Example An online retailer's terms limit its liability for
any losses resulting from delayed deliveries, specifying
that users cannot claim damages beyond the refund of the
purchase price. This limitation helps the
retailer manage its risk and avoid excessive liability. 5
Dispute resolution terms and conditions often include a
dispute resolution clause outlining the process for
resolving conflicts between the user and the service provider.
This may include requirements for arbitration or mediation
before pursuing legal action. Example a software subscription
service includes an arbitration clause requiring users to
resolve disputes through arbitration rather than in
court. This clause helps to streamline
dispute resolution and reduce the costs associated with
litigation. Challenges in enforcing online
terms and conditions Enforcing online terms and conditions can
be challenging, particularly if the terms are not clearly
presented or if the process for obtaining consent is flawed.
Key challenges include ensuring proper notice and consent,
avoiding unconscionable terms, and addressing jurisdictional
issues. One notice and consent for
online terms and conditions. To be enforceable, users must
have clear notice of the terms and provide informed consent.
If terms are buried in fine print or hidden and obscure
links, they may be challenged in court.
Example, a website buries its terms and conditions in a hard
to find link. A user later disputes the
enforceability of certain terms, claiming they were not clearly
notified. The court may rule that the
terms are unenforceable due to the lack of proper notice.
Two unconscionability terms that are overly harsh, 1 sided, or
unfair may be deemed unconscionable and thus
unenforceable. Courts will consider whether the
terms were presented fairly and whether the user had a
reasonable opportunity to understand and reject them.
Example A user challenges a service providers terms that
impose excessive fees for early termination, arguing that the
clause is unconscionable and should be voided.
The court may find that the fees are so unreasonable that the
clause is unenforceable. 3 Jurisdictional Issues Online
terms and conditions often need to address which jurisdictions
laws will govern the agreement, especially in international
transactions. Jurisdictional clauses specify
the location where disputes will be resolved and which countries
laws will apply. Example an e-commerce platform
operating globally includes a choice of law clause specifying
that disputes will be governed by the laws of the company's
home country. This clause helps to manage the
legal complexities of operating in multiple jurisdictions.
Part Three International Contracts In today's
interconnected global economy, contracts frequently cross
international borders, involving parties from different legal
systems. This globalization of business
transactions necessitates a robust legal framework to manage
the complexities of international contracts.
This section delves into the intricacies of international
contracts, with a particular focus on the United Nations
Convention on Contracts for the International Sale of Goods.
CISG and. Explores the key differences
between the SISK and US contract law.
It also addresses critical aspects such as choice of law,
jurisdiction, arbitration, and the enforcement of international
judgements. SISK Overview.
What is the SISK? the United Nations Convention on
Contracts for the International Sale of Goods CISG is an
international treaty that establishes a uniform legal
framework for the sale of goods between parties located in
different countries. The SYSC was adopted in 1980 and
has since been ratified by over 90 countries, including major
trading nations such as the United States, Germany, China,
and Japan. The primary purpose of the SYSC
is to facilitate international trade by reducing legal barriers
and providing predictable, harmonized rules that govern
cross-border transactions. By standardizing the legal
principles applicable to international sales contracts,
the SYSC aims to reduce the uncertainty and complexity that
often accompanies such transactions.
Key objectives. Uniformity to provide a
consistent set of rules governing international sales
contracts, reducing discrepancies between national
legal systems. Predictability to create a
predictable legal environment that fosters confidence and
trust in international trade. Flexibility to allow parties to
tailor their contracts to their specific needs while providing
default rules that apply in the absence of specific terms.
The SISK applies automatically to contracts for the sale of
goods between parties whose places of business are in
different countries, provided that both countries are
signatories to the Convention. However, parties can opt out of
the SISK or modify its provisions if they wish to be
governed by a different legal framework.
Scope of the SISK Applicability The SISK governs contracts for
the sale of goods between parties whose places of business
are in different countries, provided that these countries
are signatories to the Convention.
The applicability of the SYSC is not dependent on the nationality
of the parties, but rather on the location of their places of
business. Key Points Automatic application
The SYSC automatically applies to international sales contracts
unless the parties expressly opt out.
This makes the SYSC the default legal framework for such
contracts in signatory countries.
International Scope. The SYSC is specifically
designed for international transactions and does not apply
to purely domestic sales contracts.
