UNCITRAL SINGAPORE SEMINAR ON : 35 YEARS OF THE CISG : Achievements and Perspectives

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1 UNCITRAL SINGAPORE SEMINAR ON : 35 YEARS OF THE CISG : Achievements and Perspectives April 2015 Singapore Rosario Elena A. Laborte-Cuevas Senior State Counsel Department of Justice Philippines

2 In ASEAN, only Singapore ratified CISG; 9/10 of ASEAN Member States have not signed or ratified the UN Convention on CISG.

3 Philippines is not yet a signatory to CISG. Discussion on possible accession to CISG is in preliminary stage. Various informal initiatives and consultations have taken place over the years.

4 No specific law on contracts for international sale of goods. Civil Code of the Philippines, Book IV, generally applies to international sale of goods transactions, and similar transactions.

5 The Bulk Sales Law (Act No. 3953, 1972) Consumer Act of the Philippines (RA 7394, 1992) Price Act (RA 7581, 1992) Retail Trade Liberalization Act (RA 8762, 2000) Electronic Commerce Act (RA 8792, 2000) Laws on Products Liability

6 Philippine laws and the CISG : Comparative Analysis

7 Formation of Contract : PH : Acceptance of the offer binds the offeror from the time that it came to his knowledge. (Art. 1319, Civil Code) CISG : Acceptance of the offer binds the offeror at the moment the indication of assent reaches the offeror. (Art. 18 (2), CISG) == CISG provides more comprehensive provision how an acceptance would bind the offer, taking into account different systems of contract formation.

8 Revocation of Offer : PH : Offeror can revoke his offer anytime before his knowledge of the acceptance, by communicating his withdrawal or revocation. (Art. 1324, Civil Code) CISG : For the offeror to revoke his offer, revocation must reach the offeree before the offeree has dispatched his acceptance. (Art. 16, CISG) == There is similarity with regard to revocability of an offer;

9 On Interpretation of Contract : PH : If the words of the contract appear to be contrary to the evident intention of the parties, the latter shall prevail over the former. (Art , Civil Code) CISG : Statements or conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what the intent was. (Art. 8, CISG)

10 Form of Contract : PH : Contracts are obligatory on the parties, in whatever form they may have been entered into, provided all essential requisites for validity are present. However, when law requires that a contract be in some form to be valid or enforceable, that requirement is absolute and indispensable. (Art. 1356, Civil Code) CISG : A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. (Art. 10, CISG) == Conflict on this point.

11 Price : PH : Contract of sale is null and void and no effect if it is without cause or consideration. (Art and 1352, Civil Code) == Conflict on this point. CISG : Where a contract has been validly concluded but does not expressly or implicitly fix or make a provision for determining the price, parties are considered to have impliedly made reference to the price generally charged at the time of the conclusion of the contract. (Art. 55, CISG)

12 Rescission and Fundamental Breach : PH : Obligation to pay the price by buyer is correlative to the obligation of the seller to deliver the thing sold. Non-performance by one party authorizes the other to exercise the right to demand performance or its rescission. (Art. 1191, Civil Code) CISG : Both seller and buyer have the option to rescind the contract, if the failure of the other party to perform his obligations under the contract or the Convention amounts to a fundamental breach. (Art. 49 and 64, CISG) == Both in agreement that rescission is permitted only for breaches, substantial or fundamental in nature.

13 Specific Performance : PH : Injured party, in case of breach of reciprocal obligations, may choose, as a matter of right, between specific performance and rescission of contract, with payment of damages in either case. (Art. 1191, Civil Code) CISG : Injured party may also file a case for specific performance, however, a court isnot bound to enter a judgment for specific performance unless it may do so under its own law in respect of similar contracts of sale not governed by the Convention. (Art. 28, CISG) == Both in agreement.

14 Anticipatory Breach : CISG : Party may suspend performance of his obligations if it becomes apparent that the other party will not perform substantial part of his obligations. (Art. 71, CISG) PH : There can be suspension of payment by buyer on account of anticipatory breach of the seller of his obligations. However, there is no corresponding remedy on the part of the seller. (Art. 1590, Civil Code)

15 Stoppage in Transit by Seller : PH : In case of insolvency of buyer, unpaid seller has the right of stopping the goods in transitu after he has parted with the possession of them. (Art & 1534, Civil Code) CISG : In case of serious deficiency in a buyer s ability to perform or in his creditworthiness, or his conduct in preparing to perform the contract. (Art. 71 (2), CISG) = PH allows only in case of insolvency. CISG provides a more comprehensive enumeration of grounds for stoppage in transit.

16 Limitations for Warranty Claims : PH : In breach of warranty of conformity of the goods, buyer may withdraw from the contract or demand a proportionate reduction of the price, with damages in either case. Appropriate action must be filed within 6 months from the delivery of the thing sold. (Art & 1567, Civil Code) CISG : Buyer has remedy of specific performance or rescission in case of breach of warranty of conformity of goods by seller. Prescriptive period is 2 years from date goods were actually handed to buyer, unless time-limit is inconsistent with contractual period of guarantee. (Art. 39 (2), CISG) == Conflict with CISG; PH statute of limitation is shorter.

17 Passing of risk : CISG : allocation of risk does not depend on ownership over the goods. Risk of loss transfers to the buyer when the goods effectively leave the control of the seller. (Articles 67, 68, 69, CISG) == CISG provides simpler uniform rule. PH : Determination of who bears the risk of loss depends on who owns the goods (res perit domino). Before perfection, it is the seller. After delivery, it is the buyer. In case of after perfection and before delivery : buyer (Art / 1538); seller (Art. 1504).

18 Similarities and differences exist between CISG and PH laws; Differences do not represent clash between the solutions offered by each one to legal problems in the sale of goods; CISG leaves domestic relations on the sale of goods totally preserved;

19 Uniform rules of CISG, appropriate for sale of goods between parties in different countries with different legal traditions; Nothing in rules of CISG that would offend fundamental principles of PH contract law; Nothing legally objectionable to PH accession to the Convention;

20 Considering that : efforts on ASEAN to harmonize trade laws, including accession to CISG... largest trading partners of the PH are parties to CISG... CISG is the uniform sales law of countries over three-quarters of world trade... It is to the advantage of PH to take steps to accede to CISG before it finds itself left behind by its neighbors and other countries aiming to promote international trade.

21 Policy decision is required; Consultation with relevant agencies and secure concurrence; Accession package to be prepared; DFA to secure CTC of the Convention and Summary of Benefits; DFA will prepare Accession/Ratification Package for the Office of the President; * Department of Foreign Affairs

22 Determination if CISG is treaty; Deposit of Instrument of Accession to the UN Secretary General; DFA to inform agencies of entry into force of the Convention for the Philippines; If determined to be a treaty, after presidential ratification, Convention to be transmitted to Senate for its concurrence (PH Constitution requires 2/3 concurrence of Members of the Senate to ratify. * Department of Foreign Affairs

23 Maraming salamat po Thank you.. Rosario Elena A. Laborte-Cuevas Senior State Counsel Department of Justice

UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (1980) [CISG]

Go to CISG Table of Contents Go to Database Directory UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (1980) [CISG] For U.S. citation purposes, the UN-certified English text