|
| |
CONTRACTS FOR INTERNATIONAL SALE OF GOODS.
Term Paper ID:25655
|
|
|
Essay Subject:
Examines origins, purposes, scope, criticisms of, weaknesses & interpretations of United Nations' Convention's law on global trade, U.S. as example.... More...
|
30 Pages / 6750 Words
45 sources, 70 Citations,
OTHER Format
$100.00
Return to List of Papers
|
Paper Abstract:
Examines origins, purposes, scope, criticisms of, weaknesses & interpretations of United Nations' Convention's law on global trade, U.S. as example.
Paper Introduction:
CISG AND U.S.-MEXICAN TRADE
This research paper deals with the relevance of the United Nations Convention on Contracts for the International Sale of Goods (CISG) to international trade relationships and practices between the United States and Mexico. CISG was intended to provide a common legal framework which would promote the development of international trade. Prior to the adoption of CISG and its ratification by the United States and Mexico, trade between the two countries lacked such a framework. The approach taken in this essay is to state the principal criticisms of CISG and to analyze their validity or invalidity in the context of the actual course of Mexican-American trade, including the case law under which CISG has been interpreted by various courts. The conclusions are: (1) CISG has played only a very marginal role in
Text of the Paper:
The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper.
Bathram, Sales Transactions in Latin America: TheFundamental Issues, 21 University of Miamai Inter-American L. [25] Sheridan, A 1 . Recent Mexican governments have done much to streamlineexport-import procedures and to allay the concerns of foreign exportersabout the red tape, bureaucratic delays and lack of due process they oftenencounter there. Roterex Corp., 1994 U.S. In Symposium, supra. 8. Most of the serious impediments to Mexican-Americantrade would exist, whether or not CISG existed and remedies for them arebasically a question of reforming the Mexican domestic legal system to makeit more hospitable to foreign traders. . A Contextual Approach to the Question, 11 Computer L. Leete says that "the CISGis significantly different from the U.C.C. Mary's L. Rev. 312-354 (Winter,1989-9 ).Harold J. 79 as anexcuse for their non-performance.[51] Nothing came of these legalexercises, presumably because either the Mexican lawyers advised that Art.79 could not be stretched that far or foreign financial pressures werebrought to bear on the Mexican Government to dissuade importers from takingsuch a position which has never prevailed under the lex mercatoria becauseof its destabilizing effect on international trade. Roterex Corp., 1994 U.S. . materially alters the terms ofthe offer." Gabriel says that "the central difference . J. [41] Noel J. J. 4318 June 15, 1994 (Arbitral Award, InternationalesSchiedsgericht der Bundeskammer der gewerbl, UNILEX. One of the weaknesses of CISG is that under it, no provision was madefor the establishment of a central tribunal to adjudicate disputes, as, forexample, has been done under the GATT treaties through the establishment ofthe World Trade Organization in Geneva. At common law, whenthe terms of the seller's and the buyer's forms conflicted, the terms ofthe last form under the mirror image and last shot doctrines prevailed. The United States hasdeclared that it will not be bound by Article 1(1)(b), on thegrounds that to do so would displace the application of the UniformCommercial Code (UCC).[4] Winship says that under the American reservation,"a court sitting in the United States is required to apply the conventiononly if the parties before it have their places of business in differentContracting States, such as where the seller is in Texas and the buyer isin Mexico."[5] CISG by its terms does not apply to contracts for the supply ofservices (Art. Buyer's rights of rejection and inspection of goods. [21] Humberto Gayou & Robert G. Berman & Monica Ladd, "Risk of Loss or Damage inDocumentary Transactions Under the Convention on the International Sale ofGoods," 425-426. . The civil lawtends to find that an offer is irrevocable and cannot be revoked in thelanguage of Art. Rosett argues that CISG offers only the illusion of providing aworkable, common legal standard for the resolution of problems arisingunder contracts for the international sale of goods. Contract Formation --The Battle of the Forms. 331-37 (Spring, 1995).Louis Del Duca & Patrick Del Duca, Practice under the Convention onInternational Sale of Goods (CISG): A Primer for Attorneys andInternational Traders (Part II), 29 Uniform Commercial Code J. Tenenbaum saysthat "Mexico has taken remarkable steps to make itself a more attractivecentre of private dispute resolution."[29] Other legal problems arise in trans-national transactions due to theinterplay between foreign choice of law clauses and Mexican law. This process was expanded under the regime of President CarlosSalinas de Gortari (1989-1993), during which steps were taken toward theprivatization of the banking, airlines and other nationalized industriesand to eliminate barriers to trade with Mexico. . [32] Siqueiros, 32 . However,from the standpoint of nationals of countries in the less developed ThirdWorld, such as Mexico, which, because of past history, are supersensitiveto the power of the Colossus to their North, Bathram argues that "the SalesConvention offers parties to a potential sales contract an acceptablecompromise when negotiating which country's laws apply."