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Would English law on trade usages benefit from adopting a more formal approach such as seen in other jurisdictions as well as in international conventions?

Anne-Katherin Drettmann
August 2009

  1. Introduction
  2. De lege lata
    1. The nature of trade usages
    2. Definition and requirements of a trade usage
      1. Trade usages must be in accordance with the law
      2. Trade usages must be reasonable
      3. Trade usages must be generally known
      4. Trade usages must be in accordance with the express provisions of the contract
      5. Belief in its binding nature
    3. Other similar instruments of interpretation - distinctiveness of trade usages
      1. Course of dealing
      2. Trade practice
      3. Mercantile or trade terms, trade rules
      4. INCOTERMS
    4. Trade usages in arbitration
      1. English arbitration
      2. Perception of trade usages in international commercial arbitration
    5. Interim result
  3. Trade usages in comparative perspective
    1. The Uniform Commercial Code
      1. Its history
      2. Its construction
      3. Article 2 - §1-205
      4. Objectives of the rule
    2. The United Nations Convention on Contracts for the International Sale of Goods
      1. Its history
      2. Its construction
      3. Articles 8 and 9 CISG
    3. Common Frame of Reference
      1. Its history
      2. Its construction
      3. Article II.-1:104 CFR
  4. De lege ferenda - analysis of the comparison
    1. Evaluation of the American position
    2. Evaluation of the position taken by the CISG
    3. Evaluation of the approach taken by the CFR
  5. Conclusion - quo vadis?
       Bibliography

A. INTRODUCTION

An inspection of a cross-section of sales agreements should disclose that the terms of a sales contract can be innumerable and difficulties may arise in determining the meaning of the contract with its various specifications. Assume, for example, that an English merchant buys wood products from a Swedish seller f.o.b.[1] Stockholm and the contract provides that it should be governed by English law. According to a Swedish trade usage the performance in Stockholm is f.a.s.[2] not f.o.b., i.e. the seller is not responsible for the costs of loading.[*] In case of a dispute this constellation may give rise to many different legal questions, especially with regard to the respective trade usage and its applicability. From a legal perspective what is the nature of a trade usage and where to find it in the law? By what means is the existence of a trade usage and its relationship to similar instruments established? What preconditions have to be met for national trade usages? Are foreign trade usages of any relevance in English commercial life and do they have to meet certain national requirements as well in order to be acknowledged in English law or is this simply unnecessary? Who has authority to declare a usage as being in existence? And can an English judge apply a foreign trade usage at any time? Do "international trade usages" exist? Finally, what is the very nature and relation of the terms "f.a.s." and "f.o.b." in regard to trade usages? These and similar questions may arise in international commercial transactions.

Thus, the purpose of this paper shall be to examine trade usages [3] closer - from a national as well as an international perspective. In English law there is no codified rule in relation to trade usages nor is commercial law in general codified (B.). As an alternative to traditional litigation procedure, this rather informal position is becoming even more evident in commercial arbitration which enjoys growing popularity (C.). Thereafter I shall compare the English approach to a more formal one taken by many European jurisdictions as well as the USA (D.) and then assess whether the English legal system could benefit thereof (E.). Finally, I shall conclude this paper with a short summary and an evaluation of the current state of English law in this matter and possible future prospects (F.).

B. DE LEGE LATA

As stated above, the English position on trade usages is rather informal. Trade usages assist in the interpretation of contracts, i.e. a certain expression is given a certain meaning which may depart from the natural meaning of the word. They belong to the area of commercial law and as such remain uncodified. Trade usages and similar instruments accommodate to the needs of commercial life. Merchants do not have to agree on every single aspect of their contract but employ usages instead and thereby speed up the whole transactions. According to Goode, the unwritten customs and usages of merchants are a source of obligation of utmost importance in commercial contracts and their ramification on the content and interpretation of contractual terms cannot be over-emphasised.[4] Moreover, this feature distinguishes commercial contracts from others but it is a distinction not formally adopted by the law.[5]

The fruitfulness of business mind and the possibility that a legal practice which starts life without any legal force but obtains the devotion of law over time are salient characteristics a commercial lawyer must be responsive to. Is a particular document a document of title? The House of Lords may have said no - possibly several times. On considering how much time has gone by since the rulings were made, cannot it now be said, that the acceptance of this document as a document of title in mercantile usage is so well-established as to sustain it legal recognition as such?

What is it that gives binding force to unwritten mercantile usage? Is it the expressed or implied adoption of the usage in their contract by the parties or does it have independent normative force?

To be able to draw a comparison between the English position on trade usages and that of foreign jurisdictions, I shall focus on English trade usages, their nature, distinctiveness and definition their application and interpretation in civil courts as well as in arbitration, in a first step to fully understand national differences and certain characteristics. Therefore, I shall elaborate on the nature of trade usages (I.) and define what is meant by and required of a trade usage (II.). Thereafter I shall consider other but similar means of interpretation and emphasise the distinctiveness of such trade usages (III.). For the sake of completeness, I shall make a short digression on trade usages in arbitration (V.). This shall form the scope and mandatory contents of the basic framework for the envisaged codification later on.

I. The nature of trade usages

Many institutions of commercial law originated in the course of influential business dealings between individual enterprises which then developed into a trade usage and eventually became an abstract rule of law. In civil law countries this law was called common law. In Anglo-American jurisdictions this concept is not used since the whole fabric of common law is regarded as such. However, in both legal families - in the civil as well as common law tradition -, the term "common law" is used as dissociation of statutory law. Of course, this observation is insufficient to determine the nature of a trade usage. A trade usage is not of general application nor has it acquired a high degree of abstraction. Conversely, it is of special application and has not yet cut the umbilical cord with its origin. Therefore the distinction between usage and an abstract rule is not primarily the normative or non-normative effect of the prescript in question but it is its inherent character and quality.[6]

II. Definition and requirements of a trade usage

As a consequence of its nature, the definition of a trade usage is not an easy task. However, uniformly accepted features of a trade usage are apparent. Schmitthoff summarises them as follows: 'a trade usage is a method of dealing or a way of conduct generally observed in a particular line of business with such regularity that it is accepted as binding by those engaged in that line of business'.[7] [8] Although the treatment of trade usage by the courts and sometimes even the legislator - and their practical effect - is certainly not the same, in general this definition is sufficient for both national as well as international trade usages, since no conceptual distinction is drawn between them in English law.[9]

As stated above, English law has still to codify the requirements that qualify a practice as a trade usage. They stem from case law and have constantly been refined during the last century. With regard to any contemplated codification, reference to basic preconditions should be made. First of all, to be effective a trade usage must not be contrary to the law (1.), and must be reasonable (2.), generally known or known to the party against whom it is invoked (3.), and consistent with the express provisions of the contract (4.). Finally, it must be observed from a belief in its legally binding nature (5.).[10]

1. Trade usages must be in accordance with the law

First of all the trade usage must be in accordance with the law. This first prerequisite may be considered as a unifying feature of trade usages throughout the different jurisdictions.[11] Thus, trade usages may oust optional rules of law, i.e. jus dispositivum, but do not supersede mandatory legal rules, i.e. jus cogens.[12]

2. Trade usages must be reasonable

Secondly, a usage must be reasonable. Otherwise it will not be imported into a contract if it appears to the court to be unjust or unreasonable, unless the party against whom it is set up was aware of it and can be considered to have agreed to it.[13] Therefore a trade usage may legally favour one side over the other as long as some fundamental principles are not infringed. However, if, on dispute before a legal forum, it is found that the side privileged by the usage endeavours to enforce some rule of conduct which is so entirely in favour of their side, the courts have always determined that such a usage, if sought to be enforced against a person in fact unaware of it, is unreasonable.[14] Thus, in the case of Ropner v Stoate, Hosegood & Co [15]it was held that an alleged usage of the port of Bristol for consignees to take delivery of cargo at a fixed rate of 5000 tons a day, whatever the size and appliances of the vessel, was unreasonable.[16]

3. Trade usages must be generally known

The trade usage must be definite and uniformly adopted in order to have the effect to add a qualifying or independent term. There must be no doubt as to its nature; and it must be taken to be known and have been followed, in that form, and as a steady thing, in transactions of that particular kind, by all persons repeatedly engaged in that trade, or branch of the trade.[17] Otherwise it is not possible to say with certainty what the term is, which is to be incorporated into the contract.[18] "It must have quite as much certainty as the written contract itself."[19] The usage must be so general and notorious that a person dealing in the market could easily ascertain it and must be presumed to have been aware of it.[20] Consequently, the adoption of the usage must be identical whenever there has been nothing expressly agreed upon on that point. Occasions in which the usage has expressly been excluded or changed rather tend to prove its general adoption.[21] However, if it happens constantly, this can imply the existence of a negative usage which destroys the former one which is always excluded. Therefore the standard to prove this requirement to be fulfilled is quite demanding as the presumption is that the usage is known to all persons who engage in the trade. And even if one of the parties to the contract has previously been outside this branch of trade, and is in fact unaware of the usage, still the same rule applies in general in order to protect the other party who is entitled to assume that the other party knows what is notorious in the trade.[22]

4. Trade usages must be in accordance with the express provisions of the contract

In addition to the requirements stated so far, a usage may only be employed if the trade usage is in conformity with the provisions of the contract and not explicitly excluded. An example for such exclusion is an "entire agreement" clause.[23] In The Helene Knutsen [24], dealing inter alia with the construction of a c.i.f. contract for the sale of diesel, the commercial court decided that the dispute as to whether there was a usage to the effect that a representative portion of samples of oil tested by an inspector for the purpose of making his determination would be retained by an inspector for a reasonable time could not be resolved due to an "entire agreement clause". This clause within the contract was effective to exclude implied terms based upon usage.[25] The purpose of such a provision is to preclude a party to a written agreement from threshing through the undergrowth and finding some implied terms extending the contractual agreement and perhaps leading to legal uncertainty.[26]

5. Belief in its binding nature

Finally, according to Goode in order to constitute a trade usage the practice must be perceived as a form of legally binding obligation, not as a matter of mere courtesy or convenience or a desire to accommodate a customer's wish.[27] This requirement, which has its counterpart, the opinio juris, in international customary law, causes considerable difficulty in private law, for if the belief is true, the requirement is unnecessary, whereas if it is false, this belief provides a bizarre basis for giving the practice binding force. In addition thereto, the onus to prove this requirement rests with the person alleging the said usage. The raised objections become fairly evident in the case Libyan Arab Foreign Bank v Bankers Trust Co.[28] In that case, which arose out of a dispute between the United States and Libya, a claim for repayment of a Eurodollar deposit with the London branch of an American bank was resisted. This was due to a usage in the Eurodollar market that withdrawals could be made only by transfer through a clearing system in the country of the denominated currency, in this case New York. Here the transfer would have been blocked by a Presidential order prohibiting transfers to Libyan nationals. Slaughton J decided that the usage was not sufficiently proved to the extent that the said usage is observed from a sense of legally binding obligation.[29]

Moreover, the opinio juris requirement appears to make it impossible for a new usage to develop. This would require a collective, future oriented binding will. To put it another way, this implicitly ascribes a collective mental state to the business community. This in itself is quite unreal.[30] Such a subjective element seems to be quite unique to the theory of English law as we shall see later on.[31]

III. Other similar instruments of interpretation - distinctiveness of trade usages

In English law trade usages affect the construction of contracts. They are considered to be implied terms, means of interpretation. As stated above [32], usages differ from rules in that they do not reach such a high level of abstraction. When it comes to other quite similar instruments, such as course of dealings (1.) and trade practices (2.) or trade terms (3.) as well as INCOTERMS (4.), the criteria employed for a distinction are somewhat different.

