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Contracts for the International Sale of Goods (Vienna Convention)

In the modern world the trade has gone beyond the borders of particular countries and gained international significance. Along with the development of markets and the emergence of new technical tools business entities in the Republic of Armenia gain an opportunity to enter into contracts and sell goods in foreign countries without any additional complexities. The Convention on Contracts for the International Sale of Goods was adopted in Vienna in 1980 with the aim of erasing the barriers between the parties to foreign trade transactions and resolving contradictions between the legislation of different countries when conducting foreign trade activity. This convention operates in 62 countries. The Republic of Armenia joined Vienna Convention in 2010.

The Vienna Convention establishes a uniform legal regime for the contracts for the international sale of goods. And it is important due to significant differences of national legal systems of different countries. If the parties to the contract are from different countries, for example, the Republic of Armenia and the Republic of France, they may have some problems due to different demands of national legislation to the contract form. This Convention is designed to resolve such contradictions. Contracts for the international sale of goods always hav a foreign element, as the parties are from different countries. The subject of such a contract is an import, or an export of goods and the currency used as a means of payment is foreign for both parties, or at least for one of them.

In accordance with Article 11, the contract of sale need not be concluded in, or evidenced by writing and is not subject to any other requirement. It may be proved by any means including witnesses. But some countries made the declaration which says that if any party has the place of business in a Contracting party’s country, the condition that allows a contract of sale, or its modification, or termination by agreement, or any offer, acceptance, or other indication of intention to be made in any form other than in writing is not applied. Such a declaration has been made in the Russian Federation, The Argentine Republic and the Republic of Belarus.

The Vienna Convention may be applied to the countries which are contracting parties to this Convention. Nationality, civil, or trade status of the parties is not considered when determining the applicability of this Convention. Except, the contracts for the sale of goods subject to production is deemed as sale contracts if the party didn’t take an obligation to supply the significant part of the materials required for production of such goods. The Vienna Convention is not applied to the contracts in which the preponderant part of the obligations of the party who furnishes the goods consists in the supply of labor, or other services.

Article 2 of the Convention establishes this convention does apply to sales:

  • of goods bought for personal, family, or household use, unless the seller, at any time before, or at the conclusion of the contract, neither knew, nor ought to have known that the goods were bought for any such use;
  • by auction;
  • on execution, or otherwise by authority of law;
  • of stocks, shares, investment securities, negotiable instruments or money;
  • of ships, vessels, hovercraft or aircraft;
  • of electricity.

Important to remember that the Vienna Convention regulates only the conclusion of the contract, as well as rights and obligations of the parties to the contract. It doesn’t apply to its validity, validity of its provisions, as well as all consequences which may take place with respect to the ownership of the goods. Parties from the Republic of Armenia and for example the Republic of France are bound by customs and practice which they established for their relations. The contract is concluded by means of an offer if it is sufficiently definite and indicates the intention of the offer, or to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly, or implicitly fixes, or makes provision for determining the quantity and the price.

Until a contract is concluded an offer may be revoked if the revocation reaches the customer before he/she has dispatched an acceptance. However, an offer cannot be revoked if it indicates, whether by stating a fixed time for acceptance, or otherwise, that it is irrevocable; if it was reasonable for the customer to rely on the offer as being irrevocable and the customer has acted in reliance on the offer. An offer enters into force when it reaches the customer. The offer, even if it is irrevocable may be withdrawn if the ­withdrawal reaches the customer before, or at the same time as the offer. The offer in any cases is terminated when a rejection reaches the customer.  

It is necessary to know that a statement, or any other conduct of the customer indicating assent to an offer is an acceptance. Silence, or inactivity does not in itself amount to acceptance. According to the Vienna Convention the acceptance of the offer enters into force when noted assent is received by the seller in the Republic of Armenia. The acceptance is not effective if the acceptance doesn’t reach the seller within the time he/she has fixed, or if no time is fixed, within a reasonable time, due account being taken of the circumstances of the transaction.

However, if, by virtue of the offer, or as a result of practices which the parties have established between themselves, or of usage the customer may indicate assent by performing an act, such as one relating to the dispatch of the goods, or payment of the price without notice to the seller, the acceptance is effective at the moment the act is performed, provided that the act is ­performed within the period of time fixed by the parties, or within a reasonable time.