Certainty and Predictability in the International Sale of Goods Act - Case Study Example

Certainty and Predictability in International Sale of Goods Act – An Analysis (Words count 2000 words –excluding foot s, bibliography, table of cases and table of conventions) Table of Cases Calzaturificio Claudia v Olivieri Footwear 96 Civ. 8052 (HB) (THK) Deutsche Milchkontor GmbH v Germany [1983] ECR 2633, Para 16 Golden Strait Corporation v Nippon YKK [2007] UKHL 12, para 1 Kleinwort Benson Ltd v Lincoln CC [1992] 2 AC 349 MCC- Marble Ceramic Ctr v Ceramica Nuova D Agostino S.P.A 144 F 3d 1384, 1391 (11th Cir. 1998) Medcalf v Hall (1782) 3 Doug 113, 115. 24 New Zealand Mussels VIII ZR 159/94 R (Nadarajah and Abdi) v Secretary of State for the Home Department [2005] EWCA Civ 1363 Raw Materials Inc v Manfred Forberich GmbH 03 C 1154 Tee Vee Toons, Inc et al v Gerhard Schubert GmbH 2002 WL 498627 (S.D.N.Y.) Used laundry machine ZG 101/94 Vallejo v Wheeler 1740 1 Cowp 143,153. Table of International Conventions Contracts for the International Sale of Goods (CISG) or (Vienna Convention) Private International Law Uniform Commercial Code Introduction United Nations Convention held in Vienna in 1980 on Contracts for the International Sale of Goods famously known as “CISG” offers a uniform, update and fair regime for contracts pertaining to the international sale of goods. CISG bestows meaningfully in offering certainty in mercantile transactions thereby minimising transactions’ costs. Any law should be easily accessible, and it should be clear, intelligible and predictable. Law should offer certainty where the questions of legal liability and right should be easily solved by the application of the law and should be exercised without any discretion. It is often commented that one of the main intentions behind enacting CISG is to offer predictability, and certainty. Thus, certainty becomes the bedrock desiderata of any mercantile law and the necessity for predictability and certainty is often persuaded in CISG where there are international contracts are signed with the foreign parties1. The main goal of the CISG is to offer analogues and fair legal regime, which will give due recognition to varied economic, social and legal setup, for commercial contracts concerning sale of goods between parties residing in different states. The Convention will be applicable wherever contracts are signed between two parties having a place of business within a signatory state. In such case , the CISG will be straightaway applicable , with an aim to circumvent recourse to private international regulations to decide, which law is applicable to the particular mercantile contract ,hence placing significantly to the legal predictability and certainty in international sales contracts. Further, the CISG may be applicable to an international sale of goods contract when the rules of private international law mention about the law of contract state as the applicable one or due to the preference of the contracting parties in spite of the fact, whether the place of business is situated in a signatory state of CISG or not. Thus, CISG intends to offer a neutral body of regulations that can be easily acknowledged in the background of its global demeanour2. This research essay will analyse in detail the observations made by Lord Mansfield in Vallejo v Wheeler that in all mercantile transactions, the great object should be certainty by referring various decided case laws on the subject. Certainty and Predictability in CISG Though 74 nations were signatory to CISG as of date, UK is yet to ratify CISG. The power of English international sales law in mercantile product sales is perhaps one of the chief aims that UK is reluctant to keep out most of the well-known principles in the place of newer homogenous law. Nonetheless, CISG is prolonging to build up a vibrant pedigree of case laws addressing issues in international business contract. The CISG is a significant instrument that is offering an effective resolution to businessmen in conjunction with the usage of Incoterms embedded into a contract for the international business contract. As the CISG regulations continue to be employed on a continuous basis by parties with no connection to English law or UK, international traders may be urged to transform their practice and to include CISG in more international mercantile contracts3. The following case laws help us to understand “certainty and predictability “in CISG. Mansfield, in Vallejo v Wheeler4” held that in business transactions, the great object should be certainty. Some eight years later, Mansfield