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Presented in "Celebrating Success: 25 Years United Nations Convention on Contracts for the International Sale of Goods" (Collation of Papers at UNCITRAL -- SIAC Conference 22-23 September 2005, Singapore), published and copyright by the Singapore International Arbitration Centre at 54-66. Reproduced with permission of the SIAC.

The Doctrines of Parol Evidence Rule and Consideration
-- A Deterrence to the Common Law Lawyer?

Petra Butler [*]

  1. Introduction
  2. CISG's lack of impact in common law jurisdiction
  3. Parol evidence rule
    1. The parol evidence rule and the CISG
    2. Parol evidence rule and the common law
    3. Summary
  4. Consideration
    1. Consideration and the CISG
    2. Consideration under common law
    3. Summary
  5. Conclusion

I. INTRODUCTION

The United Nations Convention on Contracts for the International Sale of Goods ('CISG') and the process by which it was created have widely been perceived as a benchmark for the successful unification of commercial law in the post-war era.[1] In fact, the CISG has so far drawn 65 States to join its regime, accounting for two-thirds of all world trade.[2] Generally, the CISG embodies a modern approach to contract formation, recognising that contracts are often concluded quickly and without any formal documentation of the negotiations. The CISG provisions dealing with contract formation are found in Part II of the CISG which contains the rules of formality and offer-acceptance. The rules of formality refer to the writing requirements, certainty of terms and types of admissible evidence. Offer-acceptance rules include, inter alia, the mechanics of formation and the 'firm offer' rule. The circumstances under which a contract can be modified are dealt with in Article 29 of the CISG which is in Part III.

One of the world's most potent trading nations, the United Kingdom, has not acceded to the CISG [3] and the case law of some of the other major common law jurisdictions that are signatories to the CISG (for example, New Zealand, Australia and Canada) is rather scarce. As a result there is still no judicial pronouncement on whether the common law of contract involves concepts and principles which are incompatible with the principles and concepts promulgated by the CISG.[4] Some commentators predicted difficulty in adaptation. As Murray stated '[w]e are struck by a new world where there is no consideration, no statute of frauds, [page 54] and no parol evidence rule, among other differences'.[5] In the author's opinion, there is no great incompatibility between the common law contract rules and the CISG rules. In the United States, the CISG has found acceptance and has been regularly analysed by the courts.[6] A comparative view towards the United States is opportune since US law has its roots in the common law and still adheres to a myriad of common law concepts and principles, even though its development has been different for more than 250 years.

In regard to contract formation, there are two features which are particular to common law (at least from a non-common law perspective): the parol evidence rule (which states that any oral or any other extrinsic evidence cannot be permitted to alter, contradict or explain the terms of a written contract) [7] and consideration (which means that the plaintiff has to pay a price for the defendant's promise).[8] This paper will examine both concepts in turn and will argue that neither the parol evidence rule nor consideration are common law concepts which today form an obstacle to the embracing of the CISG in common law countries nor should they be an obstacle for common law courts in the interpretation of the CISG in regard to issues related with either concept. In advancing this argument, regard will be had to relevant US case law.

II. CISG'S LACK OF IMPACT IN COMMON LAW JURISDICTION

The lack of impact of the CISG in common law countries is obvious from a computerised search of the Pace Law School website of CISG case law (the most comprehensive and up-to-date CISG case database on the internet). In May 2004, a search showed that out of a total number of 1,265 cases listed, the United States accounted for 56 decisions, followed by nine New Zealand decisions and respectively eight by Australia and Canada. In contrast, the website contained 350 German decisions, 102 Dutch decisions, followed by Switzerland (101 decisions), Belgium (96 decisions) and Austria (90 decisions).[9] [page 55]

The lack of impact in common law countries cannot be explained by a lack of common law input in the CISG drafting process or a lack of resources. In regard to the latter, the University of Basel, Pace University and UNCITRAL [10] itself provide comprehensive case law databases.[11] Textbooks and commentaries on the CISG are available in English.[12] Furthermore, the new UNCITRAL Digest of case law on the CISG ('UNCITRAL Digest') is a further resource in English which makes access to the interpretation and the case law on the CISG very accessible.[13] As to the former, common law countries were involved in the drafting of the CISG.[14]

