Subrogating Under International Sales Contracts: Which Law Applies?

6 Questions | By Pamela Pengelley | Updated: Mar 21, 2022 | Attempts: 224

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Where an insurer has paid for a loss that arises in the context of a sale of goods between parties in two different countries, the recovery potential of a subrogation action may depend on the choice of law governing the purchase agreement. Yet, determining the proper law of an international sales contract can be a tricky proposition. Subrogating insurance professionals should be aware that even when the law of a contract seems to be clearly stated, the outcome may be counter-intuitive. We have put together this quiz to allow you to test your knowledge - see if you are able to correctly assess the proper law of a sales contract in the following scenarios:TO TEST YOUR KNOWLEDGE, PRESS "START QUIZ" BELOW:

Questions and Answers

1.

A U.S. company, Acme Co., enters into a contract to purchase drywall from a Chinese company, ChinaDust Corp. The sales contract states: "This contract will be governed by the law of the State of Tennessee." Which law applies?
- A.
  
  The U.S. Uniform Commercial Code ("UCC")
- B.
  
  U.S. Common Law
- C.
  
  Chinese Law
- D.
  
  The United Nations Convention on Contracts for the International Sale of Goods ("CISG")
2.

The same U.S. company, Acme Co., then purchases luxury cars from a German automobile manufacturer, GermanGo GmbH. The sales contract states: "This contract is governed by German law." Which law applies?
- A.
  
  The UCC
- B.
  
  U.S. Common Law
- C.
  
  The CISG as ratified by German Civil Law
- D.
  
  None of the Above
3.

In preparation for an employee retreat, U.S.-based Acme Co. purchases hockey equipment from a Canadian company, CanuckPuck Co. The contract states: "This contract is governed by and subject to the law of the province of Ontario." Which law applies?
- A.
  
  The UCC
- B.
  
  U.S. Common Law
- C.
  
  Ontario's domestic "Sale of Goods Act"
- D.
  
  None of the Above
4.

Acme Co. purchases a streetcar from U.K. company, BritaniaRail Inc. The contract states: "This contract is governed by and subject to the law of New York." Which law applies?
- A.
  
  The UCC
- B.
  
  U.S. Common Law
- C.
  
  The U.K.'s Sale of Goods Legislation
- D.
  
  The CISG
5.

Finally, Acme Co. purchases a piece of equipment from Singapore. The sales contract states: "This agreement shall be governed by and interpreted in accordance with the laws of the United Kingdom." Which law applies?
- A.
  
  The Uniform Commercial Code (UCC)
- B.
  
  The Law of Singapore
- C.
  
  U.K. Sale of Goods Legislation
- D.
  
  None of the Above
6.

BONUS QUESTION: With respect to sales contracts that are governed by the CISG, which of the following statements is INCORRECT?
- A.
  
  Consideration is necessary in order to form a binding sales contract.
- B.
  
  Acceptance of an offer occurs when it is received by person who has made the offer.
- C.
  
  A sales contract does not have to be in writing.
- D.
  
  Extrinsic evidence can be used to alter, contradict or explain the terms of an unambiguous written contract