Introduction
This essay examines the legal issues surrounding a potential contract for the international sale of goods between Lune de Fleurs (LDF), a French perfume manufacturer, and Parfums Pacifiques Pty Ltd (PP), an Australian distributor. The agreement, initiated informally at a party in New York, involves the purchase of 200 litres of perfume essence with no written documentation. Chelsea Sagan, PP’s managing director, now harbours concerns about the suitability of the product for Australian conditions. This essay addresses four key questions: whether a valid contract has been formed and the significance of the lack of writing; whether the United Nations Convention on Contracts for the International Sale of Goods (CISG) 1980 could apply; the extent to which the CISG must be applied if relevant; and, if the CISG does not govern, what law and terms would apply. Through a structured legal analysis, supported by academic sources, this essay aims to provide a sound understanding of the principles governing international commercial contracts.
Formation of a Valid Contract and the Role of Writing
The first issue is whether a valid contract for the international sale of goods has been formed between LDF and PP, despite the absence of written documentation. Under general contract principles, a contract requires an offer, acceptance, consideration, and an intention to create legal relations (Treitel, 2015). Here, Jean-Jacques’s positive representation of LDF’s operation and Chelsea’s immediate agreement to purchase 200 litres of essence at US$6,000 per litre arguably constitute an offer and acceptance. The agreed price provides consideration, and the context of the discussion between two business representatives suggests an intention to be legally bound. Thus, a contract appears to have been formed verbally.
The lack of writing does not necessarily invalidate the contract. In many jurisdictions, including under international commercial law, contracts for the sale of goods do not always require written form to be enforceable, provided there is sufficient evidence of agreement (Schwenzer et al., 2012). Indeed, the informality of the agreement—made at a social event—does not inherently undermine its legal validity, as long as the essential elements are present. However, the absence of a written agreement could pose practical challenges in proving the terms, particularly regarding Jean-Jacques’s verbal exclusion of warranties, which may be disputed.
Application of the United Nations Convention on Contracts for the International Sale of Goods (CISG) 1980
The next question is whether the CISG 1980 could apply to this transaction. The CISG governs contracts for the international sale of goods between parties whose places of business are in different states, provided those states are contracting parties to the Convention (Article 1, CISG). France and Australia are both signatories to the CISG, with France ratifying it in 1982 and Australia in 1988 (Schwenzer et al., 2012). LDF’s principal place of business is in France, and PP’s is in Brisbane, Australia, satisfying the requirement for an international transaction. Furthermore, the subject matter—perfume essence—falls within the definition of ‘goods’ under the CISG, as it is a tangible, movable item (Article 2, CISG).
However, the CISG only applies if the parties have not excluded its application (Article 6, CISG). In this case, there is no indication that LDF or PP explicitly opted out of the CISG. Additionally, while the agreement was made in New York, the place of negotiation is irrelevant under the CISG, as the focus is on the parties’ places of business. Therefore, the CISG is likely applicable to this transaction, providing a unified framework for interpreting the contract’s formation and terms (Honnold, 1999).
Extent of Application of the CISG
If the CISG applies, must it be applied in full? Under Article 6 of the CISG, parties have the autonomy to derogate from or vary the effect of any of its provisions, except where such derogation would contravene mandatory rules or public policy. In practice, this means that while the CISG provides a default framework, parties can agree to exclude specific provisions or modify them through their contract terms (Schwenzer et al., 2012). Here, Jean-Jacques’s verbal statement excluding all warranties could be interpreted as an attempt to derogate from the CISG’s implied warranties of quality and fitness for purpose (Articles 35-36, CISG). However, the enforceability of this exclusion is uncertain, as it was not documented, and the CISG requires modifications to be agreed upon clearly, ideally with evidence (Honnold, 1999). Generally, if the CISG applies, courts and tribunals will apply its provisions to relevant issues unless explicitly excluded by the parties, but the full application depends on the agreed terms and any derogations.
Scope of CISG Governance Over Issues in the Transaction
Does the CISG govern all issues that might arise in this transaction? The CISG is not exhaustive in scope. It primarily addresses the formation of the contract, the rights and obligations of the buyer and seller, remedies for breach, and risk allocation (Articles 1-3, CISG). However, it explicitly excludes certain matters, such as the validity of the contract under national law, property rights in the goods sold, and liability for death or personal injury caused by the goods (Article 4-5, CISG). For instance, if Chelsea argues that the agreement lacks validity due to a lack of capacity or fraud, such issues would fall outside the CISG and be governed by applicable domestic law (Schwenzer et al., 2012). Furthermore, procedural issues, such as the enforcement of a letter of credit for payment, are beyond the CISG’s purview. Therefore, while the CISG governs core aspects of the sale, supplementary national laws would address excluded matters, creating a potential for conflict or overlap.
Alternative Governing Law and Terms if CISG Does Not Apply
If the CISG does not apply—perhaps because the parties later exclude it or a court deems it inapplicable—the governing law would be determined by private international law principles, specifically conflict of laws rules. Typically, this involves identifying the law with the closest connection to the contract, often based on the parties’ places of business, the place of performance, or an express choice of law (Collins, 2008). Here, absent a choice of law clause, a court might consider French law (as LDF’s place of business and likely place of performance) or Australian law (as PP’s place of business). The terms of the contract would remain as verbally agreed—200 litres at US$6,000 per litre, with payment via letter of credit and exclusion of warranties—though proving these terms without documentation could be problematic. The specific application of domestic law is outside the scope of this essay, as instructed, but the determination of governing law would shape the interpretation and enforcement of these terms.
Conclusion
In conclusion, a valid contract for the international sale of goods appears to have been formed between LDF and PP, despite the absence of written documentation, as the essential elements of offer, acceptance, and consideration are present. The lack of writing does not inherently invalidate the agreement, though it poses evidentiary challenges. The CISG 1980 is likely applicable, given the international nature of the transaction and the parties’ places of business in contracting states. If applicable, the CISG does not need to be applied in full, as parties can derogate from its provisions, though the verbal exclusion of warranties in this case remains uncertain. The CISG does not govern all potential issues, with matters like contract validity and procedural enforcement falling under national law. If the CISG is excluded, conflict of laws principles would determine the governing law, shaping the interpretation of the agreed terms. This case highlights the complexities of international commercial transactions, underscoring the importance of formal agreements to mitigate legal ambiguity.
References
- Collins, L. (2008) Dicey, Morris & Collins on the Conflict of Laws. 14th edn. Sweet & Maxwell.
- Honnold, J.O. (1999) Uniform Law for International Sales under the 1980 United Nations Convention. 3rd edn. Kluwer Law International.
- Schwenzer, I., Hachem, P., and Kee, C. (2012) Global Sales and Contract Law. Oxford University Press.
- Treitel, G.H. (2015) The Law of Contract. 14th edn. Sweet & Maxwell.