[14] Americanexporters and importers may have the necessary leverage to insert anAmerican choice of law clause which would exclude application of CISGentirely. . It rejected the exporter's defense that the contract had tobe in writing under Sec. CISG is silent as to the effect of suchdisclaimers, if any. [14] Shelly P. No answer can begiven in the abstract or on purely theoretical grounds. (1988).John Honnold, "Introduction," 419-422. J. v. Damages. J. The contract was subject to CISG. S.p.A. [4 ] Burt A. When foreign governments complain about such legal impediments,recent Mexican governments have responded, for example, by amendingMexico's Code of Commerce to implement the bi-national arbitration panelsunder NAFTA and by adhering to the New York Convention on the Recognitionand Enforcement of Foreign Arbitral Awards (1971) and the Inter-AmericanConvention on International Commercial Arbitration (1975). 99-167(Fall, 1996).Economist Intelligence Unit, Country Report Mexico 4th Quarter 1996.Export-Import Sales under the 198 United Nations Sales Convention, 8Hastings International and Comparative l. Art. . [23] Economist Intelligence Unit, Country Report Mexico 4th Quarter1996, 11. Sec. (1988).Michael Tenenbaum, International Arbitration of Trade Disputes in Mexico,12 J. 3. Pastin & Wise said that "the 1982 debt crisiscalled into question long-standing political ties based on state patronageand production geared toward the domestic market" and that "tradeliberalization has been associated with inflation reduction."[18] Important steps to implement the new policy were the internalEconomic Solidarity Pact of 1987 which imposed controls on wages andprices, the 1987 Framework Agreement with the United States, calling fortariff reductions and the easing of Mexico's restrictions on foreigninvestment and the issuance of new regulations in 1989 and 199 whicheffectively removed the barriers to 1 percent foreign ownership ofMexican companies, (except in the oil, petrochemical, nuclear, powergeneration, railroads, telephone and communications, road and air transportindustries). [47] Del Duca & Del Duca (Part II), 156. Mary's L. of International Arbitration, 78 (December, 1994).. imports from Mexico free of U.S. v. Contract-based suits therefore should not producedifferent results depending on the forum in which they are initiated,especially where the different societies have similar goals."[1 ] TheAmerican Association of Exporters and Importers said in a report toCongress that: "the main advantage of the Convention is that it willprovide an agreed set of rules for the many international salestransactions in which it would be otherwise unclear what law governs."[11] Not all commentators agree that there is an overwhelming need for theadoption of CISG, at least with respect to international sales of goodsinvolving the major trading countries of the industrialized world. exporters, create uncertainty for others,and potentially complicate the decision-making process of almost all U.S.citizens, doing business in Mexico."[28] Mexican exporters to the UnitedStates face similar difficulties under the U.S. 1993).Delchi Carrier, S.p.A. [48] Del Duca & Del Duca (Part II), 122. [6] Winship, Changing, supra, 534. 4(a)), or their effect on the property in the goods sold (whichleaves out most sales on a secured basis) or to product liability claimswhich result in personal injury or death (Art. In Symposium,21 Cornell International L. Americanexporters into Mexico or Mexican importers from the United States maytransact their business directly --i.e. TABLE OF AUTHORITIES INTERNATIONAL AGREEMENTS, CONVENTIONS AND TREATIESInter-American Convention on International Commercial Arbitration (1975).New York Convention on the Recognition and Enforcement of ForeignArbitral Awards (1971).United Nations Convention on Contracts for the International Sale ofGoods. customs duties, which even beforeNAFTA averaged only about 1 percent, would drop from 13.5 percent pre-NAFTA to 76 percent by 1999 and the percentage of U.S. Defenders ofCISG can argue that it was never designed to remedy such problems, but aninternational legal system that fails to afford practical legal remediesfor breach of international sales contracts is to that extent far from aneffective regime. Chilewich enteredinto a contract with an Italian shoe manufacturer, Filanto, to supply thefootwear. 1994).Filanto, S.p.A v. . When this occurs, the UCC preservesthe contract and omits the disputed terms. 8 and 29 of CISG takes a somewhat different tack. It is unclearwhether the Convention applies to only part of the contract and whethercomputer software, which tells the computer hardware what to do, falls intothe category of goods or services.[6] Primak points out that often softwareis licensed or leased rather than sold outright. In Symposium,21 Cornell International L. Under Mexican law, Siqueiros says that "if [CISG] isinapplicable, Mexican law will be applied to substantive issues if theobligation contemplated in the contract is to be performed in Mexico."[32]What this means is that an American secured creditor may be effectivelydeprived of an effective way to enforce its rights in Mexico, even if itdesignates the UCC of an American state as the applicable law. ConventionApply? Chilewich Int'l Corp.: Sounds ofSilence Bellow Forth Under the CISG's International Battle of theForms, 7 Transnational Lawyer 141-162 (Spring, 1994).Elisabeth Malky, "Seeking Salvation Through Exports," Business Week,March 6, 1995, 32."Mexico," Economist, October 28, 1995, 3.Noel J. Del Duca & Patrick Del Duca, Practice under theConvention on International Sale of Goods (CISG): A Primer for Attorneysand International Traders (Part II), 2 9 Uniform Commercial Code J., 1 (Fall, 1995). products "will disrupt thebusiness operations of many U.S. Allan Farnsworth, "Review of Standard Forms or Terms Under theVienna Convention," 444. LEXIS 1282 ,1994 WL 495787 (N.D.N.Y. 4318 June 15, 1994 (Arbitral Award,Internationales Schiedsgericht der Bundeskammer der gewerbl, UNILEX, anarbitrator found that "seller's conduct and delay of five months inreplying to buyer's offer indicated its intention to accept it."[48] 5. [45] E. By September 3 , 1981, 27 nations had signed it.