FH Joanneum International Business Law CASES
Satu Pitkänen CISG/Business contracts
Analyze under the CISG the following cases:
1.
A Swedish reindeer farmer phones a Danish retailer and offers ten kilograms of reindeer meat at a discount price. The retailer tells that he is very interested in the offer and he will probably get back to the subject very soon. After doing some calculations he, thirty minutes later, calls the farmer and tells that he accepts the offer. Now the farmer, however, tells that he already sold the meat to a Norwegian retailer. The Danish retailer demands the meat at the discount price since he has made arrangements counting on the offer, and threatens the farmer with action for damages. Analyze the case.
2.
Wilhelm Tell Inc. received a letter in their mail on January 1 offering to sell them 6,000 components for $25 apiece. Seller’s letter closed with the following statement: ”I know that this offer is so attractive that I will assume that you accept it unless I hear otherwise by January 31." Wilhelm Tell Inc. did not reply. Seller shipped the components on February 1. What are the responsibilities of Wilhelm Tell Inc.?
3.
A US company Moneymakers Inc., in a letter, offered to sell coffee beans to British Coffeemill Ltd. After Coffeemill mailed an acceptance, the market price for coffee began to fall. Coffeemill immediately contracted to buy coffee at a lower price from another supplier and telegraphed a rejection to Moneymakers.
a) Can Coffeemill withdraw the acceptance?
b) If the British common law was applied instead of the CISG, would the solution be different?
4.
Hejsan Ab from Sweden has offered to sell computers at € 500 to a French company Tresbien SA. The offer is valid until May 30. On May 15 Tresbien SA sends an email rejecting the offer. However, they change their mind and send May 30 a letter with an order of 20 computers. Hejsan Ab answers now that they have raised the price by € 100. Your comments?
5.
Suspenders Inc. received a letter in their mail on January 1 offering to sell them 1,500 components XYZ for $20 apiece, delivery CIF Boston. The offer was due on Jan 30. Suspenders Inc. replied immediately: “According to your offer, we order 1,250 of components XYZ for $20 apiece, delivered CIF Boston.
On January 30 however, there was no delivery for Suspenders at the Boston port. What are the rights of the company?
6.
Heggblade-Marguelas-Tenneco (HMT) from Mexico contracted to deliver 100,000 hundredweight sacks of potatoes to Bell Brand Foods, an American subsidiary of Sunshine Biscuit, over a period of several months. HMT had recently been formed through the merger of a potato grower and a company that marketed agricultural products. This contract was HMT's first experience with marketing processing potatoes.
Because processing potato contracts are executed many months before the harvest season, the custom in the processing potato industry was to treat the quantity called for in a contract solely as a reasonable estimate of the buyers' needs based on their customers' demands and the ability of the growers to supply. As a result of a decline in demand for Bell Brand potatoes, it was able to take only 60,000 hundredweight sacks from HMT. When HMT sued for damages for breach of contract, Bell Brand argued its contractual obligation was reduced by trade usage. HMT argued that since the quantity terms in the contract were definite and unambiguous, there was no reason to fall back on trade usage.
SOLUTIONS
The solutions are based on the CISG articlas.
1.
Art 23: A contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convention.
Art 18.2: An oral offer must be accepted immediately unless the circumstances indicate otherwise. (An acceptance is not effective if the indication of assent does not reach the offeror within the time...) Therefore the acceptance was delayed and is to be regarded as a new offer.
Thus there was no contract between the farmer and the Danish retailer.
2.
According to the Art 18.1 silence or inactivity does not in itself amount to acceptance. Thus there was no contract under which the buyer would have had any obligations.
3.
a) Art 18.2: An acceptance of an offer becomes effective at the moment the indication of assent reaches the offeror.
Art 22: An acceptance may be withdrawn if the withdrawal reaches the offeror before or at the same time as the acceptance would have become effective.
b) Mail Box Rule: Acceptance becomes binding when mailed.
4.
Art 11: A contract of sale is not subject to any requirement as to form.
Art 17: An offer, even if it is irrevocable , is terminated when a rejection reaches the offeror. So, the offer had lapsed and Hejsan Ab was free to increase the price. Tresbien:s order was now a new offer, a purchase offer.
Even if Tresbien had not rejected the offer, their acceptance would have been too late:
Art 18.2: An acceptance is not effective if the indication of assent does not reach the offeror within the time he has fixed or, if no time is fixed, within a reasonable time
If the offeror wanted, they could accept the order:
Art 21.1: The offeror can by sending a notice without delay, make a late acceptance effective.
Art 21.2: If a letter or other writing containing a late acceptance shows that it has been sent in such circumstances that if its transmission had been normal it would have reached the offer or in due time, the late acceptance is effective… unless, without delay, the offeror orally informs the offeree…
5.
The reply of Suspenders Inc. contains modifications, the amount of merchandise differs from that of the offer. Art 19.1: the reply is a rejection of the offer and considered as a counteroffer.
Even if the reply obviously purports to be an acceptance, the seller does not have the obligation to notify, since the terms of the reply alter the offer materially (Art 19.3).
6.
Art 9.2: The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.