People need contracts when purchasing and selling goods to affirm the transaction’s occurrence and protect each other from irregularities that may lead to dispossession of the items through court orders. The contract protects buyers by assuring them that the seller has transferred the possession of the things to them; hence, no one can reclaim them unless the court directs otherwise under consultations. The sale of goods contract is the name that people assign to such a contract involved in the buying and selling of commodities. The sale of goods contract is an agreement where the seller agrees to transfer the ownership of a specific item for price consideration. It is a legally binding agreement and provides many rights and remedies for actions that occur in trade. This report discusses the sales of goods contract under the United Nations Convention on Contracts for the International Sale of Goods (CISG). It uses the arguments to describe the validity of an agreement between ElGup plc (Claimant) and JAJA Biofuel (Respondent). The report also figures out the Claimant’s General Conditions of Sales validly included in the contract.
Have the Parties Concluded a Contract in 2020?
The CISG is a multilateral treaty among 78 contracting states. It guides these countries in selling and purchasing goods by providing a uniform framework for international trade. The CISG laws provide harmonized and unified regulations directing how the countries treat international traders and create an enabling environment that gives the terms under which a contract may come into existence or undergo nullification. Since ElGup plc and JAJA Biofuel are international companies, they have to use the CISG as guidelines for the contract they make between themselves. In this case, the CISG provides the basis of the arrangements the two companies make and may be used by the jurisdiction to determine the contract’s validity or solve any matter arising. The clauses that define the contract are mainly Art. 14, Art. 15, and Art. 55 of the CISG act. The CISG provides all the guidelines for making an international agreement and determining its essentialities.
The report values the elements of the contract under the CISG To determine whether the parties agreed. The essential features include the offer and the acceptance, consideration, capacity, legality, intentions, and certainty. A jurisdiction determines whether the contract meets this requirement from its initiation to the sealing or revocation. An agreement is initiated when a person gives an offer to another. The one giving the proposal is the offeror, whereas the one receiving the bid is the offeree. In this case, the Claimant was the offeror because Mr. Chandra, its Chief Operations Officer (COO), approached Ms. Bupati, the Respondent’s Head of Purchasing, at the palm oil summit and negotiated a possible conclusion a contract. The introduction of the offer initiates the negotiations for an agreement. After Mr. Chandra starts the contract by approaching Ms. Bupati, she accepts the offer and begins negotiations. Accepting a proposal by the offeree binds the two parties legally to complete the contract and promise to stick to their responsibilities to one another.
Another element of a contract is the legality of the contract. Legitimacy means that parties agree to the agreement and are guided by the law to ensure that they meet their obligations to one another. In the case between ElGuP plc and JAJA Biofuel, the parties agree that the guiding law to the contract is the Mediterraneo law to govern the AA by displaying their intent to pursue Art. 8 CISG. The existence of regulations guiding the contract’s basis creates an affirmation of the presence of an agreement between the parties. They are legally bound to the understanding and must enforce it to avoid the penalties that may arise from offending the contract.1 Every arrangement must be guided by specific laws that can be used as the basis for an argument in court. In this case, The Mediterraneo is the law that the parties agreed on to guide their actions towards the commitment to fulfill the contract’s requirement.
Additionally, capacity is an essential element of a contract that the parties must comply with to ensure that the contract exists. Capacity is a participant’s ability to hold all the requirements stipulated by the law to agree. In most cases, the interested party must be a senior and liable for the contract conditions. Ms. Bupati meets the requirements to enter into a contract about the supplies within the organization since she is the Head of Purchases. Therefore, she makes all the agreements relating to acquiring critical materials for the company’s running. She fits to join an agreement on behalf of her company and agrees to the contract that Mr. Chandra initiates. She even negotiates the terms of deals and sends several emails to negotiate the contract further and seek more information regarding the previous agreements. These actions support the existence of a contract between the two parties.
Furthermore, the contract met the conditions of having the intentions as one of the elements of the contract. Intentions as an element of a contract are the parties’ aspirations that the agreement will be legally binding. The offeror intends that once the offeree accepts the offer, the contract comes into being, and both parties commit to meeting their obligations, as the agreement requires them to do.2 Once Ms. Bupati agrees with Mr. Chandra’s offer and further negotiates, the offeree hopes that the contract has come into being. Any other decision to terminate the agreement afterward puts the defiant party in danger of compensating the victim for the damages caused. A contract relies on the party’s intentions to legally bind themselves to the conditions in the contract. Intentions create a legal commitment of the parties to the contract’s success and indicate that the parties are ready to face the consequences of violating the agreements made. Thus, for a contract to exist, each party must reveal their intentions to commit to their understanding.
