Global Sales and Contract Law

GLOBAL SALES AND CONTRACT LAW

GLOBAL SALES AND CONTRACT LAW

By

INGEBORG SCHWENZER

PASCAL HACHEM

CHRISTOPHER KEE

Great Clarendon Street, Oxford OX2 6DP

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2012

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To our families

PREFACE

Globalised trade necessitates globalised legal thinking. This is especially true in

the field of contract law in general, and sales law in particular. It is an easy

statement to make, but not quite so easy to implement. We believe a range of

factors informs what actually amounts to globalised legal thinking and we hope

these permeate throughout this book. We have been guided by our belief in the

need to enhance respect for different legal thinking, and to improve access and

understanding of these different approaches, and to further the dialogue and

exchange of ideas that already exists.

We have sought to produce a practical endeavour – something that can actually

be used in practice – in other words we did not set out to build theories but

rather give answers to practical problems. In the process we have attempted to

underscore the relevance of comparative legal studies and the functional

comparative approach in particular. We hope that our work will be used by a

large spectrum of those involved in contract and sales law—ranging from

students and academic researchers, to legal practitioners, as well as law makers.

With this in mind we have written the book so that it can be read and utilised in

two ways. This is a book which can be read cover to cover. However it can also

be used as a reference source for particular issues.

We are well aware that one can really only fully understand the operation of law

in jurisdiction from the inside, and while we have all lived and worked in

several jurisdictions, our personal experience does not extend to all the

jurisdictions covered in this book. As such we have relied heavily on the advice

of our core research team, our correspondents and existing academic texts. We

have done our best to confirm the accuracy of the information we report. This

has been particularly difficult at times, especially where legislation and

commentary was only available in languages not spoken by any of our team. In

a variety of instances we have had to work from unofficial translations – where

our experience suggested these translations may not be entirely accurate we

have endeavoured to express a qualified view.

This book is the result of a four year research project conducted at the

University of Basel, Switzerland under the direction of Prof Dr Ingeborg

Schwenzer LLM, and the two senior researchers Dr Pascal Hachem and Dr

Christopher Kee. Dr Kee’s doctoral thesis on validity in sales law is published

as Part IV of this work.

The work on this book has been a daunting but extremely rewarding challenge,

and it would not have been possible without the support and assistance of many

people. The core research team in Basel consisted of Dr Mohamed Hafez LLM,

Dr Jean Alain Penda Matipe LLM, Dr Natia Lapiashvili LLM, Dr Edgardo

Munoz LLM, and Dr Sophia Juan Yang LLM. Additional specific research

assistance was provided by Başak Başoğlu, LLM, Claire Chabat, LLB MLaws,

Yulia Douanova, Deepaloke Chatterjee, Dr Kevin Kee MEd, MEd (Admin),

Candy Tang, Gabriela Vizcaíno, Claudio Marti MLaw, Philippe Monnier MLaw,

Sarbajeet Nag, Alissa Anita Palumbo JD, Ref. iur. David Tebel. Valuable

assistance was also received from numerous student assistants—stud iur

Christoph Burckhardt, Tomie Keller BLaw, stud iur Lukas Meyer, stud iur

Christian Schlumpf, stud iur Nicole Schmidt. Last but not least we were

supported by a worldwide network of correspondents. We are greatly indebted

to all these people and sincere thank them for their contributions.

Our work would not have been possible without financial support from a

number of organisations, in particular the Swiss National Science Foundation,

the Freiwillige Akademische Gesellschaft, the Max Geldner-Stiftung, and the

Stiftung zur Förderung der rechtlichen und wirtschaftlichen Forschung an der

Universität Basel. A resource contribution was also made be Mr Cristobal

Reitze.

We also received statements of support from various international organisations

for which we are very grateful. These organisations were in alphabetical order:

Association Suisse de l’Arbitrage, Beijing Arbitration Commission, Chartered

Institute of Arbitrators, CISG Advisory Council, Institute for International

Commercial Law (Pace University), Institute for Private International Law in

Africa (University of Johannesburg), Ohada, and the Singapore International

Arbitration Centre.

