International Business Transactions
I. Documentary Transactions
A. International vs. Domestic Transactions
1. Higher risk
a. payment
b. quality
c. quantity
d. currency fluctuation
e. political interruptions
2. Cultural differences
3. Legal differences
a. intern’l sales regulation of bills of lading for US use Federal Bills of Lading Act, 49 USCA § 80101-16
b. regulation of Ks with carriers use COGSA, 46 USCA § 1300-1315
4. Risk reduction
a. foreseeable risks assigned
b. large risk broken into smaller manageable risk
B. The Sales Contract
1. Letter from buyer p.38 – requesting proforma invoice
2. Proforma invoice p.39 – gives pricing options (FOB, FAS, CIF, C&F)
3. Purchase Order p.40- considered offer or acceptance, battle of forms may result
4. Order acknowledgment form (optional)
5. Letter of credit
6. Seller ships
a. “freight forwarder” – handles details of shipping
b. goods transported to carriers pier
• prepaid – seller pays before shipment
• collect – buyer pays before receipt
c. carrier issues:
i. dock receipt – p.48
ii. bill of lading – p.50
• non-negotiable- carrier delivers only to person on bill of lading
• negotiable- carrier delivers to person with bill of lading (required by letter of credit)
d. sight draft – p.54
C. Contracts for the International Sale of Goods (CISG)
1. Covers – the formation of contracts for the sale of goods
2. Excludes:
a. goods for personal use bought at auctions from foreclosures
b. securities
c. ships, aircraft
d. electricity
e. transactions only incidentally invoking goods (maquilladoras)
3. Applicability (Art. I)
a. applies to K parties whose places of business are in 2 different states
a. applies if both countries have signed
b. conflicts of laws (US opted out of this)
c. individual parties may opt out (Art 95)
4. General
a. began in 1980, took 8 years for 10 countries to ratify
b. clearly written, heavy on common law
c. 44 countries have signed
d. gives rights & obligations of the buyer & seller
e. does not cover problems of title or product liability
D. Commercial Terms
1.
. contract for carriage of goods
iv. contract for insurance of goods
v. give buyer notice of delivery to port
vi. tender bill of lading
b. buyer’s obligations
i. pay K price
ii. obtain import license and authorization
iii. assume risk and costs from ship’s rail
iv. accept delivery of goods when invoice and proof of insurance tendered
c. essential feature – CIF is a K for the sale of goods to be performed by the delivery of documents (must be “sale of documents” character)
3. FAS – free alongside ship
a. seller assumes costs to FAS point
b. seller does not have to arrange export license
4. FOB Vessel – seller bears cost of transportation to vessel
note: FOB – sale is a sale of goods
– sellers cost concerns stop at ships rail
CIF – sale of goods to be performed by delivery of documents
– sellers cost concerns stop at destination
