GLOBAL SALES AND CONTRACT LAW GLOBAL SALES AND CONTRACT LAW By INGEBORG SCHWENZER PASCAL HACHEM CHRISTOPHER KEE Great Clarendon Street, Oxford OX2 6DP Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide in Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries Published in the United States by Oxford University Press Inc., New York © I Schwenzer, P Hachem, C Kee, 2012 The moral rights of the authors have been asserted Database right Oxford University Press (maker) Crown copyright material is reproduced under Class Licence Number C01P0000148 with the permission of OPSI and the Queen’s Printer for Scotland First published 2012 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this book in any other binding or cover and you must impose the same condition on any acquirer British Library Cataloguing-in-Publication Data Data available Library of Congress Cataloging in Publication Data Data available Typeset by Cenveo, Bangalore, India Printed in Great Britain on acid-free paper by CPI Group (UK) Ltd, Croydon, CR0 4YY ISBN 978–0–19–957298–4 10 9 8 7 6 5 4 3 2 1 To our families PREFACE Globalised trade necessitates globalised legal thinking. This is especially true in the field of contract law in general, and sales law in particular. It is an easy statement to make, but not quite so easy to implement. We believe a range of factors informs what actually amounts to globalised legal thinking and we hope these permeate throughout this book. We have been guided by our belief in the need to enhance respect for different legal thinking, and to improve access and understanding of these different approaches, and to further the dialogue and exchange of ideas that already exists. We have sought to produce a practical endeavour – something that can actually be used in practice – in other words we did not set out to build theories but rather give answers to practical problems. In the process we have attempted to underscore the relevance of comparative legal studies and the functional comparative approach in particular. We hope that our work will be used by a large spectrum of those involved in contract and sales law—ranging from students and academic researchers, to legal practitioners, as well as law makers. With this in mind we have written the book so that it can be read and utilised in two ways. This is a book which can be read cover to cover. However it can also be used as a reference source for particular issues. We are well aware that one can really only fully understand the operation of law in jurisdiction from the inside, and while we have all lived and worked in several jurisdictions, our personal experience does not extend to all the jurisdictions covered in this book. As such we have relied heavily on the advice of our core research team, our correspondents and existing academic texts. We have done our best to confirm the accuracy of the information we report. This has been particularly difficult at times, especially where legislation and commentary was only available in languages not spoken by any of our team. In a variety of instances we have had to work from unofficial translations – where our experience suggested these translations may not be entirely accurate we have endeavoured to express a qualified view. This book is the result of a four year research project conducted at the University of Basel, Switzerland under the direction of Prof Dr Ingeborg Schwenzer LLM, and the two senior researchers Dr Pascal Hachem and Dr Christopher Kee. Dr Kee’s doctoral thesis on validity in sales law is published as Part IV of this work. The work on this book has been a daunting but extremely rewarding challenge, and it would not have been possible without the support and assistance of many people. The core research team in Basel consisted of Dr Mohamed Hafez LLM, Dr Jean Alain Penda Matipe LLM, Dr Natia Lapiashvili LLM, Dr Edgardo Munoz LLM, and Dr Sophia Juan Yang LLM. Additional specific research assistance was provided by Ba ak Ba o lu, LLM, Claire Chabat, LLB MLaws, ş ş ğ Yulia Douanova, Deepaloke Chatterjee, Dr Kevin Kee MEd, MEd (Admin), Candy Tang, Gabriela Vizcaíno, Claudio Marti MLaw, Philippe Monnier MLaw, Sarbajeet Nag, Alissa Anita Palumbo JD, Ref. iur. David Tebel. Valuable assistance was also received from numerous student assistants—stud iur Christoph Burckhardt, Tomie Keller BLaw, stud iur Lukas Meyer, stud iur Christian Schlumpf, stud iur Nicole Schmidt. Last but not least we were supported by a worldwide network of correspondents. We are greatly indebted to all these people and sincere thank them for their contributions. Our work would not have been possible without financial support from a number of organisations, in particular the Swiss National Science Foundation, the Freiwillige Akademische Gesellschaft, the Max Geldner-Stiftung, and the Stiftung zur Förderung der rechtlichen und wirtschaftlichen Forschung an der Universität Basel. A resource contribution was also made be Mr Cristobal Reitze. We also received statements of support from various international organisations for which we are very grateful. These organisations were in alphabetical order: Association Suisse de l’Arbitrage, Beijing Arbitration Commission, Chartered Institute of Arbitrators, CISG Advisory Council, Institute for International Commercial Law (Pace University), Institute for Private International Law in Africa (University of Johannesburg), Ohada, and the Singapore International Arbitration Centre. A number of prominent and influential people in the fields of international commercial law and arbitration also lent us their considerable support. In particular we would like to acknowledge (in alphabetical order) Professor Michael Bridge, Professor J Martin Hunter, Dr Pierre Karrer, Colin Wall and Dr Markus Wirth. A special mention must be made of our dear friend the late Professor Albert Kritzer, who as ever was always full excitement and encouragement for our work. Thanks go also to the University of Basel, and our colleagues, both at the Chair and the Faculty more broadly, who have assisted us with all matters of administration. Particular mention is made of Claudine Abt, Elke Müller, Jörg Fraunhoffer, and Dr Ulrich Pfister. We are also greatly indebted to the team at Oxford University Press, especially to Rachel Mullaly and Khanam Virjee, for their patience and the swift handling of the publication process. The end product (with the exception of the index and tables) is our creation and the errors are ours. Local advice must always be sought about the particularities of any individual jurisdiction. We hope that many people all over the world will find this book a helpful guide to comparative sales and contract law. And it was fun and a cultural enrichment for all of us! Ingeborg Schwenzer Pascal Hachem Christopher Kee Basel, August 2011 CONTENTS Contributors Abbreviations List of Country Codes Table of Cases Table of Legislation 1. Introduction I. SALES LAW: DEVELOPMENT AND MODERN PRACTICE 2. Development of Domestic Sales Laws 3. Uniform Laws and Projects 4. Contract and the Law 5. Modern Practice of International Sales Law II. AMBIT OF SALES LAW 6. General Remarks on the Ambit of Sales Law 7. The Concept of Goods 8. Identifying the Boundaries of a Sales Contract III. FORMATION OF THE CONTRACT 9. General Remarks on Contract Formation 10. Offer and Acceptance 11. Electronic Communications 12. Standard Terms 13. Agency 14. Modification of Contract IV. VALIDITY 15. General Remarks on Validity 16. Capacity to Contract 17. Mistake and Error 18. Fraud and Duress 19. Consequences of Mistake, Fraud, and Duress 20. Illegality and Immorality 21. Excessive Benefits and Unfair Advantages 22. Form Requirements V. PRE-CONTRACTUAL LIABILITY 23. General Remarks on Pre-Contractual Liability 24. Pre-Contractual Duties 25. Pre-Contractual Liability VI. CONSTRUCTION OF CONTRACT 26. Interpretation and Supplementation 27. Practices and Usages VII. OBLIGATIONS OF THE SELLER