LAW10013 Week 3: Week 3 Collab Notes

Week 3 – International Sales Contracts (Part 1)

Subject: LAW10013 – Commercial Law Lecturer: Nick Nicolopoulos Date: TP2 2025 Materials: Transcript + Slides

Overview

Topic Summary This week introduced the (‘Vienna Convention’ or ‘CISG’), focusing on formation, performance, conformity, third-party claims, and remedies. The Convention’s application in international contracts was examined alongside Australian private international law principles to determine proper jurisdiction. Key differences from Australian common law include the non-requirement for consideration and the admissibility of parol evidence. Stacey’s rug import scenario was used to contextualise the rules on conformity, acceptance, and remedies.

Key Concepts and Legal Doctrines

1. Vienna Convention – Application and Interpretation

Exclusions – Art 2 Does not apply to:

Personal/household goods
Auctions
Legal sales
Securities, currency
Ships, aircraft, hovercraft
Electricity

Interpretation – Art 7(1)

Must promote uniformity
Avoid reliance on domestic legal concepts
Foreign case law may be considered

2. Formation of International Contracts

Elements / Test (Art 23)

Agreement (offer + acceptance)
Intention to be bound
No requirement for consideration

Parol Evidence (Art 8 & 11)

Statements and conduct can evidence intent
Admissible even to vary a written contract
No writing requirement unless excluded by a party’s domestic law

3. Conformity of Goods

Match quantity, quality, and description
Be fit for ordinary and disclosed purposes
Match sample provided
Be adequately packaged
Meet standards of the seller’s country (unless otherwise disclosed)

Authority

<Badge text="" variant=“note” /> (2012) – Seller unaware of buyer’s jurisdiction standards; NZ trucks not registrable in Australia – Citation: [2012] [Turner & Trone, para 4.150]

4. Examination and Notification

Requirements – Art–39

Buyer must inspect goods within the shortest practicable time
Must notify seller of non-conformity within a reasonable time after discovery or when they ought to have known

5. Third-Party Claims

Rules – Art–42

Goods must be free from claims by others
Applies to intellectual property as well
Buyer may accept goods subject to such claims

6. Performance and Risk

Buyer Obligations – Art–54

Pay as agreed and facilitate payment
Delivery and payment concurrent unless otherwise agreed

Risk – Art 66

Once risk passes, buyer bears loss/damage (unless caused by seller)

Preservation Duties – Art–86

Duty on both parties to preserve goods in rejection or delay scenarios

7. Exemptions and Breach

Exemption – Art 79(1)

Party not liable if performance impossible due to unforeseeable impediment
Mere unprofitability not sufficient

Fundamental Breach – Art 25

Must substantially deprive buyer of expected benefit
Non-payment generally qualifies: <Badge text="" variant=“note” /> (2002) – Citation: Downs Investments Pty Ltd (in liq) v Perwaja Steel [2002] [Turner & Trone, para 4.310]

Anticipatory Breach – Art 71(1)

Party may suspend performance if substantial breach appears likely

8. Remedies

Buyer’s Remedies – Art 45

Require performance
Seek additional time
Demand remedy for nonconformity
Avoid contract
Claim damages

Seller’s Remedies – Art 61

Same as above (mirrored)

Avoidance – Art 81

Requires express declaration
Releases obligations but preserves some contractual effects

Damages – Art 74

Must be foreseeable and measurable with certainty
Can include lost profits

IRAC Case Summaries

Case: <Badge text="" variant=“note” /> (2012)

Element	Detail
Issue	Whether seller had to comply with buyer’s domestic standards
Rule	Seller must meet own country’s standards unless aware of buyer’s requirements
Application	Trucks sold by NZ dealer not registrable in Australia
Conclusion	Buyer could not recover; seller not aware of foreign standards
Ratio	Fitness for purpose assessed using seller’s domestic legal standards unless otherwise agreed

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Case: (2002)

Element	Detail
Issue	Whether failure to pay under CISG amounts to fundamental breach
Rule	Fundamental breach substantially deprives the other party of contractual benefit
Application	Non-payment held to substantially defeat contract purpose
Conclusion	Breach deemed fundamental
Ratio	Non-payment is ordinarily a fundamental breach under the Convention

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Worked Examples

Problem: Stacey’s Rug Imports

Facts Contract signed for 100 rugs/month for 3 years. Pre-contract emails show intention for high variety and quality. First shipment defective; limited variety. Goods stored unopened for two weeks.

Issue(s)

Does CISG apply despite Greg being in Indonesia?
Can Stacey rely on pre-contract emails under CISG?
Were goods conforming (Art 35)?
Did delay in inspection (2 weeks) bar remedies under Art 38/39?
What remedies are available?

Lecturer’s Reasoning

Art 1(1)(b) applies as Australia is a signatory; CISG incorporated into International Sale of Goods (Vienna Convention) Act 1987 (Cth) oai_citation:4‡LAW20009 Collab Transcript Week 3.txt
Parol evidence is admissible (Art 8, 11)
Variety and quality failed (Art 35(1), (2)); rugs tattered, limited designs
2-week delay may reduce remedies, but not bar damages claim (Art 38–39)
Buyer may seek to avoid contract and recover first payment (Art–46, 74)

Answer Summary ✓ CISG applies (Australia = party; Art 1(1)(b)) ✓ Emails admissible; show pre-contract representations (Art 8) ✗ Goods not conforming to contract (Art 35) ✗ Delay in inspection may affect extent of remedies ✓ Stacey may rescind contract, seek refund, and claim damages oai_citation:5‡LAW20009 Collab Transcript Week 3.txt

Practical Exam and Study Tips

Memory Aids / Mnemonics

AID: Agreement, Intention, (no) Consideration (formation under CISG)
PACE: Performance, Acceptance, Conformity, Examination

Supplementary Reading and References

Cases Mentioned (AGLC4 format)

[2012] [Turner & Trone, para 4.150]
Downs Investments Pty Ltd (in liq) v Perwaja Steel [2002] [Turner & Trone, para 4.310]
[1984] AC 50
<Badge text="" variant=“note” /> (1951) 83 CLR 486

Legislation

(Vienna Convention)
(Cth)

Other Sources

LAW10013 Week 3 Slides
Lecture and tutorial discussion oai_citation:6‡LAW20009 Collab Transcript Week 3.txt

Open Questions or Clarifications

How would choice of law clauses override default CISG rules in future contracts?
Can a party pre-emptively opt out of CISG in a cross-border B2B agreement?