2nd seminar

   Conditions for the application of the CISG. Formation of the contract. Contractual terms and
   conditions and their incorporation into the contract, battle of forms. Arbitration agreement.

Case study

The company High-quality Wine, s.r.o (headquarters and place of business in Brno) sells quality
wines to leading Czech and Slovak wineries and first-class restaurants. The Czech company purchases
wine bottles from French company Vin de haute qualité, s.a.r.l (registered office and place of
business in Bordeaux), German company Qualitätswein, GmbH (registered office and place of business
of Mainz) and Portuguese company Vinho de qualidade, Lda (registered office and place of business
in Porto). The formation of contract process with each company was as follows:

A – French company

Mr. Dvořák, CEO of the Czech company, visited the warehouse of the French company during his visit
to Bordeaux in July 2020. There, he met in person with the CEO of the French company, Mr. Guillot.
Mr. Guillot showed him a catalogue of bottled wines, and Mr. Dvořák explicitly said (in French): “W
e will definitely be interested in doing business with you. Please send me an offer.” On 6 August 2
020, the French company sent a proposal by e-mail, namely for 600 Pessac-Léognan 0.75 l bottles for
 the price of 10000 euros. The proposal included the following arrangements and clauses relevant to
 this case:

"We are bound by this proposal until 31 August 2020."
 "An integral part of this contract are the seller’s business terms and conditions, which are attac
hed to this proposal for the concluding of the contract."


The seller’s terms and conditions then contained the following clauses and arrangements:
"This contract is governed by the United Nations Convention on Contracts for the International Sale
 of Goods."
"Interest rate is agreed in the amount of 4.4% p. A. from the due date of the purchase price until
its payment. The seller is not obliged to send the buyer a special invitation to exercise this righ
t."
“All disputes arising out of or in connection with this contract shall be settled in accordance wit
h the rules of the International Chamber of Commerce (Paris). The place of arbitration shall be in
Prague."


On 16 August 2020, the Czech company replied via email and agreed to the proposal.

1.       Determine the legal regime of the relationship between the Czech and the French company (i
.e., do the CISG application test).
2.       Consider, why interest rate is an “internal” loophole (gap) of the CISG. Are these interna
l loopholes regulated anywhere in the CISG? Why is the interest rate amount not directly regulated
in the Convention?
3.       Internal gaps are addressed in Article 7 (2) of the CISG. These gaps are first addressed b
y the general principles on which the Convention is based. List such principles.
4.       The Czech company did not pay the purchase price for the delivery of wines on time. The Fr
ench company demanded the agreed interest rate. The Czech company argued that the provision on inte
rest rate was invalid under the Czech law. Assess the validity of this provision of the contract (f
rom the point of view of the Czech courts, do not consider the arbitration clause).
5.       The Czech company is a bad business partner and objected to the form of the contract. Acco
rding to the company, email communication does not constitute a written form under the CISG. Consid
er this objection. Use the judgment of the Supreme Court of the Czech Republic to resolve this issu
e.
6.       Analyse the contractual process, comment on the personal meeting in July. Specify as preci
sely as possible the moment at which the contract was concluded.
7.       Assess whether the seller's offer is irrevocable.
8.       As soon as the proposal was sent, the managing director of the French company realized tha
t he had made a mistake and wrote EUR 10000 instead of EUR 12000. Consider his chances of withdrawi
ng the proposal.
9.        The Czech company further tried to argue that the seller's terms and conditions did not b
ecome part of the contract because they were in French, so they did not understand them and did not
 have the opportunity to become acquainted with them. Assess whether the terms and conditions have
become part of the contract (deal with the company's objection and the inclusion clause).
10.   The Czech company refused to pay the purchase price. Determine where the French company will
be able to sue the Czech company for the payment of the purchase price (determine where and how the
 dispute will be resolved, whether the dispute is arbitrable, whether the arbitration clause meets
the requirements under the Czech law and consider whether it is an arbitration before a permanent a
rbitration court or it will be an ad hoc arbitration).
11.   Let’s modify our case scenario. There was no arbitration clause in the proposal. The arbitrat
ion clause was written on the invoice issued by the seller to the buyer. "All disputes arising out
of or in connection with this contract will be resolved before the arbitral tribunal at the ICA in
Geneva." The buyer paid the purchase price based on the invoice sent. Analyse the parties' consensu
s on the arbitration clause included in the invoice. Furthermore, without any regard to your conclu
sion, assess the validity of this arbitration clause.

