Answer The Followinga Commercial Exporter In The Us Attempts To Cr
Answer the following: A commercial exporter in the US, attempts to create a contract with a Mexican buyer for the sale of a container load of house wares. The exporters pro forma invoice is dated and sent August 20th. The Mexican acceptance is mailed on August 30th, and received by the exporter on September 9th. The exporter, however, mailed a revocation of its offer on September 3rd, which was received by the Mexican party on September 10th. Answer the following questions and ensure you provide any URL's from the internet to support your answer.
1. Is this transaction subject to the CISG?
2. Is there a contract?
3. Why or why not is this a binding contract?
4. When was the contract formed and when was it legally terminated?
Paper For Above instruction
The scenario presented involves a commercial transaction between a US exporter and a Mexican buyer, raising important questions about contract formation, the applicability of the United Nations Convention on Contracts for the International Sale of Goods (CISG), and the legal status of the agreement. This analysis explores these issues step-by-step, providing clarity on international sales law and contractual obligations.
1. Is this transaction subject to the CISG?
The CISG, or United Nations Convention on Contracts for the International Sale of Goods, applies to sales of goods between parties whose countries are signatories to the convention. The United States ratified the CISG in 1988, and Mexico joined the convention in 2008. Given that both countries are signatories, the CISG is generally applicable to the transaction unless the parties explicitly exclude its application in their contract (United Nations, 1980).
In this scenario, since the transaction involves a US exporter and a Mexican buyer for the international sale of goods, the CISG likely governs the contract unless explicitly excluded. The CISG's scope encompasses commercial sales of goods, which aligns with the sale of house wares in a container load. Therefore, this transaction is subject to the CISG unless a choice of law clause explicitly states otherwise. Typically,
parties engaged in international trade tend to apply the CISG to facilitate uniformity in obligations and remedies (Schlechtriem & Schwenzer, 2016).
2. Is there a contract?
Determining whether a contract exists in this scenario hinges on the principles of offer and acceptance under the CISG—specifically Articles 18, 19, and related provisions. The US exporter issues a pro forma invoice on August 20th, representing an intention to enter into a contract. The Mexican buyer mails acceptance of this offer on August 30th. The acceptance reaches the exporter on September 9th. Meanwhile, the exporter sends a revocation of the offer on September 3rd, which the Mexican party receives on September 10th.
According to the CISG, a valid contract is formed when the acceptance of an offer reaches the offeror, unless the offeror revokes the offer before acceptance is received (Article 18). Acceptance must be effective upon receipt unless the offer specifies otherwise; similarly, revocation is effective upon receipt (Articles 16 and 17). Here, the acceptance was mailed on August 30th and received on September 9th, which under the "mailbox rule" generally considers the acceptance effective upon dispatch unless the offer stipulates that acceptance is only effective upon receipt (Schlechtriem & Schwenzer, 2016).
As for the revocation, it was mailed on September 3rd and received by the Mexican buyer on September 10th, which is after the acceptance was effective. Therefore, the acceptance was effective prior to the revocation becoming effective, as acceptance was already in place upon receipt of the acceptance message on September 9th. Consequently, a contract was formed upon the Mexican buyer's acceptance on August 30th, effective on September 9th.
3. Why or why not is this a binding contract?
Given that the acceptance was effective before the revocation was received, the contract is binding. Under the CISG, once acceptance is effective, a binding contract exists, and the offeror cannot revoke the offer unless the revocation was made before acceptance became effective (Articles 16 and 18).
In this case, the revocation was mailed after the acceptance was dispatched but was only received after the acceptance had already become effective—meaning the offeror’s intention to revoke was too late. Unless the revocation was communicated before the acceptance was effective, which it was not, the contract remains binding. Therefore, the Mexican buyer's acceptance on August 30th, effective upon receipt on
September 9th, created a binding contractual obligation, and the revocation sent on September 3rd does not negate this (Schlechtriem & Schwenzer, 2016).
Thus, the parties are legally bound by the contract for the sale of house wares, with rights and obligations defined under the CISG and the specific terms of the agreement.
4. When was the contract formed and when was it legally terminated?
The contract was formed when the Mexican buyer’s acceptance was received by the US exporter on September 9th. Under the CISG, acceptance becomes effective upon receipt unless the parties agree otherwise or the offer specifies a different method. Since no such modifications are mentioned, September 9th is the date of formation.
Legal termination of the contract depends on the fulfillment of contractual obligations, mutual agreement to rescind, or abandonment of performance. In this scenario, the exporter attempted to revoke the offer on September 3rd, but since the acceptance was already effective by September 9th, the revocation does not terminate the contract. There is no indication that the buyer withdrew or that the exporter and buyer agreed to terminate the agreement. Hence, the contract remains valid beyond the date of the attempted revocation. Exceptions could include breach or frustration of contract. For instance, if the exporter refused to deliver the goods after the contract's formation, the buyer might claim breach; conversely, the exporter could argue that the revocation, although ineffective, terminated negotiations. However, as per the facts provided, the contract was formed on September 9th and remains in effect unless rescinded by mutual consent or breach.
References
Schlechtriem, P., & Schwenzer, I. (2016).
Commercial Transaction under the CISG
. Oxford University Press.
United Nations. (1980).
Convention on Contracts for the International Sale of Goods (CISG)
. Retrieved from https://uncitral.un.org/en/texts/salegoods/conventions/cisg
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