CISG & International Trade Law: Analyzing BigMi Contract Dispute

This case study delves into a contract dispute involving BigMi, a Chinese smartphone company, and a seller based in California, United States. The core issue revolves around BigMi's breach of contract by failing to provide a letter of credit as agreed upon, after the seller had chartered a ship to transport the components. The analysis focuses on the applicability of the United Nations Convention on Contracts for the International Sale of Goods (CISG) to this situation. The document explores the complexities of determining whether the contract falls under CISG jurisdiction, considering that the contract was technically between BigMi's New York branch and the seller in California, while the parent company is based in China. It examines the potential liability of the parent company for the actions of its subsidiary and how Article 1 of the CISG applies when parties belong to different states. Ultimately, the analysis aims to determine if CISG provisions are applicable and whether BigMi breached the contract, potentially subjecting them to losses incurred by the seller.

Running Head: INTERNATIONAL LAW
International Law
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Author Note

1INTERNATIONAL LAW
Answer 2 A
The United Nation Convention on Contract for International Sale of Goods is an international
Treaty which has been ratified by 89 States. The treaty had been entered up on into for the
purpose of establishing uniform International sales law. This treaty is also often referred to as the
Vienna Convention. The primary purpose of the Treaty is to make arrangements for exporters in
order to help them avoid issues in relation to choice of law. Through this treaty accepted
substantial rules are provided which may be relied upon by the courts, arbitrators and contracting
parties to resolve contractual issues. Where an Express term of a contract does not prohibit the
incorporation of the Treaty it is deemed to be present in relation to contract between parties
belonging to the member states of the Treaty. The application of the Treaty is done in relation to
contract for sale of goods between those parties who operate in different states and the states are
contracting states. The provisions of the Treaty is also applicable in situation where one of the
parties to the contract belong to a non contracting state and the conflict of law rules provides that
the law of the contracting state would be applicable. The application of the Treaty is done in
relation to Commercial products and goods only. In the light of certain exceptions the application
of the Treaty cannot be done in relation to household, family or personal goods along with
aircrafts, ships and intangible services. The parties to the contract have the right of excluding the
incorporation of the Treaty into the contract. The Treaty is considered to be as the backbone of
all countries’ international trade.
ANSWER 2B
Identified issue

2INTERNATIONAL LAW
In the given situation the contract which has taken place between BigMi and the seller is between
the contracting states of the convention. This is because the BigMi Company belongs to China
who is a member of the convention and the seller belongs to the United States of America who is
also a member of the convention. Thus as both the states from where the parties to the contract
belong to the contracting states the provisions of CISG would be applicable. The issue which has
been identified in the given situation is that the seller was supposed to receive a letter of credit as
soon as the ship with the goods had been dispatched however BigMi has failed to provide the
letter of credit to the seller as they were able to procure the goods at a less price. In the given
situation the seller has been subjected to losses as it had to sell the goods at a lesser price and
also include the cost of the charter. It has been provided through article 9 of the convention that
any terms which have been agreed by the parties between themselves are binding upon them.
Therefore in the given situation as the letter of credit had not been provided to the seller when
the goods were dispatched by the seller, BigMi have breached the contract with the seller. The
primary issue is thus the breach of contract.
In the given it has been provided that the contract which has been formed between Big Mi and
the seller have same states party. This is because both New York as well as California belongs to
a single state, which is the United States of America. It has been provided through the provisions
of Article 1 of the CISG that the provisions of the convention would only be applicable where
the parties belong to different states. Thus the as per the first interpretation the parties would not
be applied with CISG as they belong to the other states.
On the other hand it has been provided through the case study that the parent company of Big Mi
is in China. In situation where the subsidiary company is liable a claim is made from the parent
company. In the given situation where the contract had been breached as per Article 9 and 25 of

3INTERNATIONAL LAW
the convention by the subsidiary company in New York the parent company would be liable. If
this interpretation is taken then the application of article 1 in this situation can be done. It has
been provided through the provisions of Article 1 of the CISG that the provisions of the
convention would only be applicable where the parties belong to different states. Here China and
USA are different states and the parties to the CISG. Thus the CISG would be applicable.

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References
The United Nation Convention on Contract for International Sale of Good