Internationa Seen 19.11.10
Transcript of Internationa Seen 19.11.10
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International Purchasing
Rules-of-the-RoadTerms and Conditions in the
International Marketplace
Charles E. Rumbaugh, JD, CPCM
May 1, 2000NAPM International Purchasing Conference
New Orleans, Louisiana
2000 Charles E. Rumbaugh [email protected]
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Need for InternationalSources of Supply
AS CLOSE AS YOUR KEYBOARD!
Attribute of World Class Customers
Consolidation of Purchasing through Internet
Automotive, Aerospace,Medical/Hospital purchases, etc.
Recognition of Greater Need to Know your
Supplier, Cultural differences, EthicalConduct/Rules, etc. 2
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Private International Law
Role of different national legal SystemsCivil law & Common Law
Socialist & Islamic lawConflict of laws
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Public and Private International Law
The Role of International
Organizations
International Monetary
Fund
World Bank
GATT and WTO
ICC
Convention/treaty that
affects private transactions
Tax treaties
Friendship treaties
Law of the Sea Convention
NAFTA
Convention for the
Convention forInternational Sale of
Goods (CISG)
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Role of the Uniform
Commercial Code in US
Art. 2 of UCC applies to transactions
in goods
http://www.law.cornell.edu/ucc/ucc.table.html
Standardized sales law in 50 states
with some individual state variation5
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Need for International
Standardized Sales Law
Response- CISG (Convention for theInternational Sale of Goods)
negotiated in 1980--effective in 1988
Country differences in approach to contract
law
CISG a compromise6
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Applicability of CISG3 Conditions for Applicability
Commercial sale of goodsBetween parties whose places of business are in
different countries
The places of business are in countries that haveratified the CISG
http://www.cisg.law.pace.edu/cisg/text/treaty.html7
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Applicability of CISG
Sales Excluded from CISG
Consumer goods
Goods bought at Auction
Securities, stocks, negotiable instruments Vessels, aircraft, ships
Preponderant part for labor or services
Assembly contracts whereby substantial part ofmaterials provided by Buyer
Death or personal injury caused by the goods
Opt out Provision of Convention
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Applicability of CISG
As of February 2000, 57 States haveadopted the CISG.
No overarching decision-authority
CISG is the uniform international sales
law of countries that account for overtwo-thirds of all world trade. 9
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Writing
UCC: Contracts forthe sale of goods of
$500 or more must be
in writing to beenforceable
CISG: Need not be inwriting! Contract can
be proven in various
methods.
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Parol Evidence
UCC: If contract isfinal written
expression, then parol
evidence is notadmissible to contradict
(prior/contemporaneous
oral agreement).
CISG: Court mayconsider all relevant
circumstances
including negotiations,any practices which
the parties have
established betweenthemselves, usage, and
any subsequent
conduct of the parties.
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Custom Practice and Trade Usage
UCC: Allows pastdealings and trade
usages for guidance in
interpreting contractsand to fill in the gaps.
CISG: Those tradeusages which parties
agree to or derived
from past dealings Those usages that the
parties knew or ought
to have known areregularly observed in
trade or industry
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Entering into the Agreement
UCC: Offerreasonably definite.
Reasonable price
presumed--if notstated.
CISG: An offerwhen it is a proposal
and sufficiently
definite and indicatesthe intention of the
offeror to be bound.
Describes/identifies goods Expressly/implicitly fixes
or makes provision for
determining the quantity
and the price
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Entering into the Agreement
UCC: Offersrevocable but Firm
offers permitted for
up to 3 months
CISG: Offer may notbe revoked if offeree
reasonably relies on
the offer as beingirrevocable.
Also, offers may not be
revoked it it indicates itis irrevocable
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Battle of the Forms
UCC: (Between
Merchants) Written
confirmation is
acceptance even with
additional terms unless Offer expressly limits
acceptance to its terms
(Adds excluded)
If offer not so limited,
material Addsexcluded
If offer not so limited,
objection to non-materialAdds are excluded
CISG: Acceptancecontaining new terms
that do not materially
alter become part of thecontract unless there is a
prompt objection
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Battle of the Forms (cont.) CISG: If the
acceptance termsmaterially alter, then it
is deemed rejection
of the offer and acounteroffer (No UCC
2-207 counterpart and
no battle of theforms)
Mirror Image Rule
Silence is
acceptance?