1. Course of dealing

Within the contractual area, a number of cases deal with what could be called 'course of dealings'. In this situation the parties to a contract deal in a certain manner for a period of time although the practice adopted is neither part of a written or oral contract nor need to be engaged in by other merchants in the same trade. A problem may arise concerning the interpretation of a word or words in the contract or something not covered by the explicit terms of the contract. Here the practice between the parties may evidence how to fill this gap or remedy this deficiency. Thus, it is a means of interpretation too. Unlike a trade usage, a course of dealing is confined to the contractual relationship of the parties and requires a longer contractual relationship.[33]

2. Trade practice

A 'trade practice' is another instrument similar to trade usages and therefore needs some explanation as well. The term alludes to the established practices of persons engaged in the same and other kindred of trade. The methods they adopt, and the conditions they impose on one another, evidence what they regard as proper and satisfactory in conducting such transactions.[34] Moreover, when things are ordinarily done at the place in some particular way this is considered to be a general arrangement, a guiding principle. The various usual practices demonstrate what is and is not reasonable in performing a contract, and it would be inconvenient and unreasonable not to work within the limitations evidenced by them. This is a much more indefinite subject than that of trade usages. A definite uniform usage may be impliedly incorporated into the contract with the effect of adding terms to it. Conversely, trade practices need not be either definite or uniform, and though they are of importance in showing how the agreed terms of the contract are to be understood, and should be performed, e.g. the manner in which the obligation to load a full cargo on board a vessel is to be satisfied.[35] To put it another way, although they are means of interpretation as well, they cannot add other independent terms to a contractual agreement. Moreover, such varying practices are only some guide to what is a reasonable manner of performing the contract, whereas a definite usage imported into the contract becomes the guide and rule as to what is to be done.[36] In Ropner v Stoate, Hosegood [37] Channell J distinguishes trade practices i.e. the mode of performing the contract from trade usages which directly relates to the obligation of the parties. Moreover, the time of performance - and not the point in time of contracting - is the crucially determining factor in what is regarded as customary in trade practices.[38] Finally, trade practices as well as course of dealings may develop into trade usages as soon as they fulfil the requirements stated below. The main obstacle here is the burden of proof.[39]

3. Mercantile or trade terms, trade rules

Moreover, "trade" or "mercantile terms" need some consideration when elaborating on trade usages and their distinctiveness as they have become especially important on an international level,[40] as shown above in the introduction. Transnational trade is characterised by a fast processing of a great numbers of deals. Therefore, the persons involved must be able to stipulate the contractual provisions in a quick and legally secure way.[41] As a consequence thereof, so called "trade terms" aim to match the present needs of international business. They are best described as generated abbreviations comparable to a code word. Each one provides a certain catalogue of duties for the parties to the contract.[42] Unfortunately, neither the nature nor the classification of such terms is an easy task. Trade terms indicate a certain way of interpreting contractual terms, i.e. certain legal incidents are attached to them unless a contrary intention appears.[43] Consequently, they are - like trade usages - means of construction or interpretation of a contract, although they may not add terms to the contract. Moreover, they are - at least on a national level - definite and certain as to their respective contents.[44] However, they need expressed incorporation to be part of the contractual provisions. Thus, although they may be the product and outgrowth of commercial usage and trade usages may assist in defining their very contents, trade terms do not represent such usages.[45] They are contractual provisions explicitly incorporated by the parties. It follows that by nature they are contractually agreed expressions. Trade terms provide for international practice in commercial sales.[46] Consequently, although they do not represent trade usages, they play an important role in commercial law and are closely connected to trade usages.[47] However, Benjamin - in his 4th edition - takes a different view in relation to the Vienna Convention. He assumes that the English rules could be preserved - even if the UK would ratify the Convention - as trade usages relevant to the interpretation of the contract.[48] Undoubtedly, trade usages are used to further specify these trade terms, as most of them only contain a limited bundle of duties. Therefore additional interpretation is often necessary.[49]

4. INCOTERMS [50]

However, such trade terms could only fulfil their task properly, if all parties involved interpret or "decode" them accordingly.[51] Since some trade terms are interpreted differently throughout the various jurisdictions,[52] the ICC [53] published a general guideline for the interpretation of the most common terms.[54] They came to be known as "INCOTERMS"[55] and represent trade terms with standardised content.[56] Trade terms are given a meaning in accordance with a national interpretation whereas INCOTERMS provide an international and most common interpretation.[57] Their widespread adoption facilitates the handling of arrangements and secures consistency in the terms used for price and delivery. However, it is often necessary to qualify these stipulations by additional words,[58] whose interpretation may be according to trade usages.[59]

The INCOTERMS are not binding in English courts and are best described as a general guideline for the international interpretation of those trade terms.[60] If parties wish their trade terms to be interpreted in accordance with the INCOTERMS, their intention should be clearly stated in the contract.[61] Problems arise in the interpretation of trade terms if there is no such reference in an international contract. According to Benjamin, in most of the cases to come before the English courts, the parties had not explicitly adopted the INCOTERMS.[62] It is unclear whether the international character of the contract implies the interpretation according to the INCOTERMS or whether the national understanding of such stipulations is to be employed. Sassoon assumes that where the scope or onus of any particular duty is in doubt due to lack of authority or absence of agreement expressed or implied,[63] the INCOTERMS may nevertheless furnish prima facie evidence. However, in a recent court decision [64] the interpretation of a contract in accordance with the INCOTERMS was denied, because they were not explicitly incorporated into the contract.[65] Reference to them was only made in the invoice which post-dated the agreement between the parties, and, "in any event, did not, having regard to the evidence as a whole, reflect any agreement about when risk and property would pass different from that contained in the General Trade Rules for wood pulp and the provisions of the Sale of Goods Act 1979".[66] Thus, the national interpretation of such terms was employed instead,[67] which is in line with international court decisions [68] and awards.[69] [70] Goode takes a rather neutral position and solves the problem by assuming that the INCOTERMS are a source for identifying trade usages even where, under national law, they would not have been considered incorporated into the contract.[71]

Although English law does not recognise these terms as trade usages on a national level, it is not clear if they could be treated as such on an international level.[72] Schmitthoff, for example, classifies them as an international trade usage.[73]

Thus, individuals and groups in business and mercantile transactions adoptpractices that may lead to certain legal results which do not flow from statute, established case law, or expressed provisions of contract.[74] These practices may have been created from course of dealings and developed into more abstract trade usages. Alternatively, they offer a basic framework for trade stipulations such as trade terms. The dissociation of other similar instruments so far is essential for the contemplated codification in the second part of this paper. In conclusion one may say that the salient features of trade usages are twofold. First of all, they may import terms to the contract, i.e. they do not only explain certain terms of a contract or show how they ought to be performed, but also they include terms which the parties have not thought necessary to express.[75] Such terms are tacitly taken for granted.[76] Consequently, the parties to a contract are entitled to act in accordance with trade practices, but are bound to act according to trade usages.[77] It overrides the rule of law which would otherwise apply, just as expressed provisions override implied ones. However, trade usages are not law as they are always based on the underlying contract. Therefore, the circumstances of the conclusion of the contract must allow for the assumption that the parties had knowledge of the usage and an intention to incorporate it. This was denied in Clacevich v Hutcheson where the whole trade was under the control of the merchant establishing the usage and therefore it was held non-binding.[78]

Secondly, it is presumed that the usage is known to all men engaged in the trade. It makes no difference if one of them has just recently engaged in this line of business and lacks indeed knowledge of it.[79] In conclusion one may say, trade usages take effect as implied terms of the contract and are not considered in English law to have independent normative force.[80] Due to the far-reaching consequences of trade usages, a sharp definition and clear-cut preconditions are necessary to identify trade usages and dissociate them properly from other similar instruments explained above.

IV. Trade usages in arbitration

Finally and in order to shift the attention from the English position on trade usages, confined to national boundaries, to an international comparative one, it might be of considerable interest to examine the role of trade usages outside the courts of law and within arbitration. Arbitration is constantly growing in popularity - approximately 85 % of all commercial contracts are submitted to arbitration.[81] Moreover, London is considered to be one of the most important arbitration centres.[82] It is a form of dispute resolution in which the parties agree to submit their differences to a third party or a tribunal for a binding decision. It is consensual in origin and the person deciding the dispute is not appointed by the state.[83] The legally binding outcome distinguishes arbitration from other alternative dispute resolution methods.[84] The major advantages are the fact that the parties can select an arbitrator familiar with the business in which the dispute arises and that the proceedings are less formal and more flexible than litigation.[85] This latter aspect is of special interest for the purposes of this paper. Therefore I shall shortly elaborate on English commercial arbitration (1.) and then turn to the perception of trade usages in international commercial reality (2.).

1. English arbitration

English law on arbitration can be found primarily in the Arbitration Act 1996 [86] which is the principle statute governing arbitration,[87] and forms part of the English private law.[88] Prior thereto, it could be argued that the most relevant source of English arbitration law was the common law,[89] and according to Goode this fact made English arbitration law largely inaccessible to those who were not experts in this field.[90] Growing dissatisfaction with the status quo led to the 1996 Act constituting a positive example of codification and a detailed primary source of law.[91] Especially the former aspect helped the UK to reassure its leading role in international commercial arbitration.[92]

Arbitration may be domestic or international. However, English arbitration law no longer distinguishes between domestic and international arbitration.[93] Nevertheless, such a distinction may be of considerably importance in relation to the applicable law and in regard to international usages as well as the fact that the parties may not be English.[94] Arbitral tribunals in international commercial arbitration exercise wide powers going well beyond those available to a judge of a national court, for example the determination of the law applicable,[95] the sources of law to which recourse may be made,[96] and the admissible evidence.[97] In the past English law took the position that every contract subject to arbitration proceedings had to be governed by some municipal law nor were the parties at liberty to choose a system of law other than English law. This meant that neither the laws of a foreign country nor principles of international law could be applied. Nowadays the arbitral tribunal is not bound by rules of evidence or procedure nor, in a case involving a foreign element, is it obliged to apply English conflict of laws rules. The 1996 Act clearly states that the parties are not bound to choose a legal system. In so far as the chosen provisions are dispositive the tribunal is also free to determine that they have been modified by any applicable trade usage or the lex mercatoria.[98] Furthermore, section 46 (1) of the 1996 Act allows the tribunal to decide the dispute in accordance with "other considerations". This refers to what is known in civil law countries as "amiable composition" and according to Tweeddale is given the same contents as equity clauses.[99] Therefore the tribunal is not obliged to apply the principles of the relevant law, e.g. rules of evidence. Alternatively, the tribunal may decide the dispute in accordance with some principles other than a national law, e.g. 'the usages and customs of the trade'.[100] This is based on the assumption that international commercial transactions do not need national laws but are better served by general principles and trade usages.[101]

2. Perception of trade usages in international commercial arbitration

If the parties choose English law to govern their contract, per se the arbitrators are bound by the requirements stated above in order to apply a trade usage for the construction and interpretation of a contract. However, the aforesaid implies that they do not apply such a demanding standard of proof.[102] They sometimes even resort to their own expert knowledge instead,[103] and are more willing to invoke usages for their decision.[104] Moreover, trade usages are of utmost importance,[105] since the arbitrators are free to use trade usages to assist their decision,[106] and are not dependent on the parties to name one as a defence and prove it.[107] All this is well demonstrated on an international level in an ICC arbitration case.[108] There the seller of goods under a contract of sale made in 1979 brought arbitration proceedings to recover the balance of the price. The buyer claimed the right to set off loss suffered from the fact that the goods did not conform to the contract of sale. There was a disagreement whether the buyer had given notice of the lack of conformity in due time. The tribunal applied conflict of laws rules to determine the law of the seller's country as the proper law. However, the tribunal considered the applicable law to impose time requirements for the giving of notice of defects that were as short and specific as to run counter to generally accepted trade usages. Thus, the tribunal refused to apply the law applicable under conflict of laws rules, and instead applied Articles 38 and 39 of the Vienna Sales Convention. The Tribunal found that there was no better source to determine the established trade usages than the terms of the United Nations Convention on the International Sale of Goods of 11 April 1980, usually called "the Vienna Convention".[109] This is so even though neither the country of the buyer nor the country of the seller are parties to that Convention. If they were, the Convention might be applicable to this case as a matter of law and not only as reflecting trade usages. The Vienna Convention, which has been given effect to in 17 countries by that time, may be fairly taken to reflect the generally recognized usages in the matter of non-conformity of goods in international sales.[110] The tribunal decided that the buyer had given notice of non-conformity within the time laid down by Articles 38 and 39, that in any event the seller was debarred by Article 40 from invoking the time limits laid down in those Articles because he had known of the non-conformity and did not disclose it, and that therefore the buyer was entitled to compensation which could be set off against the seller's claim. It can reasonably be inferred from the rather truncated report of the award that under the applicable law the buyer would have been held to have given notice of non-conformity out of time. What is surprising according to Goode, who discusses this award in lengthy, about the award is not that it broadened the scope of the Convention beyond its own stated boundaries - for this can happen in many ways, including treatment of the Convention as the embodiment of existing usage - but that it took no account of the applicable law and, in doing so, assumed without discussion that the Vienna Sales Convention did in fact express relevant trade usage.[111] On the latter point according to Goode at least four matters should have been taken into consideration by the tribunal. First of all, when the contract was accomplished the Vienna Convention had not been made.[112] Secondly, there was a convention in force at the time of the contract, namely, Vienna's predecessor, the 1964 Uniform Law on International Sales. One may speculate that by 1979, 15 years after it was made, ULIS had attracted only eight ratifications and one accession, compared with the 17 ratifications, referred to in the award, and that a total of nine adopting States was not considered strong enough evidence of prevailing international trade usage. However, if this is true of ULIS, then how much more so of a convention that was still only in draft at the time of the contract and might conceivably have proved as unsuccessful as ULIS. Thirdly, at the 1980 Diplomatic Conference there was much discussion on what became Article 39 but was then Article 37.[113] last visited: 10.08.2009). Two delegates on separate occasions pointed out that the article in question was one of the most controversial in the entire Convention - hardly the strongest basis for treating the article as evidence of an internationally established usage.[114] And why should it be entrusted with greater weight than the stricter provisions of a convention already in force for 14 years? Finally, international trade conventions are not prepared by the very members of the community whose usages they are supposed to embody. Therefore Goode concludes, often conventions are not recognised precisely because they do not display the practices or perceptions of the dominant commercial community. Although nowadays more determined efforts are made to consult business interests on a proposed international convention. A good example is provided by the Hamburg Rules [115] which, though technically operative, have not proved very successful because the policy decisions and the drafting were undertaken almost entirely by lawyers. Unfortunately, there is no indication from the report of the award [116] whether any of the above arguments were placed before the tribunal. Goode considers a further problem as well. A purely dispositive provision of an international trade convention, even if accurately reflecting existing usage, may be displaced by subsequent usage. The drawing of inferences of uncodified usage from an international trade convention raises a number of conundrums. How can a tribunal be sure that the convention still reflects trade usage and has not been displaced by subsequent usage? There may be a presumption in favour of the continuing validity of a convention as evidence of usage but it is certainly rebuttable. Moreover, tribunal in the award at hand, deciding a case ten years after the contract, relied on the fact that the Vienna Sales Convention had been carried into effect in 17 countries. Suppose that the hearing had taken place not in 1989 but in 1981, when no ratifications had taken place. Would that have made a difference? Certainly at that stage there would not have been clear indication of the level of support the Convention would command. The absence of ratifications would have had no significance either, because it would have been too early to draw any inferences. Suppose that, at the time when the case was in fact heard, there had still been no ratifications. That would have been clear evidence that the Convention had gained no support from governments and was unlikely to do so. Should the tribunal have taken this fact into consideration in giving an award in 1989, when if it had made the adjudication in 1981 no real significance could have been attached to the lack of ratifications? The respective award shows that reliance on conventions as evidence of international trade usage is at once a virtue and a danger. Extensions of this kind may not trouble arbitrators; they have greater impact on national judges, since this may impose the duty on a national court to apply the provisions of a convention which its own state has declined to ratify.[117]

Referring to this award once more - from an academic point of view - another aspect becomes evident. The private character of the hearing and the relative confidentiality of the proceedings and award may be considered as the major drawbacks. These salient characteristics prevent lawyers and legal scholars from accessing the methods and instruments employed by arbitrators. There seem to be no agreed preconditions to be met in order to establish a trade usage for the interpretation of a contract nor is there an agreed procedure when a trade usage is to be taken into consideration. As a consequence, trade usages are of utmost importance in arbitration - presumably because the application of trade usages is somewhat more relaxed and does not follow strict rules.

