International sale carriege and contract of goods Essay

International sale carriege and contract of goods - Essay Example In the United Kingdom, the nature of a sale transaction, as to whether domestic or international, is determined in accordance with the places where the contracting parties hold their principal places of business. If the parties hold their places of business in different jurisdictions, the sale is characterised as international, otherwise it is domestic. This is the approach taken by the s. 26 of the Unfair Contract Terms Act 1977 as well as Article 1 of the United Nations Convention on Contracts for the International Sale of Goods (CISG hereafter).1 Many types of risks are being borne by long distance sellers in an international sale of goods, which include, inter alia: the uncertainty resulting from the transit of goods by sea; possible political uncertainty; conflict of law, and; payment issues. 1.1 The Uncertainty Brought About by Transit of Goods by Sea It has been said that the management of international business is the management of risk, a fair assessment considering the geog raphical distance between parties and the political and legal disparities between and among various jurisdictions. International sale of goods is complicated by the likely sea transit of goods. The uncertainty of having the goods travel from one point to the other for a considerable period of time from the time the seller brings his goods to the carrier for shipment to the time these goods are actually delivered to the buyer often entails risks that parties are eventually forced to assume. Thus, it is an often told tale in the international business world of goods damaged, spoiled, rusted, contaminated or lost while aboard vessels or when the vessels sink because of bad weather as they are being taken from one point to another. 2 1.2 Conflict of Laws Additionally, when a transaction of sale of goods involves parties coming from different states or countries a conflict of laws is likely to ensue. Thus, when conditions necessitating resolutions of dispute regarding the contract crop u p, the problem of what law should govern the interpretation of the contract as well as the proper forum of the dispute resolution become a problem. After resolution, the problem of enforcing them in the other jurisdiction remains.3 1.3 Problems Pertaining to Payment If the sale, for example, is agreed to be on credit terms the main problem of the seller is how to ensure payment. Allied to this is the problem of currency fluctuation that may occur at any time during the pendency of the transaction, which can potentially change the complexion of the transaction from being profitable to disadvantageous.4 1.4 Political Instability If the other party comes from a state with an unstable political environment and changes in government policies in international transactions occur during the pendency of the transaction, this could lead to changes as well in the nature of the original contract between the parties.5 To minimise risks inherent in