B – Spanish company

With the Spanish company Vino de calidad, SRL (headquarters and place of business in Burgos, Spain)
, the implementation of their agreed framework contract and subsequent individual sales contracts h
as been running smoothly since July 2015. The framework contract includes not only the purchase of
wines that the Czech company resells directly, but also the distribution obligations (the Czech com
pany was authorized to exclusively distribute wines in Moravia and Silesia). While they did not agr
ee on a choice of law clause, the arbitration clause has been agreed as follows: "Dispute Resolutio
n: Arbitration, Czech Republic."

1. Qualify and determine the legal regime of the relationship between the Czech and the Spanish com
pany.
2. Would the answer change if the contract was concluded between a Czech company and a Portuguese c
ompany Vinho de qualidade, Lda (registered office and place of business of Porto)?
3. Assess the validity of the arbitration clause. What are the obligatory requirements for an arbit
ration clause under the Czech law?

C – German Company

Based on a previous phone call from the German company, the Czech company emailed a proposal to con
clude a contract on 14 January 2020. The proposal included a precise specification of bottled wines
, including quantity and purchase price, choice of the Czech law, business terms and conditions of
the Czech company. The proposal further contained “We are bound by this proposal until the end of J
anuary 2020”. The terms and conditions, which were incorporated into the proposal and were part of
the email as an attachment in a PDF file, included the following provisions:
"DAP, Brno, INCOTERMS 2020"
 "All disputes arising from this contract will be resolved before the Czech courts."

The German company Qualitätswein, GmbH replied by e-mail the next day (15 January 2020) stating tha
t it was accepting the offer. The German company, however, attached its business conditions to the
email, also by linking to the attachment in the PDF file. These terms and conditions included, inte
r alia, provision on "EXW Mainz INCOTERMS 2020" and arbitration clause "All disputes or claims aris
ing out of or in connection with this contract, including disputes concerning its validity, breach,
 termination or voidness, shall be dealt with in arbitration proceedings before the Deutsche Instit
ution für Schiedsgerichtsbarkeit eVV in Munich by one arbitrator appointed in accordance with the r
ules of this arbitration tribunal. " The Czech company responded to the email the following day (Ja
nuary 16, 2020) saying: "We agree."

1.       A dispute has arisen between the parties as to the legal regime of their purchase contract
. The German company argued that the legal regime was governed by the UN Convention on Contracts fo
r the International Sale of Goods. The Czech company referred to the clause on the choice of Czech
law and argued that the purchase contract is governed by Czech law with regard to the autonomy of t
he will of the parties. Who is right?
2.       Determine the moment and content with which the contract was concluded. Then focus on whet
her the arbitration clauses have become part of the contract, or which one of them.
3.       The companies were interested in resolving the jurisdiction of any of their disputes, ther
efore they agreed to amend the contract in the form of an addendum containing the following clause:
  “All disputes arising out of this this contract shall be resolved at the arbitral tribunal of the
 Deutsche Institution für Schiedsgerichtsbarkeit eVV in Munich or at the general court in the Czech
 Republic. The specific court will be determined by the plaintiff. Assess the validity of this clau
se.
4.       Irrespective of your answer to the second question, determine whether there would be anoth
er solution if the German company:
       (a) attached its terms and conditions without any reference clause
(b) did not attach its terms and conditions but included a link to its website where the terms and
conditions were available in German but had to be looked for
c) did not attach its terms and conditions, but incorporated a hyperlink that directly referred to
the text of the terms and conditions
5.       Let’s modify the case. Always assess whether a contract has been concluded. It remains rel
evant that the offer was sent by email on 14 January 2020 and the offeror is bound by the offer unt
il the end of January.
a) the Czech company withdrew the offer on 21 January 2020. The German company insisted on the offe
r because it relied on the deadline for accepting the offer by the end of January
b) the German company immediately rejected the offer on 15 January 2020, however, a week later it d
ecided to accept the offer and sent an e-mail accepting the offer (22 January 2020)
c) the German company sent an unconditional acceptance of the offer by email on 1 February 2020
d) the German company decided to send the acceptance of the offer by regular mail due to failing Wi
-Fi connection at their headquarters. The company sent the acceptance of the offer on 28 January 20
20 (according to the date on the postmark), however, because of a three-day strike by the employees
 of the German Post, the acceptance of the offer reached the Czech company on 1 February 2020.
       (e) the German company was silent.
6.       Is there a provision in the CISG regulating a situation if the offeror does not specify th
e period for which he/she feels bound by the offer? Until when has the offeree (the recipient) to a
ccept or reject the offer?