International sales of goods
Updated: 4 days ago
Author: Alessia Fucile
Date of Publication: 26/04/2023
The purchase and sale of goods give rise to a kind of contract between the buyer and the seller; this creates a mandatory relationship implying the fulfillment of contractual and legal obligations by the contracting parties.
Taking into account the large number of international sales that are daily made, it is important to know and respect some international unified rules. The international law applies to the sale of movable property. On the contrary, rules governing immovable property are commonly those of the place where the real estate is located.
The Conventions regulating the contract of sale of goods
The sale of movable property is not primarily regulated by Community law, but by two international conventions having precedence over it: the Hague Convention (1955) and the United Nations Convention of Vienna for the International Sale of Goods (1980).
The first one contains rules of private international law and it provides the criteria to determine the applicable national law. In the event that the contracting parties have not expressly chosen the law to be applied, the Hague Convention established the enforcement of the legislation. This means that the applicable law is the one of the country where the seller has his habitual residence or where he stands at times of receiving goods.
The Vienna Convention of 1980, also known as CISG, is a treaty stipulated by the United Nations and, for this reason, it is the main text referred to international commerce. Currently, 94 countries have ratified it; some of the States non joining the Convention are United States, Malta, Portugal and the United Kingdom. This treaty regulates the international sale of goods if the parties have their place of business in signatory States of the Convention.
The Convention has no jurisdiction in two cases: a rule of private international law does not refer to the law of the signatory States or the contracting parties freely agree on the law applicable to the contract.
The Vienna Convention, as already mentioned, is applicable to the sale of goods, but it refers to business contracts only; put differently, it explicitly excludes from its scope the sales intended for personal or familiar use.
The treaty, moreover, is limited to regulate certain aspects of the purchase contract: its formation and the rights and obligations arising between sellers and buyers.
Concerning the form of the contract, the Convention of 1980 sets no conditions. In fact, this is basically free, except in specific cases requiring the written form. As regards the parties' obligations, the seller must deliver the goods according to quality and quantity established by the contract; he also has to transfer the ownership and issue all documents relating to the products. The buyer, on the other hand, is required to pay the price of the goods and pick-up them at the time of delivery.
The conclusion of a sales contract
In accordance with Article 23 of the Vienna Convention, a sales contract is concluded at the point where there is the acceptance of a proposal made by a counterparty to the other. In other words, they enter into a contract when the seller receives the notification of the purchase order or when the buyer receives the order confirmation. However, in some cases, a sales contract is concluded only upon shipment or payment of the goods.
What happens in case of default of the parties?
When a contract includes the transportation, sometimes, the responsibility already passes to the buyer at the time of delivery of goods to the carrier. In other cases, the seller is no longer responsible for the goods only when the buyer receives them; if he decides not to accept the delivered goods, the buyer shall be automatically deemed in breach. This also happens if the purchaser refuses to pay the price agreed upon contract acceptance.
The seller, in addition to the delivery of the goods as stipulated, also undertakes to pack them properly before shipment. In the event of damaged or defective products, the buyer is entitled to compensation if he notifies it to the seller within two years after receiving.
When the parties are in such situations, it is necessary to identify the competent court which decides about reimbursements by issuing a judgment or an injunction. If the buyer and seller are domiciled in a Member State of the European Union, the court of the State of the defendant has jurisdiction.
On the other hand, if one of the parties is not based or domiciled in an EU country, the jurisdiction lies with the non-EU court of the defendant’s domicile.