cautioned in Medcalf v Hall5 that there cannot be any uncertainty in commercial law and due to this fact, in all commercial cases, there exists two main aims such as certainty and convenience. As per Oldham, Lord Mansfield was progressively hesitant to exhibit more significance on commercial usage at the cost of certainty6. In Golden Strait Corporation v Nippon YKK7, it was observed that the quality of certainty is having customary strength and major salient feature of English Mercantile law8. The concept of certainty is not restricted to mercantile law, but it is also applicable in public law where there is a need for good administration, and the public bodies had to function without whims and fancy and consistently coordinating with the public as held in R (Nadarajah and Abdi) v Secretary of State for the Home Department9. Thus, the concept of certainty also impedes any back-dated amendments in the law. Certainty requires that law should be certain at the juncture when the people have to function by reference to it10. In Deutsche Milchkontor GmbH v Germany11, the Court of Justice of EU espoused certainty in its jurisprudence. The concepts of genuine expectation and assurance of legal certainty are inalienable legal part of the Community. In some scenarios, an individual may be hoodwinked by a public official, about law’s effect or content where the law is itself unambiguous12. Thus, in such scenario, the citizen may be compelled to bank upon the law as it has been offered to him instead of the law as it really is. The pre-stipulation to a genuine anticipation of this kind of belief is that the imprecise presentation of law by the official should itself had been unambiguous – that is, certain in its message. In contemporary times, courts have followed a more genuine approach, for instance, permitting the recovery of monies defrayed under the mistake of law as held in 13Kleinwort Benson Ltd v Lincoln CC. 14 In MCC- Marble Ceramic Ctr v Ceramica Nuova D Agostino S.P.A15 , it was observed by the U.S. Court that one of the main elements supporting the consultations and espousal of CISG was to offer parties to international contracts for commercial transactions with some magnitude of certainty as to the notions of law that have to be followed against any probable disagreements and to do away with the earlier doubt which party’s law should be applicable16. In Tee Vee Toons, Inc et al v Gerhard Schubert GmbH17, it was held that the aggrieved party has the duty to demonstrate, with reasonable certainty, that it witnessed a loss. Thus, the Claimant also has the duty to demonstrate that magnitude of the loss, but not necessary to do so with mathematical accuracy under CISG provisions18. Article 7 of CISG offers an ambiguous interpretation. Article 7 elucidates what the court should ensure if there is any problem with application. Article 7 (2) of CISG states that issues regarding matters fall under this Convention, which is not specifically detailed in it are to be resolved in adherence with the general norms on which it is footed upon , or in the absence of such norms , in adherence with the appropriate law by virtue of regulations of private international law. Critics argue that Article 7 exhibits fissures within the Convention, the reference to domestic law would go against in guaranteeing a uniform application. This area could also establish a lack of legal certainty. Some argue that Article 7 allows the judges to declare their verdict, which may not be in adherence with the scope of Convention19. In New Zealand Mussels20 case , a seller from Switzerland who despatched to a buyer from Germany New Zealand mussels, which contained a cadmium concentration which exceeded the limit advocated by the German health authority. In this case, the German Supreme Court held that the alleged excess cadmium concentration was not in infringement of the contract as the mussels were still eatable. Further, German Supreme Court was of the view that article 35(a) & (b) of CISG does not set forth a commitment on the seller to supply products, which adhere to all public or statutory provisions in force in the import nation unless the analogues provision also present in the export nation also, or there had been a communication from the buyer to the seller about the existence of such provisions footing upon the expert knowledge of the seller or the knowledge of the seller about such a provision due to the special scenario. In this case, German Supreme court further observed that the buyer had lost the privilege to foot upon the lack of conformity and thus to avoid the payment for the