INTERNATIONAL

COMMERCIAL
CONTRACT (PART 1)
 INTERNATIONAL COMMERCIAL CONTRACT

Major types of international commercial activity in which contracts

can occur include:
+ SALES which may involve contracts for the sale of goods or
services;
- LICENSING which involves contracts that one party allows
another party the right to make, use or sell product under
certain conditions;
- INVESTMENT which may involve the formation and operation of
a joint venture, or a foreign branch or subsidiary of a company 2
I. DEFINITION OF INTERNATIONAL SALES OF GOODS

▪ The international sales of goods

- Business transactions usually take place beyond the territory of a country.
- Performed in different countries with different elements of geography,
history, climate, economy, policy, law, culture and religion.

▪ Article 27 Law on Commerce 2005 (Law no. 36/2005/QH11):

(1) International purchase and sale of goods shall be conducted in form of
export, import, temporary import for re-export, temporary export for re-
import and transfer through border-gates.
(2) Conducted on the basis of written contracts or other forms of equal legal
validity
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I. DEFINITION OF INTERNATIONAL SALES OF GOODS

1. The characteristics of the contract of international sales of goods:

(i) Contracts for the international sale of goods have all the fundamental features
of an international commercial contract, including foreign elements:

- Parties have different nationalities or commercial headquarters in

different countries

- Goods as the subject of the contract are overseas

- The place to sign or perform contract is in a foreign country

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I. DEFINITION OF INTERNATIONAL SALES OF GOODS

(ii) Contracts for the international sale of goods have the basic features of an
asset sale contract:

- There is an agreement between The Seller and The Buyer to establish,

change or terminate the sales relationship.
- The Seller is obliged to transfer the ownership of the property being the
subject of the contract to The Buyer.
- The Buyer is obliged to receive the goods and pay the value of the goods to
The Seller as agreed. 5
I. DEFINITION OF INTERNATIONAL SALES OF GOODS

2. The subject of international sales of goods contract

- Goods that are the subject of contracts for the international sale of goods
include both tangible and intangible goods that are distinguished on the
basis of their form of existence. It can be an object, a product made by
humans or intangible property rights. However, the concept of goods in the
law of different countries is not similar.

▪ Article 3.2 Law on Commerce 2005 (Law no. 36/2005/QH11):

“2. Goods include:
a) All types of movable property, including movable property formed
in the future;
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b) Things attached to the land.”
I. DEFINITION OF INTERNATIONAL SALES OF GOODS

3. The parties of international sales of goods contract

- The parties of international sales of goods are the entities of international trade
including traders (individuals and businesses), involving foreign elements and in
some certain cases states will be “special” subjects of this relationship.
Eg: A goods sale and purchase contract signed between a Vietnamese company and
a US company.
4. The form of international sales of goods contract
- The form of a contract for the international sale of goods can be concluded orally,
in writing or by specific acts - the US, UK, France, etc.
- The contract for the international sale of goods can only be conducted in writing
or other forms of equal legal validity - Vietnam (Art. 27 Law on Commerce 2005)

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HOW TO SOLVE THE CONFLICT BETWEEN NATIONAL LAWS OF
DIFFERENT COUNTRIES ?
United Nations Convention on
Contracts for the International Sale of
Goods 1980 (CISG)
II. CISG 1980 – THE VIENNA
CONVENTION

❑ CISG was drafted on the basis of

efforts to develop a unified law
on the international sale of
goods, CISG has been accepted
on a global scale and is
considered the most successful
convention contributing to the
promotion of international trade.
❑ It was adopted through the
diplomatic efforts of the
9
UNCITRAL
II. CISG 1980 – THE VIENNA
CONVENTION

❑ CISG is a treaty offering a

uniform law for international
sales of goods to bridge the gap
between the different legal
systems of the world.
❑ The CISG allows traders to avoid
choice of law issues, as the
CISG offers “accepted
substantive rules on which
contracting parties, courts, and
arbitrators may rely”. 10
MAIN CONTENTS OF CISG 1980

PART I: PART II:

Sphere of Application Formation of the Contract
and General Provisions (Articles 14-24)
(Articles 1-13)

PART III: PART IV:

Sale of Goods Final Provisions
(Articles 25-88). (Articles 89-101)
1. SPHERE OF THE APPLICATION OF CISG
a. Requirements for application of CISG (Article 1 .1.a)

b. The contract is c. The places of business

a. The contract is between parties are located in countries
for the sale of whose places of that have ratified CISG
goods business are in (the States are
different countries Contracting States)

Eg: A company established in Vietnam signs a contract with a company

established in German to sell coffee. Is CISG applicable?
- Coffee is considered as a type of goods –> the contract is to buy and sell goods.
- Two parties whose places of company are in different countries, specifically in
Vietnam and in German. 12
- Both Vietnam and German are the State Members (Contracting States) of CISG
Article 1 (1) (b)

