CISG and Distribution Agreements

CISG and Distribution agreements 1

The CISG’s limited sphere of application

Sales v. distribution agreements

© Roberto Luzi Crivellini. All rights reserved.


Article 1

(1) This Convention applies to contracts of sale of goods between parties whose places of business are in different States


CISG and Distribution agreements 3© Roberto Luzi Crivellini. All rights reserved.

FRAMEWORK AGREEMENT(it lays down the terms on which later individual contracts of sale

will be concluded)

(services no CISG)+

SALES CONTRACTS(sales CISG)

4© Roberto Luzi Crivellini. All rights reserved.

ROME I REGULATION

(recital 17) Although franchise and distribution contracts are contracts for services, they are the subject of specific rules.

art. 4 (f) a distribution contract shall be governed by the law of the country where the distributor has his habitual residence;


BELGIUM CZECK REP RUSSIA

PANAMA GUATEMALA

HONDURAS PARAGUAY

PUERTO RICO OMAN TUNISIA

LEBANON


TYPICAL CONTRACT


BELGIUM

Act of 27 July 1961 concerning the unilateral termination of exclusive distributorship concession of an undetermined duration, as modified by the Act of 13 April 1971.


BELGIUM

A distribution concession, pursuant to this Act, is any agreement by which a principal grants to one or more distributors the right to sell in his own name and for his own account products that he himself produces or distributes


CISG and Distribution agreements

SPAIN Decreto Real 201/2010

“The contract of concession of sale or distribution is the contract by which an enterpreneur committs to buy, at certains conditions, products – generally branded – from another enterpreneur, who grants to him exclusivity in a certain territory, and to resell the products at certain conditions, as well as, to provide after sale service”


GERMANY FRANCE AUSTRIA

SWITZERLAND SPAIN PORTUGAL


Application by analogy of certain provisions of laws on commercial

agency


Federal District Court of Pennsylvania 29.8.2000

Although exclusive distribution agreements are considered contracts for the sale of goods under the UCC adopted in Pennsylvania …. The CISG does not apply to distributorship agreements that do not cover the sale of specific goods and contain definite terms regarding quantity and price.


Oberlandesgericht München 22.9.1995

If the distribution agreement only provides for the supply of products (and no ancillary covenants) then CISG can be considered applicable


Italian Cassation Court (sez. Un. 20.9.2004 n. 18902)

The exclusive distribution agreement is a framework contract which can be implemented in different ways… the exclusive covenant in this case was ancillary… since we deal with internationak sales of goods …. CISG can be applied


FRAMEWORK AGREEMENT(services no CISG)

+SALES CONTRACTS

(sales CISG)

?


Concession of sale: a distribution

agreement which has as its primary

aim the commercialization of the

products in a certain territory,

according to the expectations of the

grantor …



… which entails a priviledged

position for the distributor

(generally but not necessarily, an

exclusivity in the territory) and

requires in compensation certain

investments and a binding non

compete covenant (prof.Fabio

Bortolotti)© Roberto Luzi Crivellini. All rights reserved.


SALES FRAMEWORK AGREEMENT(program of supplies)

DISTRIBUTION AGREEMENT(ancillary covenants: exclusivity, etc.)

CONCESSION OF SALE(Integration in a network - the core of the agreement is

the collaboration, organization and promotion of sales)



CONCESSION / DISTRIBUTION AGREEMENT

GENERAL CONDITIONS OF SALE

ORDERS / CONFIRMATIONS



CISG applicable rules

Art. 8 (interpretation)

Art. 9 (trade usages)

Art. 74 (damages)


Opting in. Why not?

It is not expressly provided for in the CISG, but it is generally accepted that the parties are at liberty to choose to apply the CISG even when it would not be applicable ratione materiae or under the “place of business” or the international private law rules (ICC case 11849/2003)


ICC RULES OF ARBITRATION

Article 21: Applicable Rules of Law 1) The parties shall be free to agree upon the rules of law to be applied by the arbitral tribunal to the merits of the dispute. In the absence of any such agreement, the arbitral tribunal shall apply the rules of law which it determines to be appropriate.


UNIDROIT PRINCIPLES

Article 21: Applicable Rules of Law 1) The parties shall be free to agree upon the rules of law to be applied by the arbitral tribunal to the merits of the dispute. In the absence of any such agreement, the arbitral tribunal shall apply the rules of law which it determines to be appropriate.


Art. 7 (2) Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law

CISG and Distribution Agreements?

… you’d better have a good contract.

Roberto Luzi Crivellini

[email protected]

CISG and Distribution Agreements

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