counteroffer. (1) The objections to the arbitration provision in the August 7 cover letter were a material modification amounting to a rejection of the offer.

• If the offeree knows that the offeror has begun performance and fails to notify the offeror within a reasonable time that it objects to the terms of the contract, it will be deemed to have assented to those terms. (2) Because Chilewich went ahead with the contract (getting the letter of credit) and Filanto did not timely object, Filanto accepted the terms of the Chilewich’s proposed contract.

• ORDER: Case dismissed; the matter must be arbitrated in Moscow.

•

DEFINITENESS

• A contract must be sufficiently definite so that a court can enforce it.– A contract is sufficiently definite if it:

• describes the goods, and • expressly or impliedly fixes or makes provision for

determining the quantity.

DEFINITENESS

• Price should be stated or a means provided for determining it.– Price not stated: courts imply will the price

generally charged at the time of the contract for like goods sold under comparable circumstances in the trade concerned

FORMALITIES

• No Formalities: The CISG does not require a contract to be in any particular form (article 11,12,96)– A contract may be proven by oral testimony

regardless of the price involved. • Basis: French

Commercial Code.

GENERAL STANDARDS FOR PERFORMANCE

• Fundamental Breach:– When one party substantially fails to deliver what the other reasonably

anticipated receiving. (art. 25)• Avoidance: (art. 26)

– The right to be excused from having to perform any obligation required by the contract.

• 3. Requests for Specific Performance( art. 46)• a. An injured party make ask a court “to require performance” if the

other party fails to carry out its obligations.• b. A court is not obliged to order specific performance unless the

court can do so under its own domestic rules.•

Avoidance

• Requirements: – The other party must have committed a fundamental breach.– The injured party must notify the other party.– The injured party must be able to return any goods he has

already received.

• 2) Effect of avoidance: – Only the obligation to perform is set aside.– Avoidance does not affect any provision in the contract

concerning:• The settlement of disputes (such as arbitration, choice of law, or

choice of forum clauses), or

• Any other provisions governing the rights and duties of the parties “consequent upon the avoidance of the contract.”

Obligations

• For the seller:– Delivery of goods– Transfer of Bills– warranty

• For the buyer– Payment– Take delivery

REMEDIES

• Buyer’s Right of Avoidance– Requirements for avoiding a contract:

• The seller commits a fundamental breach, or• The seller commits a lesser breach and the buyer

gives the seller a Nachfrist notice that the seller rejects or does not comply with during the period it specifies.

– Basis: German Civil Code.

REMEDIES

– Nachfrist Notice: the fixing of an additional period of time of reasonable length for performance by the seller of his obligations.

• The period must be definite and the obligation to perform within that period must be clear.

• During the Nachfrist period the seller is entitled to correct (i.e., “cure”) the non-conformity at his own expense.

– A cure may not be made if the breach is fundamental and the buyer chooses to avoid the contract.

REMEDIES

– Time for Avoidance: Once the Nachfrist period has run, or once the fundamental breach becomes clear, the buyer has a reasonable time in which to avoid the contract.

REMEDIES

• Seller’s Right of Avoidance – Analogous to that of the buyer’s avoidance

remedy

REMEDIES

• Buyer’s Right to a Reduction in Price – Applicable when:

• the seller delivers non-conforming goods • the buyer accepts them, and• the seller is not responsible for the non-conformity

REMEDIES

– Formula for determining the price reduction: The price is to be reduced by that ratio of:

• The value at the time of delivery of the goods actually delivered, to

• The value that conforming goods would have had at the time of delivery.

REMEDIES

– Example

• Idaho potatoes sold at $3.50/bushel for delivery in Djakarta • Damaged in transit by act of nature • Undamaged potatoes are worth $4.00/bushel if purchased in

Djakarta • Damages potatoes are worth $2.80/bushel

– The price reduction ratio is:

$2.80 = 7 $4.00  10

– Applying this ratio, the reduced price the buyer pays is:

$3.50 x 7/10  =  $2.45

第四讲Anticipate breach of contract

• Article 71:

• suspend the performance of a contract on the ground of an anticipatory breach.– Deficiencies in ability or creditworthiness– The act in performing or preparing the

contract show that …can not perform at least of the substantial part of the contract

Passing of Risk

• Vital issue:Who is liable for losses incurred before the completion of the contract.

• Passing of risk and the duty to pay• When:

– To be transported by carrier– Sold in transit– Through delivery– In unascertained goods

Impediment beyond control

• Force majeure– A party is not liable for damages resulting from his

failure to perform if he can show that:• His failure was due to an impediment beyond his control.• The impediment was not something he could have reasonably

taken into account at the time of contracting, and• He remains unable to overcome the impediment or its

consequences.

Typical situations: Natural disasters, war, embargoes, strikes, breakdowns, and the bankruptcy of a supplier.

• Dirty hands – One party may not rely on a failure of the other party to perform

to the extent that such failure was caused by the first party’s act or omission.

– Case 10-8

– Italy 14 January 1993 District Court Monza (Nuova Fucinati v. Fondmetall International) [translation available] [Cite as: http://cisgw3.law.pace.edu/cases/930114i3.html]

Other conventions

• The United Nations Convention on the Limitation period in the international sale of Goods

• Convention on international agency

INTERNATIONAL ECONOMIC LAW

chapter 3chapter 3

Trade Terms & TransportationTrade Terms & Transportation