V. Interim result

Before daring to contemplate provisions from other jurisdictions or conventions dealing with trade usages and related instruments, one shall shortly summarise the English position de lege lata. In English law the unwritten customs and usages of merchants form a source of obligation in commercial contracts. Thus, their ramifications on the construction of contracts cannot be exaggerated.[118]

The fruitfulness of business mind and the possibility that a practice which starts life by having no legal force but does obtain, over time, the devotion of law are salient characteristics of commercial law. Whether a particular document is a document of title involves questions relating to trade usages. And the acceptance of a certain document as a document of title in mercantile usage may be sustained according to its legal recognition as such.

In the theory of English law a usage takes effect as a term of the contract of the parties and is dependent for its validity on satisfying certain external legal criteria, i.e. certainty and consistency of practice, reasonableness, notoriety, and conformity with mandatory law. Consequently, in order to constitute a usage the mere practice or course of dealing must be followed as a legally binding obligation, comparable to the traditional principle that usus must be conjoined with opinio juris in public international law,[119] andnot as a matter of mere courtesy or convenience or desire to accommodate the other party's requests.[120]

The importance of arbitration in relation to the purposes of this paper is twofold. First of all, the 1996 Act, mentioned above, must be mentioned. In her article Arden considers this act as an "extremely important example of the codification of commercial law [...]"[121] and as an adequate answer to Lord Mustill's earlier recommendation to make a statutory statement of the more important principles of common law. The Act not only resolves uncertainty in case law, it also reverses existing case law and alters the English position due to a comparative approach to law.[122] The purpose of the Act was to modernise English arbitration law and to make London an attractive venue for international arbitration.[123]

Apart from these aspects as regards codification, arbitration in general appears to be an interesting field when considering trade usages. The tribunal, consisting of experts in that very kind of business instead of 'legal' experts, is at liberty [124] to apply trade usages and their impact gains even more importance if the dispute is an international one.[125] Moreover, the requirements to be fulfilled to apply a usage are considerably vague and have not been articulated yet or at least those awards formulating the preconditions in order to establish such a trade usage have rarely been published. Furthermore, arbitrators are more willing to employ usages as a means of interpretation and to open the law for commercial reality. Thus, comparing the normal procedure to apply a trade usage with that in commercial arbitration, the English position appears to be stricter and the courts do not tend to ask for any relevant usage to assist their decision.

However, the focus shall now turn to the comparative part where the English position is contrasted against other national and international provisions.

C. TRADE USAGES IN COMPARATIVE PERSPECTIVE

Having examined the English legal position on trade usages in a classic litigation case as well as in commercial arbitration, now I shall focus on rules from other jurisdictions and international conventions. Since England belongs to the common law tradition, I shall devote myself to the American position, i.e. the Uniform Commercial Code and its relevant provisions (I.). Referring to the civil law tradition and the commercial law within Europe, I shall also turn my attention to the CISG (II.). Finally, reference should be made to the envisaged Common Frame of Reference, which provides a rule to of trade usages and may have a significant impact on the English position due to its membership in the European Union (III.).

VI. The Uniform Commercial Code

The Uniform Commercial Code [126] is the most extensive commercial code ever created within the English-speaking world and mainly concerned with the sale of and payment for goods.[127] Accordingly it purports to deal with all the phases which may ordinarily arise in the handling of commercial transactions, from the very beginning till the end, and is not confined to business-to-business relations.[128] Commercial transactions usually consist of five phases,[129] the first being the formation of the sale contract. The relevant rules for commercial transactions are to be found in Article 2. In the following I shall briefly refer to the history (1.), explain the construction of the UCC (2.), in particular Article 2, §1-205 UCC (3.) and then focus on the objectives of the code and the cited provision (4.).

1. Its history

The National Conference of Commissioners on Uniform State Laws in the United States of America was the initial sponsor of the Code although theirs was not the first venture into the field of commercial law reform.[130] In 1940, Mr William A. Schnader conceived the idea of a comprehensive commercial code that would displace the old uniform acts by not only modernising them but promoting uniformity as well. With the help of Professor Karl N. Llewellyn, who became later on the "Chief Reporter", a comprehensive body of law was prepared and by 1950 the first draft completed. After several changes, by1968 the code was effective in all but one state, namely Louisiana.[131] Judging by its reception in the enacting jurisdictions, the Code is an incomparable success story in the history of American law.[132]

2. Its construction

The Code is to be liberally construed and applied to promote its underlying purposes and policies, which are to simplify, clarify and modernise the law governing commercial transactions. Moreover, it permits the continued expansion of commercial practices through custom, usage and agreement of the parties.[133] Of course, the unification aspect should not remain disregarded.[134] Additionally, each section should be read in light of the purposes of the Code and the application of the language should be construed narrowly or broadly, as the case may be, in conformity with the policies involved. Besides the text itself, the Official Comments appended to each section of the Official Text of the Code are by far the most useful aids to interpretation and construction.[135] In order to allow a gradual expansion of commercial practices, the drafting philosophy of the Code was an open-ended one, with room for courts to move in and readjust over the decades.[136] The Code provides flexibility and thereby its own machinery for expansion of commercial practices.[137] It is intended to be a semi-permanent piece of legislation and for the law embodied therein to be developed by the courts in the light of unforeseen and new situations and practices. However, its interpretation and application are limited to its reason. Freedom of the contract is a principle of the Code, i.e. the provisions may be varied by agreement. Hence, many sections contain gap-filling rules which apply unless the parties otherwise agree, e.g. §§2-307, 2-308 UCC. This principle is subject to exceptions. They may be general in nature, i.e. that the obligations of good faith, diligence, reasonableness and care prescribed by the Code may not be disclaimed by agreement. Some provisions explicitly exclude variations, e.g. §§2-318, 9-602 UCC.

3. Article 2 - §1-205

Article 2 - §1-205 reads as follows:

"(1) A course of dealing is a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.

(2) Usage of trade is any practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage are to be proved as facts. If it is established that such a usage is embodied in a written trade code or similar writing the interpretation of the writing is for the court.

(3) A course of dealing between parties and any usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware give particular meaning to and supplement or qualify terms of an agreement.

(4) The express terms of an agreement and an applicable course of dealing or usage of trade shall be construed wherever reasonable as consistent with each other; but when such construction is unreasonable express terms control both course of dealing and usage of trade and course of dealing controls usage of trade.

(5) An applicable usage of trade in the place where any part of performance is to occur shall be used in interpreting the agreement as to that part of performance.

(6) Evidence of a relevant usage of trade offered by one party is not admissible unless and until he has given the other party such notice as the court finds sufficient to prevent unfair surprise to the latter."

As mentioned early the terms of a sales contract can be innumerable.[138] Difficulties may arise in determining the meaning of the contract with its various specifications.[139] Therefore the Code provides in Article 2 general principles of interpretation and construction because the Code's main purpose is to enforce the so-called agreement-in-fact.[140] Accordingly, the Code provides that the contract is to be read on the assumption that the course of prior dealings between the parties and the usages of trade were taken for granted when the contract was formed.[141] Thereby the UCC tries to answer the question how to read such a contract,[142] and defines the relevant means of interpretation.[143] After determining what is to be understood under a usage of trade and a similar course of dealing, the Code gives some examples as to further explain their respective meaning and their peculiar features. Moreover, it provides a rule in case of conflict between the express terms,[144] course of dealings and usages, cf. §§1-205(4), 2-208(2).[145] It is emphasised that only where the parties have not agreed does the Code fill in points the parties have not considered and in fact agreed upon.[146] These means of interpretation differ from the gap-filling provisions in that the Code defines not their content but the situations under which they arise. Due to these similarities, terms deriving from such sources are referred to as "understood terms".[147] Accordingly, a "usage of trade" refers to understandings arising from the business background of the parties' transactions. The Comments emphasise the importance of a trade usage in determining the terms of the contract: [148]

'This Act deals with "usage of trade" as a factor in reaching the commercial meaning of the agreement which the parties have made. The language used is to be interpreted as meaning what it may fairly be expected to mean to parties involved in the particular commercial transaction in a given locality or in a given vocation or trade.'

It follows that a usage of trade is of utmost importance in determining the meaning of the words used by the parties to describe their transaction.[149] Even the parol evidence rule, which normally renders parol evidence inadmissible if a written completely integrated contract exists does not prevent the parties from introducing a usage of trade to explain the words used in their written contract.[150] [151] Similar rules apply to course of dealings, although they are not concerned with general industry practice.[152] Unlike in English law, in America course of dealings may also add additional terms.[153]

In order to establish such a usage the crux of the matter is notice, cf. §1-205(6) UCC. Accordingly it is not even necessary that the usage is of long duration or universal in the industry. Therefore full recognition is available for new usages and for usages currently observed by the great majority of decent dealers. Similarly, it is not necessary that the parties have actual knowledge because those who "should know" are bound anyway. Moreover, the persons bound by the usage do not need to be in a particular industry or, indeed, even be merchants. The case Hahn v Ford Motor Co [154] is a case in point. The consumer admitted to have notice of a certain usage and the court considered this sufficient to include the content of the usage into the contract.

Usages of trade may either be industry-based or location-based. Problems may occur if there are different trade usages in different locations and each location is relevant to the contract. Where the goods are not sold within the location of the usage, at least the other conflicting usage can be applied.[155]

Additionally, the Code provides the rules relating to the procedural burden. Accordingly any claimed usage must be proven "as facts", cf. §1-205(6) UCC. Presumably this means that the existence and content of a usage is ordinarily a question for the jury.[156] The onus rests with the person alleging the existence of such a usage. In carrying this burden, it is normally necessary to use an expert witness, either to testify to the usage of trade or to qualify some written or published standard as a correct reflection of it.

Finally, the code - until recently - also provided the rules to determine the meaning of certain terms, in particular mercantile terms, e.g. f.o.b., cf. §§2-319 to 2-324 UCC. These provisions contained a series of terms that deal with the responsibilities of buyer and seller regarding the transportation of the goods. Although they were not localised next to the rules for interpretation, they did relate to the topic at hand. As stated above, under English law, such trade terms are usually interpreted in accordance with their respective English meaning unless the parties explicitly incorporated INCOTERMS into their contract. Since such problems are not unique to the English system, the UCC envisages replacing the UCC trade terms with the INCOTERMS 2000.[157]

4. Objectives of the rule

The UCC rejects both the "lay-dictionary" and the "conveyancer's" reading. Conversely, the Code determines the meaning of the agreement by the language used by the parties and by their actions, read and interpreted in the light of commercial practices and other surrounding circumstances. The measure and background for interpretation are set by the commercial context, which may explain and supplement even the language of a formal or final writing.[158]

VII. The United Nations Convention on Contracts for the International Sale of Goods [159]

Although the United Kingdom is still not party to the Convention, a fact regretted by some legal scholars as well as English judges, England cannot escape its influence and legal impacts throughout Europe.[160] The English position is mainly supported by the arguments of legal certainty [161] and the leading role of English law in international commercial transactions. This position could be lost if England adopted the CISG and rendered it applicable through its conflict of laws rules.[162] Although the success of the CISG is increasing constantly and its supporters are raising significant arguments, e.g. that companies in the United Kingdom cannot ignore the Convention completely since conflict of laws rules may lead to its adoption,[163] and that the failure to adopt the Convention may adversely affect the City of London as a forum for litigation and arbitration,[164] it seems rather unlikely that the United Kingdom will alter its position within the near future.[165]

Despite all this, the Convention tries to bridge the gap between differences of the civil and common law dogma.[166] Considering the contracting states, e.g. America and Australia as well as many of the European states, this can be chalked up as a success.[167] Nevertheless, the Convention is often criticised for being influenced far too much by the civil law perspective. Article 9 CISG is sometimes considered an "internationalised version of the German §346 of the German Commercial Code".[168] For the purposes of this paper, the Convention is therefore of special importance. It mirrors a cross-section of the leading legal systems and in particular their application of trade usages. Before referring to the relevant provisions, I shall give a short outline of the Convention's history (1.) and its construction (2.) and then focus on Article 9 CISG (3.).