The contract between ElGup plc and JAJA Biofuels exists because it meets all these conditions for the existence of a contract. The Respondent argues that the contract had not met some of the guidelines from Art. 14 of the CISG. These conditions include the pricing for the consideration and sufficient definiteness of the proposal. True to the laws under Art. 14 on requiring the offeror to provide detailed information about the contract to the offeree, the agreement does not lie since Mr. Chandra did not explicitly provide all the critical data. However, under Art 15 of CISG, the contract exists once the offeree receives the offer and accepts it from the offeror. The agreement between the Claimant and the Respondent exists because the Claimant addressed a specific person by Art. 14, and the Respondent accepted the offer.
According to Art. 14 a counter offer terminates the initial contract and initiates another one. If the jury used the clause to determine the existence of the agreement between the two parties, the conclusion would be that the contract never existed since the Respondent had responded to the contract through emails, inquired about the contract, and proposed new terms for the agreement leading to a counter offer. Nonetheless, Art. 15 states that a counteroffer may not affect the initial contract if the new terms do not interfere with the initial proposals directly hence some support for the agreement between the Claimant and the Respondent. Art. 15 also supports the presence of a contract when the two parties make implicit decisions; thus, the parties within this contract agreed by implicitly deciding about some contents of the agreement. Art. 55 supports the existence of a contract without mandatory listing of a price as required in Art. 14 of the CISG. Based on these stands, the Parties concluded the deal.
If a Contract was Concluded were Claimant’s General Conditions of Sale Validly Included into that Alleged Contract?
The General Conditions of Sale (GCoS) apply to all forms of business agreements regarding exchanging goods for consideration. The GCoS are responsible for guiding the parties’ actions within a sale of goods contract and defining the correct way of handling any arising issues from the contract. These GCoS include the offer and interpretation, ownership and passing of risks, payment terms, delivery, limitation of liability, assignment of the agreement, amendments of the agreements, force majeure, termination of a contract, and governing law and dispute rejection. GCoS provide the terms under which a contract exists and protects the actions of any individual from affecting the other negatively. These General Conditions of Sales are applicable in the cases and provide the basis for speculations by the jurisdiction about the contract’s validity in place.
First, the contract has a governing law and dispute resolution guideline under which the parties obtain the arguments for the rights they own in the contract. The parties implicitly select the Mediterraneo law to guide the contract and determine violations if any arise. Since the Midererraneo law applies in the Arbitration Agreement (AA), the CISG laws guide the contract. The articles of the CISG guide every parties’ actions and provide a flow of the terms of the agreement. Implementing this condition in the arrangement plays a critical role in affirming the contract’s existence since the contract meets the requirement of being guided by a law that legally binds the parties to their responsibilities as outlined in the contract. Therefore, the Claimant and the Respondent may use the Mediterraneo and the CISG to claim compensation when one of them violates the agreement. Sales of goods under the CISG facilitate trade-offs between two businesses in different states. The companies must be in other states; hence, the Claimant and the Respondent are qualified to use the laws to guide their contracts.
Another GCoS is the termination process of a contract. According to this section, one party’s termination of a contract is only possible if one party breaches the contract and thirty days have passed without them taking action to correct the violation. On such grounds, the Respondent’s demand for termination of the agreement between the Claimant and them is not applicable since the Claimant has not violated the law. If the Respondent insists on bringing the contract to an end, they should be ready to meet the costs of all direct losses the agreement’s termination may contribute. Terminating a warranty is only possible when one party violates it and fails to respond to their actions within 30 days or when the two parties agree to end the agreement. Therefore, the Respondent may not halt their initiated agreement with the Claimant without compromising with the Claimant or compensating them for any damages within the contracting period.
Additionally, the GCoS guides contracting between two businesses within different states by providing conditions for the amendment. Art. 8 CISG states that a contract is amendable if the parties bound by it agree to change some sections only through written communication. Written communication ensures that all parties are responsible for each other and information is approved and has evidence.3 Written communication eliminates the barriers that may hinder information flow and ensures that both parties have substantial proof that official communications existed about the change. In this case, the parties exchanged information that served as evidence in some controversial areas of the contract through emails. The emails help in influencing the jurisdiction’s decision since they act as proof of communication.