III. PAROL EVIDENCE RULE

1. The parol evidence rule and the CISG

The parol evidence rule bars evidence of an earlier oral contract that contradicts or varies the terms of a subsequent or contemporaneous written contract.[15] Issues on the parol evidence rule arise under the CISG in regard to two scenarios: firstly, whether parol evidence may be used to prove the existence or scope of a contract in accordance with Article 11 of the CISG and, secondly, under what circumstances parol evidence may be referred upon to prove the modification or termination of a contract in accordance with Article 29 CISG. [page 56]

The CISG does not generally require written documentation for the formation of a contract, its modification or its termination.[16] Article 11 of the CISG explicitly states that a 'contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses'. It cannot be stressed too much that Article 11 of the CISG frees the parties of any form requirement in regard to contract formation imposed by their domestic jurisdiction.[17] It follows from the freedom of form principles of Article 11 of the CISG that the parties are free to modify or terminate their contract in any form, be it in writing or orally or in any other form.[18] Article 8(3) of the CISG stipulates that in determining the intent of the parties in regard to contract formation (including modification and termination) due consideration has to be given to the negotiations, any practices established among the parties, usages and any subsequent conduct of the parties.

However, the principle of 'formality freedom' does not answer the question of how the judge should weigh the evidence before him or her and what evidence the parties can present to the judge. This will be determined in part by the procedural rules of the forum. Therefore, the judge may well attribute more weight to a written document than to oral testimony.[19] The weighing of evidence and the general international private law principle that rules of evidence are governed by the law of the forum could allow a possible in-road for the parol evidence rule in Member States which belong to the common law jurisdiction.

Cases involving the application of the parol evidence rule to the CISG have been limited not unsurprisingly to the US courts.[20] The majority of the US courts have declined to apply section 2-201 of the Uniform Commercial Code (which gives effect to the parol evidence rule in the United States) in cases governed by [page 57] the CISG. The most notable exception is the case of Beijing Metals & Minerals v American Business Centre Inc.[21] In that case, a Texas corporation defended itself against a contract claim of a Chinese corporation by relying on evidence of contemporarily negotiated oral terms that the parties had not included in their written agreement. The plaintiff argued that Texan law applied to the dispute whereas the defendant asserted that the CISG was applicable. The Fifth Circuit Court of Appeals held that the parol evidence rule would apply regardless of whether Texan law or the CISG governed the dispute.[22] On this basis, the court excluded the testimony about oral terms under the state's parol evidence rule. The court thereby seemed to follow the principle that matters of evidence were a question of procedure and, therefore, the forum law (which was Texan law) applies.[23] The court also emphasised that there was as yet virtually no US case law interpreting the CISG. As Lutz points out, the court's 'haste to reach the safe harbour of domestic law' probably also explained the reluctance to engage in an analysis of the applicable law.[24]

However, five years later the 11th Circuit Court of Appeals clearly stated the US position. In MCC-Marble Ceramic Center Inc v Ceramica Nuova D'Agostino SpA, the Italian seller (D'Agostino) agreed to sell to MCC-Marble ceramic tiles to its requirements. After MCC-Marble refused to make certain monthly payments, D'Agostino refused to fill the remaining orders. MCC-Marble sued for breach of contract whereas the seller defended on the basis of the payment default. The seller pointed to pre-printed terms on the reverse of the written contract which gave the seller the right to cancel the agreement if MCC-Marble failed to make payment. At trial, MCC-Marble sought to introduce evidence from the parties' negotiations to prove that the agreement did not include the pre-printed terms. The trial court applied the parol evidence rule and granted summary judgment for the seller. The 11th Circuit Court of Appeals reversed that judgment. In its judgment, the court first clarified that the parol evidence rule was a substantive rule of law, not a rule of evidence and courts could not invoke the rule as a procedural rule of the forum. The parol evidence rule did not purport to exclude a particular [page 58] type of evidence as an untrustworthy or undesirable way of proving a fact, but prevented a litigant from attempting to show the fact itself, namely, the fact that the terms of the agreement were other than those in the writing.[25] The court held that the CISG did not contain a parol evidence rule but on the contrary the drafters of the CISG were comfortable with the concept of permitting parties to rely on oral contracts because they eschewed any statutes of fraud provision and expressly provided for the enforcement of oral contracts as stated in Article 11 of the CISG. Moreover, the court pointed out that Article 8(3) of the CISG expressly directed courts to give 'due consideration ... to all relevant circumstances of the case including the negotiations ...' to determine the intent of the parties. Given Article 8(1) of the CISG's directive to use the intent of the parties to interpret their statements and conduct, Article 8(3) of the CISG was a clear instruction to admit and consider parol evidence regarding the negotiations to the extent they reveal the parties' subjective intent.[26] The court explicitly rejected the Fifth Circuit Court of Appeals finding in regard to the parol evidence rule as being 'not particularly persuasive on this point'.[27] Since the decision in MCC-Marble, the US law can be seen as not applying the parol evidence rule under the CISG.[28] Due to the lack of other decisions which examine the relationship between the parol evidence rule and the CISG, the strong support by the literature and the aim of a conforming interpretation of the CISG in all countries the law is that according to Article 8(3) of the CISG, prior negotiations between the parties can be evidence of the content of a contract under the CISG.[29] [page 59]

