10 CLAUSES OF AN INT’L SALE

1. Description of Goods
 Quality, quantity, the type
2. Contract Price
3. Delivery Terms
4. Time of Delivery
5. Payment Conditions
 Lumpsum or installment
6. Documents
 Describe with reasonable certainty that one can export goods.
 That the seller (or the party) is authorized to make imports and exports.
 Certification from DTI, etc.
7. Inspection of Goods (by buyer)
8. Retention of Title
 Ownership in transit
9. Force Majeure (fortuitous events)
10. Resolution of Disputes
 Tells which court will settle disputes among the parties involved

RULES GOVERNING IMPORTS AND EXPORTS

 Imports and Exports – int’l sale of goods

 Importer – buyer
 Exporter – seller

DIFFERENT LAWS GOVERNING TWO COUNTRIES

LAW ON CONFLICT OF LAWS

1. Treaties and Conventions

 Treaties – between 2 countries
 Conventions – involves multiple countries
o For Int’l Human Rights to take effect on our country, our country
must be a signatory of such.
2. Domestic Laws
 Lex Loci Celebrationis
o Law where the contract is celebrated/perfected
o The Philippines apply/follows this law.
 Int’l Football of Laws
o Nagpapasa—pasahan ang mga countries kung anong law/s ang
gagamitin
 Ren Voi Doctrine
o The law that will apply is the law where the country of origin is.
 3. Customs and Usage
4. Others
 The decision of laws is the opinions of scholars, courts, expert opinions,
etc.

INCORPORATION CLAUSE

 Philippines incorporates the generally accepted principles of int’l law.

o Part of the law of the land
o Legally binding in the Philippines
o One of the GAP is the customs and usage

TREATIES AND CONVENTIONS

HAGUE CONVENTION on the Law Applicable to Int’l Sales of Goods

1. Sales contract must comply with the law chosen by countries.

2. If no agreement, the law where the office of the seller is located except …

Except:

1. (ang nagbenta is) Branch

o The law that will apply is the law where the branch is located.
o Seller is from Country A, but has a branch located in Country B. Buyer is
from Country C and bought from seller’s branch. The law that will apply is
the law in Country B.
2. Order was received by the seller in the country of the buyer
o The law that will apply is the law where the buyer resides.
o Buyer from country B ordered from Seller (from country A) but received
buyer’s order from an agent located in the country of the buyer.

ROME CONVENTION on Contractual Obligations

The law that applies:

1. Law chosen by the parties

o May be in whole or in part
o Not necessarily one law should/can be applied
o Specifically designated by the parties on the terms of the contract
2. Law of the country which has the closest connection with the contract
o Who has the closest connection? In our terms, it is the debtor. He has the
obligation.

CUSTOMS AND USAGE

 Not legally binding

 Cannot be invoked by the party
  Used for reference only
 Part of int’l law governing the EWAN HAHHAHA

OTHERS

1. MODEL CONTRACTS
o Consist of templates of contracts to be used
o Prepared by:
 PROFESSIONAL ASSOCIATION – biased to the members of the association
 INDEPENDENT ORGANIZATION

INT’L CHAMBER OF COMMERCE (ICC)

 Its aim is to have equal benefits between or among parties

Model Clause of Force Majeure from ICC

 If the loss is due to force majeure, the owner shoulders/bears the loss.

2. GENERAL PRINCIPLES
 Principle of Good Faith
o Good faith
 Absence of knowledge
 You are in good faith if you have no knowledge about
the defects.
 What you don’t know won’t hurt you.
 General principles is for reference only
 Applicable and legally binding in the Philippines
 Doctrine of Incorporation
o Other countries do not have doctrine of incorporation that’s why
the general principle is for reference only and not legally binding.