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Disclaiming Implied Warranties
UCC: Seller may
disclaim only by using
conspicuous, or
specified, languagesuch as as is
CISG: No limitations--
Any form of
disclaimer permitted
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Remedies for Breach
UCC: Perfect tender
rule
CISG: Buyer can avoid
contract only if fundamentalbreach
Substantially deprive Buyer
of what he/she is entitled to
expect under the contract
If fundamental, Buyer need
not take delivery-may avoid
contract and not pay If not fundamental, non-
breaching party required to
continue contract and sue oflosses
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Specific Performance
UCC: Limited to
special circumstances
Unique goods
Inadequate remedy atlaw
CISG: Normal remedy
of civil law--Buyer
wants what was
ordered Specific performance
available
Exemption for
countries that do not
have such a provision
under their own law
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Excuses for Performance
UCC:
Impossibility
Frustration of purpose
Commercialimpracticability
Notice
CISG: Impediment--
Beyond control
Not reasonably
foreseeable Was unavoidable
Notice
IN i l CO i TERMS
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INternational COntracting TERMS
INCOTERMS 2000
Different than trade terms in UCC! Do not confuse them!
Used in International Trade--
Promulgated by Intl Chamber of Commerce
http://www.iccwbo.org/
First published in 1936
Do not modify!
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INCOTERMS 2000EXW EX WORKS (... named place)
FCA FREE CARRIER (... named place)FAS FREE ALONGSIDE SHIP (... named port of shipment)
FOB FREE ON BOARD (... named port of shipment)
CFR COST AND FREIGHT (... named port of destination)
CIF COST, INSURANCE AND FREIGHT (... named port of destination)
CPT CARRIAGE PAID TO (... named place of destination)
CIP CARRIAGE AND INSURANCE PAID TO (... named place of destination)
DAF DELIVERED AT FRONTIER (... named place)
DES DELIVERED EX SHIP (... named port of destination)
DEQ DELIVERED EX QUAY (... named port of destination)
DDU DELIVERED DUTY UNPAID (... named place of destination)
DDP DELIVERED DUTY PAID (... named place of destination)
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INCOTERMS 2000DDP DELIVERED DUTY PAID (... named place of destination)
At Sellers Expense:
Loading at Sellers premises, Local cartage, Contract of
carriage/dispatch, Trade Documentation and Customs clearancein country of export, Export charges, Transportation at terminal,
International main carriage, Trade documentation in country in
transit/importation, Customs clearance in country of importation,
Import charges, and Local cartage.
At Buyers Expense:
Unloading at Buyers premises.
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INTERNATIONAL ADR What is ADR--
Alternative Dispute Resolution Spectrum of ADR Methods
Reasons not to be forced to litigate in aforeign court
One form of ADR--Baseball Arbitration Putting the Deal together
Contract Performance
Claims Resolution
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Letters of Intent(Memorandum of Agreements)
Recommended from get-go due to CISG and impact of
internet in communications
Consider provisions for mutual benefit--
No contract/agreement until and unless (named) officers execute a
document in writing
Specify who are the authorized agents!
Compliance with US Anti-Bribery Laws
Foreign Corrupt Practices Act
Language ADR Provision
Liability limitations/indemnification
Other...
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Significant Provisions in
International Purchase Agreements
Parties, quantity of
identified goods, price,
payment, quality,
place/time of delivery,liability, ADR, &
indemnification
Independent Contractor
Language
Currency Issues
Offset Obligation(s) Compliance with US Anti-
Bribery Laws
Foreign CorruptPractices Act
Expanded remedies for
breach? Force Majeure
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Significant Provisions in
International Purchase Agreements Export Administration
Regulation- Commerce Dept.
International Traffic in
Arms Regulations (ITAR)- State Department
Use of Carnet
Warranties
Trade Terms-INCOTERMS If NOT DDP (Buyers
Premises), then cover
risks/costs associated with terms! Letters of Credit/Stand-By
letters & Relationship to the
Underlying Contract Basis for drawdown
ADR
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Significant Provisions in
International Purchase Agreements Role of prior dealing/trade
usage Final agreement of parties
Severability
Publicity
Points/Method of Contact
E-Commerce
Licenses/Inventions
Other duties of the parties...
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Summary
Use the CISG to streamline negotiations(and the time) in the international
marketplace--your suppliers expect it from
World Class Customers! Otherwise, negotiate laws that will apply!
Consider a Letter of Intent (Memorandumof Agreement) from the get-go to establish
the framework for the relationship.