[1]By May, 1996, the number of countries acceding to CISG reached 47 andincluded most nations engaged in international trade. [46] Del Duca & Del Duca (Part II), 154. Local laws protecting local sales representatives and distributorsmay be found in a number of countries in addition to Mexico but they seemout of kilter with Mexico's current emphasis on competitive arrangements.Mexican firms doing business as exporters to, or importers from the UnitedStates, enjoy an advantage over their American counterparts doing businessin Mexico and are free to terminate such arrangements with Americanintermediaries, so long as they observe the express terms of theircontracts with them. As important as the growth in the size of trade is the change in itscomposition with the largest segments of Mexico's exports to the UnitedStates in 1995 being manufactured goods and petroleum products and thelargest segments of its imports being intermediate goods and capitalgoods.[23] A very large share of Mexican-American trade is, therefore, accountedfor by transactions between American parents and their wholly-owned ormajority-owned affiliates. J. 2(c)), purchases and sales of stocks, negotiableinstruments and money (Art. Nowhere in CISG are the terms "Sale" or "Goods" defined.Agreements for the transfer by sale, lease or licensing of technology arenot covered by CISG. CISG AND U.S.-MEXICAN TRADE This research paper deals with the relevance of the United NationsConvention on Contracts for the International Sale of Goods (CISG) tointernational trade relationships and practices between the United Statesand Mexico. InSymposium, supra. 66-7 ,"would, if they were applicable, conflict with elementary principlesunderlying those transactions," under the lex mercatoria, and areparticularly critical of CISG for failing to incorporate the standard tradeterms of the International Chamber of Commerce (INCOTERMS), including suchcommon delivery terms as f.o.b., c.i.f., etc., which they caution theexporter must explicitly specify in CISG contracts if untoward results areto be avoided.[44] 4. Chilewich Int'l Corp.:Sounds of Silence Bellow Forth Under the CISG's International Battle of theForms, 7 Transnational Lawyer, 141, 159-162 (Spring, 1994). Warranty disclaimers. 39(1)requires buyers to give sellers notice of their rejection of non-conforminggoods, but Farnsworth says that Art. Interest rate issues have been involved in 42 of thereported cases under CISG.[49] 7. Hall, "Roadblock in Mexico," Journal of Commerce andCommercial, July 13, 1995, 6 A. [38] Henry P. is essentiallyevident when an offeror objects to the variant terms or when the variantterms constitute a material alteration. Note 1 saysCISG was implemented in Mexico through the issuance of Decreto dePromulgacion de la Convencion de las Naciones Unidas Sobre los Contractosdo Compraventa Internacional de Mercaderias, Diario Oficial [D.O.], March17, 1988. [51] Kevin G. Risk of loss and damage. [37] Id., 1 3. 19 itsrejection operated as a counter-offer. Remedies for default. Nez Marketing de los Angeles, E.U.A.,M/66/92 May 24, 1993 (Mexico, COMPROMEX, Comision para la Proteccion delCommerce Exterior), UNILEX, an American exporter, Nez, orally agreed tosell 24 tons of garlic to a Mexican importer, Morales, then failed to makedelivery. If they do not, then as the American Association of Exporters andImporters said, "there will be greater certainty . de Hermosillo, Sonora,Mexico v. J. Para, New Taboos on the International Sale of Goods,Management Review, 36 (July, 1991). When the Mexican peso suffered its more than 5 percent devaluationagainst the dollar in early 1994, some Mexican law firms were reportedlyinvestigating the possibility of Mexican importers invoking Art. It should be noted at the outset that, despite the attractiveness ofthe Mexican market, American and other foreign exporters and importers,have found Mexico to be among the more difficult countries in the world inwhich to do business. [26] For a discussion of the strict rules applicable to public bids andcontracts, including the requirement that they be governed by Mexican law,see Siqueiros, 295. J., 2 3 (Fall, 1992). At that time, Mexicohad principally exported to the United States oil, autos, chemicals andagricultural products and served as a market for American consumer andindustrial goods.[16]Siqueiros said that "for years, Mexico's industrialization policy was todevelop domestic industry by eliminating imports. 885-1 4 (1994).Kevin G. The import permit wasintended to be the commercial instrument for protection of Mexicanindustry."[17] Beset with mounting foreign trade debts, large internaldeficits, a rapidly devaluing currency and rising inflation, Mexico,beginning in the middle 8 s, opted to join the international economy and todeemphasize protectionism. without using intermediaries.Often, however, they find that local agents, sales representatives ordistributors perform valid business functions. An American federalDistrict Court found that as a matter of common law the UCC applied andruled that because Filanto took an unreasonable time to reject the Russian-American arbitration clause, it was subject to it. There is first the problem ofcorruption, la mordida or little bite, bribes and kickbacks, which remainsa major problem. 8 and 29 and isinconsistent with the holding of COMPROMEX in Morales. of International Law, 291 (Spring, 199 ). Revocability of Offers, Written or Oral. [49] Del Duca & Del Duca (Part II), 157. Under the UCC, parol or oral evidence can be used to interpret theintent of the parties but not to create a contract in the first place.Arts. [19] Siqueiros, 393. Giesze, Mexico's New Antidumping and Countervailing Duty System:Policy and Legal Implications, as well as Practical Business Risks andRealities for United States Exporters to Mexico In the Era of the NorthAmerican Free Trade Agreement, 25 St. InSymposium, supra. [36] Louis F. American Business Center, Inc., 993 F.2d 1178 (5th Cir. These measures includeddramatic reductions in tariffs on imported goods, which on the whole, fellfrom 1 percent in 1986 to 11 percent in 199 and the removal of mostimport restrictions, quotas and permits, which covered only 3 percent ofimports by 199 following Mexico's entry into GATT in 1986.