Download - Legal Env Ibe 2
-
8/12/2019 Legal Env Ibe 2
1/55
In ternat ional Con trac tsPart One
-
8/12/2019 Legal Env Ibe 2
2/55
Contracts can be complicated
-
8/12/2019 Legal Env Ibe 2
3/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
-
8/12/2019 Legal Env Ibe 2
4/55
Concepts to know
Businesses in international trade areinvolved in contracts.
Contracts in a country are governed by thelaws of that country.
But how do companies in differentcountries make a contract?
-
8/12/2019 Legal Env Ibe 2
5/55
International
Contracts
Lex Mercatoria
International Sales Contracts and the CISG
Agency versus Distributorship Legal Issues
Elements of an Agency or Distributor Contract
Termination
Arbitration and Mediation
What is Lex Mercatoria?
Wasnt he an enemy of Batman?
-
8/12/2019 Legal Env Ibe 2
6/55
Lex Mercato r ia
Definition
Refers to all international trade laws andconventions
Is made up of a multitude of internationalagreements and international trade customs
Complements domestic laws
Is used when the contract is between two partiesin different countries
-
8/12/2019 Legal Env Ibe 2
7/55
International
Contracts
Lex Mercatoria
International Sales Contracts and the CISG
Agency versus Distributorship Legal Issues
Elements of an Agency or Distributor Contract
Termination
Arbitration and Mediation
-
8/12/2019 Legal Env Ibe 2
8/55
How do we define aninternational contract?
Two basic requirements:
Economic: Goods go from one country toanother and money is sent back from one
country to another. The transaction or sale is linked to the laws of
different countries.
-
8/12/2019 Legal Env Ibe 2
9/55
Uniform Commercial Codeof the United States
-
8/12/2019 Legal Env Ibe 2
10/55
Uniform Commercial Codeof the United States
-
8/12/2019 Legal Env Ibe 2
11/55
Uniform Commercial Codeof the United States
Several organizations wrote a code oflaws for dealing with personal property.
They were not law in any state until the
state adopted them. All fifty states, the District of Columbia,
Guam, Puerto Rico, and the U.S. Virgin
Islands have adopted them. They provide a uniform legal system for
doing business in the United States.
-
8/12/2019 Legal Env Ibe 2
12/55
Convention for the InternationalSale of GoodsCISG
Created in 1980
Has become the Law of InternationalContracts
Adopted by most countries as part of theirCommercial Law
The United States has not adopted all ofthe CISG.
-
8/12/2019 Legal Env Ibe 2
13/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
-
8/12/2019 Legal Env Ibe 2
14/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Makingan offerYou can withdraw your
offer at any timebefore the expiration date
You cannot withdrawyour offer before theexpiration date
-
8/12/2019 Legal Env Ibe 2
15/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Makingan offerI offer $200,000
Seller pays freightFive day deliverySix day delivery
$195,000
-
8/12/2019 Legal Env Ibe 2
16/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Makingan offerI offer $195,000
Seller pays freightSix day delivery
-
8/12/2019 Legal Env Ibe 2
17/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Makingan offerI offer $195,000
Seller pays freightSix day delivery I offer $200,000
Seller pays freightFive day delivery
-
8/12/2019 Legal Env Ibe 2
18/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Makingan offer
Modificationof originaloffer
I offer $200,000Seller pays freightFive day delivery
$195,000
Six day delivery
-
8/12/2019 Legal Env Ibe 2
19/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Makingan offerI offer $200,000
Seller pays freightFive day delivery
$195,000
Six day deliveryI offer $200,000
Seller pays freightSix day delivery
-
8/12/2019 Legal Env Ibe 2
20/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Makingan offer
Rejectionof original
offer
I offer $200,000Seller pays freightFive day delivery
$195,000
Six day deliveryI offer $200,000
Seller pays freightSix day delivery
-
8/12/2019 Legal Env Ibe 2
21/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Makingan offer
Changes area counter-
offer
I offer $200,000Seller pays freightFive day delivery
$195,000
Six day deliveryI offer $200,000
Seller pays freightSix day delivery
-
8/12/2019 Legal Env Ibe 2
22/55
International SalesContracts
Differences Between CISG and UCC
Making an offer
Acceptance The second step in the formation of a contract Under the CISG, the second party must completely agree with all
the terms presented in the offer; otherwise, it is a rejection of theoffer.
