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Question: Discuss about the International Sale of Goods. Answer: Issue The primary issue in the given scenario is to determine whether Carrie is entitled to compensate Shipton for the loss that he suffered due to the breach of obligations on part of Carrie. In the given scenario, Carrie and Shipto have entered into a negotiation to carry certain goods of Shipton from Portsmouth, which is located in the United Kingdom to Santander, which is in Spain. Given that the transition of goods falls under the international transactions, the transition shall be subjected to the legal provisions stipulated in the UN Convention on Contracts for the International Sale of Goods (CISG) (Bridge 2017). This UN Convention entails provisions governing the agreements of international goods and services. Legal Rules The provisions set out in the UN Convention CISG, is applicable to parties who belong to nations that are signatories to the Convention. It is also applicable to parties who select the law of jurisdictions of countries that is party to the Convention. For instance, UK is not a signatory to the Convention but has a codified legal system or a stable common law prevailing in the country. Under such circumstances, any laws related to supply of goods and services shall be subjected to such Common law or the relevant codified law excluding the provisions of the CISG Convention. In the given scenario, Carrie and Shipton has not mentioned the laws that would be applicable to the international transition of goods, hence, the two relevant statutes that would be applicable to the transaction are the provisions of CISG and the Sale of Goods Act 1979. The provisions of these statutes shall determine the validity of the contract entered between Carrie and Shipton. The rationale for the applicability of these two statutes is that Spain being a signatory to CISG and UK being the non-party to the Convention, there are possibilities that the parties will decide to apply the jurisdiction of laws of either countries to determine the validity of contract between them. In order to determine whether Carrie is entitled to compensate Shipton, it is essential to understand the essential elements of a valid contact and the obligations and rights of the parties under the Sale of Goods Act 1979 and the CISG. Elements of a valid contract CISG Convention According to CISG, in order to render a transaction as legally valid, there must be an offer at least between two persons, where one person will propose certain terms and conditions known as offeror to another person known as offeree (McKendrick 2014). However, for an offer to be valid, it requires three essential requirements to be fulfilled. Such elements include: sufficient certainty of the proposal; efficacy of the offer; an intention to be legally bound by the contractual obligations after acceptance of offer; According to Article 14 of the CISG, a proposal must be made to a particular group of persons or to any person or it may be considered as an invitation to offer. As per Article 14(2) of the CISG, an offeror must specify whether the proposal made is an invitation to treat or an offer. The second requisite of the provision is to establish that the parties have legal intention to be bound by the contractual obligations to determine the efficacy of the contract. The last essential element that is, the sufficient certainty of the proposal, which is set out under Article [14(1)] stipulates that the nature, price and quantity of the goods are fundamental while making the offer to the offeree (Meeson and Kimbell 2017). Determination of Price An offer must include the price of the goods either expressly or impliedly for establishing the effectiveness of the contract as stipulated under Article [14(1)] of the CISG. However, the provision does not necessitate the offer to include a fixed price expressly. In other words, the determination of price can be made subject to the need for further information or consideration of market price. This uncertainty in determination of consideration satisfies the price determination requisite as an essential requirement of a valid offer (Soyer and Tettenborn 2016). The element of price determination or consideration is subjected to two contradicting provisions under CISG Convention. On one hand, the provision under Article 14 states that a contract is rendered as valid only when it expressly or impliedly includes the determined price. On the other hand, the legal provision under Article 55 of the CISG states that the contract is rendered as valid if the contractual parties perform the contractual obligations even in the absence of the inclusion of price in the contract. This notion is based on the doctrine of party autonomy that is stipulated under Article 6 of the CISG. This principle states that if the contracting parties have confirmed the performance of the contractual obligations from their conduct or have actually performed their obligations, the requirement to incorporate the determined price in the contract is said to have been waived by the contracting parties (Janssen 2017). [Article 6] states that the contracting parties may include their own rules in the contract that would legalize their contractual relationship. Quantity and nature of the goods In order to determine the efficacy of a sale contract, it is essential to include the quantity and nature of goods in the terms and conditions of the proposed offer. Under Article 14 of the CISG, it is not mandatory to describe the goods explicitly as they may be determined impliedly in the contract. However, it is essential that at least the goods be mentioned in the contract to enable the courts interpret such goods while determining the validity of the contract. Under CISG, an oral indication of the quantity and nature of the goods is adequate (Gillette and Walt 2015). Sale of Goods Act 1979 [SGA] Under the provision set out in section 2(1) of the SGA 1979, a sale of goods contract is defined as a contract whereby the seller agrees or is willing to transfer the goods or services to the buyer in exchange for a pecuniary consideration called price. A sale contract may be oral or in writing; it may be partly oral or partly in writing (Symeonides 2014). As was ruled in Hillas v Arcos [1932], such sale contract may be implied by the conduct of the