[19] NAFTA (the North American Free Trade Agreement between Mexico, Canadaand the United States) accelerated this process. 478. and Mexico Ever More Tightly," LosAngeles Times, May 5, 1997, A 1 and A 1 . However, there clearly are someproblems with how CISG has been interpreted by various national tribunals,which need to be resolved over time. Notable by theirabsence were Great Britain and Japan and other important trading nations,including Algeria, Brazil, Greece, India, Indonesia and Israel.[2] Following Senate approval on October 9, 1986, the United Statesratified CISG, effective January 1, 1988. However, Art. exports to Mexico are intermediate goods, "which areinstalled in Mexican computers, spun into Mexican T-shirts and riveted intoMexican cars--many headed back north of the border."[25] Technically, CISGapplies to such trade, but the chances of commercial disputes arisingtherefrom are minimal. 79 "reflects a compromisebetween the common law and civil law doctrines concerning changedcircumstances."[5 ] He suggests that lawyers for American exporters who donot wish currency devaluations, for example, to excuse non-performance byforeign importers should insert a detailed and tighter force majeure clausein international sales contracts governed by CISG. Introduction CISG was the product of more than 5 years' work by legal expertsworking under the auspices of the League of Nations and the United Nations.The text of the Convention was approved without dissent at a UN conferenceheld in Vienna in 198 . The concept of a fundamental breach of thecontract under Art. 2-2 1 of the UCC, which states that all contractsfor the sale of goods with a price in excess of $5 must be evidenced by awriting. de C.V.de Hermosillo, Sonora, Mexico v. [43] Id., 452. In Symposium, supra. At the time the two countries ratified CISG in the mid-to-late 198 s,Mexico was just beginning to enter the global economy. . [9] John Honnold, "Introduction," 42 . 16(1), "if it indicates, whether by stating fixed time foracceptance, or otherwise, that it is irrevocable," or if, under Art. The contract was performed and adispute erupted as to the quality of Filanto's shoes. Malky estimated that in 1994 maquiladorasaccounted for $26 billion in exports.[24] Sheridan estimated that about 8 percent of U.S. In Symposium, 21 Cornell International L. 1229 (S.D.N.Y.1992).Jose Luis Morales y/o Son Export, S.A. Hall, "Mexican Exports: UN Pact Not Escape Clause forImporters," Journal of Commerce and Commercial, April 5, 1995 at A 5 and A1 .----------------------- 28 and less chance thatan American exporter or importer will find himself subject to a rule of lawfar from his normal expectations."[15] Role of CISG in Strengthening Stability of Mexican-American Trade CISG should be seen as one of many necessary changes, and notnecessarily as even among the more important reforms, which havefacilitated the stable growth of Mexican-American trade and investmentrelationships. . [8] CISG, Preamble (No further citations to CISG will be footnoted.They will be referenced by the Article number). (1988).----------------------- [1] The nations which signed CISG in 198 -1981 were Argentina,Australia, Austria, Chile, Czechoslovakia, Denmark, East and West Germany,Egypt, Finland, France, Ghana, Hungary, Italy, Lesotho, Netherlands,Norway, People's Republic of China, Poland, Slovenia, Singapore, Sweden,Syria, United States, Venezuela, Yugoslavia and Zambia. Under Chapter 19 of NAFTA, the Mexican government acceptedvarious procedural safeguards for the handling of customs related disputes.Nevertheless, they remain a problem. J. 78 is vague as to what interest rate applies tobreach of contract, leaving the issue open to varying interpretations underdomestic law, where judicially imposed rates of interest, which can varyconsiderably, according primarily to the rate of inflation in the seller'sand buyer's countries, in the case of some countries, including the UnitedStates and Mexico. Hall, "Mexican Exports: UN Pact Not Escape Clause for Importers," Journal of Commerce and Commercial, April 5, 1995, A5 and A 1 .Kevin G. exports to Mexicowhich would be free of Mexican duties would fall from 17.9 percent pre-NAFTA to 66.3 percent in 1999.[2 ] International economic developments, principally the intensificationof competition in international trade and the emergence of the tigereconomies of East Asia, converted Mexico into a very attractive place forAmerican and other foreign investment in part because Mexican wage rates in199 were only 12 percent of comparable American and other labor costs andbecause Mexico, due to its propinquity to the United State, was well-located to serve the American market as an assembler of electronics andother manufactured products, which would be re-exported. Conversely, the CISG strikes theoffer and recognizes the alteration as a counter-offer."[38] An example of how an unwary international trader can be caughtbetween different interpretations of Art. Scott Primak, Computer Software: Should the U.N. [5 ] Farnsworth, 447. Leete, Contracts under the United Nations Convention on theInternational Sale of Goods and the Uniform Commercial Code: Pitfalls forthe Unwary, 6 Temple L. Sales Convention,"487-533. Sometimes, however,the exporter finds it expedient to sell on open credit terms. of International Arbitration 53-78 (December, 1994).Peter Winship, Changing Contract Practice in the Light of the UnitedNations Sales Convention: A Guide to Practitioners, 29 InternationalLawyer 525-554 (Fall, 1995).Peter Winship, "Private International Law and the U.N. He says that "theConvention should apply to softwarewhether it is sold or licensed," but acknowledges that it may not.