However, does that mean that the parol evidence rule is an unsurmountable obstacle for common law judges, lawyers and businesses in other common law countries?

2. Parol evidence rule and the common law

The parol evidence rule is long established in English law. In Bank of Australasia v Palmer Lord Morris held:[30]

Parol testimony cannot be received to contradict, vary, add to or subtract from the terms of a written contract, or the terms in which the parties have deliberately agreed to record any part of their contract.

This has been interpreted to mean that even if the written contract can be an incomplete or an inaccurate record of what the parties agreed, the parties are stuck with what was written: extrinsic evidence of terms which were agreed but which were, by accident or design, omitted from the written agreement, could not as a general rule be given.[31] Not surprisingly, English courts found quickly that the strict adherence to the rule could lead to unjust results. Therefore, the parol evidence rule has many exceptions and its ambit is quite unclear.[32] The Law Commission even stated that the exceptions to the parol evidence rule were so numerous and so extensive that it may be wondered whether the rule itself had not been largely destroyed.[33] One of the most important exceptions has been (contrary to the early stated interpretation of the rule) that if the parties agree to commit only part of their agreement to writing, evidence may be admitted of the other part which was agreed orally.[34] Another important exception has existed in regard to contracts between businessmen. The courts have had to bend the parol evidence rule occasionally in order to fill out the material contained in the document so as to give the contract the commercial purpose that the parties intended.[35] As the Law Commission points out, the courts sought to adapt the [page 60] parol evidence rule to take account of the 'habits of mankind'. The scope of the rule has been reduced to the point that there is now considerable uncertainty as to when it is applied.[36]

3. Summary

The principal purpose of the parol evidence rule is to respect the importance the parties may have accorded to their writing.[37] Commentators on the CISG have agreed that written agreements will be afforded special consideration under it.[38] Article 29(2) of the CISG gives weight to the written agreement when the parties themselves expressly give weight to it. In commercial reality, parties do not always have time to document their negotiations. This fact is well recognised by English law which, for example, accepts that a bill of lading is a receipt for the goods but is not a contract of carriage although it may be evidence of that contract's terms.[39] The Law Commission in 1986 suggested the abolition of the parol evidence rule stating that this would not make a difference on how cases would be decided.[40] The actual legal position is comparable with the position of the CISG in that there is no writing requirement for commercial contracts under either legal regime since both legal systems recognise that commercial reality sometimes does not leave time to draw up a comprehensive contract. Both systems leave room to acknowledge that written documentation of the contract between the parties is of particular value. But they also both allow oral agreements related to written agreements being taken into account either by Article 8(3) of the CISG or by a case law developed exception to the parol evidence rule.[41] [page 61]

IV. CONSIDERATION

The other common law concept which is heralded as an obstacle to embracing the CISG is consideration. In common law, a contract cannot be formed without consideration (unless a deed is used). Consideration can be defined as the price (in the widest sense) paid by the plaintiff for the defendant's promise.[42] Where a formed contract is changed, then consideration needs to be provided for it.[43] Since the CISG deals with commercial contracts where there is generally consideration, the issue of consideration arises in regard to the modification of a contract according to Article 29(1) of the CISG.

