- Republic of Korea
- 2011gahap3744, 2011gahap108441
- Seoul Central District Court
APPLICATION OF CISG - CHOOSE BY PARTIES OF LAW OF A CONTRACTING STATE AS LAW GOVERNING THE CONTRACT (ART.1(1)(B) CISG)
MODE OF ACCEPTANCE (ART. 18(2) CISG)
TIME FOR ACCEPTANCE - WITHIN A REASONABLE TIME (ART. 18(3) CISG)
[CLOUT Case no. 1566; abstract prepared by Haemin Lee, National Correspondent].
The plaintiff (Korean corporation, seller) and the defendant (corporation of the
United States of America, buyer) reached an agreement in February 2008, under
which the plaintiff would exclusively supply the fabrics and components for a type
A blind (window shade) to the defendant. After the contract had been performed, the parties began to discuss entering into a new contract in June 2008. The defendant requested to purchase the type A blind, however the plaintiff, who has developed a type B blind in the meantime, recommended the type B blind to the plaintiff instead. A dispute arose over the payment of the goods of both contracts.
In court, the plaintiff asserted that CISG was not the governing law of the contracts,
because the parties had agreed upon the laws of the Republic of Korea to govern the
contract. However, the Court held that, the mere fact that the plaintiff and the
defendant agreed upon the laws of the Republic of Korea as the governing law does
not exclude the applicability of CISG, which is incorporated as lex specialis in the
legislative framework of the country.
As such, the Court laid out the premise that: (a) CISG governs the formation of
sales contract and the rights and obligations of the seller and buyer arising from the
contract; and (b) the laws of the Republic of Korea govern the validity of the
contract, including the defect in the expression of parties’ intent on account of
mistake or fraud (Article 4 CISG).
The Court denied the plaintiff’s claim for payment for the new contract because a
contract for supply of goods was not formed between the plaintiff and the defendant
(Article 18(2) CISG). This was because: (a) the defendant’s original order dated
June 25 2008, constituted an offer of a contract to supply goods as to type A
products; (b) afterwards, the defendant altered the content of the offer by indicating
to the plaintiff that type B, instead of type A, products may be supplied; (c) without
responding to the defendant’s order, the plaintiff only issued an invoice on the
payment of balance under the originally formed contract, while recommending a
mass purchase of type B products to the defendant; (d) there is lack of evidence to
support the fact that the plaintiff accepted the above offer by, for instance, issuing
an invoice for the payment of the price of goods under the above order; (e) the
defendant’s offer with no time fixed for acceptance loses its validity, unless the
plaintiff’s acceptance arrives within a reasonable time.
The defendant made a counterclaim for a refund of the already paid price
of goods in the former contract on the ground that its contract with the plaintiff
was: (a) avoided by agreement (Article 29(1) CISG); (b) cancelled for reasons of
fraud or mistake; or (c) avoided under Article 49(1) CISG (as the plaintiff sold
goods that infringed the patent rights of another company).
The Court held that there was no evidence to support the plaintiff’s agreement to
avoidance, apart from the parties’ consultation on switching the product to type B.
Likewise, the Court rejected the claim for cancellation on account of fraud or
mistake, and the claim for avoidance under Article 49(1) CISG, on the grounds that
there was a lack of evidence to acknowledge patent infringement as alleged by the
Original in Korean:
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Case law on UNCITRAL texts (http://www.uncitral.org/uncitral/en/case_law.html) A/CN.9/SER.C/ABSTRACTS/168}}