1. Its history

The CISG entered into force on 1 January 1988, and since then the number of Contracting States has risen constantly. Efforts to unify the law on the international sale of goods began in the 1920s and the first provisional report for unifying sales law was presented in 1929. Consequently a committee of representatives of the Common law, French, Scandinavian and German legal systems was set up and the first draft law appeared in 1935. Finally, the Hague Conventions on the sale of goods, Uniform Law on the Formation of Contracts for the International Sale of Goods [169] and Uniform Law on the International Sale of Goods [170] were drawn up at the Hague Conference in 1964.[171] However, considering the number of states that have implemented the Hague Conventions, they remained rather unsuccessful.[172] Nevertheless they have gained some importance in the practice of German, Benelux, and Italian courts. Moreover, national reformers and legislatures have increasingly used them as model laws. Apart thereof, the Hague Conventions laid the foundations for the 'new' Uniform Sales Law drawn up by UNCITRAL and they influenced not only the basic structures and key features in the CISG, eventually concluded in 1980,[173] but also many of its specified solutions.[174] The United Nations Conference took place in Vienna in March and April 1980 with 62 states taking part in the deliberations. Article 99 CISG required the deposit of 10 instruments of ratification, acceptance and approval or accession. This was achieved on 11 December 1987 so that the CISG entered into force on 1 January 1988.[175]

2. Its construction

The Convention is divided into four parts. First of all, the scope and application of the CISG with its general provisions are laid down. Secondly, the convention refers to the formation of the contract and thirdly provides the substantive rules for the sale contract. Finally, the convention concludes with the public international law provisions and allows a contracting State to implement the Convention without the second and third parts.[176] Thus the CISG combines the provisions governing the formation of the agreement with those governing substantive sales law.[177] The Convention is a self-executing one and makes excessive use of indefinite legal concepts, such as "reasonable". The latter is presumably a compromise between irreconcilable conflicts of interests and introduced to circumvent a breakdown of the project. Almost unavoidable if worldwide recognition by legal scholars and lawyers with different legal traditions is envisaged.[178] Therefore the meaning of the provisions of the CISG is not always clear so that interpretation by way of gap-filling is required. However, it is uncertain whether the Convention contains general principles permitting gap-filling or whether reference must be made to domestic law. In case of the latter, the uniformity of the Convention is in danger.[179]

Although the application of the Convention is largely fashioned to commercial sale of goods, it may also apply to non-commercial sales of goods because the scope of special rules for businessmen is not uniformly defined. To some legal systems such rules are even completely unknown. This would lead to an extremely widespread sphere of application. Therefore, in order to avoid an unreasonable burden on private individuals,[180] the Convention does not apply to purchases for personal use, cf. Article 2a CISG.

The uniformity of the legal concepts used in the CISG are to be maintained by interpreting them as far as possible uniformly [181] and autonomously and by constructing specific examples for indefinite legal concepts.[182]

3. Article 8 and 9 CISG

Article 8(3) CISG reads as follows:

"In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties."

Article 9 CISG reads as follows:

"(1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves.

"(2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, the parties to contracts of the type involved in the particular trade concerned."

Whether usages should be recognised at all was a controversial topic throughout the deliberations.[183] Nevertheless Article 9 ULIS and Article 13 ULF as well as its successor, Article 9 CISG, deal with usages in further detail.[184] Although Article 13 (1) ULF provided for a definition of a usage, Article 9 CISG does not define this term any more.[185] It only distinguishes between usage and practice established between the parties, although regularity of behaviour on a couple of occasions is insufficient.[186] Thereby the CISG adopts the legislative technique of most legal systems, i.e. uses the concept of a 'usage' but leaves it to the courts to define what constitutes such a usage.[187] The predecessor of Article 9 CISG, Article 13 ULF, provided that 'a usage is any conduct by businessmen, acts or omissions, which is so widespread in transactions of the kind in question, and therefore so usual, that the other party must be assumed to have had regard to it and its application to the contract.'[188]

A usage may serve to interpret and supplement the contract, e.g. an arbitration clause of the type found in the usages of commodity exchanges or ports and may thus supplement the contract.[189] Hence a usage forms part of the contract unless the contract itself purports otherwise. With regard to the CISG this means that a usage forming part of the contract takes priority over the dispositive provisions of the CISG.[190]

According to Schlechtriem the sphere of a usage - with regard to the persons and matters covered -, especially of a normative usage, should be carefully defined in order to apply it only to the same type of business. Different rules often apply to different territories and sometimes an international trade usage only develops on the basis of a view of the law shared between two particular countries.[191]

The requirements for a usage to be established are not laid down in the convention. Only Article 4(a) CISG states that the validity of a usage, and thus if it is to be taken into account when interpreting and supplementing an international contract of sale, is a matter for domestic law. Accordingly, where a usage affects transactions always negotiated at a certain place, e.g. at commodity exchanges, the domestic law of that place determines whether or not the usage is valid and can be taken into consideration.[192] The situation is similar if usages concern only conduct at a particular place, such as a port or institutional arbitration court. It appears to be more demanding to assess usages in standard cases of the international sale of goods. First of all, the proper law under the conflict of laws rules of private international law must be determined. It is then for the domestic law applying for the purposes of Article 7(2) to establish the proper law of the contract and decide on the validity of the usage. Sometimes this may lead to differences in the extent to which a usage is recognised, especially where such recognition is prohibited by mandatory - mostly public law - provisions of domestic law. With regard to the procedural law, to a large extent the employment of arbitration agreements may be restricted.[193] However, a general exclusion would be incompatible with the CISG.

Furthermore, Article 9 CISG explains the order in which commercial customs are to be taken into consideration for the purposes of interpreting and supplementing the parties' contract of sale. Accordingly, the parties are bound by practices existing between them. Article 9(1) CISG states further that these practices may supplement the terms of the contract but that the binding force of such practices is an expression of the principle of good faith, e.g. the parties may have adopted a certain means of sending the numerous communications required under the CISG. Consequently, a repeated waiver of rights by one party may establish a subsequent contractual commitment.[194] Secondly, a word must be said to agreed usages, whose terms the parties are considered to have incorporated into their contract. Due to the contractual agreement as to the incorporation of the usage, it is irrelevant whether the actual sales transaction falls within the scope of that very usage or whether the requirements for the existence of an international usage are fulfilled, provided the usage exists.[195] The borderline of such a general, agreed implementation often merges with that of codified rules, such as INCOTERMS, the ICC guidelines for documentary credits or local usages, such as the "Hamburger Freundschaftliche Arbitrage"[196] In Germany, the "Allgemeine Deutsche Spediteurbedingungen"[197] is one example of a complete set of rules which has proved itself as a usage.[198] Goode argues that the ICC's INCOTERMS 2000 could be resorted to as evidence of usage even where, under national law, they would not have been considered incorporated into the contract.[199] In one CISG-case the court applied the INCOTERMS 2000 for the interpretation of a c.i.f. contract, although the parties made no reference thereto.[200]

A usage in the strict sense, i.e. which supplements the contract independently of the parties' intentions and which forms part of the contract by operation of law, a so called normative usage,[201] is only dealt with under Article 9(2) CISG. It becomes evident from the formulation of the rule that the contractual terms take priority and that thereby a relevant usage may be excluded.[202] Moreover, the successful application of a usage also depends on the satisfaction of certain requirements. Accordingly, the usage must be widely known and regularly observed in international trade. Although this does not per se exclude usages associated with a particular port or institution, it does imply that a considerable number of foreigners must participate in or use such an institution. Consequently, such trading facilities must be important for international trade. As a second requirement, the parties must know or ought to have known of the usage. It follows that they equally apply to newcomers unaware of such usages but that they should familiarise themselves with them as soon as possible.[203] Such an assumption as to the knowledge of the parties may be made only in the case of truly international events. Silence in response to an offer or a commercial letter of confirmation may also be significant in relation to such localised but nevertheless international usages. A choice of law or arbitration clause may become part of the contract as a result of such usages. Moreover, international usages specific to a particular sector fall within the scope of Article 9(2) CISG. Here it is once more important in view of all relevant factors to make sure that the usage actually applies to the dispute in question. Finally, non-localised international usages are found in the shipping sector, in banking and insurance agreements.[204]

A conflict between two international usages is excluded per definitionem. For if a usage is widely recognised, widespread and regularly observed, then it must be a qualified majority of participants and the others, as the remaining minority, cannot simply create an international usage. Consequently, international usages appear to be limited to a closed sector, which means that the area covered by it will be narrow although within such sectors usages retain their importance.[205]

Article 9 CISG remains silent as to the perception of mercantile terms and INCOTERMS although its predecessor Article 9(3) ULIS provided that common expressions, clauses or forms are to be interpreted according to the meaning normally accorded to them by the relevant trade sectors. Even though such standard clauses and forms are now common in international trade, the rule was considered to be superfluous and was therefore eliminated. Article 8(2) CISG was introduced instead. Therefore even on an international level, the question arises whether INCOTERMS must be contractually incorporated into the contract to be used as a means of interpretation or if such an agreement is unnecessary. Especially German scholars favour the view that they are standard terms which need incorporation by the parties and are otherwise inapplicable, although this is not a unanimous view.[206] In Germany this set of rules are considered as 'Usancen'[207] which require an agreement for their implementation into the contract.[208] Even Melis assumes that the INCOTERMS need contractual incorporation to be applied to the dispute and do not have normative power or even the force of law.[209] According to Goode's classification, most of them are written usages and must thus be incorporated into the contract by the parties.[210] However, others do resort to the INCOTERMS, even in the absence of any agreement by the parties. They emphasise that the INCOTERMS can be qualified as interpreting trade usages. Accordingly, the INCOTERMS are to be taken into consideration under Article 9(2) CISG unless explicitly excluded. Consequently, within the context of Article 8(2) CISG, the interpretation of a mercantile term would have to be interpreted in accordance with the INCOTERMS.[211] The better arguments go for the latter approach at least in connection with the CISG. The INCOTERMS are widely recognised in international trade. They provide for a uniform interpretation which is one of the objectives of the Convention. Thereby, they help to maintain legal certainty.[212] Despite these convincing arguments, the requirements of a normative usage have to be fulfilled, i.e. that the contents of the INCOTERMS must be widely recognised and well-known for a considerable period of time. Although the central definitions are widely known and recognised, the peripheries of such terms and their respective definitions do not meet the preconditions. Therefore even on the international level and despite the convincing arguments, the INCOTERMS need to be contractually incorporated into the contract to be an admissible tool of interpretation of the contract. Only if the relevant term is an expressed trade usage, can it assist in the construction of the contract by way of Article 8 (3) and 9 CISG.[213]

How a usage is dealt with in legal proceedings, depends on the relevant domestic law. In general, the existence of a usage is a question of fact and needs to be proved. According to Melis it is easier for an arbitration tribunal to decide on such matters,[214] especially where the tribunal has expert knowledge of the particular sector involved or the arbitrators have international experience.[215]

VIII. Common Frame of Reference

Finally, I shall turn my attention to the so called "Common Frame of Reference".[216] This is the most recent project of the European Union for the possible codification of European contract law and is therefore restricted in its scope and application to its member states only, including the United Kingdom.[217] Due to the possible impacts of such a piece of legislation for English law, I shall shortly summarise the history of the CFR (1.) before focusing on its construction (2.) and the relevant rule as regards the topic of this paper (3.).

1. Its history

The formation of a European private law is one of the major challenges of modern times. It has been accomplished through legal scholarship, legislation and the judiciary and may be traced back to the legal understanding of Helmut Coing, who emphasised the common grounds shared by the modern national systems of Europe. Moreover, comparatists such as Hein Koetz have identified common problems of contract law throughout Europe and sought appropriate solutions based upon a common understanding. From these early initiatives to the present, a genuinely European body of legal rules has developed with almost 20 directives enacted so far. These in turn have become subject to academic and judicial elaboration.[218] However, the harmonization process is tailored to narrow boundaries, since the European Court of Justice does not constitute a Supreme Court for the adjudication of European private law matters for the European Union and the European legislature lacks a general competence in the field of private law.[219] Consequently, the development of an authoritative European reference text promises to undertake an important step forward. Since a European contract code is due to the aforementioned reasons neither possible nor likely to be practical attainable,[220] the notion of an optional instrument has been raised. Thus, in 2003 the innovative idea of a Common Frame of Reference was born.[221] It is characterised best as a 'toolbox',[222] or guideline for future legislation in the area of general contract law.[223]

2. Its construction

The CFR comprises currently of seven books and two annexes. Book one contains general provisions, books two and three contain rules on the general law of obligations, including formation and validity of contracts. Book four is dedicated to special contracts, comprising of six parts and book five, six and seven deal with Benevolent intervention in another's affairs, Non-contractual liability arising out of damage caused to another and Unjustified enrichment, respectively. Woven-into this structure is the acquis communautaire.[224] Currently the CFR is still a draft whose 'Outline Edition' was published at the end of 2008.

3. Article II.-1:104 CFR

As stated above, book two of the CFR contains the provisions on the formation of the contract. It also provides for a rule on trade usages. Article II.-1:104 CFR reads as follows:

"(1) The parties to a contract are bound by any usage to which they have agreed and by any practice they have established between themselves.