1. Consideration and the CISG

The CISG takes a very clear approach towards consideration. Article 29(1) of the CISG states that '[a] contract may be modified or terminated by the mere agreement of the parties' thereby clearly indicating that there is no place for consideration in the CISG. Indeed, the Secretariat Commentary specifically states that Article 29(1) of the CISG was intended to 'eliminate' and 'overrule' the common law requirement of consideration.[44] Consideration, however, was not only discussed in regard to Article 29(1) of the CISG but also in regard to other Articles in the CISG and likewise rejected. Honnold concluded from the constant rejection of the doctrine of consideration during the negotiations of the CISG that this permanent rejection of consideration under the CISG by the working party members when the issue came to the fore (because consideration was a barrier to enforcing the agreement) amounted to one of the 'general principles' pursuant to Article 7(2) of the CISG.[45]

In New York, in Geneva Pharmaceuticals Technology Corp v Barr Laboratories Inc, a Canadian manufacturer of chemicals had supplied the plaintiff US company with samples of a chemical ingredient and agreed to support the company's application for approval by the Food and Drug Administration as the supplier of the ingredient for the manufacture of the drug. After the approval, the plaintiff submitted a purchase order, which the Canadian firm [page 62] rejected due to obligations under another contract. The Canadian defendant, amongst other things, claimed that consideration was lacking and so there was no valid contract in place. Without closer examination of the CISG's stance in regard to consideration, the New York District Court found that according to
Article 4(a) of the CISG the validity of a contract was a matter of the domestic law. Regarding the question of consideration as a validity issue, the court found consideration under New Jersey law.[46]

2. Consideration under common law

Despite the fall back to consideration by the New York District Court, like with the parol evidence rule, the question arises whether consideration as treated by the common law courts is an actual obstacle for common law jurists to embrace the CISG.

Generally speaking, there is a general dissatisfaction with the doctrine of consideration. Already nearly 70 years ago, in 1937, the English Law Revision Committee stated that the doctrine of consideration did not satisfy the need of the law.[47]

In regard to the modification of a contract, the question arises as to what kind of consideration has to be adequate, adequacy being one of the requirements of consideration. However, it has been settled for over 300 years that the courts will not inquire into the 'adequacy of consideration'.[48] This means, the courts will not evaluate whether the consideration and the promise for which the consideration is given are comparable, nor will the courts denounce an agreement merely because it seems unfair.[49] However, the consideration must have some commercially measurable value.[50] [page 63]

What can amount to consideration can be seen in Shuttle Packaging System v Tsonakis et al. There the plaintiff alleged it had entered into a purchase agreement with the defendants which required the defendants to supply thermoforming line equipment for the manufacture of plastic gardening pots together with the technology and assistance to use the equipment. The contract also included other terms relating to payment schedules, non-competition, warranties, notices, expenses, interest and an integration clause. The non-competition term did not include the specific terms for non-competition, but required the further execution of a non-competition agreement. The parties later entered into a non-competition agreement which contained various covenants of the seller. The non-competition agreement contained no covenants for the buyer, but listed the payment of the purchase price under the purchase agreement as the consideration. A dispute arose in regard to the geographical area of the non-competition agreement. The court rejected the defendants' argument that the non-competition agreement (which was agreed as being a modification of the contract) was ineffective because of lack of consideration for the agreement. The court held that the non-competition agreement was made part and parcel with the purchase agreement and assumed that the consideration for the non-competition agreement was the consideration for the purchase agreement.[51]

In Williams v Roffey Brothers & Nicholls (Contractors) Ltd, the Court of Appeal held that the payment of extra money to ensure performance of an existing duty to avoid a penalty clause constituted a valuable consideration since it was a practical benefit.[52] This was applied in Simon Container Machinery Ltd v Emba Machinery AB where the question arose whether the plaintiff, as a subcontractor of the defendant had a claim towards the insurance money the defendant had received. The reason for the insurance pay out was that the buyer of goods (from plaintiff and defendant) could not pay the purchase price. The defendant had taken out insurance against the non-payment risk. The defendant argued that there was no consideration in regard to the additional agreement which entitled the plaintiff to get a share of the insurance payout. The court found consideration 'because the additional agreement (including the relevant entitlement) was of importance to the plaintiff and was plainly intended to have legal effect. The court endorsed its finding with the following example: 'The position can be starkly stated as follows. A and B have made a commercial agreement and intend making further [page 64] similar agreements. A says to B "I want you to accept some further obligations in relation to all our contracts." B agrees. It would be remarkable if B were not bound to accept the addition to the first contract.'[53]

The examples show that the courts are prepared to find either consideration in the original contract being good for the modification or relying on the parties' intent in regard to finding valid modification. It will depend on the facts of each individual case how much weight judges will give the formal requirement of consideration when determining whether there has been a valid modification of a contract. Equitable estoppel also comes into play in regard to showing how under common law equity courts dealt with the situation where someone acted to his or her detriment on a promise. The doctrine of equitable estoppel states that where a promise is made which, to the knowledge of the person making the promise, is going to be acted upon by the person to whom it is made and detriment has been suffered, the promisor will not be allowed to renege or act inconsistently with the promise.[54] Therefore, it would be open to a party to estop its part of the modified contract if the other party would not perform according to the agreed modification as far as it had suffered a detriment.