[7] Purposes of CISG: Its Special Meaning in North/South Contracts The purposes of CISG are set forth in its preamble, namely, that "thedevelopment of international trade on the basis of equality and mutualbenefit is an important element in promoting friendly relations amongStates," and "the adoption of uniform rules which govern contracts for theinternational sale of goods and take into account the different social,economic and legal systems would contribute to the removal of legalbarriers in international trade and promote the development ofinternational trade and promote the development of internationaltrade."[8] One of its principal draftsmen, American law professor John Honnold,said that "the 198 Convention replaces the Babel of diverse laws andlanguages with rules that have been internationally developed and accepted.For the first time we have a workable basis -a legal lingua franca- for theguidance, criticism and further development of experience in the field ofinternational commerce law."[9] Sono said that "the business world isbecoming global. Chilewich Internat'l Corp., 789 F. Winship says that a recentAmerican case, Delchi Carrier, S.p.A. (1988).Louis Del Duca & Patrick Del Duca, Practice under the Convention onInternational Sale of Goods (CISG): A Primer for Attorneys andInternational Traders (Part I), 27 Uniform Commercial Code J. Berman & Monica Ladd, "Risk of Loss or Damage in DocumentaryTransactions Under the Convention on the International Sale of Goods,"423-437. Disputes between Mexican partners or investors andAmerican owners are, as noted above, exempt from CISG. Before CISG was adopted, itwas common for American exporters to provide in such contracts that theycould be terminated on 3 days' notice, subject to fulfillment of anyoutstanding obligations with respect to completed sales. of International Law, 291-322 (Spring, 199 ).Kazuaki Sono, "Restoration of the Rule of Reason in Contract Formation:Has There Been Civil and Common Law Disparity?" 477-486. [39] See Gary E. In 1994 UPS ceased operating in Mexicobecause it said it faced "a nightmare at Mexican customs locations, wherepackages must be opened up and searched."[27] Increased enforcement of Mexican dumping laws is another area ofconcern. 15 employs the civil law concept that an offer becomeseffective when it reaches the offeree, rather than the common law 'mailbox' rule that an acceptance becomes effective when it is mailed. de C.V. Another major areaof trade outside the scope of CISG are imports by Mexican state agencies,which are governed by Mexican law.[26] None of this is intended to suggest that CISG has not provided auseful framework for stabilizing Mexican-American trade, but merely toplace its importance into the proper perspective. The approach taken in this essayis to state the principal criticisms of CISG and to analyze their validityor invalidity in the context of the actual course of Mexican-Americantrade, including the case law under which CISG has been interpreted byvarious courts. Dist. Battram, Sales Transactions in Latin America: The FundamentalIssues, 21 University of Miami Inter-American L. He calls this an "unwieldy and vague rule."[45] Difficultiesin determining whether the buyer has inspected and notified the seller ofdefects were involved in 27 of the 142 cases which have been decided underCISG.[46] Arts. J. Chilewich, an American international trading firm, entered into acontract in 1989 with a Soviet trading agency, Raznoexport, to supply itfootwear. Foreign exporters havetypically avoided those problems by requiring payment in advance for thegoods they sell to Mexican importers or against irrevocable internationalletters of credit or by selling goods on consignment. 2-2 1, 2-2 2, 2-2 7, 2-2 9(2), 2- 316. [15] Export-Import Sales Under the 198 United Nations SalesConvention, supra, 2 7. Berman & Ladd say that the provisions ofCISG dealing with the risk of loss and damage to goods, Arts. Hillman, "Article 29(2) of the United Nations Convention onContracts for the International Sale of Goods," 449-466. Giesze says that the sum total of Mexican requirements in thatarea, expensive customs bonds, Mexican insistence on premature payment ofcustoms duties, unduly complicated customs declarations and Mexican unfairtrade practice investigations aimed at U.S. 7(2) that "questions concerning matters governed by this Conventionwhich are not expressly settled in it are to be settled in conformity withthe general principles on which it is based on, in the absence of suchprinciples, in conformity with the law applicable by virtue of the rules ofprivate international law." According to Rosett, the "central fault [of CISG] is that it is hardto detect a systematic set of values at work . It was the combination of these measures taken by Mexico, includingthe enactment in 1989 of Mexican laws authorizing maquiladoras, 1 percentforeign-owned Mexican companies operating near the American border engagedprimarily in the business of "importing machinery, equipment, raw materialsand components into Mexico on a duty-free basis for processing and furtherexportation" which, together with NAFTA, have fueled the dramatic expansionin Mexican-American trade during the past decade.[21] To this laundry list,one must add the financial bailout package extended by the United States toMexico in 1993 to enable Mexico to weather the peso crisis and economicdownturn of 1994-1996. This decision has beencriticized as an exercise in American nationalism inconsistent withCISG.[39] Substitute Mexican importer for the American importer and Americanexporter for the Italian exporter in the Filanto case, and it is possiblethat a different result might have been obtained, depending on whether thecourts of the United States or Mexico heard the dispute. 