parties to the contract. As per section [8] of the Act, the element price must be included in the contract or shall be determined during the course of dealing between the contracting parties. In the event, the price of the goods is not determine din the manner prescribed under subsection (1), the buyer is obligated to pay a reasonable price for such goods and services depending upon individual circumstances as stated in section [8(2)] of the Act. Sea Waybills Unlike the Bill of Lading, a sea waybill may be defined as a receipt of goods mentioned in a contract of carriage of goods by sea (Glass 2014). The contract requires the carrier to deliver the goods to a person whom the carrier can identify with the help of the Sea waybill. As per Article 58 of the CISG, the provision refers to the transport documents that are related to the disposition of goods. Sea waybills are defined as one such transport documents that controls the disposition of goods and are non-negotiable instruments. In other words, every sea waybill document shall include the word non-negotiable printed on it in capital letters and shall include the name of the designated consignee (Kroll, Mistelis and Viscasillas 2015). The name of the consignee or its agent is not required to be mentioned in the sea waybill at the port where the goods ought to be discharge as after obtaining the document that contains the identity of the consignee, the carrier shall deliver the goods to such consignee. This rule had been set out under Article 45 of the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea 2009 (the Rotterdam Rules). Further, as per article 58 of the CISG, a sea waybill includes the goods to be carried out and delivered to the consignee within the expansive construction of the CISG provisions. Since a sea waybill is used as a receipt of the goods carried out by the sea, it includes quantity, weight and apparent conditions of the goods so transported by sea, thus, obligating the carrier to carry them to the specified venue. A uniform set of rules regarding sea transport were developed in the form of UNCITRAL Convention on Contracts for the International carriage of Goods Wholly or Partly by sea or the Rotterdam Rules that came into force in 2009. The convention purports to unify the rules relating to transition of goods by sea internationally (Tseng 2016). The provisions of this obligates the carrier to take care of the commodities from the point where such goods have been received to the point they have been delivered. The Carrier is obligated to exercise duty of care towards the goods while transporting them by sea. In case of any legal claims with respect to such transition can be made within two years from the time of delivery. Exclusion Clause During the formation of contract, Carrie included an exclusion clause in the shipping document, which exempted her from any liability that may arise from the loss of the goods to be transited irrespective of the reason for such loss (Schwenzer 2016). As per section [6] of the CISG Convention, exemption and limitation of liability clauses are said to be common instances in international sale contracts. However, given the applicability of the party autonomy in contracts under CISG, the contracting parties are free to limit or exclude the remedies of the aggrieved party. Nevertheless, the contracting parties are at liberty to derogate any remedial provisions only if the obligee is not deprived of all the available remedies under the CISG Convention, as the obligee must be entitled to at least one remedy. The limitation or the exclusion clause that deprives the obligee of the remedies shall amount to infringement of the general principle of reasonableness and the violation of the principle of observance of good faith set out in Article [7(1)] of the CISG, which are fundamental principles of the CISG Convention. These principles ensure that the performance of the contractual obligations does not become optional and remains to be the readiness of the obligee to perform such obligations. The aggrieved person shall be entitled to damages for the loss sustained. However, other than the compensation, the other remedies include: reduction of price [Art 50]; remedy of avoidance under [Art 64]; rights of seller to cure [Art 48]; specific performance under section [46(1)] restore the lack of conformity of the goods [Art 46(3)]; In LEstrange v Graucob [1934], the person relying on the exclusion clause must establish that the clause was part of the contract and binds the contracting party as per the English law. In Olley v Marlborough Court [1949], the court held that the inclusion of the limitation clause must be informed to the other party either at the time of forming the contract or before its formation by providing a reasonable notice for the same. However, the reasonable test varies from one case to another but in case of uncertainty with respect to the limitation clause, the court shall apply the doctrine of contra proferentem where the court shall construe the limitation clause against the party who included it and has relied on it. In Hadley v Baxendale, the court held that the aggrieved person must prove that the loss suffered is direct outcome of the breach of the contract. Outcomes of Passing the risk: [Art 66] of CISG There are no substantial differences between the provisions under the CISG and the English law in regards to passing of risk. [Article 66] endorses the statutory provisions set out in Article [53] under which the buyer is obligated to the price-risk that is passed on to him after it is passed by the seller to him. Nevertheless, in Sterns Ltd v Vickers Ltd [1923], it was held that for contracts involving transportation of goods by sea, the risk of loss is shifted subsequent to the termination of the contract. However, before the risk is passed on to the buyer, the seller must repair, procure and preserve the goods and diligently deliver them to the assigned destination (Nord and Cerqueira 2017). In case of damage caused to the goods during transportation, the seller is entitled to re-supply such goods, given that he is obligated until he delivers the goods to the place of delivery. Further, if the goods are damaged after the performance of the contractual obligations and buyer exercises control over such goods, the buyer shall be liable for the damage caused to the goods. Nevertheless, the