"(2) The parties are bound by a usage which would be considered generally applicable by persons in the same situation as the parties, except where the application of such usage would be unreasonable.

"(3) This Article applies to other juridical acts with any necessary adaptations."

Article II.-1-104(1) CFR has the same wording as Article 9 CISG so that the focus shall be on Article II.-1-104(2) CFR. This provision takes an approach different from those considered so far. It not only combines certain features from the different rules under comparison but arguably goes beyond their respective scopes as well. Article II.-1-104(2) CFR does not provide a definition of a trade usage, but supplements and intensifies the proviso of good faith laid down in Article II.-1-102 (1) CFR. According to its literal meaning two formulations catch the eye. First of all, the CFR does not seem to restrict common usage to a supplementary role, so as to assist in the process of interpreting a contract or of specifying points the parties have failed to regulate. Conversely, by introducing 'usage' as a binding, objective standard rather than as a supplementary device, the CFR implies - at least creates such an impression - that the usage has priority over the parties' agreement. Thereby trade usages are given a totally new, general gap-filling role providing irreconcilable differences between the other national and international provisions, namely the common law position as well as the formulations of the UCC and the CISG. Although both provisions - the UCC as well as the CISG - cannot be considered identical either, they have common features regarding the reception of trade usages. They are all based on the theory that they need some form of incorporation into the contract to be taken into consideration, regardless whether the parties agree explicitly or impliedly, see supra. Accordingly, for English Law, the UCC and CISG, the principle of party autonomy is paramount,[225] and takes precedent over the application of unwritten trade usages. In contrast thereto, the CFR further restricts the principle of party autonomy and imposes far-reaching constraints on the freedom of contract.[226] From an English perspective the approach taken by the drafters of the CFR does not strike the balance between preserving the old and replacing it with the new, because the introduction of a new law cannot force the discard of the heritage which gave it birth.[227] As Goode emphasises "the general philosophy of the common law is that businessmen should be free to make their own law".[228] Taking into consideration the draft of a British contract code, which is deemed to be a model for future transnational contract codes,[229] this becomes even more evident as its relevant provision does not impose such restrictions. Moreover, the drafters of the CFR introduced the word "reasonable" in Article II.-1-104(2) CFR. This term is familiar to common law lawyers since a practice must be reasonable to be recognised by English law as a binding usage.[230] However, it is a rather indefinite term which calls for interpretation and may provide legal uncertainty. This can be assumed by drawing a comparison with the Vienna Convention, although official comments on the Draft are still forthcoming. As aforesaid its provisions make excessive use of indefinite legal concepts, such as "reasonable".[231] Despite this fact, the idea to introduce the term "reasonable" into Article 9 CISG was dismissed on grounds of legal certainty.[232]

The introduction of normative usages into the contract independent of any agreement paves the way for soft law, i.e. conventions or general principles which normally need some form of incorporation, to be applicable at any time regardless of what the parties intended or may have intended. Consequently, the controversial question whether courts or tribunals can resort to INCOTERMS even though the parties have not chosen them for their contract may be resolved. The above mentioned grounds for refusal, such as their contractual nature, cannot be employed under the CFR.[233] In conclusion one may say that Article II.-1-104(2) CFR widens the role of trade usages and their scope for application to a noticeable extent at the expense of the parties' autonomy. The content that the parties may agree upon appears to rest on the general proviso of good faith, fair dealings and usage.[234]

D. DE LEGE FERENDA: ANALYSIS OF THE COMPARISON

Up to this point I have been presenting my understanding of and opinion on the English approach to trade usages and those taken by the American UCC, the international CISG and the European CFR. Presumably many similarities and some differences have become evident during the comparative part of this paper. However, they do need further evaluation which I will present in the following section. I shall start with the UCC (I.), continue with the provision of the CISG (II.) and conclude with the European CFR (III.).

IX. Evaluation of the American position

The American position is a formal one, as it codifies a rule for trade usages in the UCC. This provision refers to the interpretation of contracts but is not restricted to merchants.[235] Moreover, Article 2 - §1-205 UCC is the only provision of those under consideration that not only sets forth a definition of what is to be understood under the term "trade usage" but how to distinguish it from similar instruments of interpretation. It is quite detailed as it provides further examples and appears to be in accordance with the English position. However, the requirements set forth in the UCC for a practice to be recognised as a binding trade usage differ to some extent from those in England. The UCC requires that the usage be regularly observed and the parties be - at least potentially - aware of it. In contrast thereto in England the party alleging a usage must prove in addition thereto that the usage is reasonable and that there is a belief in its binding nature.[236] The reference to reasonableness is quite surprising since such an indefinite term provides legal uncertainty and is rather atypical for English law in general. Although such flexible expressions generally encourage the consistent growth of Code law whilst trusting the courts to observe the general policies and philosophy of the Code as a whole,[237] they do not seem suitable for a provision dealing with trade usages, since the UCC as well as the CISG avoid such a term.[238] Considering that in England the courts are quite responsive to the needs of the business community and reluctant to deny recognition to the legal efficacy of commonly used commercial instruments and practices,[239] such an indefinite term appears to be obsolete.

Additionally, the opinio juris requirement may be a sufficient basis for a rule of international customary law, but does not appear to be sensible in private law. The UCC therefore remains silent on any subjective requirement but instead adopts the test that the usage must have such regularity of observance as to justify an expectation that it will be observed with respect to the transaction in question. This automatically shifts the burden of proof to the other party challenging the binding force of the usage who must then show that the practice was followed purely for convenience.[240] Although the UCC no longer provides rules for the interpretation of mercantile terms, the incorporation of the INCOTERMS is envisaged, see supra, and thereby the code would solve the problem of application of such a set of rules. This produces legal certainty as the meaning of the respective terms can be found in a code and questions of application is the situation in England do not arise.[241]

X. Evaluation of the position taken by the CISG

The most important aspect of the CISG appears its scope of application since this is much more limited than that of the UCC. It applies only to contracts for the sale of goods and only merchants fall within the scope of the Convention. Thus the international sales law is alien to the English and American position because both legal systems do not strictly distinguish between the commercial law and general sales law.[242] In terms of content, the CISG does not contain a general definition of what is to be understood under a trade usage although its predecessor, Article 13(1) ULF, came up with one very similar to the definition of the UCC. The CISG is more detailed in dealing with the different trade usages and their respective preconditions. In Article 9(1) CISG a rule for the recognition of agreed usages is set forth whereas Article 9(2) CISG contains a provision for so called normative usages. The difference between them is that agreed usages imply actual knowledge by the parties but for normative usages potential knowledge is sufficient. Since the consequences of the latter are serious, the CISG requires the alleged usage to be widely known and generally observed. Moreover, the parties have to explicitly exclude such a normative usage if they do not wish their agreement to be influenced by that usage.[243] As stated above, the theory of English law requires that for a usage to be established the practice must be perceived as a form of legally binding obligation. There is much difficulty in the supposed requirement and it is quite interesting that no such subjective element is to be found in §1-205 UCC or in Article 9 CISG. Instead the UCC adopts the test that the usage must have such regularity of observance as to justify an expectation that it will be followed with respect to the transaction in question. And the CISG employs a test similar to the one in the Commercial Code as it requires the usage to be widely known and generally observed. This makes it easier to establish new trade usages and causes a shift in the burden of proof, i.e. that the onus of proof rests on the party challenging the binding nature of the usage and it is on him to show that the practice was followed purely for convenience. Applying such an approach in English law would avoid the difficulties that arose in the aforementioned Libyan Arab Foreign Bank case.[244]The party challenging the binding force of the alleged trade usage presumably would have failed to successfully prove the said practice was only an expression of mere convenience or courtesy.[245]

The formulation of Article 9(2) ULIS that the parties be bound by such usages which a reasonable person in the same situation would have considered applicable was not upheld in Article 9 CISG. Even the proposal during the conference for the Vienna Convention to require a usage to be reasonable in order to be successfully established was dismissed and not implemented into Article 9 CISG. The refusal was justified with legal certainty. Although the CISG as well as the UCC make excessive use of indefinite legal concepts, they refrained from such a term in Article 9 CISG and Article 2-§1-205 UCC, respectively, to avoid further uncertainty.[246]

Despite these similarities and the fact that various legal scholars have argued that the CISG concept of trade usages corresponds to - or at least resembles - that of the UCC, there are important differences that must be acknowledged. Admittedly both neither the CISG nor the UCC depart from the requirement that to be relevant the usage be obligatory and require a subjective standard to be met. Moreover, they both only consider usages of the particular trade the parties are involved in and set forth the rule, either expressly or implicitly, that expressed terms control contrary trade usages. Nevertheless, for several reasons their concepts cannot be analogised. Primarily this is not possible because the views on and the importance of trade usages as such differ from system to system. These factors have to be taken into consideration when construing the CISG concept of trade usages by way of Article 7(I) CISG. This makes it impossible for the CISG concept to correspond to that of the UCC.[247] The latter is not influenced by many other foreign jurisdictions and their perception and application of trade usages. It sets forth certain requirements to be met whereas Article 4(a) CISG provides that the validity of trade usages is not dealt with under the convention. Therefore Article 9 CISG may serve as a model for an envisaged rule in English law but needs further refinement with regard to the requirements for a valid trade usage.

XI. Evaluation of the approach taken by the CFR

Finally, the CFR formed also part of the comparison and may as well serve as a model provision for English law. Although it is restricted to Europe, it shows similarities in its structure with the Vienna Convention. Neither defines the term 'trade usages' but both classify usages and name some requirements. Therefore Article II.-1:104(1) CFR which is identical with Article 9(1) CISG deals with agreed usages. Article II.-104(2) CFR just like Article 9(2) CISG refers to the aforementioned normative usages. However with regard to its content, Article II.-104(2) CFR goes far beyond Article 9(2) CISG. For it does not restrict the role of usages to a supplementary one, being a means of interpretation. It rather introduces usages as an objective standard and thereby implies that they have priority over the parties' agreement. This conflicts sharply with the theory in English law as well as with the provisions of the UCC and CISG. What all these approaches have in common is their view that usages are a means of interpretation which takes effect as an express or implied term of the contract between the parties.[248]

Moreover, Article II.-104(2) CFR restricts this broad concept of normative usages by use of the term "unreasonable". Such an indefinite term was not introduced into Article 9 CISG because it tends to cause legal uncertainty. Although the CFR sets forth in Article I.-104 CFR that the term reasonableness "is to be objectively ascertained, having regard to the nature and purpose of what is being done, to the circumstances of the case and to any relevant usages and practices", this appears to be a circuitous argument as usages must not only be reasonable they also define what is considered to be reasonable! Consequently, the standard to be employed with regard to normative usages remains unclear. Furthermore, the provision at question curtails the freedom of contract and the parties' autonomy as the alleged usage takes precedent over the contractual terms unless the usage is objectively unreasonable. As a consequence thereof, this provision does not seem to fit in the English system of contract law, where party autonomy is paramount and indefinite legal concepts are rather avoided.

In summary, the CFR differs from the CISG and UCC in that it employs the objective theory, which emphasises the nature of a usage as a general rule binding both parties, even if they are not aware of it, a so called normative usage, whereas the latter favour the subjective theory which focuses on the parties' intentions: their declarations are regarded as incorporating such a recognised commercial usage. Article 9(2) for example refers to that approach by stating that the parties may be considered to have implicitly made a usage applicable to their contract or its formation. However, both theories agree that basically the usage must be widespread, widely recognised and that businessmen know or ought to have known of it. Consequently and with regard to English theory, there is no need for the relevant business community to be aware that the usage has legal force.[249]

Finally, the question arises which of the rules under consideration would presumably fit best into the English legal system. What is advocated here is rule of the kind exemplified by the UCC, restating, simplifying and modernising the law in the area of trade usages in order to make it more responsive to the practices and needs of modern commerce. Trade usages have been regarded as an especially reliable source of information about the parties' intentions,[250] and enjoy a privileged status in US domestic sales cases decided under the UCC.[251] Although the UCC goes beyond the provision in the draft of a British contract code,[252] it is the only rule under consideration which defines trade usages and sets forth requirements in line with those in the CISG but avoids the criterion of an opinio juris. Finally, the UCC appears to be appropriate as it developed out of a common law tradition and does not discard its heritage. With regard to international trade usages, the structure of the CISG may be helpful and could be woven-in the envisaged rule. This might be necessary since the UK has not ratified the CISG whereas in the USA the Vienna Convention applies automatically in case of an international commercial sales contract.[253]

E. CONCLUSION: QUO VADIS?

Due to its high level of development and its sensitivity to commercial needs, English law of contract is commonly used by parties [254] in international trade.[255] This might explain England's intransigent attitude towards codification and alteration of the status quo.[256] The fear of codification is always closely related to a lack of flexibility in the law, static rules which are quickly outdated.[257] Even if formulated in a more flexible way, they still tend to be too indefinite for the English system. Despite these objections against further codification, there is a general complaint that English cases and statutes are hard to identify and moreover get explained in different ways by various authorities.[258] Thereby English law is unnecessarily complicated and confused and not so easily accessible.[259] Even within the 'fringe' area of formation of contracts, namely their interpretation, this becomes evident. Although there is no official or general definition, in the leading case Devonald v Rosser & Sons [260] a trade usage is defined, according to Schmitthoff "briefly but correctly",[261] as "a particular course of dealing or line of conduct generally adopted by persons engaged in a particular department of business life".[262] However, and especially in English law, there are several aspects in relation to trade usages which need to be considered. One of the major obstacles here is access to an immense diffusion of judge-made laws.[263] Where to find detailed rules, their exceptions and qualifications, made by generations of judges, in order to successfully establish a trade usage? Even if not impossible considerable time must be invested in order to take a closer look at the common law and find some adequate answers. As shown in this paper, legal concepts do matter [264] and an accessible, modern law with clear-cut rules provides predictability,[265] an essential feature in international trade.[266] All this becomes apparent when considering not only the UCC or CISG but also England, whose 1996 (Arbitration) Act is a well-formulated piece of legislation. Its success reassures England of its leading rule in international commercial arbitration.[267] This in turn relates to another problem, namely costs.[268] If the legal position remains unclear, the onus lies with the parties to secure every single detail with regard to their relationship within their agreement.[269] If the legal situation was simpler through the use of codified rules, the drawing up of a contract would be less expensive.[270]

In conclusion, the major disadvantages of the status quo in England may be access and costs.[271] Goode is correct when he points out uncodified rules and law in general cause severe problems of access and transparency.[272] The draft of a British contract code shows clearly that there is a need for codification, as it i.a. provides a rule dealing with trade usages.[273] Moreover, a definition comparable to the one in the UCC would not only help to access (a foreign) law and to decrease costs but also heighten awareness of the problems or at best bridge the gap between differences of dogma,[274] namely whether or not the significance of a usage for the contract is based on subjective or objective grounds.

