Unification of contract law and Russian law ICC

Unification of contract law and Russian law ICC documents 1

International rules for interpretation of international commercial terms – Incoterms Group E Group F Group C Group D EXW FCA FAS CFR CIF CPT CIP DAF DES DEQ DDU DDP Ex Works Free Carrier Free Alongside Ship Cost and Freight Cost, Insurance and Freight Carriage Paid to Carriage and Insurance Paid to Delivered at Frontier Delivered Ex Ship Delivered Ex Quay Delivered Duty Unpaid 2

CISG and Incoterms First Seller’s obligation to deliver the goods under CISG -– Incoterms 1) if the contract involves carriage of the goods – handing the goods over to the first carrier for transmission to the buyer (FCA Incoterms), 2) in other cases – in placing the goods at the buyer’s disposal at the seller’s place of business (Ex Works Incoterms) 3) if the seller is bound to arrange for carriage of the goods (F terms and C terms) – he must make such contracts as are necessary for the carriage and according to the usual terms for such transportation 3

CISG and Inicoterms Article 32. 1 – a notice of the consignement is precised in point А. 7 where it is indicated that the seller shall hand over to the buyer appropriate notice and duly identified the goods Article 32. 2, 32. 3. – making contracts necessary for carriage and insurance of the goods is precised in - Point А. 4 C terms (CFR, CIF port of destination, CPT, CIP point of destination), the seller shall assure “juridical” handing over the goods to the buyer; - Point А. 4. D terms (DAF Delivery at frontier, DES, DEQ port of destination, DDU, DDP point of destination – the seller is obliged to deliver the goods to the point of destination and hand them over to the buyer in this point 4

CISG and Incoterms Article 33 – a date of delivery is indicated in point А. 4 and B. 4 Incoterms, Article 31 – handing over of documents is indicated in points А. 2. , А. 8. и А. 10. Инкотермс The buyer’s obligation to pay the price is indicated in point B. 1 Incoterms in a general manner 5

CISG and Incoterms Article 60 – the buyer’s obligation to take delivery is developed as following: -pursuant point B. 2 the buyer shall receive an import license, carry out customs clearing for import and transit of the goods through any country -pursuant point B. 2 E terms and F terms the buyer shall make contract for carriage –pursuant point B. 6 the buyer shall bear additional costs after delivery of the goods, pay all customs duties and other costs necessary for import and transit of the goods through any country for import (except DDP) -pursuant point B. 7 the buyer is obliged to hand over to the seller an appropriate notice -pursuant point B. 8 the buyer is obliged to receive an appropriate transport document pursuant point B. 9. the buyer is obliged to pay for the inspection of the goods before shipment -pursuant point B. 10 the buyer is obliged to pay such costs which are necessary for receiving documents mentioned in this point 6

CISG and Incoterms Article 60. b) – the buyer’s obligation to take delivery is developed in Incoterms: in accordance with point B. 4 of all terms the buyer is obliged to take delivery of the goods (receive them from the carrier) 7

CISG and Incoterms Article 36 – the seller’s responsibility for any lack of conformity which exist at the time when the risk passes to the buyer is detailed in point A. 5 and B. 5 Incoterms CISG is dealing with consequences of various breaches of Incoterms’ conditions and relief from obligations and exemptions from liability in case of unforeseeable events 8

Russian Civil Code and Incoterms Commercial customs under Russian CC: Article 28. 3. Law on International Commercial Arbitration, § 26. 2 ICAC Rules, articles 5, 421. 5 CC article 1211. 6 CC – PIL rule 9

CISG and Russian Civil Code Art. 456 CC the seller’s obligation to transfer the goods and documents relating to them (art. 33 CISG) Art. 468 CC Handing over the goods to the buyer (art. 31 CISG) Art. 460 CC Third party claims (art. 42 -44 CISG) Art. 477. 5 CC – 2 years period for notice on the nonconformity of the goods (art. 39/2 CISG) Art. 484, 513 CC – the buyer’s obligation to take delivery (art. 60 CISG) Art. 524 CC – calculation of damages in case of rescission of contract (art. 76 CISG) 10

ICC Model International sale contract manufactured goods intended for resale ICC publication No 556 E Russian Civil Code on standard terms of a contract – art. 427: Contracting parties may provide in a contract that its individual terms are determined by standard terms developed for contracts of the respective type and published in the press. In cases when there is no reference to standard terms in a contract, such standard terms shall be applied to the relations if the parties as customs of commerce if they meet the requirements established by article 5 and 421. 5 11

ICC Model International sale contract manufactured goods intended for resale • 1 st part – Specific conditions, setting out terms which are special to a particular contract of sale, • 2 nd part – General Conditions, setting out standard terms common to all contracts incorporating the ICC General conditions pf sale 12

ICC Model International sale contract manufactured goods intended for resale 1. Applicable law – failing contrary agreement between the parties, the model contract subjects the transaction to CISG 2. With a view to ensuring maximum certainty regarding the terms agreed between the parties the model contract provides that modifications must be made in writing 3. The parties are invited to choose the appropriate trade term under Incoterms 4. Retention of title 13

ICC Model International sale contract manufactured goods intended for resale 5. Two types of remedies: liquidated damages and damages for any additional loss 1. in case late-delivery, non-delivery 2. in case of non-conformity of the goods 14

ICC Model International sale contract manufactured goods intended for resale Where there is delay in delivery the buyer is entitled to claim: Liquidated damages equal to 0. 5 %for each complete week of delay, provided the buyer notifies the seller of the delay Liquidated damages for delay shall not exceed 5% of the price of the delayed goods In case of termination of the contract under articles 10. 2 or 10. 3 the buyer is entitled to claim damages for any additional lost not exceeding 10% of the price of nondelivered goods 15

ICC Model International sale contract manufactured goods intended for resale Non-conformity of the goods 1. The buyer shall examine the goods and shall notify the seller of any lack of conformity of the goods within 15 days from the date when the buyer discovers or out to have discovered the lack of conformity 2. Seller’s options: a)replace the goods with conforming goods, b)repair the goods c)reimburse to the buyer the price paid for the non-conforming goods and thereby terminate the contract as regards these goods 16

ICC Model International sale contract manufactured goods intended for resale 3. The buyer will be entitled to liquidated damages as quantified under article 10. 1 (for the late delivery or nondelivery). These damages may be accumulated with damages for the late delivery but can in no case exceed in the aggregate 5% of the price of those goods 4. When the contact is terminated under articles 10. 2 or 10. 3 the buyer is entitled to claim damages for any additional lost not exceeding 10% of the price of nonconforming goods 5. When the buyer elects to retain non-conforming goods he shall be entitled to a sum equal to the difference between the value of the goods under the contract and the value of delivered goods, such sum not to exceed 15% of the price of those goods 17

ICC Model International sale contract manufactured goods intended for resale Force majeure: A party is not liable for a failure to perform his obligations in so far as he proves: a)that the failure was due to an impediment beyond his control, and b)that he could not reasonably be expected to have taken into account the impediments and its effects upon his liability to perform at the time of the conclusion of the contract Obligation of a party seeking a relief to give notice to the other party (in case of failure to give notice - responsibility for damages) Ground of relieves the party failing to perform from the liability in damages, from penalties and other contractual sanctions, except from the duty to pay interest on money owing as long and to the extent that the ground subsists. 18

ICC Model International sale contract manufactured goods intended for resale Resolution of disputes Unless otherwise agreed in writing, all disputes arising in connection with the present contract shall be finally settled under the Rules of Arbitration of the ICC by one or more arbitrators appointed in accordance with the said Rules 19