2. 1993), hasheld that the parol evidence rule applies to contracts governed by CISG.That decision flies in the face of the provisions of Arts. 47 and 49(1) incorporate the civil law (German) concept ofnachfrist, giving the buyer a right to stipulate an additional time ofreasonable length for delivering or remedying any defects in the product,and under which the buyer will forfeit its right to avoid the contractunless he has given such a notice, a concept unknown to the UCC.[47] In aGerman case, parties not cited, SCH. Under the UCC, the trend was toward upholding theformation of commercial contracts. This is reassuring to American exportersbecause foreign companies trading in less developed countries, such asMexico, have fears, based in part on bitter experience, which cause them tobe somewhat apprehensive about local legal systems in the importingcountry. In substance, theyleave open the possibility that an oral contract for the sale of goods maybe enforceable, especially if one party has changed position in reliance onan oral promise. In Symposium, 21 Cornell International L. v. CASESBeijing Metals & Minerals Import/Export Corp. Export-Import SalesUnder the United Nations Sales Convention, 8 Hastings International andComparative L. According to Gayou & Gilbert,"as a practical matter, enforcing a foreign judgment in Mexico will bedifficult at best, even if the foreign judgment creditor retains competentMexican counsel from the time the lawsuit is filed in the foreigncountry."[31] The situation of the secured foreign creditor of Mexican debtors doesnot improve under CISG. N.Y. 1992). [16] Elisabeth Malky, "Seeking Salvation Through Exports," BusinessWeek, March 6, 1996, 32. 2(d)), ships, vessels, hovercraft or aircraft(Art. [24] Malky, 32. Under it, the percentageof U.S. AContextual Approach to the Problem, 11 Computer L. v. Del Duca & Del Duca say that "oneof the difficulties of the CISG as a source of rules governing theformation and performance of contracts for the sale of goods is that thereis no supreme body for its interpretation."[35] As of May, 1996, a total of 142 cases have been brought which arebased on or involve issues of interpretation of CISG.[36] Ten of thosecases have involved the United States and only one, Mexico.[37] As thefollowing discussion illustrates, a number of significant problems ofinterpretation relating to CISG have already arisen in decided cases. CISG also does not apply toissues relating to the validity of contracts (such as whether they are voidor voidable as against the public policy of one of the contracting states)(Art. 2(f)). 2-2 1 for years. [42] Roger A. Since1984, Mexican exports to the United States have increased from less than$1 billion to $57 billion in 1996.American imports from Mexico have increased from about $19 billion in 1984to $73 billion in 1996.[22] Together, bilateral trade measured in dollarsis up 5 per cent since 1979, and Mexico has become the third largestexport market of the United States, after Canada and Japan. [18] Manuel Pastin & Carol Wise, The origins and sustainability ofMexico's free trade policy, 48 International Organizations 478, 475(Summer, 1994). Under Article 4(b), CISG does not apply to securityinterests which form a part of or relate to contracts for the internationalsale of goods. Under UCC section 2-316, sellers can limittheir post-sale warranty obligations through written disclaimers which meetcertain formal requirements. In Symposium, 21 Cornell International L. 19 is the 1992 Filanto case citedabove. v. 193-216 (Fall, 1992).Gary K. Gabriel, The Battle of the Forms: A Comparison of theUnited Nations Convention for the International Sale of Goods and theUniform Commercial Code, 49 Business Lawyer 1 58-1 59 (May, 1994). 5). Areas of Interpretation and Concern Even if it is less than half of the total trade, as appears to be thecase, CISG does apply to traditional sales of goods between the twocountries, including some of the NAFTA induced trade. Leete, Contracts under the United Nations Convention onthe International Sale of Goods and the Uniform Commercial Code: Pitfallsfor the Unwary, 6 Temple L. (1988).Eduardo Siqueiros T. Scott Primak, Computer Software: Should the UN Convention Apply? [35] Louis F. [7] L. [27] Kevin G. Legal Framework for the Sale of Goods into Mexico,12 Houston J. Farnsworth says that Art. [44] Berman & Ladd, 423. The text of CISG itselfacknowledges this potential shortcoming of the treaty when it states inArt. [28] Craig R. 2(e)) or of electricity (Art. It has not hindered and in a minorway has helped facilitate trade between Mexico and the United States.Conflicting interpretations of its provisions and conflicts between thelegal systems of Mexico and the United States may limit the legal remediesavailable to American sellers of goods. J. [12] Harold J. Supp. 231 (April,1991). [5] Id. Siqueiros points out thatsuch clauses are unlikely to be enforceable in Mexico because they wouldcontravene Mexican public policy and specific statutes which provide forthe indemnification of Mexican sales agents or distributors "for anydamages caused by the premature termination" which can include foreseeablelost profits.[3 ] It is not likely that such liabilities can be avoidedunder CISG because, as noted above, CISG does not apply to serviceagreements. 