1INTERNATIONAL BUSINESS LAW Question One Introduction During the execution of contracts, particularly international contracts, usually everything go as planned, although regardless of the good intentions difficulties and challenges arises. The ‘United Nations Convention on Contracts for the International Sale of Goods’, also known as CISG is regarded as an international law relating to sales that is intended and designed to manage such situations. Since the year of 1980 this particular regulation has served as a tool to unify international sales legislation. Article 79 (1) administersthe circumstances in which any particular unforeseeable or unpredictable difficulty, or an impediment, has ascended and that particular impediment is distressing a party involved in a contract who may not be able to rationally overcome that impediment1. This paper shall provide an analytical view relating to the requirements forwarded by aforementioned article of CISG in order to overcome the gaps or impediments. Discussion There is a difference between the external and the internal impediments or gaps in relation to the CISG. Internal gaps or impediments shall be considered to be those matters that may be governed and administered by CISG, although such matters are not settled by CISG in an expressed manner. These internal gaps or impediments must be resolved with the help and utilization of the underlying principles as provided in the CISG. An instance in relation to an internal gap or impediment is reasonability standard. The gap relating to reasonability standard is that numerous articles as provided in the CISG suggest a reasonability assessment, however, the 1Kim, Sang Man, and Jongho Kim. "Can a Change of Circumstances Qualify as an Impediment under Article 79 of the CISG?."(2019)Chinese Journal of International Law18.1: 129-163.
2INTERNATIONAL BUSINESS LAW more exact and specific criteria and definition has not been forwarded. The external gaps or the impediments are considered to be those matters that are not at all encompassed by CISG. The rules relating to the private international law are utilized in order to search for the national law, which may be applicable, and which may be used for filing the external gaps or to overcome the external impediments. A particular instance of an external gap or impediment shall be considered to be the issue relating to contract validity that is particularly kept beyond the scope of CISG2. The case ofScafom International BV v. Lorraine Tubes S.A.S.HvC 19.6.20093shall be considered to be a relevant case in this regard. This case has confirmed the tenacious difficulties that may ascend from the conflicting and inconsistent interpretations regarding the CISG between the common law and civil law nations functioning inside the equivalent international legal outline or structure. The Principles of UNIDROIT are considered as the ‘International Commercial Practice’, and hence, these principles can be applied as a tool for filling the gaps that may be utilized in relation to the interpretation of CISG. This may be in accordance to article 7 (1) of CISG. However, it may be said that in relation to the filling of the gaps, priority must be given regarding the wording of article 7 (2), and a particular method must be chosen by the interpreter, that is, the interpreter may choose either the underlying principles as provided in CISG or he may choose the applicable national law. The selection may depend on whether the gap or the impediment is external or internal. The case ofDelchi Carrier, SpA v. Rotorex Corporation USCA 2nd Circuit 6.12.19954must be regarded as a significant case in this regard. In this case, it was stated that the Convention or CISG has made abundantly clear that the involved parties may, 2Nwafor, Ndubuisi, and Chidi Lloyd. "Re-imagining the Doctrines of Hardship and Exemption/Force Majeure underthecisgandunidroitPrinciplesofInternationalCommercialContracts."(2019)GlobalJournalof Comparative Law8.1: 52-79. 3Scafom International BV v. Lorraine Tubes S.A.S.HvC 19.6.2009. 4Delchi Carrier, SpA v. Rotorex CorporationUSCA 2nd Circuit 6.12.1995.