3. Summary

Consideration is not an insurmountable obstacle to embracing the CISG. The doctrine has also become more flexible over the years, just as the parol evidence rule has, notably statutes like the Contract (Right of Third Parties) Act 1999 (UK) or the Contracts (Privity) Act 1982 (NZ) have broken the strict privity of contract doctrine associated with consideration. Equitable estoppel has been used in the past by the courts to enforce contracts that did not have consideration. And the courts allow some in-roads into the doctrine of consideration by finding a practical benefit or placing more weight on the intention of a party to find for valid modification of a contract.

V. CONCLUSION

Neither the common law concept of the parol evidence rule nor the doctrine of consideration are incorporated in the CISG. However, the actual 'erosion' of both these doctrines should make it easier for common law jurists to embrace the CISG rules on contract formation. The CISG is the more modern document taking [page 65] into account today's international (and it would seem, domestic) commercial reality. So why is the CISG not used by lawyers in New Zealand, Australia and Canada? Maybe one of the obstacles in those common law countries is the lack of precedent. Since the United Kingdom has not ratified the CISG, an important commercial country to provide valuable precedent is missing.[55] Even US judges have repeatedly claimed that there is not enough precedent in regard to the CISG.[56] However, with the growing number of excellent websites which even make foreign judgments and arbitral awards accessible (often in an English translation), the always growing number of text books and since last year the UNCITRAL Digest which brings together relevant case law, this cannot be the case anymore.

On the other hand, it might be just plain comfort with the familiar common law system which hinders the embrace of the CISG. And it can be argued that the adherence does not matter since as shown in this paper, the difference between the CISG and the common law to contract formation in the aspects of consideration and the parol evidence rule is not radically different. This is true. However, the advantage of applying the CISG instead of the common law is that the CISG offers a regime of contractual rules which have been widely received as a benchmark for the successful unification of commercial law in the post-war era [57] and the 'greatest achievement aimed at harmonizing private commercial law'.[58] A harmonisation of international commercial law saves money and time. As Nottage points out '[w]ith great relief, if only because this means I will not have to dig out dusty textbooks on New Zealand contract law, I realise that CISG probably applies ...'.[59] [page 66]


FOOTNOTES

* Petra Butler is qualified as a lawyer in Germany and New Zealand. She obtained her LLM from Victoria University of Wellington, New Zealand, in 1992 and her PhD from Goettingen, Germany, in 1998. Professor Butler started her academic career as a researcher at the Institute for Private International Law and Comparative Law at the University of Goettingen, Germany, and worked later as a researcher at the Research Centre of Public Administration at the University of Speyer, Germany. Since 2000, she teaches and researches at Victoria University of Wellington, New Zealand. Her main research interest is human rights. She has been a member of the National Advisory Council on Human Rights for the National Plan of Action for Human Rights.

1. H Lutz, 'The CISG and Common Law Courts: It there really a Problem?' (2004) 35 VUWLR 711; H S Burmann, 'Building on the CISG: International Commercial Law Developments and Trends for the 2000's' (1998) 17 J L and Commerce 355.

2. As at July 2005.

3. The non-accession to the CISG by the United Kingdom is surprising since the United Kingdom ratified the predecessors of the CISG: the ULIS and ULF of 1964.

4. See also M Kilian, 'CISG and the Problem with Common Law Jurisdictions' (2001) 10 J Trannat'l and Policy 217, 230.

5. J E Murray, 'An Essay on the Formation of Contracts and Related Matters under the United Nations Convention on Contracts for the International Sale of Goods' (1988) 8 J of L and Commerce 11, 12.

6. 29 out of 52 reported cases in total on the CISG database were decided between 1998 and 2003 in the United States: CISG database, Pace University School of Law, New York <http://www.cisg.law.pace.edu> (last accessed July 2005).