▪ Place of businesses of the parties are in different states when the

rules of private international law lead to the application of the law of
a Contracting State.
Eg: France v.s the UK (UK has not adopted the CISG, France is the
Contracting State of CISG)
+ In the contract, the laws of France will be applied if there is any conflict
of law 🡪 CISG shall be applied.
+ On the contrary, in the contract, the laws of UK will be applied if any
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conflict of law happens 🡪 CISG is not applicable in this case.
b. Choice of Law Clause (“Opt in” or “Opt out” of the CISG)

❖ When the requirements are met and the CISG does apply, the
parties, however, may exclude or modify the application of CISG by
a “choice of law clause”. The choice of law provision must
expressly exclude application of the CISG.
▪ Example: “This contract shall be governed by the law of Vietnam
applicable to domestic contracts of sale, and shall not be governed by
the CISG.”
❖ The parties can use that same clause to exclude a domestic law and
adopt CISG in its place, depends on the rules of the State. 14
2. FORMATION OF THE CONTRACT

❖ Only govern:
(1) Types of goods
(2) Formation
(3) Rights and obligations of the buyer and seller
(4) The form of contract
❖ Not govern:
(1) Validity of the contract
(2) Liability for death or personal injury caused by goods
(3) Legal capacity of parties, ……

15
a. Types of goods

❖ CISG does not directly define the types of goods

❖ Implied definition:
- CISG only applies to goods that are movable and tangible
❖ CISG excludes sales of (Art. 2 CISG)
- Goods bought for personal, family or household use;
- Auction sales;
- Execution or otherwise by authority of law;
- Stocks, shares, investment securities, negotiable instruments or money;
- Ships, vessels, hovercraft or aircraft;
- Electricity.

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 b. Formation of the contract by offer and acceptance

2. An offer, even if it is irrevocable, may be

withdrawn if the withdrawal reaches the
offeree before or at the same time as the offer
(Article 15(2) CISG)

1. Offeror sends a proposal

3. Offeree receives the offer
to one or more specific
(Offer becomes effective (Article
persons that constitutes an
15(1) CISG)
offer (Article 14 (1)(2) CISG)

4. Offeree sends back an acceptance or a 17

rejection for the Offeror
 b1. An Offer (Article 14 (1) CISG)
❖ A proposal for concluding a contract addressed to one or more
specific persons constitutes an offer when:
✔ it is sufficiently definite if it indicates the goods and expressly or
implicitly fixes or makes provisions for determining the quantity and
the price; and
✔ it indicates the intention of the offeror to be bound in case of the
acceptance.

❖ Eg: James makes an offer to sell a car for Andrew for $5,000. Since
James is only making the offer to a specific person, only Andrew can
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accept.
 b1. An Offer (Article 14 (2) CISG)

❖ A proposal other than one addressed to one or more specific persons

is to be considered merely as an invitation to make offers, unless
the contrary is clearly indicated by the person making the proposal.

Example: A seller may send some catalogues that include product

descriptions and product price lists to indefinite number or large number
of people and that may be interpreted as public offer. But only in case
pursuant to Art. 14(2), it requires a clear indication whether it is an offer
and furthermore unless such a clear indication is provided, that proposal
will be just an invitation to make an offer. 19
 b1. An Offer (Article 14 (2) CISG)

❖ An offer will not be valid in case:

- An offer cannot become effective if it does not reach the offeree
(wrong addresses, …)
- The offeror receives the rejection of the offeree (Art. 17)
- The withdrawal of an offer reaches the offeree before or at the
same time as the offer (for an irrevocable offer) (Art. 15.2)
- The revocation of an offer reaches the offeree before the offeree
dispatches the acceptance (for a revocable offer only) (Art 16)

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b1. An Offer (Article 15 CISG)

(1) An offer becomes effective when it reaches the offeree

(2) An offer, even if it is irrevocable, may be withdrawn if the
withdrawal reaches the offeree before or at the same time as the
offer.

Company A Company B
sends an offer The offer can
receives the
be withdrawn
from offer on
10/04/2021 15/04/2021
21
 b1. An Offer (Article 16 CISG)

(1) Until a contract is concluded an offer may be revoked if the revocation

reaches the offeree before he has dispatched an acceptance (not for
irrevocable offer)

The offer can be The offer can be

withdrawn revoked

Company A sends Company B Company B

an offer from receives the offer dispatches an
10/04/2021 on 15/04/2021 acceptance on
20/04/2021

22
22
 b1. An Offer (Article 16 CISG)
(2) However, an offer cannot be revoked:
(a) if it indicates, whether by stating a fixed time for acceptance or
otherwise, that it is irrevocable; or
(b) if it was reasonable for the offeree to rely on the offer as being
irrevocable and the offeree has acted in reliance on the offer.