-
8/12/2019 Legal Env Ibe 2
23/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Makingan offer
I offer $200,000
Seller pays freightFive day delivery
-
8/12/2019 Legal Env Ibe 2
24/55
International SalesContracts
Differences Between CISG and UCC
Making an offer
Acceptance The second step in the formation of a contract Under the CISG, the second party must completely agree with all
the terms presented in the offer; otherwise, it is a rejection of theoffer.
Under the UCC, the second party is considered to have acceptedthe offer if it generally agrees with its terms, even if it wantsamendments to the quantity of the goods purchased, the deliverydates, and other details.
-
8/12/2019 Legal Env Ibe 2
25/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Makingan offer
I offer $200,000
Seller pays freightFive day delivery
I offer $200,000Seller pays freightFive day delivery
-
8/12/2019 Legal Env Ibe 2
26/55
-
8/12/2019 Legal Env Ibe 2
27/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Makingan offer
I offer $200,000
Seller pays freightFive day delivery
I offer $200,000Seller pays freightFive day deliverySix day delivery
Buyer
-
8/12/2019 Legal Env Ibe 2
28/55
International SalesContracts
Differences Between CISG and UCC
Written Agreements
The CISG does not dictate that contracts ofsale have to be written.
The UCC dictates that contracts have to be in
writing (for transactions above $ 500).
-
8/12/2019 Legal Env Ibe 2
29/55
International SalesContracts
Differences Between CISG and UCC
Breach of Contract
In the event that one of the parties to acontract does not meet its obligation,that party can be found in breach of thecontract.
-
8/12/2019 Legal Env Ibe 2
30/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Makingan offer
I offer $200,000
Seller pays freightFive day delivery
I offer $200,000Seller pays freightFive day deliverySix day delivery
Buyer
-
8/12/2019 Legal Env Ibe 2
31/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Breach ofcontract
I offer $200,000
Seller pays freightFive day delivery
I offer $200,000Buyer pays freightSix day delivery
-
8/12/2019 Legal Env Ibe 2
32/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Breach ofcontract
I offer $200,000
Seller pays freightFive day delivery
I offer $200,000Buyer pays freightSix day delivery
-
8/12/2019 Legal Env Ibe 2
33/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Breach ofcontract
I offer $200,000
Seller pays freightFive day delivery
I offer $200,000Buyer pays freightSix day delivery
Actually takes fifteen days
-
8/12/2019 Legal Env Ibe 2
34/55
Discrepancies
Uniform CommercialCode (UCC) of theUnited State
United NationsConvention onContracts for the
International Sale ofGoods (CISG)
=
Breach ofcontract
I offer $200,000
Seller pays freightFive day delivery
I offer $200,000Buyer pays freightSix day delivery
Actually takes fifteen days
Seller pays $187,000
-
8/12/2019 Legal Env Ibe 2
35/55
End of Part One.
-
8/12/2019 Legal Env Ibe 2
36/55
In ternat ional Con trac ts
Part Two
-
8/12/2019 Legal Env Ibe 2
37/55
Agency vs. DistributorshipLegal Issues
Whats the difference between an agency and a distributor?
-
8/12/2019 Legal Env Ibe 2
38/55
Agency
http://www.worldofmaps.net/europe/maps_europe.htm
-
8/12/2019 Legal Env Ibe 2
39/55
Agency
http://www.weltkarte.com/europa/deutschland/Deutschland_Staedte.gif
-
8/12/2019 Legal Env Ibe 2
40/55
Agency
http://www.weltkarte.com/europa/deutschland/Deutschland_Staedte.gif
-
8/12/2019 Legal Env Ibe 2
41/55
Agency
http://www.weltkarte.com/europa/deutschland/Deutschland_Staedte.gif
-
8/12/2019 Legal Env Ibe 2
42/55
Distributor
http://www.weltkarte.com/europa/deutschland/Deutschland_Staedte.gif
Agency vs Distributorship
-
8/12/2019 Legal Env Ibe 2
43/55
Agency vs. DistributorshipLegal Issues
There is no international agreement regardingrelationships between exporters and their agents ordistributors.