3INTERNATIONAL BUSINESS LAW with the help of the contract, select to be obligated to any particular law other than CISG, for instance the ‘Uniform Civil Code’. In this case, the term ‘homeward trend’ was explained. Homeward trend is a particular term that is utilized to explain the natural proclivity of the professionals of the law to construe foreign and new legal mechanisms from the perception of the national legal structure. The primary advantages in relation to an international legislation and law (such as international neutrality and predictability) shall not be present if the understanding and construal of the said legislation or law is reliant on the nation, where the interpreter obtained his or her legal education and knowledge or performed as legal expert or professional5. Theinternalfactorslikeorganizing,negligence,efficiencyoradministration, inadequacies or deficiencies in planning and the technical difficulties are generally regarded as inside the ‘sphere of control’ of the involved party. The ‘sphere of control’ of an involved party is considered to be very extensive and wide. Any particular probable problem in relation to the business operations and production regarding a party, for instance subcontractors, is presumed to come within the ‘sphere of control’ of the party. The external factors like natural phenomena or act of god (floods, storms), accidents, power outages and interruptions relating to road traffic does not come within the ‘sphere of control’ of the party. However, the evaluation of each instance should be done in order to determine and conclude if a particular party could have foreseen and overcome the impediment during the time when the contract was being concluded6. Conclusion In conclusion, it may be said that the CISG is regarded as self-sufficient, independent and autonomous, and such feature or facet helps to increase, boost and augment its internal as well as 5Liu, Chengwei. "Force majeure-Perspectives from the CISG, UNIDROIT Principles, PECL and Case Law,[: Case annotated update (April 2005)]." (2019). 6Fillers, Aleksandrs. "Application of the CISG to Arbitration Agreements."(2019)European Business Law Review30.4 (2019): 663-693.
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4INTERNATIONAL BUSINESS LAW universal identity. Although, certain external and internal gaps or impediments are present in relation to the CISG. This paper has forwarded an analytical view relating to the requirements forwarded by aforementioned article of CISG in order to overcome the gaps or impediments.
5INTERNATIONAL BUSINESS LAW Question Two Issue The primary issue in relation to the given scenario is whether Vanilla has committed a violation of the sales contract in relation to Cinnamon, and whether damages should be incurred by Cinnamon from Vanilla. Rule The case ofBettini v Gye(1875) LR 1 QBD7shall be considered to be a significant case in relation to the provided circumstance. The issue in this particular case was whether the pre- requisite to reach the city of London six days prior to the rehearsals shall be considered to be a condition in relation to the contract, and hence, whether Gye would be able to terminate the contract based on the violation of the aforementioned term. It was held that the pre-requisite mentioned above shall not be considered to be a condition, rather it shall be considered to be a warranty. Therefore, Gye shall not be able to rescind the contract on the ground that the condition of the contract has been violated. A violation in relation to the aforementioned warranty shall not be regarded as a negation of contract, and Gye shall have the right only to claim compensation or damages through an action. The case ofHadley v Baxendale(1854) 156 ER 1458must be regarded as a relevant case in relation to the provided circumstance. The issue in this specific case is whether the loss regarding the profits was so remote that claim cannot be made by the claimant. It was held by the court that any particular party shall be able to successfully claim damages regarding losses that 7Bettini v Gye(1875) LR 1 QBD. 8Hadley v Baxendale(1854) 156 ER 145.
6INTERNATIONAL BUSINESS LAW may stem from the violation of a contract, and where the loss (if reasonably perceived) is the natural outcome of such violation. Article 79 as provided in the CISG states that if any particular party is able to demonstrate that it failed to perform the contract because the circumstances were beyond the control of that party, and it was impossible for the party to reasonably foresee such an impediment during the establishment of the contract, then that particular party shall not be held to be accountable for any violation of the contract9. This concept is similar to that of the notion of frustration as per the common law. In the case ofTaylor v Caldwell(1863) 3 B & S 82610, it was stated that in certain situations, a particular contract shall be ended due to the occurrence of any supervening event, which may be outside the control of the involved parties. Article 74 as provided in the CISG states that regardless of whether the violation is non- fundamental or fundamental, an injured party shall have the entitlement in relation to the damages and compensation, which shall be equivalent to the amount arising out of the loss of the party. It may also encompass ‘loss of profits’11. Application In the given scenario, a violation of the contract was caused by Vanilla due to which Cinnamon suffered loss. The case ofBettini v Gye(1875) LR 1 QBD12shall be applied in relation to the provided circumstance. It was held that the pre-requisite in the given contract shall not be considered to be a condition, rather it shall be considered to be a warranty. Therefore, Gye shall not be able to 9United Nations Convention on Contracts for the International Sale of Goods, 1980. 10Taylor v Caldwell(1863) 3 B & S 826. 11United Nations Convention on Contracts for the International Sale of Goods, 1980. 12Bettini v Gye(1875) LR 1 QBD.
