Davies Snyder 2014 Chap1

1
An Introduction to International
Sales Transactions and the Laws
Governing Them
For many students, international sales transactions on a commercial scale—which are the sub-
ject of this book—are surprisingly strange and unfamiliar. In more basic courses in Contracts
and domestic Sales, even commercial transactions can often be fit into, or adapted from, the
familiar consumer paradigms familiar to many of us. International sales of goods, although
they need not be enormous or exotic, frequently lie in a realm full of vocabulary that is at
best vaguely familiar: letters of credit and Incoterms 2010® are commonplace in international
sales, but most people have only barely heard of them and have perhaps a slippery grasp of
what they are and how they work. The good news is that, like many business transactions and
legal devices, they make sense, even though they are sometimes complex. Keeping in mind
the problem to be solved is the crucial first step: with a clear grasp of the problem, the solu-
tions (including their complexities) can be understood easily enough as people’s responses to
perfectly understandable issues—issues that are resolved through a combination of commer-
cial devices and legal rules. We start with these fundamental matters because treating them
first, although they may seem complicated early on, will make it simpler to understand the
transactional structures and the laws governing them.
I. International Sales Transactions: Goods,

Payments, and Businesses
We might begin with the most familiar scenario, even though it will not detain us long.
A used car dealer in Germany (or the United States, or any number of countries) might
buy one or two or three used cars from another car dealer in a neighboring country, like
Italy (or Mexico, or wherever). Although it is a commercial sale, it is small in scale, perhaps
amounting to just $10,000 to $20,000. There are only two parties, who may well know each
other and may be near each other. It is much like a domestic sale, and it is not far from a
International Transactions in Goods. Martin Davies and David V. Snyder.