7. GH Treitel, The Law of Contract, Sweet & Maxwell, London, (1995, 9th ed), 176, 177.

8. J F Burrows, J Finn and S Todd, Law of Contract in New Zealand, Butterworths, Wellington (1997, 8th ed), 93.

9. H Lutz, 'The CISG and Common Law Courts: It there really a Problem?' (2004) 35 VUWLR 711, 714. These figures have to be approached with some caution since the database relies on individuals to report case law.

10. United Nations Commission on International Trade Law.

11. University of Basel: cisg online (<http://www.cisg-online.ch> with materials, cases, and legal texts); Pace University: pace cisg website (<http://www.cisg.law.pace.edu> with materials, cases, and legal texts); UNCITRAL: CLOUT (<http://www.uncitral.org>) with case law, legal texts, and working papers.

12. For example, probably the most authoritative commentary by Schlechtriem and Schwenzer has just been published in its second English edition (Commentary on the UN Convention on the International Sale of Goods (CISG), OUP, 2005).

13. The Digest was prepared using the full text of the decisions cited in the Case Law on UNCITRAL Texts (CLOUT) abstracts. The Digest was launched in 2004 and is available at <http://www.uncitral.org>. According to Perales the Digest has several advantages: it summarises the more comprehensive CLOUT case law on the CISG in a more systematic way; the Digest, however, is neutral in its presentation of the reasoning of the courts (Pilar Perales Viscasillas, 'Modification and Termination of the Contract', 25 Year United Nations Convention on Contracts for the International Sale of Goods (CISG), Vienna, 15-16 March 2005, 2, 3).

14. The United Kingdom, for example, was represented in the 3rd Session of Working Group I (30 August to 10 September 1971) and in the 3rd Session of Working Group II (17 to 28 January 1972).

15. This is the working definition in this paper because of limited space. It is acknowledged that there is no uniform parol evidence rule in existence among common law countries or even among the states in the United States: B Zeller, 'The Parol Evidence Rule and the CISG -- a Comparative Analysis' (2003) 36 Comparative Law Journal of South Africa available under <http://cisgw3.law.pace.edu> (last accessed 9 September 2005); CISG Advisory Council Opinion No 3, Parol Evidence Rule, Plain Meaning Rule, Contractual Merger Clause and the CISG (23 October 2004) <http://cisgw3.law.pace.edu> para 1.2.1 et seq.

16. However, CISG, Article 12 allows Contracting States to preserve writing requirements according to their domestic law (CISG, Article 96).

17. UNCITRAL Digest, Article 11 para 4, A/CN.9/SER.C/DIGEST/CISG/11 (<http://uncitral.org>.) (last accessed 9 September 2005). See limitation as stipulated in CISG, Articles 12, 29 II.

18. P Schlechtriem/I Schwenzer (Hrsg) Kommentar zum Einheitlichen UN-Kaufrecht -- CISG - (4th ed, Beck, Muenchen, 2004) Article 11 para 8 (P Schlechtriem); UNCITRAL Digest, Article 11 para 2, A/CN.9/SER.C/DIGEST/CISG/11 (<http://uncitral.org>.) (last accessed 9 September 2005). CISG, Article 29(2) requires a modification of a contract in writing (and therefore supersedes CISG, Article 11) if the contract between the parties specifically stipulates a writing requirement for the modification of the contract (this is not surprising and consistent with party autonomy).

19. RBV NV v JV BV (Rechtbank van Koophandel Hasselt, Belgium, 22 May 2002) <http://www.law.kuleuven.ac.be/ipr/eng/cisg/> (last accessed 9 September 2005).

20. See MCC Marble Ceramic Center, Inc v Ceramica Nuova D'Agostino SpA 114 F3d 1384, 1390 footnote 14 where the court noted its unfruitful search for cases from other jurisdictions in regard to the parol evidence rule (11th Circ CA, 1998). This is not surprising given that case law with regard to the CISG in Canada, Australia and New Zealand is nearly non-existent. See also discussion in L DiMatteo et al, 'The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence' (2004) 24 Northwestern Journal of International Law & Business 299, 328.

21. Beijing Metals & Minerals v American Business Centre Inc 993 F2d 1178 (5th Circ CA, 1993).

22. Beijing Metals & Minerals v American Business Centre Inc 993 F2d 1178, 1182, 1183 footnote 9 (5th Circ CA, 1993): 'We need not resolve this choice of law issue, because our discussion is limited to application of the parol evidence rule (which applies regardless).'