A codification process would help to merge law and commercial practice more easily. A norm on trade usages would remind legal scholars to take the needs of commercial life into consideration when examining a commercial contract. Furthermore, codification would compound clarity with flexibility,[275] enabling the courts to keep the law in tune with social and economic development [276], and preserves the importance of non-governmental norms in modern trade.[277] Especially America could serve as a good source of inspiration for drafting a commercial code and in particular for a provision covering trade usages,[278] since both jurisdictions share the same routes and are founded on the common law. By striking the balance between preserving the old and replacing it with the new, the UCC provides a good starting point.[279]


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American Cases

  • Columbia Nitrogen Corp v Royster Co 451 F 2d 3, 7 (4th Cir 1971).

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  • Hahn v Ford Motor Co 434 NE 2d 943, 33 UCC Rep Serv 1277 (Ind Ct App 1982).

  • MCC-Marble Ceramic Center v Ceramica Nuova d'Agostin, SpA 144 F 3d 1384 (11th Cir 1998).

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  • Williams v Curtin 807 F 2d 1046, 2 UCC Rep Serv 2d 1169 (DC Cir 1986).
  • German Cases

    • OLG Nürnberg, MDR 1997, 492.

    • BGH NJW 1996, 2364.

    • BGH RIW 1975, 578.

    Cases on the CISG

    • BP Oil Int', Ltd. v. Empresa Estatal Petroleos de Ecuador, 332 F.3d 333(5th Cir. 2003) (available at: <http://cisgw3.law.pace.edu/cases/020326u1.html>, last visited: 10.08.2009).

    • BP International Ltd and BP Exploration & Oil Inc, Plaintiffs-Appellants v Empresa Estatal Petroleos Ecuador et al Defendants, Empresa Estatal Petroleos de Ecuador and Saybolt Inc, Defendants-Appelles, US Court of Appeals 5th Cir 02-21066, 11 June 2003 (available at <http://cisgw3.law.pace.edu/cases/03611u1.html>, last visited: 10.08.2009).

    Arbitration Cases

    National awards:

    • Belgian Cass June 27, 1985, (1988) RCJB 5.

    International awards:

    • ICC No. 2438 (1975), (1976) JDI 968.

    • ICC No. 3894 (1981), (1982) JDI 987.

      ICC arbitration, case no. 5713 of 1989 (1990) XX I.C.C.A.Y.B. 70.

    Internet sources

    Legislation

    • Arbitration Act 1996

    • United Nations Convention on the Carriage of Goods by Sea, Hamburg, 31 March 1978, abbreviated as Hamburg Rules.

    • United Nations Convention on Contracts for the International Sale of Goods (1980), abbreviated as CISG or Vienna Convention.

    • Uniform Commercial Code, abbreviated as UCC.

    FOOTNOTES

    1. Free on board.

    2. Free alongside ship.

    * Example taken from Clive M. Schmitthoff, International Trade Usages (Institute of International Business Law and Practice, Paris 1987) 22, 23.

    3. Sometimes also referred to as "usage", "custom (of the trade)". For the purpose of this paper these words are interchangeable.

    4. Cf. Roy Goode, Commercial Law (3rd ed, Penguin Books, London 2004) 13; cf. Indira Carr and Peter Stone, International trade law (3rd ed Routledge, Cavendish 2005) 70.

    5. Cf. Roy Goode (n 4) 13.

    6. Cf. Clive M. Schmitthoff, International Trade Usages (Institute of International Business Law and Practice, Paris 1987) 9.

    7. Cf. Clive M. Schmitthoff, International Trade Usages (n 6) 14.

    8. Cf. Clive M. Schmitthoff, International Trade Usages (n 6) 14.

    9. Cf. Clive M. Schmitthoff, International Trade Usages (n 6) 10.

    10. Cf. Roy Goode (n 4) 88.

    11. Cf. Clive M. Schmitthoff, International Trade Usages (n 6) 18.

    12. This can be derived from the provisions of the Sale of Goods Act 1979.

    13. Cf. Carver Raoul Colinvaux, Carver's Carriage by Sea (13th edn Stevens & Sons, London 1982) 381.

    14. Cf. Robinson v Mollett (1875) L R 7 H L 802, 818.

    15. Cf. Ropner v Stoate, Hosegood & Co (1905) 10 Com Cas 73.

    16. Cf. Ropner v Stoate, Hosegood & Co (1905) 10 Com Cas 73, 245.

    17. Cf. Harrison v Universal marine Insurance (1862) 3 F & F 190, 192, Lindley J.

    18. Cf. Carver Raoul Colinvaux (n 13) 379.

    19. Cf. Nelson v Dahl (1879) 12 Ch D 568, 575.

    20. Cf. Grissell v Bristowe (1868) LR 3 CP 112, 128.

    21. Cf. Carver Raoul Colinvaux (n 13) 379.

    22. Cf. Carver Raoul Colinvaux (n 13) 378.

    23. Cf. Joseph Chitty, Hugh Beale, Chitty on Contracts (29th ed, Sweet & Maxwell, London 2004) para 13-018.

    24. Cf. Exxonmobil Sales and Supply Corp. v Texaco Ltd. The Helene Knutsen. [2003] Lloyd's Rep 686.

    25. Cf. Exxonmobil Sales and Supply Corp. v Texaco Ltd. The Helene Knutsen. [2003] Lloyd's Rep 686, 687.

    26. Cf. Inntrepreneur Pub Co (GL) v East Crown Ltd. [2000] 2 Lloyd's Rep 611.

    27. Cf. Roy Goode(n 4) 13.

    28. Cf. Libyan Arab Foreign Bank v Bankers Trust Co [1989] QB 728.

    29. Cf. Libyan Arab Foreign Bank v Bankers Trust Co [1989] QB 757; Ross Cranston, 'The Libyan Arab Foreign Bank Case' (1987) JIBL 499; cf. Cf. Roy Goode, 'The Codification of Commercial Law' (1988) 14 Monash U L Rev, 135, 153.

    30. Cf. Roy Goode, 'Rule, practice, and pragmatism in transnational commercial law' (2005) 54 (3) ICLQ 551.

    31. Cf. Roy Goode, 'Transnational Law' (n 30) 551.

    32. Cf. B.2.

    33. Cf. 'Custom and trade usage: its application to commercial dealings and the common law' (1955) 55 Colum L Rev 1194.

    34. Cf. Carver Raoul Colinvaux (n 13) para 900.

    35. Cf. Benson v Schneider (1817) 7 Taun 273; 1 Moo 21, 76 with regard to the loading of full cargo and Haynes v Halliday (1831) 7 Bing 587.

    36. Cf. Carver Raoul Colinvaux (n 13) para 900.

    37. Ropner v Stoate, Hosegood (1905) 10 Com Cas 73.

    38. Cf. Tsakiroglou v Noblee Thorl [1962] A C 93, 113.

    39. Cf. Chitty on Contracts (n 23) para 13-021 et seq.

    40. Cf. Indira Carr and Peter Stone (n 4) 70.

    41. Cf. Martin P. Loegering, CISG und internationale Handelsklauseln. Beiträge zum UN-Kaufrecht (Lang Verlag, Frankfurt am Main 2008) 31.

    42. Cf. Indira Carr and Peter Stone (n 4) 5.

    43. Cf. Judah P. Benjamin, Benjamin's sale of goods (6th edn, Sweet & Maxwell, London 2002) para 18-001.

    44. Cf. Judah P. Benjamin (n 43) para 18-001 et seq.

    45. Cf. David M Sassoon, C.I.F. and F.O.B. Contracts (Stevens & Sons, London 1968) para 21.

    46. Cf. Clive M Schmitthoff, Interpretation and Application of International Trade Usages (ICC Publication, Paris 1980) 49.

    47. Cf. Indira Carr and Peter Stone (n 4) 5 et seq.

    48. Cf. Judah P. Benjamin (n 43)para 18-004.

    49. Cf. Rudolf Liesecke, 'Die typischen Klauseln des internationalen Handelsverkehrs in der neueren Praxis' WM- Sonderbeilage Nr. 3/1978 zu Nr. 15 vom 15.04.1978, 25 et seq.

    50. International Commercial Terms.

    51. Cf. David M Sassoon (n 45) para 20; cf. Hans van Houtte, The Law of International Trade (Sweet & Maxwell, London 1995) 4.55.

    52. For the relationship of English law and INCOTERMS, cf. generally Cf. Judah P. Benjamin (n 43) para 18-002.

    53. International Chamber of Commerce in Paris.

    54. Cf. Andrew Tweeddale, Keren Tweeddale, Arbitration of Commercial Disputes. International and English Law and Practice (Oxford University Press, Oxford 2007) 6.41.

    55. The current version is INCOTERMS 2000, ICC Brochure No. 560.

    56. Cf. Clive M Schmitthoff, Interpretation and Application of International Trade Usages (n 46) 46.

    57. Cf. Juergen Lebuhn, FOB und FOB-USuancen europäischer Seehäfen. Lieferklauseln im internationalen Handel (3rd ed Deutscher Verkehrsverlag, Hamburg 1971) 5.

    58. Sometimes this is even envisaged, cf. Hans van Houtte (n 51) 4.59, 4.61.

    59. Cf. Roy Goode (n 4) 867.

    60. Cf. David M Sassoon (n 45) para 21.

    61. Cf. Clive M. Schmitthoff, International Trade Usages (n 6) 38.

    62. Cf. Judah P. Benjamin (n 43) para 18-002.

    63. Cf. David M Sassoon (n 45) para 21.

    64. Cf. Stora Enso Oyi v Port of Dundee [2006] 1 C L C 453.

    65. Cf. Giuditta Cordero Moss, 'Contract between Consumer Protection and Trade Usages' in Reiner Schulze, Common Frame of Reference and Existing EC Contract Law (Sellier, Munich 2007) 86 et seq.

    66. Cf. Stora Enso Oyi v Port of Dundee [2006] 1 C L C 453, 454; cf. Carole Murray, David Holloway, Daren Timson-Hunt, Schmitthoff's Export Trade: the law and practice of international trade (11th edn Sweet & Maxwell, London 2007) 2-001.

    67. Cf. Stora Enso Oyi v Port of Dundee [2006] 1 C L C 453; cf. Carole Murray, David Holloway, Daren Timson-Hunt (n 66) 7.

    68. Cf. Belgian Cass June 27, 1985, (1988) RCJB 5;

    69. Cf. ICC No. 2438 (1975), (1976) JDI 968 and ICC No. 3894 (1981), (1982) JDI 987.

    70. Cf. Hans van Houtte (n 51) 4.59.

    71. Cf. Roy Goode (n 4) 918.

    72. Cf. Rudolf Liesecke (n 49) 25 et seq.

    73. Cf. Clive M. Schmitthoff, International Trade Usages (n 6) 25.

    74. Cf. 'Custom and trade usage: its application to commercial dealings and the common law' (1955) 55 Colum L Rev 1192.

    75. Cf. Roy Goode (n 4) 88.

    76. Cf. Carver Raoul Colinvaux (n 13) para 905.

    77. Cf. Carver Raoul Colinvaux (n 13) para 906.

    78. Cf. Clacevich v Hutcheson (1887) 15 Sess Cas 4th series, 11.

    79. Cf. Carver Raoul Colinvaux (n 13) para 908.

    80. Cf. Roy Goode (n 4) 88.

    81. Cf. Martin Doris, 'Harmonising by numbers' (2007) 32 (6) EL Rev 878, 881.

    82. Cf. Sebastian G. Kuehl, Schiedsgerichtsbarkeit im Seehandel: rechtsvergleichende Untersuchung unter Berücksichtigung der Gesetzesänderungen in England, Frankreich und der Bundesrepublik Deutschland sowie der Rechtslage in den USA (New York) = Maritime Arbitration (Engel Verlag, Kehl am Rhein 1988) 18.

    83. Cf. Christopher R. Drahozal, 'Commercial Norms, Commercial Codes, and International Commercial Arbitration' (2000) 33 Vand J Transnat' L 79, 82.

