Monday, April 29, 2013

International and domestic sales of goods.

It is increasingly common to make transactions with businesses in other countries. If you are purchasing goods not for personal or household use, Article 2 of the Uniform Commercial Code ("UCC art. 2") or the United Nations Convention on Contracts for the Sale of Goods ("CISG") apply.

All 50 states have enacted the UCC. As of December 2012, 78 nations ratified the CISG. Wikipedia, United Nations Convention on Contracts for the Sale of Goods, (last visited February 21, 2013). Parties can generally contract around UCC art. 2 or the CISG, as long as other requirements for a valid contract exist. There are some things that cannot be varied by agreement, such as good faith, diligence, reasonableness and care. (If a party enters a contract in bad faith with the intention to take advantage of the other party, the other party would likely have a cause of action for fraud.)

In many cases, the parties do contract around the provisions of the UCC or CISG. In international transactions, when the parties are both contracting states and the contract is silent regarding choice of law, the CISG applies.

There are minor differences between the two. CISG art. 18 provides that acceptance of an offer is valid when it reaches the offeror. In American law, acceptance is valid when dispatched, when that is the method by which acceptance is to be effectuated. CISG art. 19 provides that a reply to an offer that appears to be an acceptance but adds additional terms or limitations operates as a rejection and counteroffer. UCC art. 2 provides that such a reply operates as an acceptance, unless the acceptance is expressly conditioned on the adoption of those terms or limitations in the contract. CISG art. 11 does not require contracts for goods over $500 to be in writing. In American law, the Statute of Frauds and the UCC require such a contract to be in writing, electronically or otherwise.

There are no likely changes in the foreseeable future to either the UCC or CISG, so any practical differences between the two are likely to remain minimal. But there are situations when the two differ, as noted above, in which case legal consequences can vary quite widely.

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