LEGT3791 Notes WEEK 1. Sovereignty:

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1 LEGT3791 Notes WEEK 1 Sovereignty: The concept of sovereignty in the international context is that all states are equal - they can enter into treaties - there is non-interference in domestic affairs by other nation states - the state has control within its own territory - there is state immunity! cannot bring a court action against a state in a foreign court (however, they can be used over their commercial activities in foreign courts) Some important components of STATE include that it has its own territory, its own population, and there is a Government in control (however, it is questionable as to whether this last factor is necessary in constituting a state, e.g. Somalia) International Instruments: A treaty is an international agreement entered into between states. It can be either bilateral or multilateral The procedure for treaties is as follows: 1. Negotiation 2. Acceptance 3. Signing! normally by a state representative or executive 4. Ratification! the legislature formally adopts the treaty, making it binding and a part of domestic law Types of International Instruments: Treaty international agreement about more serious, heavy matters (this is the instrument most commonly used) Agreement about less serious topics than treaties Convention open to anyone to come and join, under an international organisation (e.g. Convention for the International Sale of Goods) Charter most heavy issues (e.g. UN Charter) Protocol administered by international organisations, gives detail to a convention Declaration not claimed to be binding, except for the UN Declaration of Human Rights 1948

2 WEEK 2 Contracts: A contract is a legally binding agreement, based on the equality of bargaining power, which creates new, private law Formal contracts are a special old fashioned form of contract used in situations where a person wishes to put themselves under the obligations of a contract but in circumstances where they would otherwise have no obligations (e.g. deeds, wills) Simple contracts are the main form of contracts almost all business involves simple contracts Written contracts reduce disputes, lead to less confusion, and provide evidence of agreements Elements of a Contract: 1. Agreement (offer and acceptance) 2. Intention to create legal relations must be serious about the promise 3. Consideration 4. Genuine consent cannot be forced/tricked into the agreement 5. Legal capacity infants, minors, those with a mental illness, and intoxicates persons can all escape their contractual obligations. To claim intoxication, the other party must be aware of the intoxication, and you must be so drunk as to not know what you are doing 6. Legality/morality cannot agree upon something illegal Case Study: Carlill v Carbolic Smoke Ball Co. Facts: 100 pound reward if use smoke ball and catch influenza pounds was deposited in the bank to show the company s sincerity - Carbolic made offer - Carlill accepted by buying the smoke ball and using it - Intention to create legal relations through the 1000 pound deposit - Consideration was her buying and using the product - There was genuine consent and legal capacity, and legality/morality Offer: An offer is a proposal, the unqualified acceptance of which established an agreement - the offeror intends to be bound without further negotiation Offers can be made to: - one person - an identified group of people - the world at large! offers that are not directed to any person, but to anyone who becomes aware of them (e.g. Carbolic Smoke Ball case) Offers must be distinguished from: - invitations to treat! statements made to others to invite them to make an offer (e.g. newspaper ads, the

3 display of goods in a shop [as the customer makes the offer], calls for bids at auctions [the buyer makes the offer]) - mere puffs! these are statements which are obviously far-fetched. Although puffs are not intended to form part of any contractual obligation, they are made to induce a contract - the supply of information The offeree has a few options he/she can take: - accept the offer - reject the offer - ask for further information - make a counter offer - take no action on the offer Acceptance: Acceptance must be made with knowledge and reliance on the offer In the case of R v Clarke, Clarke did not fulfill the reliance on offer criteria, as he correctly named two wanted murderers to save himself from jail it was not based on the reward offered Acceptance must be in the mode prescribed by the offeror (e.g. it might have to be in writing) Acceptance must be communicated to the offeror unless: - offeror indicates that communication is not required (e.g. Carlill)! there may be acceptance by performance, in which case actions can constitute acceptance, and acceptance need not be verbal - a third party can communicate acceptance to the offeror, as long as the third party is an agent of the offeree Offeror cannot stipulate silence as acceptance (Felthouse v Bindley) Postal acceptance rule: acceptance by post is effective when posted. However, a postal revocation is effective when received Instantaneous communication (e.g. s, phone, fax) are effective when they arrive. When an enters the offeror s system, it constitutes an acceptance Counter-Offers: A counter offer acts as a new offer, and completely destroys the original offer This was the case in Hyde v Wrench, where the original offer could not be gone back to because the counter-offer destroyed it The following are not considered as being counter offers: - the spelling out of implied terms - requests for information Termination of Offer: Revocation! offeror cancels their offer Rejection Lapse of time! e.g. an offer to buy perishable goods does not last for a very long time Failure of condition