© Oxford University Press 2014. Published 2014 by Oxford University Press.
2 In t ernat i onal Tr a nsact io ns in G o o ds
domestic consumer sale in terms of our expectations and paradigms. The main difference is
that, depending on the countries involved and the parties’ contract, it may be governed by a
different body of law than the usual domestic law that would have applied if it were not an
international sale. Most prominent among these international sales laws, both in the world
and in this book, is the United Nations Convention on Contracts for the International Sale
of Goods, which was signed at Vienna in 1980. It is often called the CISG, or sometimes the
Vienna Convention. (Calling it the Vienna Convention is confusing, though, as there are
many Vienna Conventions; the Austrian capital has been a popular place to sign treaties, and
still is.) At this writing, the Convention is in force in about 79 countries, including the United
States. These countries are called “Contracting States”: the countries have contracted into the
Convention, and in international law, countries are referred to as “states.” Roughly speaking,
the CISG governs sales of goods between businesses located in different Contracting States,
unless the buyer and seller have otherwise agreed. See generally CISG arts. 1(1)(a), 6. There is
much more to analyzing what law would apply; governing law is discussed a bit more in this
chapter and is treated in some detail in Chapter 2.
Discussing governing law is jumping the gun a bit, from our perspective. What needs to
come first is an understanding of the business transactions. The small transaction just men-
tioned is so simple that the only remarkable thing about its being across a border is that inter-
national law may apply. Many international sales, though, are not so simple on the business
side, and many of the legal rules and commercial devices have evolved to solve the problems
that are typical of different kinds of larger international transactions. Perhaps the most obvi-
ous issue is that the parties may be far away from each other, and that distance may have a
variety of implications. Aside from the number of miles involved (and potentially the seas
between the parties), there are other issues. We raise them here so you can keep them in mind
as we continue through the book, issue by issue. To see them, it is easiest to keep a few basic
transaction types in mind.
A neat way to categorize international transactions is along three axes. Each variable—
each determinant, to use the apt mathematical term—triggers a set of transactional issues. Like
much commercial law in general, international commercial law is largely devoted to providing
“gapfillers,” or suppletive rules that set out what the parties’ agreement will be presumed to pro-
vide if the parties are silent on the issue. For instance, when will payment be due if the parties
do not say? Commercial law generally provides an answer to such questions, and international
commercial law is no different. A good method for thinking about the law, then, is to think
about what gaps will have to be filled. In terms of top-level issues, perhaps the main ones are
(1) the quality and quantity of the goods; (2) the way payment will be made for them; and
(3) the business models that are driving the transaction. Each of these three issues might be
divided into three possibilities that could be considered typical. As we are obviously simplifying
here, and telling a bit of a fairy tale of international transactions in a world that is obviously more
complicated than the outline here, we figured we may as well follow the Rule of Three of classic
storytelling. We will keep this introductory account to three points on each of the three axes.
A. The Goods
As to the goods themselves, the first example to consider might be a commodity sold in bulk.
When a buyer orders 10,000 metric tons of US No. 1 Hard Red Winter Wheat (ordinary
A n In t roduct i on to In t ernat io na l Sa les Tr a nsact io ns 3
protein), it is ordering a bulk commodity. Wheat comes in varieties and is graded. Within
the specified variety and grade, it is fungible—this ton of US No. 1 Hard Red Winter Wheat
(ordinary protein) is the same as that ton of US No. 1 Hard Red Winter Wheat (ordinary
protein). The same is true of, say, West Texas Intermediate crude oil, known generally as
WTI or as Texas light sweet, or of USDA Illinois North Central No. 2 Yellow Corn. These
are likely to be bought and sold in what would appear to a consumer to be extremely large
quantities—thousands of tons of wheat or corn, thousands of barrels of oil. It will have to
be transported by a mode than can accommodate large quantities over potentially very long
distances. Trucks are a possibility, but rail or ship would be more likely. More than one mode
of transport may be required.
Another possibility is on the other end of the spectrum: the sale of a good or goods
specifically identified at the time the contract is made. When Mirage Resorts (owner of the
Bellagio hotel in Las Vegas) buys a Rembrandt from a dealer in Maastricht (which is in the
Netherlands), the goods are not tons of commodities but one very specific painting that the
buyer (or its experts) has examined and decided to purchase. It will need transportation, but
it is unlikely to travel by train or ship. It will probably be carefully crated and will travel by air
with an art expert to babysit it the whole time. Less glamorously, in our first example, when
the car dealer bought the used cars, those cars were existing and identified at the time the
contract was made. They are not cars bought in bulk, and they do not need to be manufac-
tured; they were manufactured some time ago, and in fact have been used. They seem likely
to be delivered by truck.
In between those two ends of the spectrum might be manufactured goods. Consider
now the US car dealer who orders dozens of cars from the manufacturer in Japan. The quan-
tity (and the payment) may be large, but the cars are not like the fungible commodities sold
in bulk, like crude oil or wheat. Particular models, options, and colors are probably specified.
The cars may already exist—they may already have been made—or they may not. Or con-
sider the US department store that places an order for particular clothes from a European
design house. The clothes were probably shown at a fashion show months or a year ahead of
time. The orders come afterward, but still well before the season starts. (Consider that spring
clothes go up in stores shortly after Christmas, that is, in January, when the weather is at its
coldest. The stores ordered those clothes weeks or months before then.) The clothes may or
may not yet exist when the store places its order. They may still need to be manufactured.
And again, particular clothes are likely to be specified. Many of the crazy outfits that the
models wore on the runways in Milan and Paris may never get manufactured, as there will be
insufficient orders for them.
B. Payment
As with the goods, we will note three main possibilities for payment. One possibility is the
same as is common in domestic sales: trade credit. The seller sends an invoice, and the buyer is
to pay it sometime (e.g., 30 days) after receiving the invoice and the goods. Even if the invoice
says the amount is “immediately due and payable,” the seller is giving the buyer credit. The
buyer will have received the goods without paying for them yet. The seller is thus trusting
the buyer—giving credit to the buyer—so the buyer can pay later. In domestic sales, trade
credit is common. The business communities are smaller and individual businesses are more
easily researched. Credit reporting is readily available, even standardized. The seller is taking
some risk, which extending credit always entails, but businesses do not expect or even want
to live in a world without risk. The risk can be investigated and determined, and the seller
can charge good money, explicitly (through a stated interest rate) or implicitly (by raising the
price of the goods) for taking the risk. Sometimes this same thinking can be applied to inter-
national transactions. The buyer and seller will know each other from experience or reputa-
tion, or research or investigation may be quick and easy, or the transaction may be small.
The electronic funds transfer is another straightforward way to arrange payment. The
buyer and seller agree that the buyer will pay by “EFT,” or by “wiring” the money to the seller.
What this means is that the buyer instructs its bank to remove money from the buyer’s bank
account and to have the money put into the seller’s account at the seller’s bank. The mecha-
nisms for achieving an electronic transfer of these funds are variable, but two or three systems
are dominant when a US party is involved. One is a transfer through SWIFT, the Society
for Worldwide Interbank Financial Telecommunications. SWIFT allows its member banks
to send automated electronic messages to transfer money between themselves. It is likely to
be used if the transfer is not in dollars. If dollars are denominated, the “wire” will likely go
through CHIPS in New York. CHIPS is the Clearing House for Interbank Payment Systems.
CHIPS is owned by its members, which are generally very large international banks with a
branch in New York. Smaller banks may participate in CHIPS by having an account with a
CHIPS member that will effect the transfer. The other system to note is CHAPS, which is
the London equivalent of CHIPS. In addition, Fedwire (operated by the Federal Reserve)
might be mentioned because it is an important US system used for commercial “wire” pay-
ments, but it is less likely to be relevant in an international transaction: its use is domestic.
Before discussing the third typical payment option—the classic one, which is the letter
of credit—let us notice that the traditional paradigm of a buyer and seller exchanging goods
for money simultaneously is impossible in international sales. The legal imagination for cen-
turies has seemed to envision a seller holding out a good to a buyer simultaneously with a
buyer holding out some money to the seller. The seller would then grasp the money and let go
of the good while the buyer would at the same time grasp the good and let go of the money.
Once they had let go, perhaps they shook hands, but no one had to trust anyone. If the buyer
failed to hold out the money, the seller would never have occasion to let go of the good; if the
seller failed to hold out the good, the buyer would never have any occasion to let go of the
money. Sales law thus contemplates a paradigm without trust—which is to say in economic
terms, without credit. Simultaneous exchange obviates credit. But if simultaneous exchange
was ever practical, it is not now, at least for large commercial transactions, and it certainly is
not practical in international sales.
In the two payment scenarios discussed so far—trade credit and EFT—one party had
to grant the other credit. With trade credit, the seller gives the buyer credit because the buyer
gets the goods before it has to pay for them. If the buyer receives the goods but is unable
or unwilling to pay the bill, the seller will be (to put it mildly) unhappy. An EFT similarly
involves one party giving the other credit. If the buyer transfers the money before getting the
goods, the buyer is giving the seller credit. If, on the other hand, the contract calls for the
buyer to wire the money after receiving the goods, the seller is giving the buyer credit.
As should be clear by now, we live in a credit economy. One of the great boons of credit
is that it allows trade to move beyond the primitive model of simultaneous exchange. Credit,
of course, is not without risk: indeed, credit is all about risk and who will bear that risk. This
risk, and the issues that go with it, are magnified in the international context. Reputational
information may be less readily available; credit checks may be impractical or impossible;
enforcement through lawsuits may be prohibitively costly, uncertain, or worse (particu-
larly in an unfriendly forum). We refer to this issue as the buyer-seller trust problem, but it
is really just a question of credit. Commercial and legal practice has long had an elegant, if
complicated, solution to this problem. The solution is not complete; risk cannot be entirely
eliminated. But the letter of credit goes a long way to minimizing risks at reasonable cost.
Its details are left to Chapter 6, but letters of credit are so central to international sales that a
basic understanding is necessary from the beginning.
To summarize: the buyer and seller would like to trade with each other. They think. They
are not sure, because they do not know each other and do not have practical or economical
ways of checking on each other. So they have the typical buyer-seller trust problem. To solve
it, the parties agree to their sale with payment by letter of credit. To obtain the letter of credit,
the buyer goes to its bank and applies for it. The buyer is thus the applicant and the bank
(assuming it approves the application) is the issuer. After approval, the bank issues the letter
of credit for the benefit of the seller. The seller is thus the beneficiary. What the letter of credit
says, to paraphrase (unrealistically) into ordinary English, is something like “We, the Bank,
promise to pay to you, the seller, the price of the goods, provided that you present us with the
following documents by the deadline set below.” By issuance of the letter of credit in its favor,
the seller becomes the beneficiary of the bank’s—not just the buyer’s—promise to pay. Most
people would feel considerably better if an actual bank, rather than an ordinary unknown
business, promised to pay. This letter will probably be sent to the seller through customary
banking channels, so rather than receiving the letter of credit in the mail, the seller will prob-
ably be advised by a bank in the seller’s own country that a letter of credit has been issued in
its favor. The bank that gives the seller this happy news is thus called the advising bank. Please
refer to FIGURE 1.1 The Letter of Credit, which is located between pages 12 and 13.
The news might not be so happy, however, if the seller has never heard of the issuing
bank, or if the seller is worried about the stability of the bank or possibly the whole coun-
try where the buyer and the buyer’s bank are located. Case law involving letters of credit is
full of grim tales involving banks from unstable countries. But again, a solution is possible.
A letter of credit can be confirmed by a bank in the seller’s country. The confirming bank
undertakes, just like the issuing bank, to pay. Now the seller has the commitment of three
parties to pay: the buyer, the issuing bank, and the confirming bank. If the seller knows and
trusts the confirming bank, it has little reason to worry about being paid. A seller who has
doubts about being paid, therefore, can negotiate that payment be made by letter of credit,
and if the seller is particularly worried, by a letter of credit confirmed by a bank of interna-
tional repute located in its own country.
This mechanism allays the seller’s concerns about payment, but what about the buyer?
The documents required by the letter of credit are the key to the buyer’s protection. Parties
always insist that a commercial invoice be one of the documents included, but probably the
most obvious assurance for the buyer comes from the traditional requirement that the seller
also present a negotiable bill of lading in order to get paid. A bill of lading is the document
that a carrier (e.g., a shipping line) issues after it has loaded goods. (You will notice that
loading and lading are related words.) A negotiable bill of lading has three functions. Most
simply, it serves as a receipt for the goods. Second, it is evidence of the contract of carriage that
sets the obligations of the shipper and the carrier. Notice that the shipper is the person who
ships the goods, typically the seller, and should not be confused with the carrier, which is the
shipping line, or trucking company, or railroad, or whatever; unfortunately, technical and
legal usage does not quite match colloquial usage. The bill of lading is evidence of the agree-
ment between the shipper and the carrier for transportation of the goods. Third, a negotiable
bill of lading represents the right to possession of the goods. The holder of a negotiable bill of
lading is entitled to collect them from the carrier.
The simplified account of how letters of credit work should probably end here, if not
before, but one more point should perhaps be mentioned. It is possible, perhaps even likely,
that the carrier will not take the kind of responsibility contemplated in the story as it has
been told so far. It may not issue a bill of lading for 10,000 metric tons of US No. 1 Hard
Red Winter Wheat (ordinary protein) because it may not be able to weigh or inspect it.
The carrier in such a case will disclaim liability with a notation like “SHIPPER’S LOAD
AND COUNT” or “Said to Contain” or STC (short for “Said to Contain”) on the bill of
lading, particularly for goods that the carrier receives in sealed containers. (Remember that
the shipper is the seller, not the carrier.) This is the carrier’s way of saying, “We didn’t load
this stuff—the seller did. We will deliver this stuff to the holder of the bill, but we are not
taking responsibility for exactly what this stuff is or how much of it there is.” If the buyer is
concerned about this sort of disclaimer, it can require another document: an inspection cer-
tificate. Ports have inspection services available. For a fee, a qualified and independent expert
can inspect the goods and certify that they are, indeed, No. 1 quality, not No. 2, and that the
goods are hard red wheat, not something else, and so on. With many commodities, such as
oil, laboratory testing will be necessary. This is just the kind of service that can be obtained,
although of course these services are not free.
Many details are omitted from this account, but the structure should be apparent, and
more important, the way it solves the buyer-seller trust problem should be clear. With an
appropriate letter of credit, the seller knows that a bank it trusts will pay when the seller
presents documents showing it has shipped the goods. By specifying appropriate documents,
the buyer knows that the goods conform to the contractual specifications and have been
shipped. If the buyer does not eventually pay, that is not the seller’s problem: it will already
have received payment from the bank. If the seller does not ship the goods and present the
necessary documents by the deadline, it will not be able to obtain payment, the letter of credit
will expire, and the buyer will never have to pay (or, if the buyer has paid its bank already, the
money will be put back into its account). The buyer-seller trust problem is thus solved.
As mentioned, this solution comes at a cost. Banks typically charge the applicant about
3 percent to 4 percent of the amount to be paid under the credit. This cost (which, like
much other relevant material, is discussed in Chapter 6) is not prohibitive because of one of
the subtle elegances of the structure. The seller and buyer cannot practically and economi-
cally check on each other. But it is easy for the buyer’s bank (the issuer) to check on its own
customer. The bank can take the money out of its customer’s account immediately and will
not have to worry about being paid by its customer when it (the bank) honors the letter
of credit and pays. Or if the bank did not take out the money immediately, it knew it was
making a loan to its customer, and the bank is in a good position to decide whether its cus-
tomer is an appropriate credit risk. Assuming that the parties have included a confirming
bank, that bank can easily check on the issuing bank. They may not be in the same coun-
try, but banks have established methods of checking on each other’s creditworthiness. And
finally the seller will know the confirming bank, in its own country and of good repute, is
trustworthy. Although there is some credit risk, then, it is manageable: the uncertain and
thus large credit risk between the buyer and the seller has been considerably reduced by
introducing intermediaries (the banks and the carrier) into the structure. In each segment
of the transaction, the credit risk is not so great, and even when the risk at each segment is
added, the sum is not very great—and most important, is less than the credit risk between the
buyer and seller. If it were the other way around, the parties would simply trade directly and
forego the letter of credit and its attendant costs.
C. Business Models
Adding one more axis fills out a three-dimensional mental picture of the international trans-
action: the business model. Again, we will take note of three. First, all of that oil, wheat, or
corn might be bought by a business that actually is going to use it. In that sense, businesses
can be “consumers” too, that is, businesses may use or consume the goods. The ordered goods
might be necessary to fuel a plant, or they may be machines used to manufacture other goods,
or they may be raw materials that are inputs for the buyer’s manufacturing. The possibilities
are endless, but this first-line idea is that the buyer may be obtaining the goods because it
needs them and will use them. For lack of a better term, we refer to these sorts of sales as
involving an end user.
The other two types of buyers—and sellers—are those who are in the business of resell-
ing the goods. Many parties in international transactions are brokers or traders. The buyer
who ordered the tons of wheat or corn probably was not planning to eat it, or to serve it for
lunch to its employees. It probably will not ever see the commodity it is ordering. It is plan-
ning to resell the goods, possibly to an end user or possibly to another trader or broker. This
resale may happen before or after the goods arrive in the buyer’s country, and may happen
before or after the trader even buys the goods. A trader may well make commitments to
deliver a commodity a few months in advance, planning after making this sale to acquire the
goods that it will need to meet its commitments. Alternatively, a trader may buy the goods
and resell them before they even arrive at the port; indeed, goods may be sold many times
over while they are still on the high seas. Obviously, these traders and brokers are both buyers
and sellers in international transactions.
The same is true of a middle example: a distributor. In its broadest sense, a distributor is a
business that arranges to buy goods from someone else—paradigmatically, the manufacturer—
for further sale down the chain of distribution to, say, a retailer. For example, a wine distributor
in New York may discover an excellent winery in France. The US distributor will contract
with the proprietors of the French château to import the wine into the United States. The
distributor will then make contracts to sell the wine to wine and liquor retailers in New York.
The distributor may also make contracts to sell the wine to other distributors, perhaps in dif-
ferent regions of the United States. This arrangement may or may not be an exclusive distribu-
torship on one side or another: the buyer may commit not to distribute other wines (or other
French wines); the seller may commit not to sell its wine to anyone else in the United States.
One or the other may make such a commitment, or neither. Regardless of its exclusivity, the
arrangement is a distributorship. As we will see in Chapter 2, the distribution contract is itself
about the relationship of the parties, but is not generally considered a sale itself. Rather, indi-
vidual sales are made pursuant to the structure set up by the distribution contract.
These broad descriptions should help form a better picture of different kinds of inter-
national commercial transactions in goods. The level of generality is still fairly high, though.
It can be much more concrete, and in the life of a lawyer or a business, it will almost always be
concrete and particular. The next section gives some examples.
II. A Sample Transaction