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7INTERNATIONAL BUSINESS LAW rescind the contract on the ground that the condition of the contract has been violated. A violation in relation to the aforementioned warranty shall not be regarded as a negation of contract, and Gye shall have the right only to claim compensation or damages through an action. Therefore, in the given scenario, Cinnamon shall not be able to rescind the contract if the pre- requisite in the given contract is not considered to be a condition, and instead it is considered to be a warranty. A violation in relation to the warranty shall not be regarded as a negation of contract, and Cinnamon may only claim compensation through an action. Applying the case ofHadley v Baxendale(1854) 156 ER 14513in the given scenario, it may be said thatCinnamon shall be able to successfully claim damages regarding losses that may stem from the violation of a contract, and where the loss (if reasonably perceived) is the natural outcome of such violation. Applying article 79 as provided in the CISG in the given scenario, it may be said that if Vanilla is able to demonstrate that it failed to perform the contract because the circumstances werebeyondcontrol,anditwasimpossibleforVanillatoreasonablyforeseesuchan impediment during the establishment of the contract, then Vanilla may not be held accountable for any violation of the contract14. The case ofTaylor v Caldwell(1863) 3 B & S 82615must be stated in this regard. Therefore, in the given scenario, where the ship was attacked by the pirates, such a circumstance could not have been foreseen by Vanilla, and hence the delay in delivery due to such unforeseen occurrence, shall not make Vanilla accountable for any damages. Although, where Vanilla violated the contract by providing less quantity to Cinnamon, not due to 13Hadley v Baxendale(1854) 156 ER 145. 14United Nations Convention on Contracts for the International Sale of Goods, 1980. 15Taylor v Caldwell(1863) 3 B & S 826.
8INTERNATIONAL BUSINESS LAW the less yield in harvest, but because Vanilla established a contract with another organization namely Nutmeg and gave priority to Nutmeg in order to win it over as another customer. Applying article 74 as provided in the CISG, it may be said that regardless of whether the violation is non-fundamental or fundamental, Cinnamon shall have the entitlement in relation to the damages and compensation, which shall be equivalent to the amount arising out of the loss. It may also encompass ‘loss of profits’16. Conclusion To conclude, it can be said that Vanilla has committed a violation of the sales contract in relation to Cinnamon, and damages should be incurred by Cinnamon from Vanilla. 16United Nations Convention on Contracts for the International Sale of Goods, 1980.
9INTERNATIONAL BUSINESS LAW Bibliography Bettini v Gye(1875) LR 1 QBD. Delchi Carrier, SpA v. Rotorex CorporationUSCA 2nd Circuit 6.12.1995. Fillers, Aleksandrs. "Application of the CISG to Arbitration Agreements." (2019)European Business Law Review30.4 (2019): 663-693. Hadley v Baxendale(1854) 156 ER 145. Kim, Sang Man, and Jongho Kim. "Can a Change of Circumstances Qualify as an Impediment under Article 79 of the CISG?." (2019)Chinese Journal of International Law18.1: 129-163. Liu, Chengwei. "Force majeure-Perspectives from the CISG, UNIDROIT Principles, PECL and Case Law,[: Case annotated update (April 2005)]." (2019). Nwafor,Ndubuisi,andChidiLloyd."Re-imaginingtheDoctrinesofHardshipand Exemption/Force Majeure under the cisg and unidroit Principles of International Commercial Contracts." (2019)Global Journal of Comparative Law8.1: 52-79. Scafom International BV v. Lorraine Tubes S.A.S.HvC 19.6.2009. Taylor v Caldwell(1863) 3 B & S 826. United Nations Convention on Contracts for the International Sale of Goods, 1980.