    84. Cf. Roy Goode (n 4) 1162.

    85. Cf. Roy Goode (n 4) 1162.

    86. In the following referred to as the 1996 Act.

    87. S 5 of the 1996 Act requires the agreement to be in writing in order to apply this Act.

    88. Cf. Sebastian G. Kuehl (n 82) 18.

    89. Michael Mustill, Stewart Boyd, The Law and Practice of Commercial Arbitration in England (2nd ed LexisNexis Butterworths, London 1989) 53.

    90. Cf. John F Wilson, Carriage of Goods by Sea (6th ed, Pearson Longman, London 2008) 328.

    91. Cf. Roy Goode (n 4) 1169.

    92. Roy Goode, 'Insularity or leadership? The role of the United Kingdom in the harmonisation of commercial law' (2001) ICLQ 751, 756.

    93. Because of a decision not to bring ss 85-87 into force, with the result that with regards to commercial arbitration the Act does not distinguish domestic from international arbitration; cf. Stewart R Shackleton, 'Global warming: milder still in England: Part 3' (2000) 3(3) Int. ALR 59.

    94. Cf. Roy Goode (n 4) 1167 et seq.

    95. Cf. Simon James, 'Time to Slice and Dice in the Contractual Kitchen' in Reiner Schulze, New Features in Contract Law (Sellier, Munich 2007) 301 (footnote 10).

    96. Cf. Simon James (n 95) 305.

    97. Cf. Roy Goode (n 4) 1168.

    98. Cf. Roy Goode (n 4) 1181.

    99. Cf. Andrew Tweeddale, Keren Tweeddale (n 54) 6.28.

    100. Cf. Andrew Tweeddale, Keren Tweeddale (n 54) 6.29.

    101. Cf. Giuditta Cordero Moss, 'Arbitration and private international law' (2008) 11 (4) Int ALR 153, 164.

    102. Stewart R. Shackleton, 'English arbitration and international practice' (2002) 5(2) Int. ALR 67; cf. Sigvard Jarvin, 'The sources and limits of the arbitrator's powers' in Julian D M Lew (ed), Contemporary Problems in International Arbitration (Kluwer, Dordrecht 1987) 72; cf. Roy Goode, 'Usage and its reception in transnational commercial law' (1997) ICLQ 15 in Jacob S. Ziegel and Shalom Lerner, New developments in international commercial consumer and consumer law: proceedings of the 8th Biennial Conference of the International Academy of Commercial and Consumer Law in Roy Goode, (Hart Publishing, Oxford 1998) 15.

    103. Cf. Fletamentos Maritimos v Effjohn International [1997] 2 Lloyd's Rep 109 and Charles M Willie & Co (Shipping) Ltd v Ocean Laser Shipping Ltd. The Smaro [1999] 1 Lloyd's Rep 225.

    104. Cf. Gbenga Bamodu, 'Extra-national legal principles in the global village: a conceptual examination of transnational law' (2001) 4(1) Int ALR 6, 14; cf. Roy Goode, 'Usage in Transnational law' (n 102) 15.

    105. Cf. Gbenga Bamodu (n 104) 6, 12.

    106. Cf. Hugh Beale, 'The European civil code movement and the European Union's common frame of reference' (2006) 6(1) LIM 4, 6.

    107. In case of s 46 (1)(b) of the 1996 Act; with regard to international arbitration rules, cf. Art. 17(2) ICC; cf. Luis de Lima Pinheiro, 'The "Denationalization" of Transnational Relationships' in Juergen Basedow, Aufbruch nach Europa: 75 Jahre Max-Planck-Institut für Privatrecht (Mohr Siebeck, Tuebingen 2001) 442.

    108. ICC arbitration, case no. 5713 of 1989 (1990) XX I.C.C.A.Y.B. 70; Jarvin et al. Collection of ICC Arbitral Awards, Vol.II, p.223.

    109. Cf. Indira Carr and Peter Stone (n 4) 64 et seq., who argue that in general the Vienna Convention is perceived as part of trade usage or lex mercatoria by arbitration tribunals.

    110. Cf. Indira Carr and Peter Stone (n 4) 65.

    111. Cf. Roy Goode, 'Usage in Transnational law' (n 102) 21 et seq.

    112. Cf. Indira Carr and Peter Stone (n 4) 65, in general cf. Roy Goode, 'Usage in Transnational law' (n 102) 21 et seq.

    113. Cf. CISG-AC Advisory Opinion on Articles 38 and 39 (<http://www.cisg.law.pace.edu/cisg/text/e-text-39.html>

    114. Cf. Peter Schlechtriem, Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods Articles 38-40 (Manz, Vienna 1986) 69; cf. John Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (3rd ed Kluwer Law, The Hague 1999) 280; although commercial practice was taken into consideration when drafting Article 39, cf. Michael J. Bonell, Cesare M. Bianca Commentary on the international sales law: the 1980 Vienna Sales Convention (Giuffrè, Milan 1987) 303; cf. Jacob S. Ziegel, 'Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods' 1981 (<http://www.cisg.law.pace.edu/cisg/text/ziegel39.html>, last visited: 10.08.2009).

    115. United Nations Convention on the Carriage of Goods by Sea, Hamburg, 31 March 1978, abbreviated as Hamburg Rules.

    116. which, as is customary, has been filleted to preserve the anonymity of the parties.

    117. Cf. Roy Goode, 'Usage in Transnational law' (n 102) 24. This would be the case in the UK as we shall see later on.

    118. Cf. Roy Goode (n 4) 13.

    119. Cf. Roy Goode, 'Transnational Law' (n 30)550 et seq.

    120. As is the case with "course of dealings" or "trade practices", see supra.

    121. Cf. Dame Mary Arden, 'Time for an English Commercial Code' (1997) 56 Cambridge L J 516, 529.

    122. Cf. Dame Mary Arden (n 121) 516, 530.

    123. Cf. Dame Mary Arden (n 121) 516, 529.

    124. Except for certain limitations, see supra.

    125. Cf. Roy Goode (n 4) 1167.

    126. In the following referred to as UCC.

    127. Cf. Peter C. Minuth, Der amerikanische Uniform Commercial Code und deutsches Recht (Münster 2000) 12 et seq.

    128. Cf. Peter C. Minuth (n 127) 13.

    129. The five phases under the UCC. Contract of sale - the payment modalities - shipping phase - security of the payment - letters of credit.

    130. For an instructive overview over the uniform acts in this field, cf. James H. White, Robert S. Summers, Handbook of the Law under the Uniform Commercial Code (2nd ed, West Publishing Company, Minnesota 1990) 1 et seq.

    131. Cf. Richard Hyland, 'The American Experience: Restatements, the UCC, Uniform Law and Transnational Coordination' in Arthur Hartkamp and Ewoud Hondius, Towards a European Civil Code (3rd ed Kluwer Law International, The Hague 2004) 59, 61.

    132. Cf. James H. White, Robert S. Summers (n 130) 3.

    133. Cf. Peter C. Minuth (n 127) 22.

    134. Cf. §1-102 UCC.

    135. Cf. James H. White, Robert S. Summers (n 130) 12.

    136. Cf. Peter C. Minuth (n 127) 22.

    137. Roy Goode, 'The Codification of Commercial Law' (n 29), 135, 149.

    138. Cf. Bradford Stone, Uniform Commercial Code in a nutshell (6th ed, Thomson West, St Paul 2004) 28; cf. Jennifer Martin, 'Contracting for Wartime Actors: The Limits of the Contract Paradigm' (2007) 14 New England Journal of Int'l & Comp L 11, 12.

    139. Cf. Jennifer Martin (n 138) 11, 12.

    140. Lisa Bernstein, 'Merchant Law in a Merchant Court: Rethinking the Code's Search for Immanent Business Norms' (1996) 144 U Pa L Rev 1765, 1795.

    141. Cf. James H. White, Robert S. Summers (n 130) 23.

    142. Cf. Christopher R. Drahozal (n 83) 79, 81.

    143. Cf. Thomas D. Crandall, Michael J. Herbert, Lary Lawrence, Uniform Commercial Code Vol I (Little, Brown and Company, Boston 1993-2002.)4:36.

    144. Cf. Austin Sarat and Thomas Kearns, The Fate of Law (University of Michigan Press, Michigan 1993)169.

    145. Critically cf. Lisa Bernstein (n 140) 1765, 1785.

    146. Critically cf. Lisa Bernstein (n 140) 1765, 1785 and cf. Columbia Nitrogen Corp v Royster Co 451 F 2d 3, 7 (4th Cir 1971) holding that, despite express price and quantity terms, evidence to show a usage was admissible to establish a consistent additional term to the parties written contract.

    147. Cf. Thomas D. Crandall, Michael J. Herbert, Lary Lawrence (n 143) 4:37.

    148. Cf. Jennifer Martin, 'Contracting for Wartime Actors: The Limits of the Contract Paradigm' (2007) 14 New England Journal of Int'l & Comp L 11, 12.

    149. Cf. Lisa Bernstein (n 140) 1765, 1783 et seq.

    150. Cf. Thomas D. Crandall, Michael J. Herbert, Lary Lawrence (n 143) 4:38; cf. Mark Kloster, 'Trade Usage, Exclusive Remedies, and the U.C.C. Section 2-719 (1)(b)' (1988) 25 Hous L Rev 363, 365.

    151. The same applies for the Vienna Convention, see II.3. and cf. Indira Carr and Peter Stone (n 4) 68; cf. MCC-Marble Ceramic Center v Ceramica Nuova d'Agostin, SpA 144 F 3d 1384 (11th Cir 1998).

    152. Cf. Foxco Indus v Fabric World, Inc 595 F 2nd 976, 984 (5th Cir 1979) looking to a trade usage to define the term "first quality goods".

    153. Cf. Lisa Bernstein (n 140) 1765, 1784.

    154. Cf. Hahn v Ford Motor Co 434 NE 2d 943, 33 UCC Rep Serv 1277 (Ind Ct App 1982).

    155. Cf. Williams v Curtin 807 F 2d 1046, 2 UCC Rep Serv 2d 1169 (DC Cir 1986).

    156. Cf. Thomas D. Crandall, Michael J. Herbert, Lary Lawrence (n 143) 4:42.

    157. Cf. supra, B.1.d.; cf. for further the state of play visit the USCIB homepage: www.uscib.org/index.asp?documentID=2954 (last visited: 10.08.2009).

    158. Cf. Lisa Bernstein (n 140) 1765, 1783 et seq.

    159. In the following referred to as the "CISG" or "Vienna Convention".

    160. Cf. Roy Goode, 'Insularity or leadership' (n 92) 751, 757 et seq.

    161. Cf. Lucinda Miller, 'The Common Frame of Reference and the feasibility of a common contract law in Europe' (2007) JBL 378, 386.

    162. Cf. Sally Moss, 'Why the United Kingdom has not Ratified the CISG' (2005-2006) 25 JLC 483 et seq.

    163. Cf.Anna Rogowska, 'CISG in UK: How does the CISG govern the contractual relations of English businessmen?' (2007) 18(7) ICCLR 226.

    164. Cf. Sally Moss (n 162) 484.

    165. Cf. Roy Goode, 'Insularity or leadership' (n 92) 751, 756.

    166. Cf. Hans van Houtte (n 51) 4.08.

    167. Cf. Simon James (n 95) 302.

    168. Cf. Peter Schlechtriem, Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods (n 114) 41.

    169. In the following referred to as ULF.

    170. In the following referred to as ULIS.

    171. Cf. Peter Schlechtriem, Commentary on the UN Convention on the International Sale of Goods (CISG) (2nd ed, Beck, Munich 1998) 1.

    172. Cf. Hans van Houtte (n 51) 4.08.

    173. Cf. Indira Carr and Peter Stone (n 4) 61.

    174. Cf. Peter Schlechtriem (n 171) 1.

    175. Cf. Peter Schlechtriem (n 171) 3.

    176. Cf. Peter Schlechtriem (n 171) 3.

    177. Cf. Hans van Houtte (n 51) 4.13.

    178. Cf. Peter Schlechtriem (n 171) 5; cf. Franco Ferrari, Eva-Maria Kieninger; Peter Makowski, Karsten Otte, Ingo Saenger, Internationales Vertragsrecht. Kommentar (Beck, Munich 2007) 248.

    179. Cf. Peter Schlechtriem (n 171) 5; cf. Franco Ferrari, Eva-Maria Kieninger; Peter Makowski, Karsten Otte, Ingo Saenger (n 178) 247; cf. BGH NJW 1996, 2364, 2365 without reference to domestic law.

    180. Cf. Hans van Houtte (n 51) 4.09 et seq; cf. Franco Ferrari, Eva-Maria Kieninger; Peter Makowski, Karsten Otte, Ingo Saenger (n 178) 218.

    181. Critically, cf. Indira Carr and Peter Stone (n 4) 71 et seq.

    182. Cf. Peter Schlechtriem (n 171) 5.

    183. Cf. Indira Carr and Peter Stone (n 4) 70.

    184. Cf. Peter Schlechtriem (n 171) 75.

    185. Cf. Fritz Enderlein and Dietrich Maskow, United Nations Convention on Contracts for the International Sale of Goods (Commentary) (Oceana Publications, New York 1992) 67.