contract on the reasoning of the faulty package as the buyer had waited for a period of more than a month to notify the seller about the non-conformity and hence, had not reacted with the reasonable time as demanded by the article 39 (1) of CISG21. In the used laundry machine 22case, the dispute was relating to sale of defective used laundry machine by the Switzerland based seller to a Germany based buyer. After the delivery of machine to the buyer in July 1996, the buyer informed the seller about the various defects through his letters written in August and September1996 which the seller failed to repair. Payment was not honoured by the buyer citing the defects. The Federal Court in Switzerland confirmed the relevance of the CISG to the issue by virtue of its article 1(1) (a), and it regarded the notice of defects was adequate within the purview of the article 39(1) of CISG as it informed the nature of the defect within a justifiable time immediately after its discovery. The court was of the opinion that Article 39(1) (a) did not need a more detailed description. The Supreme Court of Switzerland in this case observed that the requirements to be satisfied by a notice may be adduced from the German wording genau zu bezeichnen which means “identifying the nature of the lack of conformity” and not “identifying with the precision the nature of.23” Some courts in U.S. have observed that case law construing domestic sales law , despite “ not per se appropriate “ may impact a court’s interpretation to the provisions within the Convention where the appropriate article mirror the language of the domestic law. In Raw Materials Inc v Manfred Forberich GmbH24, the U.S. court found that in employing the Article 79 of the CISG, interpretation of case law under UCC provisions offers direction for understanding the CISG Article 79. Thus, the interpretation differs with the Conventions need to be understood in the background of its international character so as to endorse a uniform application and to provide certainty. Moreover, reference to the necessity to understand the CISG in the background of its international character may be available in U.S. case laws also where in Calzaturificio Claudia v Olivieri Footwear25, the court observed that “though CISG is analogues to the UCC as regards to some provisions, it would not be proper to extend UCC case law in interpreting contracts under the CISG26. Conclusion Hence, I fully agree with Lord Mansfield finding that in business transactions, the great object should be certainty. Various other case laws such as Golden Strait Corporation v Nippon YKK, R (Nadarajah and Abdi) v Secretary of State for the Home Department, Deutsche Milchkontor GmbH v Germany, Kleinwort Benson Ltd v Lincoln CC , MCC- Marble Ceramic Ctr v Ceramica Nuova D Agostino S.P.A, Tee Vee Toons, Inc et al v Gerhard Schubert GmbH, New Zealand Mussels case , used laundry machine case , and Raw Materials Inc v Manfred Forberich GmbH cases are also insisting that the concepts of genuine expectation and assurance of legal certainty are inalienable legal part in the law of international sale of goods. Bibliography Books Anderson C B & Keller B, Practitioner’s Guide to CISG (Juris Publishing, Inc 2010) Bailey S H, Cases, Materials and Commentary on Administrative Law (Sweet & Maxwell 2005) Cairns J & Macleod G, The Dearest Birth Right of the People of England (Bloomsbury Publishing 2002) 136. Conway G, The Limits of Legal Reasoning and the European Court of Justice [Cambridge University Press 2012] Lookofsky J M, Understanding the CISG: A Complete Guide to the 1980 (Kluwer Law International 2008) Lundgren L The United Nation’s Convention on Contracts for the International Sale of Goods (Jonkoping International Business School 2014) Lundgren, L, The United Nation’s Convention on Contracts for the International Sale of Goods (Jonkoping International Business School 2014) Journal Articles Elliott M, ‘Legitimate Expectations and the Search for Principle: Reflections on Abdi & (and) Nadarajah’. 11, Jud. Rev., [2006] 281 Karton JD.H. & Germiny L de, ‘Has the CISG Advisory Council Come of Age?’ [2000] 27 Berkeley Journal of International Law, 149 Kilian M, ‘CISG and the Problem with Common Law’ Jurisdictions Journal of Transactional law and Policy [2005] Vol.10 (2) 220-241 Saidov D,’ Article 35 of the CISG: Reflecting on the Present and Thinking about the Future’ [2013] Villanova Law Review Vol 58, 52 Winsor K, ‘The Applicability of the CISG to Govern Sales of Commodity type Goods’, Vindobona Journal of International Commercial Law and Arbitration, [2010] Vol (1) 83-86 Read More