Example AUS. Company contracts with a German
supplier to purchase machinery. Since both the United States and
Germany are signatories to the sisk, the contract is governed
by the sisk unless the parties explicitly opt out and choose to
be governed by another legal framework such as the UCC or
German law exclusions. While the SISK has a broad
scope, it does not apply to certain types of transactions.
These exclusions are intended to limit the Sisk's application to
transactions that align with its primary focus, international
sales of goods. Key exclusions.
Personal, family, or household use.
The SISK does not apply to the sale of goods intended for
personal, family, or household use unless the seller knew or
ought to have known that the goods were bought for such use.
Auctions. Sales conducted at auctions are
excluded from the SISK scope. Stocks, Shares, Investment
Securities. The SYSC does not govern the
sale of stocks, shares, investment securities or
negotiable instruments. Services.
The SYSC is focused on the sale of goods and does not apply to
contracts primarily for the provision of services.
Example A. Consumer in the United States
purchases a product online from a foreign retailer for personal
use. The transaction is not governed
by the SISK as it falls under the exclusion for goods intended
for personal, family, or household use.
Key Principles of the Sisk The SISK is built on several key
principles that guide the formation, performance, and
enforcement of international sales contracts.
These principles are designed to promote fairness,
predictability, and efficiency in international trade.
Freedom of contract The principle of freedom of contract
under the SYSC allows parties to tailor their contracts to meet
their specific needs. This includes the ability to opt
out of the SYSC altogether or to modify its provisions to suit
the particular circumstances of their transaction.
The SYSC provides a flexible framework that respects the
autonomy of the contracting parties.
Key Points Party autonomy Parties are free to negotiate
the terms of their contract, including the choice of law and
the inclusion or exclusion of specific SYSC provisions.
Opt out provision Parties can agree to exclude the SISK from
governing their contract and instead choose another.
Legal framework example. Parties to an international
sales contract agree to exclude the SISK and apply New York law
to govern their agreement. This is an exercise of their
freedom to contract under the SISK.
Uniformity and Predictability One of the primary goals of the
SISK is to promote uniformity and predictability in
international sales law. By providing a consistent set of
rules that apply across different jurisdictions, the
SISK reduces the risk of legal disputes and fosters a stable
environment for international trade.
Key Points Harmonized Rules The SISK uniform rules help to
mitigate the uncertainty that arises from differences between
national legal systems. Predictable Outcomes By adhering
to the SISK, parties can anticipate the legal
consequences of their actions and avoid unexpected.
Legal outcomes example. An international buyer and
seller rely on the SIS clear rules regarding the formation of
contracts, reducing the likelihood of misunderstandings
or disputes. For instance, the SISK
provisions on offer and acceptance provide a clear
framework for determining when a contract is formed, contributing
to predictability in the transaction.
Good faith The SISK imposes a duty of good faith in the
performance and enforcement of contracts this principle is
fundamental to The system reflects a key tenet of
international trade that parties should act honestly and fairly
in their dealings with one another Key points Obligation of
good faith the duty of good faith requires parties to act in
a manner consistent with honesty, fairness, and
reasonableness. International standard good
faith is recognized as a universal principle that
underpins the integrity of international.
Trade example. A seller encounters unexpected
delays in delivering goods due to circumstances beyond their
control. The seller communicates
transparently with the buyer, demonstrating good faith in
managing the situation and mitigating potential disruptions
to the contract. Key Differences between SISK and
US Contract Law While the SISK and US contract law share many
similarities, there are key differences that parties must be
aware of when negotiating and drafting international
contracts. These differences can
significantly impact the formation, interpretation, and
enforcement of contracts. One Offer and Acceptance The
rules governing offer and acceptance under the SYS differ
from those under U.S. law, particularly as outlined in the
Uniform Commercial Code. UCC SYSC Effective When received
Under the SYSC, an offer becomes effective when it reaches the
offering, and acceptance must be communicated within the time
specified in the offer or within a reasonable time.
This requirement emphasizes clear communication between the
parties. Revocation offers under the SISK
are generally revocable until the offeree dispatches the
acceptance. However, if the offer states
that it is irrevocable, or if the offeree reasonably relies on
the offer as being irrevocable, the offer cannot be.