A number of prominent and influential people in the fields of international

commercial law and arbitration also lent us their considerable support. In

particular we would like to acknowledge (in alphabetical order) Professor

Michael Bridge, Professor J Martin Hunter, Dr Pierre Karrer, Colin Wall and Dr

Markus Wirth. A special mention must be made of our dear friend the late

Professor Albert Kritzer, who as ever was always full excitement and

encouragement for our work.

Thanks go also to the University of Basel, and our colleagues, both at the Chair

and the Faculty more broadly, who have assisted us with all matters of

administration. Particular mention is made of Claudine Abt, Elke Müller, Jörg

Fraunhoffer, and Dr Ulrich Pfister.

We are also greatly indebted to the team at Oxford University Press, especially

to Rachel Mullaly and Khanam Virjee, for their patience and the swift handling

of the publication process.

The end product (with the exception of the index and tables) is our creation and

the errors are ours. Local advice must always be sought about the particularities

of any individual jurisdiction.

We hope that many people all over the world will find this book a helpful guide

to comparative sales and contract law.

And it was fun and a cultural enrichment for all of us!

Ingeborg Schwenzer

Pascal Hachem

Christopher Kee

Basel, August 2011

CONTENTS

Contributors

Abbreviations

List of Country Codes

Table of Cases

Table of Legislation

1. Introduction

I. SALES LAW: DEVELOPMENT AND MODERN PRACTICE

2. Development of Domestic Sales Laws

3. Uniform Laws and Projects

4. Contract and the Law

5. Modern Practice of International Sales Law

II. AMBIT OF SALES LAW

6. General Remarks on the Ambit of Sales Law

7. The Concept of Goods

8. Identifying the Boundaries of a Sales Contract

III. FORMATION OF THE CONTRACT

9. General Remarks on Contract Formation

10. Offer and Acceptance

11. Electronic Communications

12. Standard Terms

13. Agency

14. Modification of Contract

IV. VALIDITY

15. General Remarks on Validity

16. Capacity to Contract

17. Mistake and Error

18. Fraud and Duress

19. Consequences of Mistake, Fraud, and Duress

20. Illegality and Immorality

21. Excessive Benefits and Unfair Advantages

22. Form Requirements

V. PRE-CONTRACTUAL LIABILITY

23. General Remarks on Pre-Contractual Liability

24. Pre-Contractual Duties

25. Pre-Contractual Liability

VI. CONSTRUCTION OF CONTRACT

26. Interpretation and Supplementation

27. Practices and Usages

VII. OBLIGATIONS OF THE SELLER

28. General Remarks on Seller’s Obligations

29. Delivery

30. Documents and Costs

31. Conformity of the Goods

32. Third Party Property Rights

33. Industrial and Intellectual Property Rights

34. Examination and Notice

VIII. OBLIGATIONS OF THE BUYER

35. General Remarks on Buyer’s Obligations

36. Payment

37. Taking Delivery

IX. PASSING OF RISK

38. Passing of Risk

X. TRANSFER OF TITLE

39. Transfer of Title

40. Transfer of Title by a Non-Owner

XI. REMEDIES FOR BREACH OF CONTRACT

41. General Remarks about Remedies

42. Suspension of Performance

43. Specific Performance

44. Damages

45. Exemption

46. Interest

47. Avoidance

48. Price Reduction

49. Concurrent Remedies

XII. UNWINDING OF THE CONTRACT

50. Unwinding of the Contract

XIII. LIMITATION OF ACTIONS

51. Limitation of Actions

Bibliography

Index

CONTRIBUTORS

Prof Dr iur Ingeborg Schwenzer, LLM (Berkeley) is Professor of Private Law

at the University of Basel, and Adjunct Professor at the City University of Hong

Kong. After completing her law studies in Tübingen, Geneva and Freiburg,

Professor Schwenzer obtained an LLM (high honours) from the University of

California, Berkeley, and her PhD summa cum laude from the University of

Freiburg.