23. Compare Beijing Metals & Minerals v American Business Centre Inc 993 F2d 1178, 1182, 1183 (5th Circ CA, 1993).

24. Beijing Metals & Minerals v American Business Centre Inc 993 F2d 1178, 1182, 1183 footnote 9 (5th Circ CA, 1993) citing Filanto SpA. v Chilewich International Corp 789 F Supp 1229, 1237 (SDNY 1992); H Lutz, 'The CISG and Common Law Courts: Is There Really a Problem?' (2004) 35 VUWLR 711, 719.

25. MCC-Marble Ceramic Centre Inc v Ceramica Nuova D'Agostino SpA 114 F3d 1384, 1389 (11th Circ CA, 1998).

26. MCC-Marble Ceramic Centre Inc v Ceramica Nuova D'Agostino SpA 114 F3d 1384, 1390 (11th Circ CA, 1998) citing J Honnold, H Bernstein, J Lookofsky, H Flechtner, J Murray, and P Winship. The court explicitly rejected Moore's arguments the only commentator reconciling the parol evidence rule with the CISG, by referring to the supranational character of the Convention and its general avoidance of domestic legal principles (p 1391) (referring to D Moore, 'The Parol Evidence Rule and the United Nations Convention on Contracts for the International Sale of Goods: Justifying Beijing Metals & Minerals Import/Export Corp v American Business Center, Inc' 1995 BYU L Rev 1347 (1995)).

27. MCC-Marble Ceramic Centre Inc v Ceramica Nuova D'Agostino SpA 114 F3d 1384, 1390 (11th Circ CA, 1998).

28. See, for example, Shuttle Packaging System v Tsonakis et all (17 December 2001) <http://www.cisg.law.pace.edu> (last accessed 10 September 2005); L DiMatteo et al, 'The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence' (2004) 24 Northwestern Journal of International Law & Business 299, 329; H Flechtner, 'The UN Sales Convention (CISG) and MCC-Marble Ceramic Centre Inc v Ceramica Nuova D'Agostino, SpA: The Eleventh Circuit Weighs in on Interpretation, Subjective Intent, Procedural Limits to the Convention's Scope, and the Parol Evidence Rule' (1999) 18 JL and Commerce 259.

29. See also CISG Advisory Council Opinion No 3, Parol Evidence Rule, Plain Meaning Rule, Contractual Merger Clause and the CISG (23 October 2004) <http://www.cisg.law.pace.edu> para 2.1 et seq. The Opinion points out that the CISG's legislative history supports the finding that the parol evidence rule has [no place] in the CISG.

30. Bank of Australasia v Palmer [1897] AC 540, 545.

31. See Evans v Roe et al (1872) LR 7 CP 138; see also Law Commission, Law of Contract -- The Parol Evidence Rule (Working Paper No 70, London, 1986), 4.

32. See for an overview of the exceptions and the case law: Law Commission, Law of Contract -- The Parol Evidence Rule (Working Paper No 70, London, 1986), 6 et seq.

33. Law Commission, Law of Contract -- The Parol Evidence Rule (Working Paper No 70, London, 1986), 13.

34. See Malpas v L & SW Ry Co (1866) LR 1 CP 336 (HL); Couchman v Hill [1947] KB 554; Turner v Forwood [1951] 1 All ER 746.

35. Hutton v Warren (1836) 1 M & W 466, 475; 150 ER 517, 521; Smith v Wilson (1832) 3 B & Ad 728; 110 ER 266 where extrinsic evidence was admitted to show that by a local custom the phrase '1,000 rabbits' used in the written contract was to be taken as meaning 1,200 rabbits.

36. Law Commission, Law of Contract -- The Parol Evidence Rule (Working Paper No 70, London, 1986), 16. See also the recent case of Shogun Finance Ltd v Hudson [2004] 1 AC 919 (HL) where Lord Hobhouse described the parol evidence rule as 'fundamental to the mercantile law of [England]; the bargain is the document; the certainty of the contract depends on it ... This rule is one of the great strengths of English commercial law and is one of the main reason for the international success of English law ... (at [49]) see critical analysis by D McLauchlan, 'Parol Evidence and Contract Formation' (2005) 121 Law Quarterly Review 9.

37. Law Commission, Law of Contract -- The Parol Evidence Rule (Working Paper No 70, London, 1986), 14. The other underlying reason was to narrow the issues in a civil jury trial.