Revoked example. A French company offers to sell
goods to a Canadian buyer. The offer specifies that
acceptance must be received within 10 days.
The Canadian buyers acceptance is effective when it is
communicated within this period and the contract is formed when
the acceptance reaches the offer.
U.S. law UCC mailbox rule. Under the UCC, an offer can
become irrevocable without consideration if it is made by a
merchant in assigned writing. The firm offer rule Acceptance
can be effective when dispatched, meaning that the
contract is formed when the acceptance is sent, not when it
is received. The mailbox rule Irrevocable
Offers. The UCC allows for firm offers
where a merchant's written and signed offer is irrevocable for
a stated period or a reasonable time, even without
consideration. Example AUS.
Seller makes a firm offer to a buyer stating that the offer is
valid for 30 days. The buyer's acceptance is
effective upon dispatch even if it reaches the seller after the
30 day period, as long as it was sent within the time frame
specified. 2 Mirror Image Rule The mirror image rule governs
the formation of contracts and the acceptance of offers.
Under this rule, acceptance must exactly match the terms of the
offer, otherwise it may constitute a counter offer
rather than acceptance. Sisk relaxed approach The SISK
does not strictly adhere to the mirror image rule, allowing for
some modifications in the acceptance unless they
materially alter the terms of the offer.
If the modifications are minor and do not significantly change
the nature of the contract, the acceptance can still be valid.
Material alteration under the SYSC.
An acceptance that contains additional or different terms is
still effective unless the modifications materially alter
the contract with the offer. Objects to the modifications
without undue. Delay example.
A buyer's acceptance of an offer under the SYSC includes a minor
modification related to packaging.
The acceptance is valid as long as the modification does not
materially alter the contract and the offer does not promptly
object. U.S. law UCC Stricter
application The UCC follows the mirror image rule more closely,
particularly in transactions between merchants.
Any changes to the offers terms may constitute a counter offer
requiring the original offer to accept the new terms for a
contract to be formed. Battle of the Forms The Ucc's
Battle of the Forms provision allows for contracts to be
formed even if the acceptance contains additional or different
terms, but this often leads to a more rigid interpretation
compared to the SYSC. Example.
A buyer's acceptance includes a different delivery term.
Under the UCC, this could be considered a counter offer
rather than acceptance, meaning the original offer must accept
the new terms for a contract to be formed. 3 Consideration The
concept of consideration is a fundamental difference between
the SISK and US contract law. Consideration refers to
something of value that is exchanged between the parties,
which is necessary for a contract to be enforceable under
U.S. law. Sisk no requirement for
consideration The sisk does not require consideration for the
formation of a contract. The focus is on the mutual
consent of the parties rather than on whether something of
value has been exchanged. Mutual agreement.
Under the sisk, a contract is valid as long as the parties
have agreed to the terms without the need to prove that each
party has provided consideration.
Example, An international sales contract under the sisk is valid
even without consideration as long as the parties have
mutually agreed to the terms. This allows for greater
flexibility in contract formation compared to U.S. law.
U.S. law Requirement for consideration In contrast, US
contract law, particularly under the common law in the UCC,
requires consideration. For a contract to be
enforceable, each party must receive something of value in
exchange for their promise. Legal detriment Consideration
can take the form of a legal detriment to the promisee or
legal benefit to the promissor, but it must be present for the
contract to be valid. Example.
AUS court may find a contract unenforceable if it lacks
consideration, even if the parties have otherwise agreed to
the terms. For example, a promise to give a
gift without receiving anything in return may not be enforceable
as a contract for remedies for breach.
The remedies available for breach of contract differ
significantly between the sisk and US contract law.
These differences can affect the options available to a party
seeking redress for a breach. Sisk Broader remedies.
The SYSC provides a range of remedies for breach, including
specific performance, damages and price reduction.
The availability of specific performance is broader under the
SYSC than under U.S. law, meaning that a party can often
compel the other party to perform their obligations under
the contract. Specific performance Under the
sisk, a party may seek specific performance as a primary remedy
unless the party has opted for damages or specific performance
is incompatible with the legal system of the forum.
State example. A buyer under the sisk may seek
specific performance to compel the seller to deliver the goods,
even if damages are available as an alternative remedy.