The offer can be The offer cannot

withdrawn be revoked

Company A Company B has to send

Company B
sends an offer back an acceptance on
receives the offer
(10/04/2021) 30/04/2021 (fixed
(15/04/2021)
time for acceptance) 23
 b2. An Acceptance (Article 18 CISG)

A statement or other behaviors

An acceptance
showing the acceptance

Silence or inactivity Not an acceptance

A reply
Not reach the offeror within the Not an effective
fixed time acceptance

Not reach the offeror within the Not an effective

reasonable time acceptance
b2. A Counter-Offer (Article 19 CISG)

A rejection
With additions,
limitations or
modifications
A counter-offer
A reply
With additional or
different terms which
do not materially An acceptance
alter the terms of the
offer
b2. An Acceptance (Article 22 CISG)
An acceptance may be withdrawn if the withdrawal reaches the offeror
before or at the same time as the acceptance would have become
effective.

The acceptance
can be withdrawn

Company B Company A will A contract is

sends an receive the concluded at the
acceptance acceptance on moment when an
(25/04/2021) 30/04/2021 acceptance of an offer
becomes effective
(Art.23 CISG)
QUESTIONS
Are statements below CORRECT or
INCORRECT?

1. According to CISG 1980, in all cases, any

late acceptance from the offeree sent to
the offeror is not considered as an
acceptance.
2. An offer, of any kind, can be withdrawn,
when it is already sent by the offeror and
before it reaches the offeree. 27
 Answer
1. 1. INCORRECT.
2. According to Art. 21 CISG: (1) A late acceptance is nevertheless
effective as an acceptance if without delay the offeror orally so
informs the offeree or dispatches a notice to that effect; (2) if an
acceptance has been sent in such circumstances that if its
transmission had been normal it would have reached the offeror in
due time.

1. 2. CORRECT.
2. According to Art. 15 (2) CISG: An offer, even if it is irrevocable, may
be withdrawn if the withdrawal reaches the offeree before or at the
same time as the offer. 28
c. The form of contract

▪ Article 11: “A contract of sale need not be concluded in or

evidenced by writing and is not subject to any other
requirement as to form. It may be proved by any means,
including witnesses.” (in writing, orally, or even including
witnesses)

▪ Article 13: “For the purposes of this Convention “writing”

includes telegram and telex.” 29
c. The form of contract

▪ Article 12: “Any provision of Article 11 … that allows … other indication

of intention to be made in any form other than in writing does not
apply where any party has his place of business in a Contracting State
which has made a declaration under Art. 96 of this Convention…”
▪ Article 96: A Contracting State whose legislation requires contracts of
sale to be concluded in or evidenced by writing may at any time make a
declaration in accordance with article 12 that any provision of Article 11
… does not apply where any party has his place of business in that
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State.
3. SELLER’S OBLIGATIONS

▪ Art. 30: “The seller must deliver the goods, hand over any documents
relating to them and transfer the property in the goods, as required by the
contract and this Convention.”
▪ Obligation of delivery:
- Place of performance: Art. 31
- Additional duties: Art. 32 related to specification, carriage, insurance
- Time of performance: Art. 33
- Delivery of documents: Art. 34
- Duty to preserve the goods if buyer fails to take delivery: Art. 85

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3. SELLER’S OBLIGATIONS

▪ Obligation of conformity in respect to the goods – Art. 35

▪ There is conformity only of the goods are:
- In conformity with specifications of the contract: quantity, quality, packaging
- Fit for ordinary purposes
- Fit for particular purpose made known to seller
- In conformity with the qualities of the sample
- Adequate packaging
▪ The seller is not liable for any lack of conformity of the goods if at the time of
the conclusion of the contract the buyer knew or could not have been unaware
of such lack of conformity

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3. BUYER’S OBLIGATIONS

▪ Obligation of the buyer: pay the price and take delivery as required by the
contract and this Convention (Art. 53)
▪ Place of payment: Art. 57 (no particular place)
- At the seller’s place of business; or
- If the payment is to be made against the handing over of the goods or of
documents, at the place where the handing over takes place.
▪ Taking delivery: Art. 60
- Buyer may refuse or accept early delivery (Art. 52(1))
- Buyer may accept (and pay) or refuse excess quantity (Art. 52(2))
▪ Duty to preserve the goods if buyer intends to reject them (Art. 86-88)

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4. REMIDIES

• Remedies for breach of contract by the Seller: Art. 46, 48, 74-77

• Remedies for breach of contract by the Buyer: Art. 62, 64, 74-77

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QUESTIONS
What situations can
CISG be applied for the
international sale of
goods contract?
35
Answer
According to the regulations of CISG and the practice of international
goods sale and purchase contracts, there are 04 cases where CISG is
applied:
1. When the parties have places of business in different countries that
are members of the CISG (pursuant to Art. 1 (1)(a) CISG); or
2. In accordance with rules of private international law, the applicable law
is the law of a CISG member state (pursuant to Art. 1 (1)(b) CISG; or
3. When the parties choose CISG as the law applicable to their contracts
based on the choice of law clause (opt-in); or
4. When a dispute resolution body chooses CISG as the applicable law. 36
THANK YOU!
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