3(2)), goods bought for personal, family or household use(Art. 16(2),there has been reasonable reliance. Where there has been no change ofposition by the buyer, the American seller might find itself stuck with anoffer that it thought it had revoked. Gabriel, The Battle of the Forms: A Comparison of the UnitedNations Convention for International Sale of Goods and the UniformCommercial Code, 49 Business Lawyer 1 53- 1 64 (May, 1994).Humberto Gayou & Robert G. 1115-1148(1994).Craig R. [3] Eduardo Siqueiros T., Legal Framework for the Sale of Goods intoMexico, 12 Houston J. 2 (a)), at auction (Art. v. (1988).Burte A. Force majeure and excusable delay clauses. Mexican firms doing business in the United States canavail themselves of the extensive protection afforded to secured creditorsunder the UCC's system for filing and perfecting security interests. [3 ] Siqueiros, 299 and 315. The provisions of CISG on damages are, except in onerespect, similar to those found in the UCC. Art. [11] Export-Import Sales Under the 198 United Nations SalesConvention, supra, 2 7. If a disputeor default occurs, it is very difficult for foreigners to enforceobligations of Mexicans in Mexican courts in part because of the nearimpossibility of piercing the corporate veil. That is going to makeinterpretation of CISG very difficult, since its language is loose and doesnot emerge from a central defining legal culture."[34] Are Rosett's fearsjustified or is Honnold correct when he state that CISG will bring a commonset of legal standards to the international sale of goods? In Symposium, 21 Cornell International L. Para says that "the Convention Rulesfor firm offers produce unexpected results for American business."[41] In the recent case of Jose Luis Morales y/o Son Export, S.A. There is some confusion about whether CISG applies tocontracts involving the sale of computer hardware and software. [13] Filanto v. 6. Indetermining whether the parties had reached a binding agreement and inconstruing its terms, trade usage and the course of dealing between theparties were used. One must look tothe case law which has developed under CISG. [4] Peter Winship, "Private International Law and the U.N. [1 ] Kazuaki Sono, "Restoration of the Rule of Reason in ContractFormation: Has There Been Civil and Common Law Disparity? 1 31 (1994). [22] Both the figures in this sentence and the preceding one are takenfrom Mary B. CISG contains nocomparable provision. Hillman, "Article 29(2) of the United Nations Conventionon Contracts for the International Sale of Goods: A New Effort atClarifying the Legal Effect of 'No Oral Modification clauses,'" 451. Gilbert, Legal Building Blocks forStructuring Sales in the Mexican Market, 25 St. Other factors have beenmuch more important. 79(1) dealing withexcuses for performance is so elastic that some observers, including somelaw firms in Mexico, have tried to give it a very expansive interpretation,as discussed below. In Symposium, supra. Del Duca & Patrick Del Duca, Practice Under theConvention on International Sale of Goods (CISG): A Primer for Attorneysand International Traders (Part I), 27 Uniform Commercial Code L. . J. Art. and common law on the issue ofrevocation."[4 ] Generally, offers not supported by consideration under theUCC are revocable at any time prior to acceptance unless the other partyunder a promissory estoppel theory has changed its position to itsdetriment in reasonable reliance on the offer staying open. J. 2(b)), on execution or otherwise byauthority at law (Art. Conclusion CISG, despite its shortcomings, represents a forward step in the longeffort to bring greater uniformity to the law applicable to internationaltrading transactions involving goods. 197-231 (April,1991).Arthur Rosett, CISG Laid Bare: A Lucid Guide to a Muddy Code, 575-589. Art. Article 14 upholds the formation of a contract when the partieshave been sufficiently definite as to the goods involved and their quantityand price. That contract contained a clause requiring the parties in case ofa dispute to submit disputes to arbitration in Moscow. Para, New Taboos on the International Sale of Goods, ManagementReview, 33-36 (July, 1991).Manuel Pastin & Carol Wise, The origins and sustainability ofMexico's free trade policy, 48 International Organizations 457-488(Summer, 1994).L. Similarly, Mexican laws with respect to the enforcement of securityobligations in Mexico present a maze for foreign companies seeking toenforce their rights as secured creditors there. Nez Marketing de Los Angeles, E.U.A., M/66/92 May 24, 1992(Mexico, COMPROMEX, Comision para la Proteccion del Comercio Exterior),UNILEX.Sch. (1988). Rev. 1127 (1994). Makata, Filanto, S.p.A. American BusinessCenter Inc., 993 F.2d 1178 (5th Cir. J.(1988).Henry D. 2-2 2 and 2-2 9(2) attempt to resurrect thevalidity of No Oral Modification Clauses [NOMs], even though as Hillmansays "American courts generally refuse to enforce [them]."[42] He says thatthe CISG compromise position on NOMs "may create confusion, even renderingthe law ineffective."[43] One American case under CISG, Beijing Metals & Minerals Import/ExportCorp. In 1993, Compromex enforced theoral agreement. CISG was intended to provide a common legal framework whichwould promote the development of international trade. 39(2), which was "inserted at thebehest of developed countries," gives the buyer up to two years afterdelivery to communicate their rejection, which can be extended by a periodof guarantee. Hall, "Roadblock in Mexico," Journal of Commerce andCommercial, July 15, 1994 at 3A and 6A.Robert A. This does not seem to be an unfair decision in view of theimporter's change of position in reliance on the exporter's promise, but itsent shivers through the American commercial legal community which has beenrelying on sec. [31] Gilbert & Gayou, 1136. Gilbert, Legal Building Blocks forStructuring Sales in the Mexican Market, 25 St. In its reply to Chilewich's standard form contract Filanto tookexception to the arbitration clause and assumed that under Art. 49 is similar to the common law concept of a materialbreach. The conclusions are: (1) CISG has played only a verymarginal role in facilitating the great expansion of that trade which hasoccurred over the past decade, other factors being much more important; (2)there is a need for the development of common legal standards to governthat trade, notwithstanding the views of the critics of CISG; and (3) thecase law is in much too embryonic a state to conclude whether or not CISGwill fulfill its intended purposes. [33] Arthur Rosett, "CISG Laid Bare: A lucid Guide to Muddy Code," 589.In Symposium, supra. Rev. 197-212 (Winter, 1985).E. [17] Siqueiros, 323. 