International Sales Transactions - A Series of Simulated Negotiation and Drafting Exercises

Abstract

This short paper describes a series of simulated negotiation and drafting exercises developed as a tool to teach various aspects of international sales transactions. Students get the opportunity to represent imaginary parties to such transactions and to negotiate on their behalf in front of the class solutions to various real-world problems which they are likely to meet in their future legal or business practice. The series covers the following aspects of international sales transactions:

* Drafting an initial memorandum of agreement to cover the main components of the sales transaction; * Allocation of costs and risk in connection with the long shipment: the use of the ICC INCOTERMS; * The UN Convention on International Sales of Goods (CISG): the scope of application of the CISG; its substantive provisions; should one exclude it? Should one exclude some of its provisions? * Modes of payment in international commerce; Letters of Credit; * Allocation of performance risks: drafting a Force Majeure clause; * Settlement of Disputes: choosing between courts and arbitration; drafting exclusive jurisdiction clauses, arbitration and mediation clauses, and choice of law clauses.

This type of exercises is very different from those students usually are required to submit in law school, where they are expected to analyze a legal problem and essentially write a judgment - thus implicitly suggesting that all problems should be solved by means of litigation. The premise of this exercise is that in international commerce, litigation is a bad option, due to the extensive costs, significant cultural problems and high level of uncertainty involved, and should only by used as a last resort. Instead, the transaction should be planned and structured in a way that minimizes the risk of a dispute, and when problems arise they should preferably be solved by negotiation.

Keywords: International Sales Transactions, Simulated Negotiation Exercise, Legal Drafting Exercise

JEL Classification: K12, K33