Chapter 3: Law on International Contract of Sale

I. Contract

Definition

• Vietnam: Art 385 - Civil Code 2015: A contract is an agreement to establish, change, or terminate civil rights and obligations.
• France: Art 1101 Civil Code: Agreement of wills to create, modify, transmit, or extinguish obligations.
• US: § 1-201 UCC: "Contract" means the total legal obligation from the parties' agreement under the UCC and other applicable laws.

Subject

• Individual
• Legal entity (Pháp nhân)
• Other subject
• Special subject - State/Gov

Purpose

• Ensure the interests of all parties

Form

1. Written Form: Documented and signed (e.g., real estate contracts).
2. Oral Form: Verbal agreements (binding but harder to enforce).
3. Conduct Form: Inferred from parties' conduct.

Content

• Terms / Clauses

Feature

• Contract = Law
• Commercial: Related to trade and traffic.

II. Sources of Law Governing International Sale Contracts

1. Convention / Treaty

1.1 Definition

• Agreement between countries on a particular matter.
• Types: Bilateral, Multilateral.

1.2 United Nations Convention on Contracts for the International Sale of Goods 1980 (CISG 1980)

• Prepared by UNCITRAL, more than 90 members.
• Covers scope of application, contract formation, sales of goods, and final provisions.

1.3 Application of CISG

• Applies to contracts between parties in different States if both are Contracting States or if private international law leads to a Contracting State's law.

2. National / Domestic Law

2.1 Application

• Chosen by contract terms, appendices, treaties, or by courts.

2.2 How to Apply

• Specific law applied first, general law if needed.

III. Formation of Contract

Fundamental Principles

• Freedom of contract
• Voluntary agreement
• Equality
• Honesty & Good-faith

Offer & Acceptance

• Offer: Clear expression to enter a contract.
• Acceptance: Reply accepting the entire offer.

Offer vs Invitation to Treat

• Offer: Proposal that becomes an agreement upon acceptance.
• Invitation to Treat: Invites a proposal.

Revocation of Offers

• Offers can be withdrawn or revoked before acceptance.

IV. Performance of Contracts

Seller and Buyer Obligations

• Seller: Deliver goods, hand over documents.
• Buyer: Pay the price, take delivery.

V. Liabilities for Breach of Contract

Basis of Liability

• Breach, damage suffered, proximate cause, fault of breaching party.

Breach Types

• Non-performance, improper performance.

Damages and Compensation

• Prove damage, loss, and cause.

VI. Remedies for Breach

Specific Performance

• Implement contract as agreed, cover costs.

Penalty

• Agreed fine, typically 8% of breached obligation.

Damages

• Compensation for direct material and profit loss.

Cancellation

• Cancel partial or entire contract for fundamental breach.

VII. Drafting a Contract for an International Sale of Goods

Key Elements

1. Parties: Clearly identify with full names and addresses.
2. Goods: Precise description and specifications.
3. Quantity: Define unit of measurement.
4. Quality: Detail characteristics, use standards or samples.
5. Price & Payment: Specify currency, price method, and payment terms.
6. Language: Specify a preferred language for interpretation.
7. Delivery Time and Document Handling: Clearly define in contract.