2-2 7 states that "a final formthat is not intended specifically as a counter-offer will act as anacceptance even though it contains different terms." CISG incorporates the concepts of usage and course of dealing underArticle 9. In Symposium, 21 Cornell International L. Mexico ratified CISG in 1987 andadopted legislation to enact it in 1988.[3] Applicability and Scope of CISG Under Article 1(1), CISG is applicable to contracts for theinternational sale of goods "between parties whose placesof business are in different States: (a) When the States are ContractingStates; or (b) When the rules of private international law lead to theapplication of the law of a Contracting State." Under Article 6 parties toan international contract for the sale of goods are free "to exclude theapplication of this convention, or subject to Article 12, derogate from orvary the effect of any of its provisions." Under Article 1.1(b), CISG canapply not only to contracts involving signatories to it, but also tocontracts involving non-signatories if they happen to have a place ofbusiness in a Contracting State and if the choice of law rules applicableto the contract call for the law of a Contracting State to apply to it.Article 95 permits any Contracting State to declare that it will not bebound by Article 1 (1)(b). Mary's L.J. 1. UCC secs. 1994), stands for the propositionthat CISG's damage provisions are applicable. [and] hasdeveloped over many centuries as part of the international lawmerchant."[12] A federal district court in New York recently expressedskepticism regarding the need for CISG at least in cases involving Americancourts when it said: "the State Department undertook to fix something thatwas not broken by helping to create the Sale of Goods Convention whichvaries from the UCC in many significant respects."[13] Berman & Ladd may be correct that the lex mercatoria alone andwithout the additional complications produced by CISG's mixture of commonlaw and civil law concepts provided a sufficiently stable basis for thegovernance of international trade among the developed nations. In Symposium, 21 CornellInternational L. [2 ] "Mexico," Economist, October 28, 1993, 3. Dist.LEXIS 1282 , 1994 WL 495787 (N.D. Rev. 344(Winter, 1989-199 ). He says that "in fact,the Convention is largely a cut-and-paste job, and the principal operatingdrafting principle was to produce a document that all could agree to andnone would reject."[33] As a collection of general legal principles, in thecivil law tradition, CISG will take on meaning through the interpretationsgiven to it by various national tribunals. Prior to the adoptionof CISG and its ratification by the United States and Mexico, trade betweenthe two countries lacked such a framework. 19makes an offeree's exception to the offeror's offer a counter-offer, thuspreventing at that stage the formation of the contract, if "it containsadditional or different terms which . dumping laws and have toadapt to the consequences of compromises which the American administrationshave to make to protectionist pressures, even after the ratification ofNAFTA. v. [34] Rosett, 58 . Makata, Filanto S.p.A. DOMESTIC LAWSDecreto de Promulgacion de la Convention de las Naciones Unidas Sobrelos Contratos de Compraventa Internacional de Mercaderias, DiarioOfficial [D.O.], March 17, 1988.Uniform Commercial Code, secs. SalesConvention," 517. [2] Peter Winship, Changing Contract Practices in the Light of theUnited Nations Sales Convention: A Guide for Practitioners, 29International Lawyer 526 (Fall, 1996). Typically,there is a service component to all computer sales contracts. Progress is being made in these areas, which CISG does notaddress. J., 334(Spring, 1995). [29] Michael Tenenbaum, International Arbitration of Trade Disputes inMexico, 12 J. Supp.1229, 1238 (S.D. Berman &Ladd pointed out that the lex mercatoria, "the law of documentary sales[which accounts for most of the world's trade in goods] is a product of thecustom of the international community of merchants, shipowners, marineinsurance underwriters, and bankers of many countries . The growth of the maquiladoras and later increased foreign investmentin auto and other manufacturing plants in the interior under NAFTAfundamentally transformed the composition of Mexican-American trade. Sheridan, "Trade Knits U.S. Giezge, Mexico's New AntiDumping and Countervailing DutySystem: Policy and Legal Implications, as well as Practical Business Risksfor United States Exporters to Mexico in the Era of the North American FreeTrade Agreement, 25 St. Allan Farnsworth, "Review of Standard Forms or Terms Under the ViennaConvention," 439-447. This should cause concern forAmerican lawyers who are accustomed to rely on clauses in export contracts,which are recognized under the UCC, and which stipulate that a seller isnot liable for any indirect or consequential damages. OTHER SOURCESShelly P. Whether it is aMexican manufacturer of bathing suits selling its products into theAmerican market, a Mexican exporter exporting tomatoes to the United Statesof tomatoes or an American exporter to Mexico of consumer products, CISGprovides a neutral set of legal norms and dispute resolution procedures forthose contracts which do not by their choice of law provision expresslyexclude the application of CISG. This was typicallyaccompanied by a choice of law clause stating that the law of, say,California would be applicable to such contracts. Rev. 199 (Winter, 1985). Mary's L.J. Chilewich Int'l Corp., 789 F.
If this paper is not what you are looking for, you can search again:
or
Click here to request an essay written just for you.
|
|
|
