Applying the United Nations Convention on Contracts for the International Sale of Goods (the CISG)

I. INSTRUCTIONS
● Solve the cases by applying the United Nations Convention on Contracts for the
International Sale of Goods (the CISG). You can find the CISG here:

  • http://www.cisg.law.pace.edu/cisg/text/treaty.html or
  • http://www.uncitral.org/pdf/english/texts/sales/cisg/V1056997-CISG-e-book.pdf
    ● Keep your answers specific and try not to exceed 5 pages for Homework 1 (not counting the
    questions).
    ● Do not just provide the answers but also explain how you got there, i.e. show your legal
    analysis and deal with all important legal problems connected to the case. Do not forget to
    refer to the relevant articles of the CISG! (it is not necessary to cite them in full). Explain
    why the conditions of the respective provision(s) are fulfilled / are not fulfilled, and what
    legal conclusions we can draw based on the facts of the case.
    ● You can use all materials which are available to you.
    Grading:
    Homework 1:
    ● In total, it is possible to “earn“ max 30 points.
    ● Assessment criteria and relevance in determination of the score:
  • Correctness of the format and structure of the answer (1/6);
  • Use of and reference to the correct legal provisions (1/6);
  • Correctness of the final answer (1/6);
  • Sufficiency of explanation of the answer, level of legal analysis and establishing
    connections, correctness of interpretation of the relevant provisions (3/6).
    Problem Questions:
    ● Pass / fail, no points are earned;
    ● You need to solve at least 3 cases under “Problem Questions” correctly, then you will receive
    “pass”.
    GOOD LUCK!
    Homework 1
    II. CASE
    Three enthusiastic Estonian university students – Bruno, Benno and Bertha – desire to become part
    of the #EstonianMafia and launch their entrepreneurial career. As their first startup, they decide to
    1
    set up a taxi company which uses cars powered by solar energy. The company is created in March
    2017 and named BOLT. They wish to launch the service in September 2017, as this is when the
    weather starts to get colder in Estonia and people tend to use taxis more.
    One of the biggest challenges for the new company is finding cars which are suitable for the
    intended service. The cars need to run on electricity, in particular on solar power, but they must also
    be comfortable and have an attractive appearance to appeal to the customers. In June 2017 the
    students find a dealership in Spain – SolarCAR – that appears to sell exactly what they need, i.e.
    electric cars that produce the energy they consume themselves from solar power. The cars are
    originally model Leaf by Nissan, but the dealership has modified them by adding a set of solar panels
    on the roof. The group gets excited and Bruno and Benno fly to Spain to visit the dealership and see
    the cars themselves. They are given a warm welcome at the dealership and a possibility to inspect
    the cars and do as many test drives as they like. The salesmen of the dealership affirm that on
    average, it takes 3 hours for the car’s battery to load by using solar power, and a fully loaded car can
    run for up to 150-200 km. The realistically attainable speed of the cars is said to be 120 km/h.
    After the boys have returned to Estonia and shared their positive experiences with Bertha, the three
    decide that BOLT will buy 7 cars from SolarCAR. On 18 July, Bruno, as the managing director of BOLT,
    sends an e-mail to SolarCAR, stating: “We were very happy with what we saw and experienced in
    Spain, and wish to order 7 cars from you. Let me emphasise that it is very important that the cars
    arrive before 1 September 2017.” Two days later, the manager of SolarCAR replies: “Thank you for
    your order, the total price will be 210 thousand euros. Please find our General Terms and Conditions
    of Sale attached to this e-mail. To finalise your order, please sign this document and return it to us.”
    Bruno does exactly what is asked – prints out the terms, signs them (without carefully reading them)
    and sends the signed copy to SolarCAR by post. In the General Terms and Conditions there is a
    section 5.4 which states: The term of delivery of Products ordered from SolarCAR is 90 days from
    placing the order, unless otherwise explicitly agreed by the Parties.
    ● Does/would the CISG apply to the contract in this case?
    ● Assuming that the CISG applies, is there a sales contract between SolarCAR and BOLT? If yes,
    what are the terms of the contract as to the price and time of delivery?
    ● Assuming that the CISG applies and that there is a valid sales contract between the parties,
    analyse the legal position of BOLT in the following circumstances:
    (a) When the cars do not arrive by 1 September 2017, Bruno asks about them. In its response,
    SolarCAR refers to section 5.4 of the General Terms and Conditions and states that the time
    of delivery is 16 October, i.e. 90 days from placing the order. Bruno angrily replies: “This is
    not what we agreed!” The calculations made by BOLT’s accountant show that if the company
    1 Community of innovative Estonian tech startups
    had been able to launch its service on 1 September, it would earn 1000 euros of profit per
    day.
    ● Can BOLT use any legal remedies in this situation?
    (b) The cars do not arrive by 16 October either. Bruno writes to SolarCAR on 17 October: “This is
    enough for us! We have been waiting for the cars for more than one and a half months and
    they are still not here! We hereby declare the contract avoided.” SolarCAR does not reply
    anything to this e-mail. The cars arrive on 20 October.
    ● Has BOLT validly avoided the contract? Is BOLT under obligation to take delivery?
    Assuming that BOLT takes delivery:
    (c) The cars are put into use and the taxi service is launched on 1 November 2017. To the
    terrible surprise of Bruno, Benno and Bertha, it appears that although a fully loaded car can
    indeed drive a distance of up to 200 km, it takes on average three full days to load the car by
    using the integrated solar panels. Since BOLT cannot allow the cars to be off service for such
    a long time, they resort to using the regular electricity grid to charge the cars’ batteries
    instead of the solar panels. Bruno, Benno and Bertha feel deceived, because use of solar
    power should have been the thing that makes their taxi company unique. They send an
    e-mail to SolarCAR stating: “You have lied to us! The car batteries take 3 days, and not 3
    hours, to charge with solar panels. This means that it is not possible to run these cars on
    solar power in practice! Either you send us substitute cars which are actually usable, or we
    will ask our money back. In any case, be prepared to take back these useless “solar cars”
    from us.” SolarCAR replies by saying: “The cars work perfectly fine! We tested them before
    sending them to you and they took 3h to fully load by using the integrated solar panels. It
    must be your northern climate which causes the charging time to increase.”
    ● Has there been a breach of contract? If yes, which legal remedies can BOLT/SolarCAR use?
    (d) In mid-December, when the weather starts to get cold and crispy in Estonia, the heating
    systems of two of the cars break down. BOLT has all seven cars checked and it turns out that
    there is a construction defect in the two cars where the problem emerged. Repairing the
    defect costs 2000 euros per car. The remaining five cars do not have this problem.
    ● Has there been a breach of contract? If yes, which legal remedies can BOLT use?
    Problem Questions
    CASE 1
    On January 2, the Buyer sends an e-mail to the Seller where he requests to buy 10 m
    3 of wooden
    boards and asks about the price of such goods. On January 3 the Seller replies that the price of the
    requested quantity would be 5000 euros and that the Seller can deliver the goods within 14 days.
    a) Alternative 1: the Buyer does not reply anything.
    b) Alternative 2: on January 5 the Buyer replies: „Everything else is fine, but I will not pay more
    than 4700 euros for this quantity“.
    ● Is there a contract? If yes, how much does the Buyer have to pay for the goods? Explain
    your answer and refer to the relevant provisions of the CISG (PS: solve both alternatives!).
    CASE 2
    On September 1, the Seller sent a letter to the Buyer offering to sell to the Buyer 5,000 widgets for €
    25 apiece. The letter also stated: „This offer is binding and irrevocable until October 1.“ On
    September 5, prior to the Buyer’s receipt of the letter, the Seller called the Buyer and told him to
    ignore the Seller’s offer as he had decided to withdraw it. The Buyer did not understand what the
    Seller was talking about, because the Buyer had still not received the Seller’s letter of September 1
    (it got lost in the mail). On September 10 the letter finally arrives. The Buyer immediately sends an
    e-mail to the Seller stating: „Thank you for this great offer which I just received. Of course I accept
    it!“
    ● Is there a contract? Explain your answer and refer to the relevant provisions of the CISG.
    CASE 3
    On September 22 the Buyer and the Seller conclude a contract for the sale of 5 used cars. In their
    contract of sale the parties agree on the following: „The Seller will organise the transport of the cars
    from Germany to Estonia and place them at warehouse C in Estonia for delivery. The Buyer will pick
    up the cars from warehouse C on October 5“. On October 4 the Seller informs the Buyer that the cars
    are ready in warehouse C, they are at the Buyer’s disposal and everything has been organised to
    enable the Buyer to pick the cars up on October 5. However, the Seller does not know that the Buyer
    is experiencing problems with finding a new suitable location (warehouse, parking lot, etc) for the
    cars. For that reason the Buyer does not arrive to pick up the cars on the agreed date. On October 7,
    when the cars are still in warehouse C, a fire breaks out in warehouse C. All 5 cars are completely
    destroyed in the fire.
    ● Assuming the CISG applies, who bears the risk of damage to/destruction of the cars? Can the
    Seller demand payment of the purchase price from the Buyer? Can the Buyer claim
    replacement of the cars from the Seller? Explain your answer and refer to the relevant
    provisions of the CISG.

