Question III

United Nations Convention on Contracts for the International Sale of Goods (CISG) is international agreement, to which both USA and Egypt are parties. Arising from Article 1 (1)(a) of convention - international sales of goods are regulated by this convention between the parties, whose companies are in different states. Due to the article 4 - these convention only regulates relations between parties concern the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. It doesn’t governed: the validity of the contract or of any of its provisions or of any usage and the effect which the contract may have on the property in the goods sold.

If you wish to exclude the application of CISG you need to draft this provision into your agreement, otherwise it automatically will be subject to the CISG rules. This option is allowed by Article 6 of present Convention, which states: “The parties may exclude the application of this Convention or, subject to article 12, derogate from or vary the effect of any of its provisions.” This provision of opt out should contain statement that both parties agree to exclude their agreement from any affect of CISG and that it will not apply to determine rights and obligations, validity and existence of this agreement.

There are several reasons for opting out. Lawyers name three most common:

• If lawyers are familiar with foreign law and feel safe and confident by using it, then it’s easier to use foreign law provisions, which, besides, can be more detailed;

• Sometimes agreement need to be pretty detailed and they contain lots of provisions, more detailed and different then this in Convention. In such cases - agreement can very big and consist of provisions from different sources;

• Also, if parties are familiar with domestic law of one party, they can choose to govern their agreement under domestic rules. If dispute over the agreement will rose litigation, lots of countries has far more better developed commercial case law of their own, than case law of interpreting of CISG.

• Sometimes party will insist on applying domestic law, because it’s just feel uncomfortable and unfamiliar with CISG provisions.

If you deem that one of this reasons can apply to you, then you can decide to opt out CISG provision and rules for own benefits.

“Political instability and Letter of Credit performance”

Question I

Letter of Credit (L/C) is one of the most common and frequently used tool for international payments. Usually it include 4 parties, which are buyer and seller and their bank. But in our case there is only one, yours bank, who operates ll the process of payment. On the request of account party - CUC - you have opened an irrevocable, unconfirmed L/C (which mean that there is no advising bank of seller, which will confirm payment) in favor of Ruritsaw.

The process of international payment by using L/C is next. After seller being noticed that in his favor bank has opened the L/C on determined amount of money he must carry the goods to the carrier or upload them on ship (depends on what terms are drafted in the contract between parties). After transferring goods to carrier, seller will receive from him documents, one of which is - Bill of Lading (BL). L/C contain the provisions that it should be honored after beneficiary (seller) will provide bank with BL and certificate of insurance of determined amount of equipment of certain type and quality. If seller will provide bank with this documents and they will be in good condition, then your bank will be obliged to pay. After you should transfer shipping documents to the buyer so he can show them to the carrier to get the equipment.

This is how L/C works in ideal situation.