The limitation to liability as a General Condition of Sales also applies in the case between ElGuP plc and JAJA Biofuels. The law states that parties are limited to any indirect cost due to negligence or breach of the contract. The Claimant should only demand compensation for the Respondent’s actions directly related to the losses. Besides this condition, another one states that the mode of payments should be clear to avoid contradiction.4 The cost is due 14 days after the invoice compilation, and the seller is bound to receive the interest due after the due date surpasses. The seller may suspend delivery under communications with the buyer if there is a delay in payment for the goods. The payment mode in the case study is through some specific bank accounts that the Respondent had requested from the Claimant. Therefore, the contract meets the requirement by law to state the mode of payment clearly and the terms revolving around the methods the parties make them.
The contract validly met the Claimant’s General Conditions of Sale from the findings above. The GCoS in this contract includes governing law, termination of the agreement, amendment of the deal, assignment of the agreement, limitations to liability, payment terms, modes, and price of goods.5 All these conditions facilitated the contract’s existence and provided the ground for the reliability of the contract to succeed. Proper communication during the initiation of the contract existed and facilitated the understanding of the contract by both parties. However, the demand for the contract’s termination by the Respondent may not be well structured since it did not highlight the reason behind the request. Termination of an existing contract should be based on specific arguments that the terminator must deliver to the victim to justify their exit from the contract. Proper communication also helps the parties separate, with the most affected victim receiving compensation or both parties agreeing to split without compensation.
A contract is an agreement between people or companies that describes the responsibilities of one party to another. The warranties guarantee the parties’ willingness to protect the deal between them. Contracts are essential in businesses since they play a critical role in ensuring that all parties fulfill their obligations in the treaties. Contracts are legally binding, meaning that one can get sued in a court for violating the terms and conditions within the treaties. Businesses often prefer to consult legal advisors before engaging in a contract. The advisors help detect areas that may conflict with the organization’s customs and beliefs, advising the parties to figure out alternative methods of engaging in the contract. The CISG guides the international trade between member states of the European Union. The CISG contains articles that direct how the sales of goods between the different states happen. Thus, there is harmonization and regulation of international businesses.
The CISG provides guidelines on listing essential elements of a contract and helps parties identify the concerning areas in the treaties. The main characteristics of every agreement in place are offer and acceptance, consideration, legality, capacity, intentions, and certainty. The lack of any of these elements leads to the nullification of the contract by default. These elements are mandatory for contracts since they provide every detail that completes a transaction. The CISG stipulates the factors to consider when initiating or terminating a contract based on such elements. The agreements between Mr. Chandra and Ms. Bupati conclude with a contract since they cater to every component in their negotiations. Besides containing the details of a contract, the agreement between Mr. Chandra and Ms. Bupati, the contract is guided by some General Conditions of Sales such as the presence of governing laws, termination of a deal, amendment of an agreement, assignment of an agreement, delivery, payment terms, and modes conditions. These conditions control the accuracy of a contract and may be used by the jurisdiction to determine the contract’s validity.
Bridge, M. G. (2021). The CISG and commodity sales: A relationship to be revisited? Singapore Journals of Legal Studies, 271.
Duke, A. (2019). What does the CISG have to say about smart contracts: A legal analysis. Chicago Journals of International Law, 20, 141.
Mazzacano, P. (2022). Public international law versus private international law: Competing or complementary intersectionality in the CISG?. In Blurry Boundaries of Public and Private International Law (pp. 179-196). Springer, Singapore.
Muñoz, E. (2019). Software technology in CISG contracts. Uniform Law Review, 24(2), 281-301.
Saive, D., & Stabel, J. (2020). Paperless trade–electronic bills of lading under the CISG and eUCP v. 2.0. Internationales Handelsrecht, 20(5), 185-194.
- See Muñoz, E. (2019). Software technology in CISG contracts. Uniform Law Review, 24(2). p. 287.
- See Mazzacano, P. (2022). Public international law versus private international law: Competing or complementary intersectionality in the CISG?. In Blurry Boundaries of Public and Private International Law. p. 182.
- See Duke, A. (2019). What does the CISG have to say about smart contracts: A legal analysis. Chicago Journals of International Law, 20, p. 141.
- See Saive, D., & Stabel, J. (2020). Paperless trade–electronic bills of lading under the CISG and eUCP v. 2.0.
- See Bridge, M. G. (2021). The CISG and commodity sales: A relationship to be revisited? Singapore Journals of Legal Studies. p. 271.