This is particularly important in cases where the goods are
unique or difficult to replace. U.S. law limited availability of
specific performance. U.S. law, particularly under the
UCC, typically limits the availability of specific
performance to cases where the goods are unique or where
monetary damages are inadequate. This reflects a preference for
monetary compensation rather than forcing.
Performance damages. U.S. law primarily provides for
damages as the remedy for breach, including compensatory,
consequential, and sometimes punitive damages, depending on
the nature of the breach and the applicable law.
Example A. Buyer in the US seeking specific
performance must demonstrate that the goods are unique, such
as a rare artwork, To obtain this remedy, in most cases, the
buyer would be expected to seek damages instead of specific
performance. Choice of law and jurisdiction
and international contracts International contracts often
involve complex legal questions regarding the applicable law and
jurisdiction. These issues are critical in
determining how disputes will be resolved and which legal
standards will apply to the contract.
One choice of law clauses. A choice of law clause specifies
which jurisdictions laws will govern the contract.
This is particularly important in international contracts where
the parties may be from different countries with
different legal systems. Key points Predictability A
choice of law clause provides predictability by clearly
establishing which legal rules will apply to the contract.
Flexibility Parties have the flexibility to choose the legal
system that best suits their needs, whether it's the law of a
neutral country, the law of one of the party's home countries,
or international rules such as the.
Sysc example. An international sales contract
between AUS buyer and a Japanese seller includes a choice of law
clause specifying that the contract will be governed by New
York law. This choice provides clarity and
reduces the potential for legal disputes over which law applies.
2 Jurisdiction clauses A jurisdiction clause determines
which court or tribunal will have the authority to hear
disputes arising from the contract.
This can include specifying a particular country, state, or
even a specific court key points.
Forum selection The jurisdiction clause allows parties to agree
in advance on the forum for resolving disputes, reducing the
uncertainty and complexity of cross-border litigation.
Exclusive versus non exclusive jurisdiction Jurisdiction
clauses can be exclusive, requiring disputes to be
resolved in a specific forum, or non exclusive, allowing disputes
to be resolved in multiple. Forums example.
The same contract between the US buyer and Japanese seller
includes a jurisdiction clause stating that any disputes will
be resolved in the courts of Tokyo, Japan.
This ensures that both parties know where disputes will be
litigated, providing a degree of certainty in the event of a
disagreement. 3 Arbitration Clauses Arbitration clauses
required that disputes be resolved through arbitration
rather than in court. Arbitration is often preferred
in international contracts for its neutrality, confidentiality
and enforceability across borders.
Key Points Neutrality Arbitration allows parties to
choose neutral arbitrators and a neutral venue, avoiding
potential biases associated with national courts.
Confidentiality Arbitration proceedings are typically
confidential, which can be important in protecting
sensitive business information. Enforceability.
Arbitral awards are generally easier to enforce
internationally than court judgments, particularly under
treaties like the New York. Convention example.
An international joint venture agreement includes an
arbitration clause requiring that any disputes be resolved
through arbitration in Geneva, Switzerland under the rules of
the International Chamber of Commerce.
This ensures a neutral and efficient dispute resolution
process for enforcement of international judgments.
Enforcing international judgments can be complex as not
all countries recognize or enforce foreign court decisions.
This makes the choice of law and jurisdiction critical in
international contracts. Challenges recognition of
judgments. Some countries may not recognize
judgments from foreign courts, making it difficult to enforce a
judgment obtained in one country in another country.
Enforcement mechanisms. The enforceability of judgements
often depends on international treaties or bilateral agreements
between countries. The lack of such agreements can
hinder the enforcement process. Example.
A party obtains a favorable judgement in AUS court but faces
challenges in enforcing it in another country that does not
recognize US judgements. In such cases, the party may
need to seek enforcement through arbitration or pursue a new
legal action in the foreign country.
Conclusion Chapter 8 has explored the special contractual
issues that arise in various types of contracts, focusing on
contracts for the sale of goods under the UCC, E contracts and
digital transactions, and international contracts governed
by the SYSC. Understanding these areas is
essential for navigating the complexities of modern
contractual relationships, which often involve sophisticated
transactions, technology, and cross-border elements.
By mastering these concepts, legal professionals and business
practitioners can better manage risks.
Ensure compliance. And achieve successful.
Outcomes in their contractual dealings.