Basic Contract and Sales Law

From
REGULATION (EC) No 1371/2007 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
of 23 October 2007
on rail passengers’ rights and obligations

Liability in case of failure to keep to the timetable
Article 32
Liability in case of cancellation, late running of trains or missed connections
1. The carrier shall be liable to the passenger for loss or damage resulting from the fact that, by reason of cancellation, the late running of a train or a missed connection, his journey cannot be continued the same day, or that a continuation of the journey the same day could not reasonably be required because of given circumstances. The damages shall comprise the reasonable costs of accommodation as well as the reasonable costs occasioned by having to notify persons expecting the passenger.
2. The carrier shall be relieved of this liability, when the cancellation, late running or missed connection is attributable to one of the following causes:
(a) circumstances not connected with the operation of the railway which the carrier, in spite of having taken the care required in the particular circumstances of the case, could not avoid and the consequences of which he was unable to prevent;
(b) fault on the part of the passenger; or
(c) the behaviour of a third party which the carrier, in spite of having taken the care required in the particular circumstances of the case, could not avoid and the consequences of which he was unable to prevent; another undertaking using the same railway infrastructure shall not be considered as a third party; the right of recourse shall not be affected.
3. National law shall determine whether and to what extent the carrier must pay damages for harm other than that provided for in paragraph 1. This provision shall be without prejudice to Article 44.

This regulation is in article 32 number 2 much the same as in the CISG article 79:

Section IV. Exemptions
Article 79
(1) A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.
(2) If the party's failure is due to the failure by a third person whom he has engaged to perform the whole or a part of the contract, that party is exempt from liability only if:
(a) he is exempt under the preceding paragraph; and
(b) the person whom he has so engaged would be so exempt if the provisions of that paragraph were applied to him.
(3) The exemption provided by this article has effect for the period during which the impediment exists.
(4) The party who fails to perform must give notice to the other party of the impediment and its effect on his ability to perform. If the notice is not received by the other party within a reasonable time after the party who fails to perform knew or ought to have known of the impediment, he is liable for damages resulting from such non-receipt.
(5) Nothing in this article prevents either party from exercising any right other than to claim damages under this Convention

To translate the Königsberger philosopher Immanuel Kant into English is not always an easy task.

When Kant makes his distinction between "Vernunft und Verstand", it is commonly translated to "reason and understanding". I agree with Hannah Arendt (The Life of the mind, p. 13-14) that this is a mistranslation. It better to say "reason and intellect", because Kant himself translated the Latin word "intellectus" into German "Verstand".

Institutt for økonomi og admistrasjon is translated fron Norwegian into English with Institute of Economics and management. And then back to Norwegian Institutt for økonomi og ledelse, which also is a mistranslation.

We obviously need the international sales act, the UN CISG. And we need the international trade. Especially in times of crisis - and in a time where we have to accept high unemployment figures, joblessness rates. US and Britain fear that the unemployment rates approaching 10 %. Even that is no big figure in a global perspective. Economics have to teach us how to live with and handle - and eventually learn to love - jobblessness rates at 20 %. The challenge is to level out this rate all over the globe. To avoid that contries A are at about 5% while countries B are above 20%. Which is both unfair an unrational. This raises difficult questions.

The dog breeder wanted the right to use my puppy for breeding

I am planning to buy a puppy and found a really beautiful male puppy at a dog breeder in a different part of the country. The breeder and I e-mailed back and forth, and talked on the phone several times too. We agreed that I would buy that puppy for 1500 US-dollars. However, I wanted to see the puppy first, so I travelled to that part of the country. I booked the cheapest possible airline tickets for 200 dollars and a very cheap hotel room for 100 dollar. I liked this male puppy very much, and we agreed that I would come back and get it two or three weeks later, and then write the contract after the vet test.

Well, I called back two weeks later to arrange the delivery of my puppy. Now all of a sudden the seller says she will include in the contract that she has the right to use my dog, whenever she pleases, to get one litter of puppies, free of charge. I could not accept this, because I wanted a decent dog to hug, not a dog fucking around like that.

Now I wonder if I can claim the 300 dollars I paid for tickets and hotel.

Answer: It is reasonable to assume that the seller not telling you her intentions before the time of delivery is approaching, must be regarded as negligence, and this entitles you to have her pay for your costs. The old roman word for negligence is culpa, and the Romans would call a case like this culpa in contrahendo - negligence during the negotiation and formation of a contract.

If the buyer does not pay in time, the seller may require him to pay the price, see article 62, below. The buyer’s obligation to pay the price follows from the contract and for the seller to cash it in is not really a remedy for breach of the contract. When the buyer’s payment is due, but still unpaid, the seller will have to undertake efforts to enforce payment. This often represents a lot of inconvenience for the seller, including trying to get access to the legal system in the home state of the buyer. If the buyer eventually is found to be completely without funds, the process may in addition prove costly for the seller.

