Risky business: distribution of risk in contracts for international sales of goods

• Author: Bazil Oglinda - Cristina Olariu
• Position: Romanian American University of Bucharest, Lawyer in Bucharest Bar Association - Lawyer in Bucharest Bar Association, Oglinda&Partners
• Pages: 103-113

Risky business: distribution of risk in contracts

for international sales of goods

Associate professor Bazil OGLINDĂ

1

Lawyer Cristina OLARIU

2

Abstract

Identifying the best legal and bu siness solution, especially in the case of an

international sale of goods contract can become a real challenge for the parties involved. In

addition to CISG, which gen erally governs these type of contracts, choosing the Incoterms

option which best suits the needs of the parties involved can represent the significant

difference between a successful b usiness or the appearance of disputes between the parties.

Which are the options for the distribution of risks? What should the seller and the buyer pay

special attention to? How does the CISG and Incoterms harmonize with the na tional

legislation regulating the risk in the sale contract? Our objective in this paper is to present

the scenarios and find possible solutions to all these issues.

Keywords: the risk in sale-purchase contracts, CISG, Incoterms, international sales of goods.

JEL Classification: K12, K15, K33

1. Introduction

In sales of goods contracts, especially in those with a foreign element,

perhaps one of the greatest challenges is the distribution of risk between seller and

buyer. From a legal perspective, the options for the allocation of risks are very

diverse, from balanced alternatives which divide the risk between the contracting

parties, to alternatives which impose the risks of the sales contract exclusively on

one of the parties.,

Often, this choice, which sometimes may seem purely legal or formal, can

also influence the economic aspects of the contract, such as the price, or other

essential conditions of the contract.

Moreover, the problem of risk becomes even more relevant and decisive for

the fate of the contract, when the latter is a long-term contract. The international

context, when compared to the internal context, entails a significantly greater

probability that events which perturb the contractual balance established by the

parties at the conclusion of the contract may occur. These events have been classified

by case law and scholarly writings in the category of risks.

1

Bazil Oglindă - Romanian American University of Bucharest, Lawyer in Bucharest Bar Association,

Oglindă&Partners, bazil.oglinda@oglindalawyers.ro.

2

Cristina Olariu - Lawyer in Bucharest Bar Association, Oglindă&Partners,

cristina.olariu@oglindalawyers.ro.