performance risk is likely to sift back upon the seller if such damage to the goods results from any conduct or omission of the seller under Article [66] of the CISG. Application In the given scenario, Carrie agreed to transport certain goods of Shipton from England to Spain and issued a Sea Waybill to him. As explained above, in order to render a contract as valid, it is fundamental that a contract includes a valid offer, acceptance and the contracting parties have intention to be legally bound by such contract. On the facts here, Shipton offered to Carrie to transport his goods by sea because Carrie operates a small shipping line. The proposal included every essential element that is necessary to render a proposal as valid under the CISG Convention. Since Spain is a signatory to the Convention and England is not, and in the absence of any specified laws to be applicable to the contract, the laws applicable to this contract are the CISG and the SGA 1979. Firstly, Shipton was particular about the addressee while making the proposal to Carrie regarding the transportation of his goods from England to Spain, which implies that he was certain that he would like to enter into the contract with Carrie. Secondly, on acceptance of the offer, Shipton seemed to have a legal intent to be bound by the contractual obligations. Lastly, Shipton mentioned about the quality and nature of the goods that he purported to be transmitted thus, satisfying the requisites of the provision stipulated under Article 14 of the CSG. Moreover, in regards to the price determination the parties to the contract did not expressly mention the price in the contract but from the conduct of the contracting parties, it can be stated that they have performed their obligations which implies the applicability of Article 55 with respect to the contract. In other words, the effectiveness of the contract can be determined even with the exclusion of the price determination element within the contract based on the doctrine of party autonomy as set out in Article [6] of the CISG. Hence, it can be stated that Shipton and Carrie had entered into a contract as per the provisions of CISG. Moreover, as per section 2(1) of the Sale of Goods Act 1979, a sale contract is formed when goods are transferred from seller to buyer in exchange of price or a pecuniary condition. On the facts here, Shipton has offered Carrie to transport his goods from England to Spain to which Carrie has made an acceptance. Although the price consideration for such transfer has not been specified in the contract, it can be inferred from the conduct of Carrie when she issued a sea waybill that amounts to a receipt of Shiptons goods to be transited by sea. In regards to Rotterdam Rules, the carriers shall be responsible for the goods that are being transmitted and ensure care and diligence is exercised during transition by sea. The legal claims arising from such international transactions shall be filed within 2 years from the date of delivery of such goods. In regards to the exclusion/limitation clause incorporated by Carrie in the shipping documents, Carrie shall be exempted from any liability that may arise from the damage caused to the goods irrespective of its cause. Since the clause was included in the contractual document, the clause shall be construed as a part of the contractual terms. However, the requirement to include such clause in a contract must be notified to the other ignorant party was upheld in Olleys case. On the facts here, Shipton was not notified about the incorporation of such limitation clause, hence, he is entitled to claim damages against the loss suffered provided he establishes that such loss resulted from the breach committed by Carrie and the causation is not remote as per the decision in Hadleys case. In regards to the passing of risk, it can be stated that based on the provision set out in [Article 66] of the CISG, Shipton shall be liable for the risk of loss after the delivery of the good at its assigned destination. This is because Carrie has performed the contractual obligation to deliver the goods at its assigned destination. Nevertheless, prior to the delivery of the goods to the buyer, the seller is responsible for preserving and exercising due care towards the goods. Now, since the goods were damaged, the performance risk is transferred from the buyer to the seller (Sturley 2016). Conclusion A contract has been formed between Carrie and Shipton when she accepted the offer to transport the goods from England to Spain and provided a Sea Waybill against it. The contract included the nature and quantity of the goods to be transferred and performance of the obligation implied the existence of price determination based on the principle of Party Autonomy. In regards to the passing of risk, since damage was caused to the goods subsequent to the performance of contractual obligations, Shipton is not entitled to claim compensation but Carrie shall be entitled to resupply the goods to Shipton for damage caused to the goods during its transition resulting from omission on part of Carrie. References Bridge, M.G., 2017.The international sale of goods. Oxford University Press Gillette, C. and Walt, S., 2015.Sales Law, Domestic and International. West Academic. Glass, D.A., 2014. All tied up? The potential impact of the Rotterdam rules on shippers' obligations to carriers under bill of lading clauses in respect of goods shipped. Goode, R., Kronke, H. and McKendrick, E., 2015.Transnational commercial law: text, cases, and materials. Oxford university press. Hadley v Baxendale [1854] EWHC J70 Hillas v Arcos (1932) 147 LT 503 Janssen, A., 2017.Information rights and obligations: a challenge for party autonomy and transactional fairness. Routledge. 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What Has Become of the Rotterdam Rules?.Journal of Transportation Law, Logistics and Policy,83(4). Symeonides, S.C., 2014. Party autonomy in international contracts and the multiple ways of slicing the apple.Brook. J. Int'l L.,39, p.1123. Tseng, C.J.C., 2016.The Rotterdam Rules in harmonising the law of international carriage of goods by sea: a study of the perspectives of shipping companies, marine insurance companies and PI Clubs(Doctoral dissertation, University of Surrey). United Nations Convention on Contracts for the International Sale of Goods (CISG) 198