Applicable law generally is that of the country where the
agent or distributorship is located. Basically, agreements between an exporter and an
agent/distributor are called distribution contracts.
-
8/12/2019 Legal Env Ibe 2
44/55
Distributor Agent
http://www.weltkarte.com/europa/deutschland/Deutschland_Staedte.gif
A Di t ib t hi
-
8/12/2019 Legal Env Ibe 2
45/55
Agency vs. DistributorshipLegal IssuesHome Government
Restrictions Home governments sometimes regulate agents/distributors to
protect them from more powerful exporters.
Home governments also may want to regulate the activities of
agents and distributors within their borders. They may have to register with the government.
They may have to be nationals of the country.
Government may inspect contracts.
Commissions may be regulated.
Agents/distributors may be limited to geographic area.
-
8/12/2019 Legal Env Ibe 2
46/55
Important Elements of Agency orDistributor Contracts
Language in which contract is written.
One language is considered primary contractlanguage.
Other languages are considered translations.
Good faithparticipants agree to act in good faith, notattempting to take advantage of one another.
Force majeure(overwhelming power) contract notbinding in event of catastrophe (ship sinking, hurricane,strike).
-
8/12/2019 Legal Env Ibe 2
47/55
Agency or Distributor Contracts
Scope of appointment
Is contract with an agent or distributor?
What products are involved?
What is the territory involved? Is the agent/distributor an exclusive representative?
What is the status of corporate accounts?
-
8/12/2019 Legal Env Ibe 2
48/55
-
8/12/2019 Legal Env Ibe 2
49/55
Agency or Distributor Contracts
Term of appointment:
Must always be a definite time period.
Termination of contract is usually a bad
solution. May be problem to find a new representative.
Fired representative may cause problems.
Customers may think exporter is not committed to market.
Better to not renew contract, but identify termsthat were not met.
Failure to say this may mean a court may consider the contract anevergreen, meaning it is of unlimited duration and nonperformancecannot be used to terminate it.
-
8/12/2019 Legal Env Ibe 2
50/55
Agency or Distributor Contracts
Choice of legal jurisdiction:
International contracts always say whichcountrys laws will govern disputes over the
contract. Exporter usually makes this choice.
International Chamber of Commerce (ICC)Model Contracts for Agency and for
Distributorship provide two choices: Traditional choice of specific countrys laws.
Generally recognized international trade laws.
-
8/12/2019 Legal Env Ibe 2
51/55
Agency or Distributor Contracts
Choice of forum and arbitration
Both parties agree on court to rule and laws toapply in dispute.
Increasing number of contracts call for anarbitration panelto settle disputes.
Profitability or commission
Determines price/margin of productsdistributor sells.
Determines commission of agents.
-
8/12/2019 Legal Env Ibe 2
52/55
Agency or Distributor Contracts
Miscellaneous clauses
Facilities and activities: size of retail site andinventory, extent of employee training, complainthandling.
Advertisingresponsibilities of both parties.
Competing linesagent/distributor can carry, if any.
Use of trademarks, patents, and copyrights.
Confidentialityof trade secrets, strategic information. Ownership of customers list.
Press Page Down to continue.
-
8/12/2019 Legal Env Ibe 2
53/55
More on Termination
Just cause termination. Exporter not fulfilling contract (rare).
Agent/distributor not fulfilling contract.
Even if there is failure to perform, the guilty party
may be legally entitled to a minimum notice andcompensation even though it is not so stated in thecontract.
Convenience termination.
Exporter may think agent/distributor is earning toomuch.
Exporter may be changing strategy.
Best to include lengthy notice period and generous
goodwill compensation package. Press Page Down to continue.
-
8/12/2019 Legal Env Ibe 2
54/55
Arbitration
Increasingly preferred way of resolving disputesbetween international partners instead of goingto court.
Venues for arbitration: International Chamber of Commerce Rules of Conciliation and
Arbitration.
United Nations Conference on International Trade Law Rules ofConciliation and Arbitration.
London Court of International Arbitration.
Stockholm Chamber of Commerce. World Intellectual Property Organization.
American Arbitration Association.
Individual law firms (many in Switzerland).
End of program.
-
8/12/2019 Legal Env Ibe 2
55/55
End of Program