UN – CONTRACTS FOR INT’L SALE OF GOODS (CISG)

 Codified laws on int’l trade

 A treaty that provides uniform regime of contracts for int’l sale of goods

4 DIVISIONS OF CISG

1. Rules on Application
2. Rules on Formation of Contracts
3. Substantive Rules for Sales Contract
4. Ratification and Reservation

APPLICATION OF CISG

1. Chosen by the parties

 2. No other private int’l law will apply
o Private int’l law refers to domestic laws

NON-APPLICATION OF CISG

1. Certain type of transaction like auctions and sale made by authorities

o The rule that will apply will be where the auction takes place
2. Certain type of goods like ship, aircrafts, and electricity
3. Certain type of subject matter like validity of contracts

FORMATION OF INT’L SALES CONTRACT

OFFER

 Definite expression to be bound in a contract

 Has no form required for it to be valid
 May be expressed or implied (thru actions)
 Price need not be fixed but there should be a definite expression of
offer/consideration.
 May be withdrawn prior to acceptance.
 The reckoning point of acceptance is communication.
 Once acceptance is communicated, the offer cannot be withdrawn because it
constitutes breach of contract.

ACCEPTANCE

 Assent to the offer

 Communication of acceptance (perfected)
 May be expressed or implied (thru actions like payment or may testing tapos ginamit
na durudiretso ang product)
 Inactivity does not constitute acceptance.
 Inactivity (silence) is not considered as form/acceptance itself.
 Can be withdrawn before communication or notification reaches the seller.
 Must be absolute acceptance
o One without reservation/it is unconditional
o Opposite of counter offer, which means conditional. There are buts. In
counter offer, the contract is not perfected.
 There are cases where the seller gives the buyer a period for the latter’s acceptance.
o If the buyer communicates its acceptance within the period, the seller
cannot reject the acceptance, unless the offer is withdrawn.
o If the buyer communicates its acceptance beyond the period, the seller
may either accept or reject its acceptance.
OBLIGATIONS OF SELLER

1. Delivery
 Is the physical transfer of possession of the thing
 Transfer of risk is transfer of ownership
 Possession – transfer of the physical well-being

Place of Delivery

a. Stipulation
b. Seller’s place at the time of perfection (pick-up)

Time of Delivery

a. Stipulation
b. At a reasonable time
o Depends upon the circumstances
o In the Philippines, it is in the discretion of the court

Products should be in conformity with:

1. Quality – it should not be superior nor inferior

2. Quantity
3. Description
4. Sample

 Products must be free from claims of third persons

 Encumbrances – tax liens, mortgage
 Hidden defects
 Aside from products, related documents must also be delivered such as Bill
of Lading.

OBLIGATIONS OF BUYER

1. Pay the Price

Who pays the freight?

 If the contract is silent, the buyer will pay in connection with the concept that the
buyer should pick-up the product.

Who pays the insurance?

 Buyer
 2. Take delivery
 To satisfy the obligation of the seller
 It is a breach of contract if the buyer did not take the delivery.

When to take delivery?

 At a reasonable time

When do we say that there is already a transfer of ownership?

 Upon delivery
 But if the transfer of risk came first, then the buyer owns the products.
 There is a transfer of risk the moment when the buyer already has the ownership
over the products.

BREACH OF CONTRACT

 All WHAAAAAATT are breach

 A breach must be substantial for it to be enforceable.
o Causes damages
 Refers to all forms of defective performance of an obligation in a contract.
 May be excusable or non-excusable.
 Whether excusable or non-excusable, a breach of contract is a breach of contract.

Excusable Breach of Contract

 Delay due to fortuitous events

o Damages may be reduced

ELEMENTS OF BREACH OF CONTRACT

1. Substantial detriment which deprived the other party of what he/she ought to
receive
2. The result of the breach must be foreseeable.
 Not caused by something that is outside the control of the party

REMEDIES OF BUYER (in case of breach of contract)

1. Specific Performance
 Do what you should have done
2. Cancel/Avoid the Contract
 Mutual Restitution – giving back of what you’ve received
3. Damages
 Another remedy is the action for damages
 The obligation of the seller will be a monetary obligation.
4. Grace Period
 Gratuity/generosity
 Additional grace period intended for the seller’s performance
REMEDIES OF SELLER

1. Specific Performance
2. Cancel/Avoid the Contract
3. Damages
o At the discretion of the court

FREEDOM TO CONTRACT

 Autonomy
 Also applicable in CISG
 The obligations and remedies stipulated in the contract are also enforceable.

The REDUCTION OF PRICE may also be a remedy, but is should be stipulated in the contract.

In a contract with PROVISION FOR INSPECTION, the inspection is at a reasonable time.