4 INTERNATIONAL SALE OF GOODS WEEK 3 Incoterms: Incoterms refers to a collection, or a uniform interpretation, of a number of essential trade terms concerning the carriage or delivery of goods They are complied by the ICC for the purpose of providing uniform interpretations of the terms and reducing or avoiding potential disputes in their use Ex Works (EXW): Risk passes to the buyer when the goods are delivered at the seller s premises, such as factory or warehouse EXW is commonly used for the carriage of goods by land, air and sea A big buyer, or a small seller, would normally use ExWorks A1 must provide the goods and documents or A2 must, where applicable, assist the buyer to obtain an export license, or other necessary approval, for export A3 is under no obligation to make contracts for carriage and insurance A4 must place goods at disposal of the buyer at the named place, and at or within the agreed time B5 risk passes when goods are placed at the buyer s disposal (delivered) as agreed B1 must pay the price of the contract B2 obtain export license or other necessary authorization for export, import or transit through a third country, as the case may be B3 no obligation to make contract of carriage [does not necessarily have to take goods out of country] B4 must take delivery at the agreed place and time B5 must bear risks after goods have been delivered as agreed, and bear additional risks caused by his or her failure to give sufficient notice for time and place of delivery (if applicable) when the goods are appropriated or identified according to the contract Free On Board (FOB): Risk passes to the buyer when the goods are placed over the rail of the named ship of the named port FOB is one of the more common Incoterms, and requires a ship The term FOB stowed and trimmed can be used, which means that the goods are placed on the ship and balanced properly. Buyers will normally specify this term A1 must provide the goods and documents or B1 must pay the price of the contract

5 A2 is responsible for obtaining export license and other necessary export approval, and, where applicable, for completing export customers formalities A3 is under no obligation to arrange a contract of carriage or to insure the goods A4 must deliver the goods to a named vessel at the named port as agreed (e.g. time and manner of delivery) A5 risk passes to the buyer when the goods have passed the rail of the named ship as agreed * B2 is responsible for obtaining necessary import or transit license and approval, and, where applicable, for completing import customers formalities B3 is responsible for making contract of carriage B4 must take delivery as agreed B5 must bear risks after delivery and additional risks caused by his or her failure to take delivery, or to give sufficient notice for details of delivery when the goods are duly appropriated, clearly set aside or identified according to the contract * Many judges interpret pass the rail to mean safely loaded on board, which eliminates the problem if the goods crash on the railing Cost, Insurance and Freight (CIF): Risk passes to the buyer when the goods are placed over the rail of the named ship of the named port Similar to FOB, CIF is one of the most common Incoterms, and requires a ship A1 must provide the goods and documents or B1 must pay the price of the contract A2 is responsible for obtaining export license and B2 is responsible for obtaining necessary import or other necessary export approval, and, where transit license and approval, and, where applicable, applicable, for completing export customers for completing import customers formalities formalities A3 (i) responsible for making contract of carriage with a vessel suitable for transporting the goods concerned on the usual terms to transport the goods to the agreed destination by the usual route; B3 is under no obligation to make contract of carriage or of insurance (ii) responsible for organizing and paying for insurance (can get minimum insurance cover). However, the seller needs to ensure protection against factors not covered under minimum insurance, including additional risks of war, strikes, riots and civil commotion A4 must deliver the goods as agreed A5 is responsible for risks until the goods have passed the ship s rail as agreed (i.e. buyer has majority of the risk, and thus wants insurance) B4 must accept the goods as agreed B5 is responsible for risks after delivery and additional risks caused by his or her failure to give sufficient notice for matters relating to delivery (if applicable) when the goods are duly appropriated, clearly set aside or identified according to the contract