Dr iur Pascal Hachem is a senior researcher and lecturer at the Faculty of Law,

University of Basel, Switzerland. After completing his studies at the Albert￾Ludwigs-University Freiburg, Germany, he obtained his PhD summa cum laude

from the University of Basel, Switzerland.

Dr iur Christopher Kee, LLB BA (Hons), Solicitor (Australia) is a lecturer at

the University of Aberdeen, Scotland and also holds appointments as a senior

researcher at the University of Basel, Switzerland and honorary fellow of

Deakin Law School, Australia. He is a barrister and solicitor of the High Court

of Australia and the Supreme Courts of Victoria and New South Wales and

specializes in international arbitration and international commercial law.

Principle Research Assistants

Dr Mohamed Hafez, LLM

Dr Jean Alain Penda Matipe, LLM

Dr Natia Lapiashvili, LLM

Dr Edgardo Munoz, LLM

Dr Sophia Juan Yang, LLM

List of Correspondents

Angola Dr. Jaime Mateus Dintete

Argentina Gabriela del Pilar Vizcaíno

Luis Angel Bellini

Lucía Mazzuca

Cintia Andrea Cecchini

Carlos Garaventa

Australia Dr Luke Nottage

Lisa Spagnolo

Benin Michel Adjaka

Bolivia Maria Nahid Cuomo

Brazil Laura Ely de Carvalho

Ana Paula Lago Maines

Anderson Jardim D’Avila

Luiz Felipe Calábria Lopes

Marcelo Boff Lorenzen

Luiz Gustavo Meira Moser

Ioulia Dolganova

Burkina Faso Alfred Bama

Cameroon Prof. Martha Tumnde

Clarisse Motsebo

Prof. Jean Gatsi

Maitre Virgile Ngassam

Dr Sadjo Ousmanou

China Prof. Xu Qingqun

Bu Lu

Prof. Li Xia

Prof. Lu Song

Long Weidi

Czech Republic Judr. Andrej Stanko

Cote d’Ivoire Dr Félix Onana

Sylvain Yao Djah

Democratic

Republic of

Congo

Maitre Urbain Babongueno

Denmark Ass. Prof. Dr. René Franz Henschel

Kasper Steensgaard

Ecuador Fernando Coronel Velasco

Egypt Dr. Mostafa El Fiky

Laila el Shentenawi

El Salvador Cristina López

France Michel Akouété

Achille Ngwanza

Guatemala Luis Fernando Bermejo Quiñónez

Emanuel Callejas Aquino

Honduras Carlos Alejandro Pineda Pinel

India Ajay Thomas

Italy Simona Florio

Japan Naoki Iguchi

Kenya Leonard Obura Aloo

Latin America Prof. Jorge Oviedo Albán

Mexico Prof. Ruben Dario Gomez Arnaiz

Diego Alonso Ramos Castillo

Dr. Emilio Maus Ratz

Santiago Aguilar

Guillermo Coronado Aguilar

Moldova Alexandr Svetlicinii

Morocco Doja Melgou

Nicaragua Ernesto Rizo

Nigeria Justice Mohammed Idris

Barrista Akin Aki Akinbote

Juliette Mengue (Lagos)

Peru Fernando Cantuarias

Ricardo Manuel Ampuero

Philippines Jun Bautista

Poland Agata Apanel

Filip Badziak

Krystyna Chmielewska

Agnieszka Lopatka

Portugal Dr. José Miguel Alarcáo Júdice

Russia Elena Gorshkova

Elena Paramoshina

Senegal Djibril Camara

Serbia Milena Djordjevic

Singapore Prof. Gary Bell

Capt Lee Fook Choon

Slovakia Judr. Jura Kotrusz

South Africa Prof EA Fredericks

Prof J L Neels

Ms MM Wethmar-Lemmer

Prof. J. Jacques du Plessis

Prof. Tjakie Naudé

South Korea Prof. Jae Hyung Kim

Soo Jin Huh

Spain Julie Marie Cerisier

Bruno Manzanares

Sara Jauregui

Turkey Başak Başoğlu, LL.M

Ukraine Leonila Guglya

Uzbekistan Firuz Safaev