A. Introduction
Maggia, S.p.A., based in Milan, Italy, is a manufacturer of coffee-making machines. Its
products are distributed widely throughout Italy and southern Europe, and it now seeks to
expand into the North American market. Representatives from Maggia attend a trade fair in
Toronto, Canada, where they display their range of products in the hope of attracting North
American buyers. Their ultimate goal is to establish a relationship with a buyer who will
become the exclusive distributor of their products: that is, a buyer with whom Maggia can
establish a long-term relationship, who will regularly buy large quantities of Maggia products
to distribute them throughout North America by on-selling them to wholesalers as well as
department store chains and restaurants.
At the trade fair, Carla from Maggia strikes up a conversation with Ralph, who rep-
resents South Philly Restaurant Supplies, Inc. (South Philly), a company based in South
Philadelphia. Ralph is very interested in the Maggia machines and he and Carla exchange
business cards. Carla explains Maggia’s long-term plans, and Ralph expresses keen interest in
the possibility of South Philly becoming Maggia’s exclusive distributor in the United States
and, possibly, the whole of North America. Ralph explains that before South Philly commits
to a long-term relationship with Maggia, it would like to buy a single shipment of a variety of
restaurant-sized Maggia coffee machines to test the market in the United States. Ralph and
Carla agree to communicate further.
After the trade fair is over, Carla returns to Milan and Ralph to Philadelphia. They
conduct the following exchange by e-mail. As you read it, you should bear in mind the legal
implications of the following exchanges and documents even though this is not like most law
school examinations in which something goes wrong and litigation ensues. As we will see in
Chapter 2, the Convention on the International Sale of Goods (the CISG) governs the ques-
tion of whether Maggia and South Philly have made a contract, and in what terms, because
both the United States and Italy are party to that Convention. As we will see in Chapter 3,
the CISG takes a strict offer and acceptance approach to the question of contract formation.
Any reply to an offer that contains additions, limitations, or other modifications is a rejec-
tion of the offer and constitutes a counteroffer: see CISG art. 19. Where any term appears
in square brackets like [this], it does not form part of the actual exchange but is included to
explain to you the terms that Carla and Ralph use with one another.
B. The Transaction Continues (Part 1)

Carla asked, rather apologetically, for payment by letter of credit. Remember, banks charge
about 3 percent to 4 percent of the amount to be paid, which will wipe out about half of the
discount Ralphie negotiated. On this transaction for $376,068, South Philly will have to pay
its bank $11,282 if the bank charges 3 percent. Nevertheless, Maggia’s request was prudent,
as it had had no prior dealings with South Philly and therefore presumably knew little or
nothing about South Philly’s creditworthiness. As we have seen, payment by letter of credit
ensures that Maggia will be paid by South Philly’s bank once the coffee machines are shipped
to Philadelphia, whether or not South Philly actually has the money to pay for them. The
credit risk of South Philly not paying is then borne by its bank, NatiBank. Because letters
of credit are expensive, Carla promises Ralphie that Maggia will not ask for payment in this
form if their two companies establish a long-term relationship in the future.
Having agreed that it would pay by letter of credit, South Philly approaches NatiBank,
applying for the issue of a letter of credit in favor of Maggia in the sum of $376,068 (i.e.,
92.5 percent of the price originally quoted by Carla, reflecting the 7.5 percent discount he
negotiated). Before agreeing to issue the credit, NatiBank would ask South Philly to pro-
vide some form of security for payment. Because the security arrangements between South
Philly and NatiBank are purely domestic banking arrangements, dependent to some extent
on South Philly’s credit and standing as NatiBank’s customer, they do not concern us here.
Let it suffice to say that a prudent bank would immediately place a hold on $376,068 that
South Philly had on deposit at the bank, or more likely (because few businesses will keep that
kind of cash at their banks), will treat the $376,068 as a loan to South Philly. Many businesses
operate with a line of credit at their banks; in that case, the bank would treat the issuance
of the letter of credit like a draw on the line of credit (e.g., if South Philly had a $1 mil-
lion line of credit with no outstanding balance, the available credit would become $623,932
upon issuance of the letter of credit). In any event, assume that NatiBank agrees (for a fee)
to perform this service for South Philly. NatiBank then issues a letter of credit to Maggia as
beneficiary. In the old days, a letter of credit was just that, a letter, but now it takes the form
of an electronic message sent through the secure international interbank messaging system
operated by the Society for Worldwide Interbank Financial Telecommunication (SWIFT)
to a bank in the seller/beneficiary’s country. Although, as we shall see in Chapter 6, NatiBank
does not necessarily have to use Maggia’s own bank for this purpose, let us assume, for the
sake of convenience, that it does so. Natibank would send the SWIFT message to Maggia’s
bank, asking Maggia’s bank to advise Maggia of the credit in its favor.
C. The Transaction Continues (Part 2)

Once Maggia receives advice from its bank that the letter of credit has been opened in its
favor, it makes arrangements for carriage of the coffee machines from Milan to Philadelphia.
Exporting companies often engage other companies to do this for them: in Europe and Asia,
such companies are usually called freight forwarders; in the United States, they are generally
called NVOCCs (non-vessel-owning common carriers). Rather confusingly, there are enti-
ties called freight forwarders in the United States, too, but they do not perform the same
functions as NVOCCs. We do not need to worry about these technicalities in our example,
though, as Maggia arranges the transportation itself, a practice quite common among compa-
nies that export regularly and that do not want to pay the extra fee that a freight forwarder/
NVOCC would charge. Maggia books space on the ship RSL Esempio for carriage of one
shipping container of coffee machines from Genoa to Philadelphia. Maggia also arranges
cargo insurance with a US insurer to cover the coffee machines against loss or damage on the
voyage to Philadelphia. As stipulated in the letter of credit, the insurance covers the machines
for 110 percent of the CIP cost, to provide for an appreciation in value between Milan and
Philadelphia. (Remember that the term CIP that Carla and Ralphie used means that the
price Maggia negotiated with South Philly covers not only the cost of the coffee machines
but also insurance premiums and carriage costs to Philadelphia.)
Maggia stuffs (yes, that is the right verb) the container at its warehouse in Milan. The
container is sealed by customs authorities for export, who then issue a document known as
a certificate of origin, attesting to the fact that the coffee machines are from Italy. The con-
tainer is carried by road on Maggia’s own truck from Milan to Genoa, where it is handed over
at the container terminal at the port of Genoa. (The notation “Genova CY” on the bill of
lading below stands for “Genoa Container Yard.”) The container sits in the container termi-
nal until RSL Esempio arrives. The ocean carrier, RSL, then issues a bill of lading acknowl-
edging receipt of the container for shipment, and containing an undertaking to carry it
to Philadelphia. Because the bill of lading is made out “to order,” it is a negotiable bill of
lading, and the holder of the original document is entitled to take delivery of the container
in Philadelphia but only upon presenting the original document. (This process is explained
in more detail in Chapters 5 and 6.) Thus, it is mainly this document, the bill of lading, that
South Philly wants to receive in return for the purchase price, as this is the document that it
needs to get possession of the container on arrival in Philadelphia.
While RSL Esempio is en route from Italy to the United States carrying the container
of coffee machines, Maggia presents to its bank, Banco Popolare di Lombardia, the docu-
ments listed in the letter of credit and reproduced in this section: the bill of lading, a signed
invoice, a packing list, a certificate of origin, and an insurance certificate. What they establish
for South Philly’s purposes are the following things, respectively: that South Philly can take
delivery of the container when RSL Esempio arrives in Philadelphia; the value of the coffee
machines for purposes of the customs declaration that South Philly will have to make to US
Customs and Border Patrol; the fact that the container actually contains the coffee machines,
a fact not established by the bill of lading itself, which uses the notation “STC,” meaning
“Said to Contain”; that the coffee machines are from Italy; and that the coffee machines are
insured to 110 percent of their value against all risks of loss or damage on the voyage. Once
South Philly has confirmation of all those facts, it is prepared to pay the purchase price, even
though it has not yet seen the actual coffee machines.
Having verified that the documents presented by Maggia conform to the descrip-
tion in the letter of credit, Banco Popolare di Lombardia pays Maggia $376,068. (In
fact, the documents do not conform exactly to the credit. For example, they are not all
in English, as required by line 46A of the letter of credit, and there are some things not
quite right about the certificate of origin. Can you spot them? The question of how closely
the documents must match the description in the letter of credit is considered in detail
in Chapter 6.) Banco Popolare di Lombardia forwards the documents by air courier (e.g.,
DHL) to NatiBank in Philadelphia, which then reimburses Banco Popolare di Lombardia
the amount paid to Maggia. NatiBank then releases the documents to South Philly, either
in return for payment of the purchase price or in return for some undertaking for future
payment, if neither was done at the time the bank issued the letter of credit, depending on
the banking deal done between South Philly and NatiBank. When RSL Esempio arrives
in Philadelphia, South Philly presents to RSL (or its local agent) the original bill of lading
issued in Genoa and takes delivery of the container of coffee machines. South Philly now
has its coffee machines and Maggia has its money. It is the beginning of a long and beautiful
relationship, we hope.
D. A Variation to the Transaction