    186. Cf. Indira Carr and Peter Stone (n 4) 71.

    187. Cf. Clive M. Schmitthoff, International Trade Usages (n 6) 11, 13.

    188. Art. 13 ULF.

    189. Cf. Bremen Cotton Exchange, cf. Heinrich Honsell, Kommentar zum UK-Kaufrecht. Übereinkommen der Vereinten Nationen über Verträge über den Internationalen Warenkauf (CISG) (Springer Verlag, Berlin 1996) 99.

    190. Cf. Clive M. Schmitthoff, International Trade Usages (n 6) 18; this evidences the principle of 'party autonomy' which is of utmost importance within the CISG, cf. Clayton P. Gillette, 'Harmony and Stasis in Trade Usage for International Sales' 39 (1999) Va J Int'l L 707, 722, cf. Heinrich Honsell, Kommentar zum UK-Kaufrecht. Übereinkommen der Vereinten Nationen über Verträge über den Internationalen Warenkauf (CISG) (Springer Verlag, Berlin 1996) 99; cf. John Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (3rd ed Kluwer Law, The Hague 1999) 125.

    191. Cf. Peter Schlechtriem (n 171) 77.

    192. Cf. Franco Ferrari, Eva-Maria Kieninger; Peter Makowski, Karsten Otte, Ingo Saenger (n 178) 256, cf. Peter Schlechtriem (n 171) 5.

    193. Cf. Peter Schlechtriem (n 171) 77.

    194. Cf. Peter Schlechtriem (n 171) 78; Franco Ferrari, Eva-Maria Kieninger; Peter Makowski, Karsten Otte, Ingo Saenger (n 178) 256

    195. Cf. Heinrich Honsell, Kommentar zum UK-Kaufrecht. Übereinkommen der Vereinten Nationen über Verträge über den Internationalen Warenkauf (CISG) (Springer Verlag, Berlin 1996) 101.

    196. 'Hamburg friendly arbitration'.

    197. 'German General Conditions for Forwarders'.In the following referred to as ADSp.

    198. Cf. Franco Ferrari, Eva-Maria Kieninger; Peter Makowski, Karsten Otte, Ingo Saenger (n 178) 255 et seq; Peter Schlechtriem (n 171) 79.

    199. Cf. Roy Goode (n 4) 918; John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (3rd ed Kluwer Law International, The Hague 1999) 124.

    200. Cf. St. Paul Guardian Insurance Co. et al. v. Neuromed Medical Systems & Support, 2002 WL 465312 (S.D.N.Y. 2002) or BP Oil Int', Ltd. v. Empresa Estatal Petroleos de Ecuador, 332 F.3d 333(5th Cir. 2003)available at: <http://cisgw3.law.pace.edu/cases/020326u1.html>.

    201. See supra.

    202. Cf. Heinrich Honsell, Kommentar zum UK-Kaufrecht. Übereinkommen der Vereinten Nationen über Verträge über den Internationalen Warenkauf (CISG (Springer Verlag, Berlin 1996) 99 et seq; cf. Clayton P. Gillette, 'Harmony and Stasis in Trade Usage for International Sales' (1999) 39 Va J Int'l L 707, 722.

    203. Cf. Gregory C. Walker, 'Trade Usages and The CISG: Defending The Appropriateness of Incorporating Custom into International Commercial Contracts' (2005) 24 J L & Com 263, 265, 272.

    204. Cf. Peter Schlechtriem (n 171) 79; cf. Peter Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht -CISG- (5th ed Beck, Munich 2008) 228.

    205. Cf. Peter Schlechtriem (n 171) 79.

    206. OLG Nürnberg, MDR 1997, 492; cf. Casel, international Trade 127; cf. Loegering (n 41) 174.

    207. Translated as 'Usance'.

    208. The US Court of Appeals took a different view in BP International Ltd and BP Exploration & Oil Inc, Plaintiffs-Appellants v Empresa Estatal Petroleos Ecuador et al Defendants, Empresa Estatal Petroleos de Ecuador and Saybolt Inc, Defendants-Appelles, US Court of Appeals 5th Cir 02-21066, 11 June 2003 (available at <http://cisgw3.law.pace.edu/cases/03611u1.html>) it was acknowledged that the Vienna Convention incorporates INCOTERMS. Even if they are not global, the fact that they are well known in international trade means they are incorporated through Art 9 (2) CISG according to the judgement.

    209. Cf. Heinrich Honsell (n 195) 102.

    210. Cf. Peter Schlechtriem (n 171) 72; cf. supra B.3.

    211. BGH RIW 1975, 578; cf. Frédéric Eisemann, Werner Melis, INCOTERMS: Ausgabe 1980; Kommentar (GOF Verlag, Vienna 1982) 37; cf. Hercules Booysen, International transactions and the international law merchant (Interlegal, Pretoria 1995) 221 et seq.

    212. Cf. Martin P. Loegering (n 41) 74 et seq.

    213. Cf. Casel, International Trade 127; cf. Martin P. Loegering (n 41) 74 et seq.

    214. See supra, C.2.

    215. Cf. Heinrich Honsell (n 195) 102.

    216. In the following referred to as "CFR".

    217. Cf. Hugh Beale, 'The Future of the Common Frame of Reference' (2007) 3 ERCL 257, 259.

    218. Cf. Wolfgang Ernst, 'Der ‚Common Frame of Reference' aus juristischer Sicht' AcP 2008, 248, 252.

    219. Cf. Article 5 (1) EC.

    220. Cf. Hugh Collins, 'The Future of European Private Law: An Introduction' (2004) 10 (6) ELJ 649, 650.

    221. Cf. Reiner Schulze, 'The Academic Draft of the CFR and the EC Contract Law' in Reiner Schulze, The Common Frame of Reference and Existing EC Contract Law (Sellier, Munich 2007) 5.

    222. Cf. Hugh Beale, 'The European civil code' (n 109) 4, 9.

    223. Cf. Research Group on the Existing EC Private Law (Acquis Group), Contract I: Pre-contractual Obligations, Conclusion of Contract, Unfair Terms (Sellier, Munich 2007)xxiv.

    224. This term refers to the relevant and already existing European legislation.

    225. With regard to freedom of contract as an overriding principle cf. Simon James (n 95) 304.

    226. Cf. Horst Eidenmüller, Florian Faust, Hans Christoph Grigoleit, Nils Jansen, Gerhard Wagner, Reinhard Zimmermann, 'Der Gemeinsame Referenzrahmen für das Europäische Privatrecht. Wertungsfragen und Kodifikationsprobleme' (2008) 11 JZ 529, 538.

    227. Cf. Jean Étienne-Marie Portalis translated by Shael Herman in 'Excerpts from a Discourse on the Code Napoleon by Portalis and Case Law and Doctrine by A. Esmein' (1972) 18 Loyola L Rev 23, 26.

    228. Roy Goode, 'The Codification of Commercial Law' (n 29) 135, 148.

    229. Brigitta Lurga, Grundfragen der Vereinheitlichung des Vertragsrechts in der Europäischen Union (Springer, Wien 2002)13; cf. Preface by Gandolfi in: McGregor, Contract Code - Drawn up on Behalf of the English Law Commission (1993) IX et seq..

    230. Cf. B.II.2.

    231. Cf. D.II.2.

    232. Cf. Michael J. Bonell, Cesare M. Bianca Commentary on the international sales law: the 1980 Vienna Sales Convention (Giuffrè, Milan 1987) 104.

    233. Cf. D.II.3.

    234. Cf. Horst Eidenmüller, Florian Faust, Hans Christoph Grigoleit, Nils Jansen, Gerhard Wagner, Reinhard Zimmermann 'The common frame of reference for European private law - policy choices and codification problems' (2008) 28(4) OJLS 707.

    235. Roy Goode, 'The Codification of Commercial Law' (n 29) 135, 142.

    236. Roy Goode, 'Concepts of Payment in the Expropriation or Freezing of Bank Deposits' [1987] JIBL 80.

    237. Roy Goode, 'The Codification of Commercial Law' (n 29) 135, 150; rather critical with regard to the USA cf. Lisa Bernstein (n 140) 1765, 1785.

    238. See supra, C.I.3. and C.II.3.

    239. Cf. Roy Goode, 'The Codification of Commercial Law' (n 29) 135, 150.

    240. Cf. Roy Goode, 'Transnational Law' (n 30)551.

    241. Nota bene: The envisaged version of the U.C.C. shall delete the national trade terms and replace them with the INCOTERMS 2000, cf. C.I.3; cf. Cf. Gregory C. Walker (n 203) 263, 265, 273.

    242. Cf. Roy Goode, 'The Codification of Commercial Law' (n 29) 135, 142.

    243. Cf. Michael J. Bonell, Cesare M. Bianca, Commentary on the international sales law: the 1980 Vienna Sales Convention (Giuffrè, Milan 1987) 107.

    244. Cf. Libyan Arab Foreign Bank v Bankers Trust Co [1989] QB 728, cf. B.II.5.

    245. Cf. Roy Goode, 'Transnational Law' (n 30)551 et seq.

    246. Cf. (as regards the CISG)Heinrich Honsell, Kommentar zum UK-Kaufrecht. Übereinkommen der Vereinten Nationen über Verträge über den Internationalen Warenkauf (CISG) (Springer Verlag, Berlin 1996) 99.

    247. Cf. Franco Ferrari, 'The Relationship between UCC and The CISG and the Construction of Uniform Law' (1996) 29 Loy LA L Rev 1021, 1031.

    248. With regard to the CISG cf. Clayton P. Gillette, 'Harmony and Stasis in Trade Usage for International Sales' (1999) 39 Va J Int'l L 707, 713.

    249. Cf. Peter Schlechtriem (n 171) 76 et seq.

    250. Cf. Martin Doris (n 81) 878, 881.

    251. Cf. Avery Wiener Katz, 'The Relative Costs Of Incorporating Trade Usage Into Domestic Versus International Sales Contracts: Comments On Clayton Gillette, Institutional Design And International Usages Under The CISG' (2004) 5 Chi. J Int'l L 181 et seq.

    252. Cf. McGregor, Contract Code - Drawn up on behalf of the English Law Commission (Giuffrè, Milano 1993) rule 41.

    253. For the scope of application of the CISG, see D. II.2.

    254. According to Stefan Weatherill, Stefan Vogenauer, 'The European Community's competence for a comprehensive harmonisation of contract law - an empirical analysis' (2005) ELR 30(6), 821, 832 English law is used two-and-a-half times more frequently than any other law.

    255. Cf. Hugh Beale, 'The European civil code' (n 106) 4, 10.

    256. Cf. Roy Goode, 'Insularity or leadership' (n 92) 751, 764.

    257. Cf. Roy Goode, 'The Codification of Commercial Law' (n 29) 135, 150.

    258. Cf. Roy Goode, 'Insularity or leadership' (n 92) 751, 756 et seq.

    259. Hugh Beale, Hartkamp, Hein Koetz, Tallon, Cases, Materials and Text on Contract Law (Hart, Oxford 2002) 38.

    260. Cf. Devonald v Rosser & Sons [1906] 2 KB 728, 743.

    261. Cf. Clive M. Schmitthoff, International Trade Usages (n 6) 14.

    262. Cf. Mackay of Clashfern (editor), Halsbury's Laws of England Vol 12 (1) (4th ed, LexisNexis Butterworths, London 1987-1997) 445.

    263. Cf. Roy Goode (n 4) 1205.

    264. Cf. Roy Goode, 'The Codification of Commercial Law' (n 29) 135, 147.

    265. Cf. Hugh Beale, 'The European civil code' (n 106) 4, 10.

    266. Cf. Stefan Weatherill, Stefan Vogenauer, 'The European Community's competence for a comprehensive harmonisation of contract law - an empirical analysis' (2005) 30(6) ELR 821, 832; cf. Roy Goode, 'The Codification of Commercial Law' (n 29) 135, 150.

    267. Cf. Dame Mary Arden (n 121) 516, 529.

    268. Cf. Lisa Bernstein (n 140) 1803.

    269. With regard to major obstacles and disadvantages during such a drafting process and the current praxis cf. Simon James (n 95) 308; critically cf. Clayton Gillette, 'The Empirical and Theoretical Underpinnings of the Law Merchant. The Law Merchant In The Modern Age: Institutional Design And International Usages Under The CISG' (2004) 5 Chi J Int'l L 157 et seq.

    270. Cf. Gregory C. Walker (n 200) 263, 265, 267; as regards trade usages: Stephen Bainbridge, 'Trade Usages in International Sales of Goods: An Analysis of the 1964 and 1980 Sales Conventions' (1983) 24 Va J Int'l L 619, 649.

    271. With regard to costs cf. Jennifer Martin, 'Contracting for Wartime Actors: The Limits of the Contract Paradigm' (2007) 14 New England Journal of Int'l & Comp L 11, 12; dissenting opinion: Lord Goff of Chieveley 'The Future of the Common Law' (1997) 46 ICLQ 745, 750.

    272. Cf. Roy Goode (n 4) 1205.

    273. McGregor, Contract Code (n 252) rule 41.

    274. Cf. Simon James (n 95) 309.

    275. At best it results from the contact between academics and practitioners, which has improved in England, but still does not go far enough, cf. Simon James (n 95) 309 (footnote 29).

    276. Cf. Roy Goode, 'Insularity or leadership' (n 92) 751, 764.

    277. Cf. Christopher R. Drahozal (n 83) 79, 81.

    278. Cf. Lord Goff of Chieveley (n 271) 745, 750.

    279. Cf. Roy Goode, 'The Codification of Commercial Law' (n 29) 135, 143.


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