38. See P Schlechtriem and I Schwenzer (Eds), Commentary on the UN Convention on the International Sale of Goods (CISG), OUP, Oxford (2005, 2nd ed), Article 11 para 13; J Honnold, Uniform Law for International Sales under the 1980 United Nations Convention , Aspen Publisher, New York (1999, 3rd ed), para 110.

39. The Ardennes [1951] 1 KB 55.

40. Law Commission, Law of Contract -- The Parol Evidence Rule (Working Paper No 70, London, 1986), 24, 25.

41. See summary of exceptions in Law Commission, Law of Contract -- The Parol Evidence Rule (Working Paper No 70, London, 1986), 6 et seq.

42. J F Burrows, J Finn and S Todd, Law of Contract in New Zealand, Butterworths, Wellington ( 1997, 8th ed), 93.

43. This is evident in regard to past consideration see L Willmot et al, Contract Law, OUP, Melbourne (2001), 148, 149.

44. Secretariat Commentary, Article 27 of the 1978 draft (draft counterpart of Article 29) para 2.3 http://www.cisg.law.pace.edu (last accessed 10 September 2005). See in the affirmative, for example, Shuttle Packaging Systems LLC v Jacob Tsonakis, INA SA and INA Plastics Corporation (17 December 2001) 1:01-CV-691 (WD Mich SD).

45. J Honnold, Uniform Law for International Sales, Kluwer Law and Taxation Publishers, Deventer (1991, 2nd ed), 284 para 204.4.

46. New York in Geneva Pharmaceuticals Technology Corp v Barr Laboratories Inc (2002) 201 F Supp 2d 236 (SD NY). See in regard to the problem of the use of Article 4(a) H Lutz, 'The CISG and Common Law Courts: It there really a Problem?' (2004) 35 VUWLR 711, 721. In contrast, in the case of Shuttle Packaging System v Tsonakis et al <http://www.cisg.law.pace.edu> (last accessed 10 September 2005) the District Court, Western District of Michigan stated that consideration had no place in the CISG.

47. Referring to Lord Wright, 'Ought the Doctrine of Consideration to be abolished from the Common Law?' (1936) 49 Harv L Rev 1225, 1227 posing the question why the contractual intention is not enough, why an external objective test is needed.

48. J F Burrows, J Finn and S Todd, Law of Contract in New Zealand, Butterworths, Wellington (1997, 8th ed), 103.

49. J F Burrows, J Finn and S Todd, Law of Contract in New Zealand, Butterworths, Wellington (1997, 8th ed), 103.

50. See, for example, Thomas v Thomas (1842) 2 QB 851 where the plaintiff's husband had expressed the wish that the plaintiff, if she survived him, should have the use of his house. After his death the defendant, his executor, agreed to allow her to occupy the house because of the husband's wishes and on the payment of 1 a year. The court declined to be influenced by the husband's wish but accepted the plaintiff's promise to pay the 1 a year as affording consideration for the defendant's promise.

51. Shuttle Packaging System v Tsonakis et al <http://www.cisg.law.pace.edu> (last accessed 10 September 2005). The court also held that in regard to CISG, Article 29(1) a consideration was not necessary. In Century Yuasa Batteries (NZ) Ltd v Johnson (unreported 27 October 2004, AA 346/04, AEA 847/04) the New Zealand Employment Relations Authority obiter stated that a consideration for a modification of a contract could be seen in a premium paid to the normal salary.

52. Williams v Roffey Brothers & Nicholls (Contractors) Ltd [1991] 1 QB 1, 20 (CA).

53. [1998] 2 Lloyd's Rep 429, 434, 435 (QB, Com Ct).

54. Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130.

55. However, as was heard at the CISG Conference in Vienna 15-16 March 2005 the opinion is changing and preparations are on the way to change that.

56. Delchi Carrier SpA v Rotororex Corp (1995) 71 F 3d 1024, 1027, 1028 (2nd Cir, CA).

57. H S Burman, 'Building on the CISG: International Commercial Law Developments and Trends for the 2000's' (1998) 17 J L and Commerce 355

58. K Bell, 'The Sphere of Application of the Vienna Convention on Contracts for the International Sale of Goods' (1996) Pace Int'l L Rev 237, 238.

59. L Nottage, 'Who's afraid of the Vienna Sales Convention (CISG)? A New Zealander's View from Australia and Japan' (2005) 36 VUWLR [<http://www.cisg.law.pace.edu/cisg/biblio/nottage.html>].


Pace Law School Institute of International Commercial Law - Last updated May 31, 2006
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