Buyers often want to defer payment, depending on their cash flow and their credit standing.
South Philly has agreed to pay $376,068 for the Maggia coffee machines. However large its
business and cash reserves, it might still prefer to defer payment until it has sold at least some
of the machines to its customers, which will provide it with the money to send to Maggia.
The details of how deferred payment works are dealt with in Chapter 6. For present pur-
poses, it is sufficient to note that the two main mechanisms that are used for this purpose are
deferred payment letters of credit and time drafts, which are called bills of exchange in the
English-speaking world outside the United States.
A deferred payment letter of credit looks just like an ordinary letter of credit, but
instead of agreeing to pay upon presentation of the stipulated documents (see the words
“By Payment” in paragraph 41D of the sample above), the bank agrees to pay at some time
in the future, measured from the date of presentation of the documents. The deferral period
is usually a multiple of 30 days. Thus, Maggia and South Philly might agree that South
Philly does not have to pay for 90 days. NatiBank would then issue a deferred payment
letter of credit promising to pay on the ninetieth day after presentation of conforming doc-
uments by Maggia to Banco Popolare di Lombardia. In all other respects, the letter of credit
would look identical to the sample above. South Philly would not have to pay for 90 days,
and Maggia would still have the security of a promise from a bank and could actually get
paid right away by selling that promise to a third party, in a process described in Chapter 6.
Another, rather more old-fashioned, method of securing deferred payment is by use of a

time draft/bill of exchange. This is a document drawn up by the seller and signed (“accepted”
is the technical term) by either the buyer or its bank, depending on what has been agreed
between the parties. Again, the details of this process can wait for Chapter 6, but we now
reproduce a sample time draft/bill of exchange to show you what one would look like. This
sample shows you both alternatives: a time draft to be accepted by South Philly and one to
be accepted by NatiBank. (Despite the way the sample document actually looks, only one of
the two, South Philly or NatiBank, would actually accept by signing.) This document would
be sent to NatiBank by Maggia with the other documents reproduced above. The signature
space at the bottom would be left blank. South Philly or NatiBank would accept the draft by
signing, and would return it to Maggia.
E. Possible Future for the Transaction

If Maggia and South Philly do negotiate an exclusive distribution agreement, as they hope
to, Maggia will regularly sell coffee machines to South Philly. The nature and terms of the
exclusive distribution agreement lie beyond the scope of this book, but the contract will
contain (among other things) promises by Maggia not to sell coffee machines to anyone
in North America other than South Philly, and by South Philly not to buy coffee machines
from anyone other than Maggia. Because the parties will be establishing a long-term rela-
tionship with a degree of trust and confidence in one another, Maggia will no longer
ask for payment by letter of credit, which, as we have seen, adds considerably to the cost
of the transaction for South Philly. The parties will use what is called open account,
another arrangement discussed in more detail in Chapter 6. In short, Maggia will period-
ically send invoices to South Philly, which will pay by electronic funds transfer (EFT) to
Maggia’s bank. South Philly’s bank, NatiBank, will charge for this service, too, but nothing
like as much as it would charge for the undertaking it has to give under a letter of credit.
Maggia would most likely demand some guarantee of payment in the event of default
by South Philly. That guarantee might well be a standby letter of credit, also discussed
in Chapter 6.
Banks use their own forms for EFT applications, some online, some still on paper. In
its application to NatiBank, South Philly will have to give an International Bank Account
Number (IBAN) for Maggia and a SWIFT code for Banco Popolare di Lombardia, so that
NatiBank knows where to send the money. The money transfer message will then be sent
from NatiBank to Banco Popolare di Lombardia via SWIFT. A typical EFT application
looks something like the following sample.
III. Commodity Trading

