This 12 hour course follws the introductory course on The International Legal Environment. It is intended to introduce participants to the basic legal rules applicable to the conclusion of international contracts of sale, as well as their performance and breach. Focus will be on the Vienna Convention for the International Sale of Goods and the INCOTERMS.  The norms of the major international legal systems will be highlighted in a comparative context.
 

Frequent recourse is made to economic analysis to explain legal rules. Legal rules are also situated in their ethical context.
 
 

In addition to the book of readings which will be distributed to participants, ample use should be made of the materials on the Professor's Webliography on International and Comparative Business Law, in particular the sections on Public and private international law and on International trade
 
 

SESSION ONE (4 class hours):

representations, errors and fraud in international contracts
transfer of ownership - reservations of property
warranties - implied and contractual
 

web sources:

International Institute for the Unification of Private Law (UNIDROIT)
 

Case studies:

Finnish Fur Sales vs Juliet Shulof Furs
Tarbert Trading vs Cometals
Mitsui vs Flota Mercante Grancolombiana
United Trade Associates vs Dickens & Matson

Assignment 1: Ownership

On April 10, 2001, an art dealer from New York City places an order with a French dealer for an original Picasso painting. The price is F 5 million FOB Paris Roissy Charles de Gaulle. The price is paid at the time of signing the order. According to the contract, the painting is to be loaded on board no later than May 15.

On May 1, 2001, a well known Museum in New York City, not knowing that the painting has already been sold, offers the French dealer F 6 million. The French dealer decides to sell the painting to the Museum; they sign a bill of sale and the second buyer walks away with the painting.

Considering himself to be quite honest, the French dealer then writes to the New York dealer apologizing for the change of plans, returning his payment and offering him a special effort on his next purchase as compensation for his disappointment. In closing he consoles the New York dealer by telling that in any case he will have easy access to the painting which will be on exhibit at the  Museum right around the corner from his Gallery!

The New York dealer decides to sue to get the painting. What are his chances of success?
 
 
 

SESSION TWO (4 class hours):

transfer of risks - INCOTERMS etc.
international transportation
international insurance
 

web sources:

Incoterms 2000
 

Case studies:

Pestana vs Karinol
Pyrene vs Scindia Navigation
Phillips Puerto Rico vs Tradax Petroleum
The Galitia
Barclays Bank vs Commissioners of Customs
Sunkist Growers vs Adelaide Shipping Lines
Croft & Scully vs M/V Skulptor Vuchetich
Western Assurance Co of Toronto vs Shaw
Korean Air Lines Disaster of September 1, 1983
 

Assignment 2:

A rapidly expanding French exporter of fashion goods has contracted with a United States chain store for the delivery of a consignment of specially made goods. The exporter has agreed to deliver DDP individual stores within the chain which are located all over the US.

The exporter subscribes an export insurance policy with a specialized insurer in France according to which the insurer will indemnify the exporter for bad debts of the chain.

Once the goods are produced, the exporter pays for them, and has them loaded in a container at Le Havre for shipment to New York where the bulk will be broken and the packages sent to the individual stores throughout the US. The exporter has an office in New York which is expected to clear the goods through US customs and the exporter's freight forwarder will break the bulk and re-despatch the small lots to the individual stores.

The exporter's French bank has agreed to pay an advance of 80% against all invoices drawn on the US chain and covered by the export insurance policy.

The exporter presents to the bank a bill of lading showing the French exporter's NY office as "consignee". The exporter also presents a set of invoices issued by the French company against the various stores in the chain for the goods in the consignment.

While the shipment is on the water toward New York, the US buyer goes bankrupt. In the meantime, the exporter has spent most of the money from the bank to pay suppliers. The goods are virtually impossible to sell to anyone other than the bankrupt chain.

With the bank threatening to sue to get refunded its advance against the invoices, the exporter turns to the export insurance company to claim indemnification off the policy. The ^policy stipulates as one of the conditions for coverage that the exporter must have performed its oblilgations under the contract of sale.

What are the chances that the exporter will be indemnified by the insurance company?

What advice would you give the exporter about managing the legal risks of doing business internationally.
 
 

SESSION THREE (4 class hours):

breaches
remedies
excuses for non-performance
 

web sources:

Pace University Center for International Commercial Law in USA
 
 

Case studies:

Delchi Carrier vs Rotorex
Teca Print vs Amacoil Machinery
Transatlantic Machinery vs United States
Harriscom Svenska vs Harris
The Eugenia
 

Assignment 3:

In pre-Khadafi times, a French engineering and construction company accepts a contract to build a highway across the desert in Lybia. The contract is with a Libyan company owned by a group of private Libyan investors.

Shortly after work is started on the highway, Khadafi takes power. The new government promptly triples the import duties on all imported asphalt.

Secondly the new government enacts a law requiring that all transportation within Libya of certain products (including specifically asphalt) must be carried out by Libyan nationals. Consequently, the French company must now contract the transportation of its asphalt through Libyan companies whereas it had intended to organize internally this strategic activity. The result of the law in practice is that the fuel supplies are sporadic, unpredictable and insufficient. Consequently, the contractor's equipment progressively rots in the Libyan desert.

Still the French company considers itself force to continue building the highway, otherwise how would it ever get paid anything. And the Libyan companies and officials with which it has contact all say that eventually the Libyan Government will make an effort to reward total completion of the highway.

Finally the highway is completed but late.

The Libyan invokes the delay to refuse to make the last payment of 33% of the price of the project.

The contract expressly provides that:

"A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences."

The French contractor asks what are its chances of success in the upcoming arbitration.
 
 

In addition to the book of readings which will be distributed to participants, ample use should be made of the materials on the Professor's Webliography on International and Comparative Business Law, in particular the sections on Public and private international law and on International trade.

www.lapres.net.html/law.html
 
 

Assessment will be based on a final written (open-book) exam which will involve solving of problems (75% of final grade). Special consideration will be given to students who will have made the best contributions to class discussion, in particular in the context of the case studies posted below (25%).