    CASE 4
    The Buyer and the Seller entered into a contract governed by the CISG for the Seller to deliver a
    sophisticated computer to the Buyer by January 1. The Seller was late in delivering the machine, so
    the Buyer e-mailed the Seller on January 2: „Anxious to take delivery of the computer. Hope that it
    arrives by February 1.“ Seller delivers the computer on February 5, but the Buyer refuses to accept it
    and declares that the contract is avoided because the Seller failed to hand over the computer before
    the February 1 date specified in the January 2 e-mail. Both the Buyer and the Seller agree that there
    has not been a fundamental breach.
    ● Is the Buyer able to avoid the contract under these circumstances? Does anything change if the
    Buyer does not say anything when he takes delivery of the computer on February 5 but then
    declares the contract avoided on March 5 by referring to the delay in delivery? Explain your
    answer and refer to the relevant provisions of the CISG.
    CASE 5
    The Seller agreed to deliver three software programs to the Buyer that are specifically designed for
    the Buyer’s business. The first was to be delivered in January, the second in February, and the third
    in March. The program delivered in January worked fine, but the one delivered in February was
    defective. It not only failed to function properly, it also made the other two programs effectively
    worthless. The Seller was unable to correct the defect, and no suitable replacement could be found
    from another supplier.
    What remedies are available to the Buyer under the CISG? Explain your answer and refer to the
    relevant provisions of the CISG (tip: you may want to consider Art 73 of the CISG).

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