Goods sold in bulk, usually in large quantities, such as wheat, iron ore, or crude oil, may
be bought by a buyer for use or resale, just like a manufactured product such as coffee
machines. A large flour producer may regularly buy wheat to produce flour for on-sale
to bakeries and supermarkets; a steel mill may regularly buy iron ore to make its steel; an
oil company may regularly buy crude oil to refine into petroleum and other products. In
these situations, very little would differ between the sale of the bulk commodity and the
sale of the coffee machines in the example above. Often, however, the international sale of
bulk commodities is affected by the fact that the market price of such fungible items goes
up and down daily, and, in the case of many commodities, even throughout every trading
day. (Think how often you have heard on the news about today’s market price of crude
oil.) If a buyer of 80,000 tons of light sweet crude oil agreed to pay the seller $84 a barrel
when the contract was made, but now, when the oil is presently on an oil tanker in the
middle of the Atlantic Ocean, the market price has gone up to $92 a barrel, the buyer has
a really strong incentive to sell the cargo to someone else at today’s market price. Eighty
thousand tons of light sweet crude oil is 600,000 barrels, for which the buyer promised
to pay $50.4 million. (The number of barrels per ton can vary between six and eight,
depending on the viscosity of the oil. Light sweet crude oil is usually about 7.5 barrels per
ton, the number used for these calculations.) Six hundred thousand barrels at $92 a barrel
comes to $55.2 million. That means that there is a $4.8 million dollar profit sailing along
in the middle of the Atlantic Ocean, waiting to be made. The buyer would have to have a
really powerful need to use that crude oil itself in order to keep it from selling the oil to
another buyer. The next buyer would be happy to pay $92 a barrel because that is today’s
price. Tomorrow the price may be $96 a barrel, and there will be another $2.4 million
profit to be made.
Bulk commodities are often bought and sold many times while in transit by commodity
traders whose sole interest is to make a profit out of the movement of the market. Imagine a
smart commodity trader, with nothing other than an office (or even just a sofa), a computer,
an Internet connection, and a line of credit, but certainly with no oil refinery at its disposal,
who thinks that the market price of light sweet crude oil is going to go up over the next few
days. The trader offers to buy from the original buyer at $92 a barrel, today’s price. The origi-
nal buyer agrees, pockets its $4.8 million profit, and makes other plans to service its need
for 80,000 tons of light sweet crude oil, hoping that the market will go down in the future,
even by a few dollars a barrel, so that it can keep some of that profit. The trader now owns
$55.2 million worth of light sweet crude oil, but, of course, it has no refinery and no use for
the oil. If the price of light sweet crude oil reaches $96 a barrel two days later our trader can
sell to a refinery—or another trader—and cash out its $2.4 million profit. Of course, if the
price of light sweet crude oil slumps to $82, our trader will lose $6 million on this trade: the
$55.2 million it paid to buy the oil minus the $49.2 million it will receive when it sells the
oil. If the trader thinks the market will go lower, it is time to get out now and swallow that
$6 million loss, which might be $8 million by tomorrow. The lucky buyer who buys at $82 a
barrel may be the original buyer, who bought at $84 a barrel and sold at $92 a barrel. Now it
has made two profits on one cargo! This is how fortunes are made and lost in the commodi-
ties markets, just as in the share (equity) markets, by correctly predicting the future move-
ment of the market.
Meanwhile, the ship and its cargo of 80,000 tons of light sweet crude oil sails serenely
on across the Atlantic, as wily traders buy and sell the cargo perhaps dozens of times, depend-
ing on how dramatically the market is moving. Eventually, the ship will have to discharge the
oil at an oil refinery, but that is part of the grimy business of dealing in the goods themselves.
Commodities traders deal in risk and probability, not actual wheat, iron ore, and light sweet
crude oil. They never want to have anything to do with the goods themselves; theirs is a world
of money. There is a big difference between the people who produce and consume the physi-
cal product and the intermediate speculators. The former do not usually take market risks;
they can buy or sell a product at the price prevailing on that day and then use it for their own
purposes, regardless of what has happened to the market price. The latter are concerned only
with the market risks, not the product.
This practice of buying and reselling occurs with all kinds of commodities, not just light
sweet crude oil. If the price of any commodity changes from day to day, week to week, or even
month to month, there is a profit (or a loss) to be made by someone on that change in market
price. As a result, bulk commodities are often traded many times and the resulting succession
of sales and on-sales—sometimes many in a day—is called a string sale (or, in the oil trade,
rather charmingly, a daisy chain). The details of how string sales work are well beyond the
scope of a book such as this, but it is important to know that for some goods, the simple,
easily understandable model of a seller selling physical goods to a buyer—Carla and Maggia
selling coffee machines to Ralphie and South Philly—is not how all international sales work.
The concept of “booking out” shows quite how abstract the commodities markets can
be, and quite how far removed from the tangible goods. Imagine that our original seller of
light sweet crude oil (let us call it A) sells to B at $84 per barrel, B sells to C at $88 per barrel,
C sells to D at $82 per barrel and D sells the oil back to A at $83 per barrel.
84 83
B 85 D
88 82
C
B O O K I N G O U T A S T R I N G S A L E O R DA I SY C H A I N.
If A had bought at $83 per barrel, A has made a profit of $1 per barrel (it sold at $84),
B has made a profit of $4 per barrel (it bought at $84 and sold at $88), C has lost $6 per
barrel (it bought at $88 and sold at $82), and D has made a profit of $1 per barrel (it bought
at $82 and sold at $83). As A is now once again the owner of the oil, there is little point
in the parties passing the documents relating to the oil from hand to hand, incurring large
bank fees as millions of dollars are passed around the loop, just so that they can make their
paper profits and losses. Instead of going to all that trouble and incurring all those transac-
tion costs, the parties agree to “book out” the circle. A, B, C, and D agree on a notional
base price—in our example, let us say $85, which lies somewhere in the middle of the prices
agreed between the parties. Each then pays the others an amount calculated by reference to
that base price, without the need to actually pass the full contract value around the loop.
Thus, instead of A receiving $84 per barrel from B and paying D $83 per barrel, A pays B $1
per barrel (the amount by which A’s sale price to B is less than the agreed base price of $85)
and D pays A $2 per barrel (the amount by which D’s sale price to A is less than the agreed
base price of $85). The end result is that A still makes the same net profit of $1 per barrel, as
it receives $2 per barrel from D and pays B $1 per barrel. The same process goes on around
the loop: B receives $1 per barrel from A (base price of $85 minus A-to-B agreed price of
$84) and $3 per barrel from C (B-to-C agreed price of $88 minus base price of $85) for
its net profit of $4 per barrel; C pays $3 per barrel to B (B-to-C agreed price of $88 minus
base price of $85) and $3 per barrel to D (base price of $85 minus C-to-D agreed price
of $82) for its net loss of $6 per barrel; D receives $3 per barrel from C (base price of $85
minus C-to-D agreed price of $82) and pays $2 per barrel to A (base price of $85 minus
D-to-A agreed price of $83) for its net profit of $1 per barrel. (Remember that our cargo is
600,000 barrels, so A and D make $600,000, B makes $2.4 million and C loses $3.6 million.
The commodities markets are not for the faint-hearted.) The process of “booking out” is
explained in some detail in Voest Alpine Intertrading G.m.b.H. v. Chevron International Oil
Co. [1987] 2 Lloyd’s Rep. 547.
To make matters yet more abstract, commodities are often traded on futures markets,
where traders do not buy and sell actual physical products but make promises to buy and sell
at what they expect the price to be at a future date. Thus, our “daisy chain” from A to B to C
to D to A might not relate to an actual cargo of light sweet crude oil presently sailing across
the Atlantic, but to a notional cargo to be loaded in three weeks’ time, as the expected prices
from day to day change as the futures market goes up and down. The cargo may be traded
many times before it is even loaded, and then many times after it has been loaded. As noted
above, this goes on in relation to all kinds of fungible commodities, such as grain, oils, fats,
chemicals, steel, etc.
String sales, daisy chains, and futures markets are the main reason most international
sales of commodities are not governed by the CISG but by English law, even when there is no
connection whatever between the transaction and England. The CISG conceives of a world
where tangible goods are exchanged in return for money—which is, let us not forget, a large
and very important part of international trade. If Ralphie and South Philly do not like the
quality or quantity of the coffee machines, they can proceed against the seller, Maggia. If the
final buyer of our 80,000 tons of light sweet crude oil wants to complain of the quality or
quantity of what it has bought, can it proceed against the original seller who pumped it onto
the carrying ship, if there have been 8 or 10 intermediate buyers between them? Obviously
not, or at least not directly. A convention like the CISG, which conceives of international
sales as being a single exchange of tangible goods in return for money, does not fare well
in the commodity trades, although some have argued that it is just as able to cope with
them as is English law: see, e.g., Bruno Zeller, Commodity Sales and the CISG, in Sharing
International Commercial Law Across National Boundaries (Camilla
Andersen & Ulrich Schroeter eds., 2008). That is one reason the CISG is often excluded in
commodity trading standard forms like those mentioned in Chapter 2. Professor Michael
Bridge has written that the law of international sales is “bifocal,” with application of the
CISG being confined mainly to manufactured products and English law governing the sale
of commodities: see Michael Bridge, The Bifocal World of International Sales: Vienna and
Non-Vienna, in Making Commercial Law (R. Cranston ed., 1997); Michael Bridge, A
Law for International Sales, 37 Hong Kong L.J. 17 (2007). This book is concerned with
the sale of tangible goods, not the rarified atmosphere of commodity and futures markets.
IV. Different Sources of Law, Different Legal Methods,

and Different Legal Cultures
With some particular transactions in mind, we need to introduce the obvious legal gov-
ernance issues. Which law will govern the transaction—the law of the buyer’s country, or
the seller’s, or another country, or some kind of international law? There is law that governs
which law will apply to a transaction. The “rules of private international law” are the rules
that decide which laws will apply—buyer’s law, seller’s law, international law, or something
else. The rules of private international law are generally referred to in the United States as the
rules of conflicts of laws. These are crucial and sometimes technical matters; they are the sub-
ject of Chapter 2. To understand what is at stake in Chapter 2, we introduce here some of the
possible sources of law and the different ways that they are used (i.e., diverse legal methods or
approaches). We also try to give some idea of the cultural expectations, desires, and fears that
may inform how the parties to an international transaction negotiate, decide, or ignore these
issues. As the whole world is the subject, some generalizations will be necessary. We hope
they are useful, but you should take them with caution.
A. Public Law and Private Law