The question will often be if the payment from the buyer has reached the seller, see this discussion on an eBay web site:

http://answercenter.ebay.com/thread.jspa?threadID=900147791&tstart=3&mod=1218000609828

for instance this comment:

How do you know the item wasn't shipped? It's only been what, 7-8 business days since EOA? How long do you think it took for your MO to reach the seller? Then allow time for him to ship? And transit time to reach you?


Here are the most relevant articles from the CISG:

Article 59
The buyer must pay the price on the date fixed by or determinable from the contract and this Convention without the need for any request or compliance with any formality on the part of the seller.

Article 62
The seller may require the buyer to pay the price, take delivery or perform his other obligations, unless the seller has resorted to a remedy which is inconsistent with this requirement.

If the drink you have bought, tastes like shit, we have a non-conformity case, and you may have a right to get your money back. But I would not suggest to handle this contract law case in the way this guy did:


I tried drinking Pepsi seven years ago and it tasted like shit so I went back to the grocery store and demanded my money back and kept demanding it until I finally got fed up with it and ripped the cash register out of the wall and ran out. The cops in the parking lot were using some new kind of pepper spray that day, one I hadn't smelled before.

Quoted from:

http://www.somethingawful.com/d/cliff-yablonski/i-hate-you-222.php

"In order to determine the occurrence of a fundamental breach regard is to be had not only to the nature of the lack of conformity but also to the readiness of the seller to remedy the non-conformity without unreasonable delay and unreasonable inconvenience to the buyer (Art. 48 CISG). In the case at hand, the Court excluded the presence of a fundamental breach of contract as the buyer had unjustifiably not accepted the seller's offer to remedy the non- conformity by delivering substituting goods, in accordance with Art. 48 CISG."

From the website

http://www.unilex.info/case.cfm?pid=1&do=case&id=223&step=Abstract

presenting a case from Oberlandesgericht Koblenz, Germany.

In such considerations as in the above case, it is important to evaluate how well the seller meets the criteria in article 48 (1):

These three conditions must be met;

1) «Without unreasonable delay»,

2) Without «unreasonable inconvenience» for the buyer, and

3) Without «uncertainty of reimbursement by the seller of expenses advanced by the buyer».

Conditions 1 and 2 mainly require a consideration of the term «unreasonable»: What is an «unreasonable delay»? What is an «unreasonable inconvenience»? These questions must be answered based on a consideration of the circumstances in each particular case.

These two conditions are also interfering with each other: If a long period of time elapses before a remedy is provided by the seller, it will be much easier for the buyer to claim that he has suffered an unreasonable inconvenience. The buyer’s problems may be so serious that the conditions in article 25 are met, giving him the right to declare the contract avoided according to article 49. An important part of this consideration is how badly the buyer’s interests are hurt. Unreasonable inconvenience for the buyer will easily be the case if the seller’s breach of contract leads to a hold in the buyer’s business, even if the seller paying damages may cover the buyer’s loss.

The principal condition that must be met before the buyer can declare the contract avoided, is that the delayed or non confoming delivery «amounts to a fundamental breach of contract», CISG article 49 (1) letter a). If there is no fundamental breach, the buyer may still be able to claim damages according to articles 74 to 79.

As to non-conforming goods, see for instance the CISG Advisory Council at:

http://cisgw3.law.pace.edu/cisg/CISG-AC-op5.html

(CISG-AC Opinion no 5, The buyer's right to avoid the contract in case of non-conforming goods or documents 7 May 2005, Badenweiler (Germany). Rapporteur: Professor Dr. Ingeborg Schwenzer, LL.M., Professor of Private Law, University of Basel.)


The principle of fundamental breach is one of the main principles in the contract law. The UN convention CISG is a good place to find general principles of contract law.

CISG article 49:

"(1) The buyer may declare the contract avoided:
(a) if the failure by the seller to perform any of his obligations under the contract or this Convention amounts to a fundamental breach of contract; or
(b) in case of non-delivery, if the seller does not deliver the goods within the additional period of time fixed by the buyer in accordance with paragraph (1) of article 47 or declares that he will not deliver within the period so fixed."


Here we find the traditional "fundamental breach" standard of the general contract law, which we referred to in yesterday's post.

The above article 49 should be read in connection with article 33 which states:

"The seller must deliver the goods:
(a) if a date is fixed by or determinable from the contract, on that date;
(b) if a period of time is fixed by or determinable from the contract, at any time within that period unless circumstances indicate that the buyer is to choose a date; or
(c) in any other case, within a reasonable time after the conclusion of the contract."

That Contract Law courses are important in law schools goes without saying. But also educations in economics and business need good opportunities to study Contract Law. All the mentioned schools and students needs basic international contract law as well.

As a good example I will mention a course of international contract law at Vytautas Magnus University, Lithuania:

http://puga.vdu.lt/vdu/naujienos/programos/v2/ivedimas/aprasymai/TEI5118-TarptautinioPrekiuPirkimoPardavimoKonvencija.pdf