Let us begin by dividing the law into two parts: public law and private law. Private law is
the law that governs relations between persons, including juridical persons like corporations.
Contracts and torts are core fields within private law. Public law is the law (1) that governs
relations between persons and the state, and (2) that organizes the state itself. Criminal law
and constitutional law are classic examples. Although a crime is likely committed against a
person, it is considered an offense against the state, for which the state itself imposes punish-
ment through the intervention of a public prosecutor. If the victim of the crime wishes to sue
for recompense, that cause of action will sound in tort and is a matter of private law: it is a
private matter between the victim and the tortfeasor. Similarly, constitutional law is about
the organization of the state and the structure of and limits on the state’s power. This distinc-
tion between public law and private law is often attributed to the Romans. Regardless of its
pedigree and its (debatable) usefulness, it is certainly old enough to be measured in centuries
and perhaps millennia, and it remains entrenched. Public law and private law subjects are
still typically treated separately both in law schools and in legal practice. You take separate
courses in criminal law and torts. The same set of facts that constitute both a crime and a tort
engenders two lawsuits, one criminal and one civil, and will generally require the employ-
ment of two sets of lawyers.
International transactions in goods are no different. The matters of contract between
the parties—formation, performance, and discharge, or breach and remedies—are matters
of private law and are the subject of this book. They are generally handled by commercial
lawyers. International transactions in goods also generate issues of public law, such as cus-
toms rules and export and import duties, as well as rules on what can and cannot be imported
or exported, and rules on free trade (without duties). Some of the most talked about are
the rules on what governments can do to subsidize their own trade and what duties may be
imposed to counter what may be perceived as unfair subsidies. These are the rules of inter-
national trade law, or trade for short. They are matters of public law; they govern the rela-
tions between persons and the state or between states themselves. They are often handled by
trade lawyers or customs lawyers (for other than routine matters), not by commercial lawyers.
These public law aspects of international transactions in goods are not the subject of this
book, although a brief orientation to the issues and the law appears in the next section of this
chapter.
B. Comparative Law
Comparative law, although it may sound like an academic subject, is one of the most practi-
cal and pressing matters for lawyers with an international practice. As is already apparent,
an international transaction might be governed by the law of one country or another, or by
international law, or by something else. As we will soon see, the parties often have the power
to choose which law will govern their transaction. The immediate question for the lawyer
is: “What law is best for my client?” The available laws are not all the same; the answer to
the question will have to result from a comparative law analysis. This book will try to take
these matters seriously and will, in various places, discuss the most likely different choices (or
leading examples of them, as it is hardly possible to write or read about all of the possibili-
ties). Particular issues require particular detail and attention. Before we get to them in later
chapters, a basic orientation is necessary as different countries, and different legal systems,
have different outlooks, approaches, and preferences.
Let us again begin by dividing law into two systems, both of which will be treated in
this book: the common law system and the civil law system. They are the leading legal sys-
tems of private law in the world. The common law is the law of England and some jurisdic-
tions that were formerly English, including the United States. This system is associated with
making law by the accretion of cases decided by judges. The cases form precedents, and those
precedents can be generalized into rules of law. The term common law is confusing, as it can
mean the law generated by decided cases, sometimes referred to as judge-made law, instead
of statutes that are passed by legislatures (e.g., “That issue is governed by common law, as the
statute does not cover it.”). Common law can also refer to the legal system that is associated
with England and this method of generating law. The context helps clarify: “The common
law is one of the two leading systems” refers to something different from “the common law
would govern that question as the statute does not apply.”
This book will treat both US law and English law. Because of American economic
power, US law is likely to be used in many international transactions in which one of the par-
ties is from the United States. English law is also important to keep in mind. The reasons may
be less obvious, but there are several. Aside from the fact that US common law derives from
English law, England—and London in particular—retains a central place in much interna-
tional commerce. London hosts one of the largest financial markets in the world, if not the
largest. (London and New York are constantly competing for bragging rights.) London is
also the seat of prestigious and respected legal, judicial, and arbitral markets. Even when no
party is English, the parties may well choose English law and may well choose dispute reso-
lution, whether in court or in arbitration, in London. It also bears noticing that London is
located within the European Union, and Europe, like the United States, wields tremendous
economic power. Finally, although we here step into speculation, we suspect that English
law and a London forum is attractive to many parties seeking a neutral and reliable venue
where English is spoken. English has become the ordinary language for much international
business. We might note that a US party that does not succeed in negotiating for its own
hometown forum is likely to find London an attractive alternative, both in terms of law and
venue, that is not too scary.
Moving to the other side of the Atlantic, a bit of explanation is in order with respect
to American law. Understanding US law is tricky for those who are unfamiliar with the frac-
tured and untidy US legal system. Contract law in the United States has been, and continues
to be, largely a matter of state law, not federal law. This may have resulted from several factors,
including earlier views of the limited power of the federal government and the relative inac-
cessibility of federal courts. The Constitution gives Congress many powers, but not plenary
power. The federal government was supposed to be a government of enumerated powers,
not general power. Although one of those powers is “[t]‌o regulate Commerce with foreign
Nations, and among the several States, and with the Indian Tribes,” US Const. art. I, § 8,
cl. 3, until the New Deal (in the 1930s) courts took a restrictive view of what constituted
interstate commerce subject to federal power. By long tradition, then, contract law has largely
been a matter of state law. Some exceptions now exist. The most important for current pur-
poses is that for international sales of goods, the federal government adopted the CISG, as
will be discussed below. Outside the international realm, however, federal intervention into
general contract law has been surprisingly small in scale and limited in scope. Accordingly,
domestic US contract law remains largely the province of state law.
Fortunately, this book does not take up all of contract law; it concentrates on sales
transactions, and the US law with respect to sales is unusually unified. Almost every state
has adopted Article 2 of the Uniform Commercial Code (UCC). The lone exception is
Louisiana, which because of its French and Spanish heritage generally follows the civil law
with respect to sales. Not every state has the same version of UCC Article 2, but the varia-
tions for our purposes are for the most part minor. American sales law generally means UCC
Article 2. Because there are some variations, however, and because of the way the US legal
system works, best practice in choosing law in a contract would include a designation of a par-
ticular state. A choice of law clause designating the law of New York and not the CISG might
read: “This Agreement shall be governed by the law of the State of New York, without regard
to the CISG.” That contract would be governed by the New York version of UCC Article
2. The New York version of UCC Article 2 is not much different from, say, the Nevada ver-
sion of UCC Article 2, but for reasons that will become clearer later, the parties will usually
want to designate a state with which their transaction bears a reasonable relation.
Even at this basic level, a few qualifications need to be noted. To say that the contract
just mentioned is governed by the New York UCC is not to say it is governed only by the
New York UCC. As we will see in Chapter 2, if one party commits a tort related to the con-
tract, it may be governed by tort law, not sales law. Second, as mentioned above, various public
law rules may apply; these may come from US federal law or from international law or from
the law of another country. A New York choice-of-law clause will not allow the parties to evade
restrictions on importing certain goods into, say, South Korea. Finally, unlike Continental
codes and their progeny, the UCC does not attempt to be comprehensive. Indeed, the UCC
expressly preserves the preexisting case law unless the case law is “displaced” by the Code.
UCC § 1-103(b) (2001). For instance, the Code does not attempt to state rules on capacity
to contract, see id., so that issue will be governed by the common law. Some issues the Code
governs in part, but the drafters expected the case law to remain relevant to “supplement” the
statutory provisions. So UCC Article 2 is not all there is to US sales law. Still, it does much
of the work, and it will generally suffice for the purposes of gaining a basic understanding.
Returning now to the European side of the water: the other leading legal system is the
civil law. The civil law is defined as being based on Roman law. Virtually all civil law jurisdic-
tions have now codified their laws, and the civil law is often associated with comprehensively
codified law enacted by a legislature. This is true, and important for understanding the civil
law method, but it is not the defining characteristic. The defining characteristic is a basis in
Roman law. The civil law is followed in virtually every country that is not either English or
formerly English. Usually the civil law is summarized with reference to two leading jurisdic-
tions: France, which codified its law in 1804, and Germany, whose codification went into
effect in 1900. Continental Europe followed the civil law for centuries, and certainly well
before codification, but now, both in Europe and elsewhere, civil law systems can ordinarily
be classified, if only generally, as belonging either to the French family or the German family.
Those two codifications proved to be enormously influential, as was the monumental schol-
arly work that preceded the codifications.
If you wanted to see the basic private law of France, you would pick up the Civil Code
(or the Code civil, in French). If you get a version that does not have a lot of notes, it is a small
book and would probably fit in your coat pocket. It consists of a series of short, simple state-
ments of legal principles. To cite a particularly relevant example: “A sale is a contract in which
one party obliges himself to deliver a thing and the other to pay for it,” declares article 1582.
Article 1583 continues: “It is perfected between the parties, and ownership is acquired by
the buyer with respect to the seller, as soon as the thing and the price are agreed, even if the
thing is not yet delivered and the price not yet paid.” The small size of the book and lapidary
simplicity of each article make the French Civil Code very attractive for a developing country
that is looking for a well-developed, carefully researched, and clearly stated law to adopt, or
to use as a model. The German Civil Code (often referred to as the BGB, its German ini-
tials) is similar. Modern times have thus seen a great civil law reception as countries in Latin
America, Eastern Europe, and Asia have adopted codes or legal systems based on the French
or the German, often with intermediate influences exerted by a colonizing European power
or by a persuasive and recent revision; a country might adopt the law of the European power
that was once its colonist, or it might adopt the law of a country that recently and thought-
fully revised its own code. Through a combination of colonization and voluntary reception,
the civil law now holds sway in most—at least two-thirds—of the world.
The history, method, and culture of the civil law differ significantly from the common
law. The Romans developed a sophisticated and complex body of law eventually put together
under the Roman emperor Justinian into the Corpus Juris Civilis. After the fall of the
Western Roman Empire, Roman law was lost, but after its rediscovery, it was systematized
during the Middle Ages and further refined during the Enlightenment in the seventeenth
and eighteenth centuries. This work, particularly the more recent Enlightenment work,
formed the basis to take the next step toward codification. The French law of contracts and
sales is particularly Roman, as the redactors of the Code largely followed Pothier, whose
work remained close to Roman law. Some of the other pre-codification scholars picked up
non-Roman influences, both in France and particularly in Germany. Indeed, there was great
debate in Germany about how far the law was Romanistic and how far it expressed the law
of the German people. Eventually, though, both countries codified their laws, and the civil
codes of those two countries have been not only monuments but models and influences.
We are oversimplifying, but just as the Constitution holds a nearly sacred place in the
minds of US lawyers and even the American people, the Code civil and the BGB hold similar
places in France and Germany. This venerated place makes them difficult to revise—daring
to come too close to the sacred is a dangerous thing—hence some revised codes (e.g., in
Switzerland) have been influential on jurisdictions looking for more modern statements of
the law. At this writing, the French are still considering a revision of the Civil Code. Your
authors refuse to predict the fate of the revision, having thought that previous efforts at revi-
sion would have been successful years ago. Nevertheless, after lengthy study and debate, the
Germans have enacted a revised law of obligations, and by the time you read this, the French
may have done so as well. We will study some of the new sections in this book, along with
some venerable articles of the French Civil Code.
Along with the idea of being special and extraordinary—not just an ordinary statute—
comes the idea that there is a coherence, even perhaps an elegance and a beauty to a civil code.
The code purports to state completely the law of its subject, even though that subject may be very
broad. The civil code states the law relating to matters between citizens. (You will see that the
term “civil” in “civil law” is at least as confusing as the multiple uses of “common law,” mentioned
above. “Civil law” can mean (1) legal systems based on Roman law, as obtain in France, Germany,
the rest of Continental Europe, and most of the world; (2) law that is not criminal (e.g., “this is
a civil matter, not a criminal matter”); (3) law that is secular and not religious (e.g., “the matter
is not just for the Church and should be reported to the civil authorities”); (4) as we see now,
within a civil law system, a matter that is between citizens, as opposed to involving the govern-
ment or merchants.) That is a very large subject, but the redactors set out to state that law. There
is other law to be stated too, and a typical civil law jurisdiction would start with five codes: a
civil code; a code of civil procedure; a criminal code; a code of criminal procedure; and a com-
mercial code. The civil code and to some extent the commercial code (which has special rules for
merchant transactions) are most relevant to the subject of this book. In later times, further codes
have been added, for example, on labor relations or environmental law. But still the notion of
comprehensive, careful, authoritative statement remains, particularly in the original codes.
This orientation has several practical ramifications for legal method. Because all of the
law is supposed to be contained in the code, but because the code contains laconic, even
elliptical, short statements of principle, much work has been done by scholars to elaborate
the meaning of the stated principles and how they should apply to particular facts or to con-
temporary issues. This scholarly teaching, or doctrine (“doctrine” actually means teaching),
is an important source of law in civil law jurisdictions. The scholars who teach in the law
schools and who write the treatises and articles that make up the doctrine have an honored
and exalted place in the hierarchy of the legal community and in society. If a lawyer wants to
know what the law is, the lawyer would probably consult the code and the writings of profes-
sors. The code and the doctrine are both primary sources of law, although the doctrine will
take account of, construe, and perhaps criticize the case law. In stating their theories of what
the law is, the professors will primarily look to the code, to previous doctrinal writers, and
to theoretical and ideological commitments, as well as some case law. As is expected both of
academic writing and civil law reasoning, the doctrinal work is highly logical, placing great
emphasis on the need for coherence and on the necessity that the law as a whole fit consis-
tently with itself. The law is an autonomous, logical system, perceived to be susceptible of
scientific exposition. For these reasons, civil law doctrine often appears highly abstract and
theoretical to common law eyes, and often seems uncannily removed from practical con-
cerns. Nevertheless, the code is the law, as understood and explained by the doctrine.
Case law and judges in the civil law system thus have a lower status than their common
law counterparts. Cases do not set precedents in the civil law system. If a body of case law
has evolved to state consistent principles, then that jurisprudence constante comes to have the
force of law. This result comes from the consistency of the results and the reasons, not from
the power of the courts to make law. Note that the highest civil law court in France, the Cour
de cassation, can vacate a lower court decision and send it back, or send it to another lower
court, but it does not have the judicial power to itself reverse the decision of the lower court.
And instead of being perceived as a dignified and distinguished figure, a judge is more likely
to be seen as a civil servant, or to put it in a less nice way, a bureaucrat. Judges in civil law
systems enter the civil service by taking a test. It is a learned job, but not an exalted one. To
get some idea of this, consider the situation in Germany: a German law professor is entitled,
just by holding the professorial position, to be a judge on the regional appellate court—if the
professor is willing to do so.
Here endeth the conventional explanation of the common law and the civil law. At this
early point in the book, we will not complicate it unduly with qualifications, but the picture
drawn above is a caricature. It exaggerates some prominent features and is sketched with
simple lines and without shading. For instance, case law in a civil law system holds a more
important place than one might suppose. French law libraries must, and do, devote consider-
able resources to obtaining access to the case law, even though it is often learned through the
prism of notes or articles written by scholars. Similarly, the Cour de cassation, even though it
supposedly does not possess the lawmaking power of a common law court, and even though
lower courts are not bound by its precedent, now sits near the pinnacle of French law. The
political necessity to abolish the power of the judges was born of the French Revolution and
its aversion to the ancien régime, the monarchy, and the aristocracy. That is some time ago!
That political will has dissipated. Its effects are not gone, however. The judge is still a civil ser-
vant, or perhaps better, a mandarin. Society may no longer be so averse to a higher status for
judges, but they have not held that status for a long time, and for the most part, they still do
not—except for judges of the highest courts, who (if the authors’ observations are accurate)
seem to be treated with great respect, as true VIPs. Similar qualifications are necessary on the
other side; treatises in the common law systems may not have status as a “source of law” as in
the civil law system. They have an important practical impact, however. The established and
respected treatises are often cited by the courts and treated as authority by lawyers and judges.
The two systems are not as far apart as the caricatures suggest.
This should hardly be a surprise. It is true that the civil law and the common law have
different methods, and different ways of thinking. This can become apparent in everyday
ways: a lawyer from a common law system may be mystified by civil law thinking that seems
to have so little regard for immediate and practical needs. A lawyer from a civil law coun-
try may be shocked by the sheer inconsistency—incoherence—of the common law. More
pointedly, rules on particular matters may be different, even opposite, between the common
law and civil law. The mode of analysis may be entirely divergent. But in the end, cases do
not have different results very often. Sometimes they do, but when it happens, it is a sur-
prise. As the great comparatists, like Konrad Zweigert and Hein Kötz, as well as René David,
observed, the common law and the civil law are both products of Western European cultures
with common ideals of justice. They are not likely to arrive at widely divergent results very
often, particularly on matters tied to shared intuitions. We suspect that the divergences tend
to arise from more technical rules that have less to do with large matters of justice. In the end,
then, the results will often be the same. But not always—not even on major matters. A mul-
tibillion dollar case can hinge on a rule that is largely technical. Who gets those billions of
dollars, and who loses them, can be determined by what law applies.
C. International Law
As should be apparent, the world would be a considerably more comprehensible place,
although less interesting, if international transactions could be governed by one unified
international law. The CISG was designed as a step in that direction. The impetus for the
CISG is manifold. Typically the buyer will want its law to apply, and the seller will want its
law to apply. Without the CISG, it would be impossible in an international transaction for
the buyer and the seller both to win. With the CISG—if it is part of the law of each of the
parties’ countries—both can win. The CISG would be familiar to the buyer and its lawyers
(it is after all part of their law, even if it applies only to international transactions), and the
same would be true for the seller and its lawyers. Neither party would have an advantage with
respect to governing law; both would have ready access to information on what the law is.
Businesses would not need to invest in finding out about the law of all the countries where
they might do business. They would just have to know the CISG (so far as sales contract
issues are concerned). This is the ideal.
The reality is of course at some remove from the ideal. The CISG has made the world
more interesting, not less. Whether it has made the law of the world more uniform could be
questioned: many transactions do use the CISG, but many do not. The parties can exclude
the CISG, if they so choose, at will. CISG art. 6. The advent of the CISG—an international
law of sales—has added another possible governing law, and thus arguably made the law less
uniform. No doubt the CISG can and does govern a large number of transactions. A “uni-
fied,” if not exactly a “uniform,” law is available and in widespread, but not exclusive, use. See
generally Ulrich G. Schroeter, To Exclude, to Ignore, or to Use? Empirical Evidence on Courts’,
Parties’ and Counsels’ Approach to the CISG (with some Remarks on Professional Liability), in
The Global Challenge of International Sales (Larry DiMatteo ed., forthcoming
2014) (now available on SSRN). But even so, that unification is hardly neat. On virtually
all matters where there is major divergence between the civil law and the common law, the
CISG has forged a compromise. Like compromises in general, the CISG compromises are
messy. As you will see in later chapters, these compromises sometimes seem even more messy
than usual. So there will be plenty to keep life and law interesting.
Most of the compromises will be taken up in later chapters, but one should be men-
tioned here, although it will come up again later. Article 7 is the provision in the treaty that
instructs readers how to interpret the treaty. Take a moment now to read it. Article 7(1)
shows the results of compromise on whether to include a duty of good faith. This will be a
prominent subject in Chapter 3. Article 7(2) is a bit different, and its interpretive issues are
often linked to differing civil law and common law outlooks. (If you are wondering whether
you have followed this correctly, do not worry. We have indeed just said that there are inter-
pretive difficulties in interpreting the article that says how to interpret the treaty.) The first
question under article 7(2) is whether a matter is “governed by this Convention” even though
the matter is “not expressly settled in [the Convention.]” Our observations suggest that
those trained in the civil law are much more likely to believe that a matter is governed by the
Convention, even if it is not settled expressly, than those trained in the common law. This
casual observation is bolstered by what may be expected based on the theory and experience
of the civil law and the common law. A lawyer used to codes that are coherent and compre-
hensive on their respective subject matters reads the CISG with the implicit expectation
that it will govern international sales generally. Such a lawyer will be used to the idea that
the enacted law will contain general statements that will have to be extended, stretched, or
adapted not only to new situations but to a variety of issues. The civil law reader may not even
perceive the operation as an extension or a stretch or an adaptation; it is simply an exercise of
legal analysis based on authoritative positive law. It is a familiar part of the technique of the
civil law and is therefore unremarkable.
The lawyer trained in the common law approaches the treaty from a different direc-
tion. We do not think it is quite the opposite direction, as it may have been in the olden
days of the common law—back when statutory or other legislative incursions were viewed
derogatorily and kept within the narrowest bounds possible—but the common lawyer will
expect the treaty to be specific, like most statutes in common law systems are. Such a lawyer
will not approach the treaty with a presumption that it occupies the whole field, like a civil
law code would do. Moreover, the lawyer will expect the matters governed by a statute to
be addressed specifically, often defining all the necessary terms. The treaty says what it says,
and that is fine, this lawyer will think; other matters may just be beyond its scope, and that
is to be expected. The best way to tell whether the treaty governs a matter is to see whether
it has any provisions on that matter. Take attorneys’ fees, for instance. There is no provision
on attorneys’ fees in the treaty. The issue of allocation of attorneys’ fees is a matter that is
therefore not governed by the treaty. (You will see this idea in Chapter 8 in Zapata Hermanos
Sucesores, S.A. v. Hearthside Baking Co., 313 F.3d 385 (7th Cir. 2002).) A lawyer with a civil
law orientation, however, might expect that such a matter would be addressed and would
be more likely to see the article 74 provision allowing the plaintiff recovery for its “loss” to
include attorneys’ fees, even though such fees are not specifically mentioned. (When you get
to Chapter 8, you will find that authorities are not unified, but you will also see that the issue
and the arguments are more complex than we discuss at this point.)
The purpose of article 7(2) is to direct which law will decide an issue, so much may be
at stake when deciding whether a matter is governed by the treaty. If the matter is governed
by the treaty but not expressly settled in it, then the matter is to be decided “in conformity
with the general principles on which [the treaty] is based.” What those principles are can
sometimes be debatable, but some are expressed in article 7(1): international character, inter-
national uniformity, and good faith. Other principles may be gathered from a reading of
the substantive articles of the Convention. Many would agree that freedom of contract and
assent- or intent-based contractual liability can easily be identified from various articles on
treaty scope and on contract formation, while the expectancy principle appears to underlie
the remedial provisions. There are others too, which we leave for discussion in later chapters.
Most importantly for now, note that only “in the absence of such principles” should a tri-
bunal decide a matter in accordance with domestic law. Committed internationalists, who
emphasize the need for international uniformity and who see a greater role for international
law, prefer to avoid resort to domestic law. Internationalists will often tend to find a matter to
be governed by the treaty—if it is not, then it is necessarily governed by domestic law—and
even if the matter is not settled in the treaty, they will prefer to apply the treaty’s underlying
principles rather than allow a court to apply domestic law.
One final note on sources of law is in order. A variety of projects attempt to unify the
law of sales or the law of contract, more or less unofficially, without formal governmental
adoption. Because they are also international in character, they might be a basis for “princi-
ples” to be applied under article 7(2). Probably the best known of these efforts is the Unidroit
Principles of International Commercial Contracts. It is considerably more ambitious—and
larger—than the CISG. It undertakes to state the law of commercial contracts generally. It is
not limited to sales law, and it includes various controversial issues that the CISG excludes
or does not treat. The Unidroit Principles were adopted by Unidroit (sometimes spelled in
all capitals, UNIDROIT, which in any case refers to one law from uni- and droit). Unidroit
is a unique institution, the sole surviving vestige of the League of Nations. (The League of
Nations was the institutional multi-nation effort after World War I to try to avoid a World
War II.) Unidroit is devoted to unifying private law, not public law, and survived the great
failure of the League of Nations (which was eventually supplanted by the United Nations).
Appreciate the political economy: to pass, the Unidroit Principles needed only approval
of Unidroit. They did not need, seek, or gain formal acceptance from any state or nation.
Because they are not enacted law, to many they are not law at all. Nevertheless, they can serve
not only as an arguable source for international principles under the CISG but also as per-
suasive authority to courts and arbitrators. They are also available to be adopted by contract.
Indeed, the redactors and promoters of the Unidroit Principles encourage parties to adopt
them by contract, and a number of parties do so. This enables contracting parties to have
international law govern their contract without as many gaps as the CISG.
There is a problem, however. Many choice of law rules, although they may allow the
parties to choose the law that will govern their contract, require that the chosen law be the
law of a “state or nation,” to quote UCC § 1-301(a). This requirement is not unusual, nor is it
unique to the United States. The Unidroit Principles, however, are not the law of any state or
nation, raising questions about the validity of the parties’ choice of them. For this reason and
others, efforts are under way to forge a Common European Sales Law (CESL). This effort
joins several others (e.g., the Trento Project, the Lando Principles that led to the Principles
of European Contract Law (PECL), and the Common Frame of Reference) to unify the law.
At the time of writing, none of them have become enacted law in the conventional sense,
but they serve, to a greater or lesser degree, as “soft law.” See generally Maren Heidemann,
Does International Trade Need a Specific Doctrine of Transnational
Contract Law? (2012). Perhaps soon the Common European Sales Law will achieve
enactment; as this book goes to press, it has been approved by the European Parliament but
has not yet gone to the Council of Ministers, whose members must adopt it before it becomes
law. Not all perspectives are the same, however, even within Western Europe. For the French
contribution and response to some of these developments, see European Contract
Law: Materials for a Common Frame of Reference: Terminology, Guiding
Principles, Model Rules (Bénédicte Fauvarque-Cosson & Denis Mazeaud eds., 2008).1
Life and law will remain as interesting as ever.
V. Public Law Issues

As noted above, this book is concerned principally with the private commercial relationships
involved in an international sale of goods, rather than the public country-to-country aspects
of international trade. Nevertheless, some awareness of the relevant public issues is necessary
even for private commercial lawyers dealing with sales transactions.
For example, as we shall see in Chapter 5, the standard trading terms in Incoterms
2010® assign responsibility, usually to the buyer, for ensuring that the goods have the neces-
sary clearances to pass through customs in the buyer’s country. Customs law is a surprisingly
intricate and esoteric body of law. It is, however, one of the central struts of the General
Agreement on Tariffs and Trade (GATT), which is the cornerstone substantive agreement
among countries that are members of the World Trade Organization (WTO). Essentially,
the countries party to the GATT (155 of them at the time of writing, including the United
States) have agreed to use only tariffs (i.e., customs duties, which are essentially taxes imposed
as goods cross the border) to regulate or restrict the incoming flow of goods from other coun-
tries, and to eliminate non-tariff barriers to trade.
1. This version in English captures the highlights of more extensive work in French toward the Common
Frame of Reference. For more, see Terminologie Contractuelle Commune (2008) and Principes
Contractuels Communs (2008), which are volumes 6 and 7 in the Droit privé comparé et Européen series. For
the response to CESL, see Le Droit Commun Européen de la Vente: Examen de la proposition de
règlement du 11 octobre 2011 (2012), which is volume 6 in the Collection Trans Europe Experts.
Obviously, many perfectly legitimate laws may have the effect of restricting the incom-
ing flow of goods to a country, so Article XX of the GATT lists a series of measures that
can be taken by a country, even though they may incidentally have the effect of acting as
a barrier to the free flow of trade. For example, a country might want to pass quarantine
laws to protect its indigenous flora and fauna from invasive foreign species, or it might want
to pass safety laws regulating construction or labeling of products for consumer protection
purposes, or it might want to pass laws prohibiting the importation of products made with
slave labor. Any one of these laws would have an effect on the free flow of imported goods
into the country in question and so would constitute what is called a non-tariff trade barrier,
the very kind of thing the basic GATT agreement promised to eliminate. Yet countries must
obviously remain free to protect their own environment, or the health of their consumers,
or to refuse slave labor. Thus, Article XX of the GATT permits countries to pass laws of
this kind, provided that they are not “a means of arbitrary or unjustifiable discrimination
between countries where the same conditions prevail, or a disguised restriction on interna-
tional trade.”
Most of the disputes that are heard by the panels of the Dispute Settlement Body (DSB)
of the WTO are complaints that one country has passed a law or regulation for a supposedly
benign and permitted purpose but with the surreptitious intention of protecting local indus-
tries from the competitive effects of foreign imported goods. To take a famous example, in
the Shrimp-Turtle Case (officially, Appellate Body Report, United States—Import Prohibition
of Certain Shrimp and Shrimp Products, WT/DS58, WT/DS61 (adopted Nov. 6, 1998)),
the United States banned the importation of shrimp caught by methods that threatened the
life of endangered sea turtles, claiming that this was an environmental protection measure.
Malaysia, Thailand, India, and Pakistan complained to the WTO that the import ban was
really designed to protect the US shrimp fishing industry from lower-priced international
competition. The United States lost the case before the WTO, mainly because it had acted
in a discriminatory fashion, treating shrimp-exporting countries in the Caribbean differently
from those in South and South-East Asia. The details of this dispute and others like it are
beyond the scope of this book. The example shows, however, how a private commercial trans-
action—a contract to import shrimp from another country, for instance—may be affected
by larger, more complex issues at a national level: Is an import ban motivated by concern for
endangered sea turtles or by concern for US shrimpers? (As you can probably tell, the answer
in such cases is usually both. The WTO dispute resolution panels have to choose what was
the predominant purpose in relation to a particular measure.)
Customs law is the nuts and bolts of the international trade regime. Countries party to
the GATT promise to use only (or mainly) customs duties to regulate the flow of trade. There
are three main issues in relation to the imposition of customs duties when goods cross a coun-
try’s border: rate, valuation, and classification. First, the importing country has to declare at
what percentage rate the imported item will be taxed. This is the easy part, a public declara-
tion of a tariff of duties to be charged. Second, the importing country must declare how it
will value the product for purposes of imposition of customs duty. The declared percentage
rate of duty is a percentage of the value of the product, but, as we shall see later, the value of
a product varies greatly from place to place, not least because the value of the product in an
importing country includes the cost of transporting it from the exporting country, insuring
it against risks, and other transaction costs that we will consider in more detail later in this
book. Third, the importing country must declare how it classifies imported products for pur-
poses of imposition of customs duty. There are many ways of classifying even a simple object
like a pen. If a customs duty of a declared percentage were to be imposed on “pens,” it would
apply only to things that could be called a pen. (A ballpoint pen? A fountain pen? A laser
pointer?) If the duty were to be imposed on “writing implements,” it would include pens,
pencils, and maybe even other objects. (Computers? Chisels?)
Countries party to the GATT could easily compromise or undercut their treaty prom-
ises by cynical manipulation of their customs duty laws, by the manner in which they classify
imported products or by the manner in which they value them for purposes of the customs
duty. Thus, the countries party to the GATT have also made international agreements about
how they will go about the process of classification (the Harmonized Commodity Description
and Coding System, set out in the International Convention on the Harmonized System
1983, overseen by the World Customs Organization) and valuation (the WTO Agreement
on Implementation of Article VII of the GATT 1994, or GATT Valuation Code). As noted
above, this is a complex and technical area of law, which (thankfully) lies beyond the scope
of this book. Our purpose here is again simply to point out that private commercial sales
of goods may have larger implications that may trigger public law and country-to-country
disputes.

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1

I. International Sales Transactions: Goods,

International Transactions in Goods. Martin Davies and David V. Snyder.

II. A Sample Transaction

B. The Transaction Continues (Part 1)

C. The Transaction Continues (Part 2)

D. A Variation to the Transaction

Another, rather more old-fashioned, method of securing deferred payment is by use of a

E. Possible Future for the Transaction

III. Commodity Trading

IV. Different Sources of Law, Different Legal Methods,

A. Public Law and Private Law

V. Public Law Issues

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