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Article 9 [Usages and established practices]

(1) The parties are bound by any usage [1] to which they have agreed [2] and by any practices which they have established between themselves.

(2) The parties are considered [4], unless otherwise agreed, to have impliedly made applicable to their contract [5] or its formation [6] a usage [7] of which the parties knew or ought to have known [8] and which in international trade is widely known [9] to, and regularly observed [10] [11] by, parties to contracts of the type involved in the particular trade concerned.

[WORDS, PHRASES AND CONCEPTS

[COMMENTARY]

[1] [parties are bound by any usage to which they have agreed]

     [1.1] It is not generally defined in the CISG what usages are. Insofar as reference is made to such usages which the parties have agreed to, this is of no relevance since agreed rules are binding for the parties in any case and independent of their character. This is true also of national usages and rules whose legal character is disputed. If, however, usages have been agreed whose validity is excluded under national law, they are not binding (Article 4, subpara. (a), which expressly mentions usages; c. also Article 4, note 6). Paragraph 2 defines those usages which are binding for the parties even though they were not agreed.

      [1.2] If usages are agreed, they will prevail over the Convention, just like all agreements between the parties (Article 6). This holds true also when the agreement is assumed under paragraph 2. Such is the view expressed overwhelmingly in publications (already Junge/Dölle, 47 on Article 9 ULIS which has a very similar content; Honnold, 149; Loewe/Lausanne, 19; Bydlinski/Doralt, 76; Bonell/BB, 104) and there are only rare instances where this issue is [page 67] considered unsolved (Garro, 479). The opinion of the majority is supported by the fact that a Czechoslovak proposal to consider only such usages as valid in the case of fictitious agreements, which are not contrary to the Convention, did not succeed (O.R., 89). Should there be contradictions between usages, agreed usages will prevail over fictitiously agreed ones, as can be concluded from the introductory half-sentence of paragraph 2. Agreed usages, in general, refer only to the post-conclusion stage of the contract, i.e. to the contract performance. Insofar as there are frame contracts or other agreements between the parties, whose effect reaches beyond the individual contract, they can also relate to the conclusion of the contract.

[2] [agreement can be express or, up to a point, implied]

This formulation expresses that there has to be an agreement between the parties. Such agreement can be an implied one. But the assumption that there is implied agreement must not be stretched too far because paragraph 2 would loose its function and the additional requirements mentioned thereunder could be evaded. A combination of both provisions by Bonell/BB, 107, seems rather unconvincing.

[3] [established practices; hierarchy: practices vs. agreed usages]

Concerning the term "established practices" compare Article 8, note 9. It is derived from US law (Art.1-205 UCC).

Practices, which can be interpreted as implied agreement between the parties and which frequently modify original agreements, should be considered as having priority in their relationship with agreed usages (so believes also Goldstajn/Dubrovnik, 99). They are generally better geared to the particularities of a concrete relationship because they are of an individual and thus more specific character. FRG jurisdiction, in line with the thus far identical (English) text of ULIS, has recognized a usage of fairness of the parties which deviates from the provisions on the time, form and content of a lack of conformity notice (OLG Düsseldorf in: Schlechtriem/Magnus, 167 fol).

[4] [concept of fictitious agreement]

This somewhat strange juridical construction of a fictitious agreement constitutes a compromise between those States whose aim was to have a normative validity of usages, hence validity brought about directly by virtue of law, and those which would have wanted to permit only the application of agreed usages. But in the end, the result in its substance comes close to a normative validity, which is even strengthened by the fictitious character of an agreement, because on grounds of party autonomy the agreement is on top of the hierarchy of the sources determining the substance of a contract (note 1.2.). A number of developing countries voiced some concern at this solution because they were not involved in establishing [page 68] those usages; and so did some Eastern European countries (summarizing Garro, 476 fol).

[5] [usages serve interpretation of the contract]

The obvious idea to be expressed here is that the usages are to be applied to those stages of contract performance which follow the conclusion of the contract, i.e. are to serve the interpretation of the contract.

[6] [fictitious agreement of usages also extends to formation of contract]

The fictitious agreement of usages thus also extends to the formation of the contract and can insofar only be deduced, apart from overlapping agreements, from relations the parties enter into at the time of starting preparation for a contract. The CISG proceeds here, as a matter of exception, from the existence of pre-contractual obligations. But fiction cannot reach beyond the substantive scope of application of the Convention (Article 4) and does, therefore, not cover subjects excluded by it.

[7] [usage an autonomous term]

It seems that using the term "usages" no additional features, except for the ones mentioned below, are to be required for the rules which become binding by virtue of fiction. This also serves to prevent the risk of an interpretation of the term "usages" under national law and related differences of opinion on whether specific rules are to be regarded as usages. The term "usages" is autonomous and can, therefore, be interpreted as broadly as possible (Bonell/BB, 111). It is not required that a usage be ancient or of long standing (Honnold, 148; Bonell/BB, 113). It seems questionable to us whether the measure of good faith should be used to determine to what extent usages are to be considered, as Bonell (ibid.) indicates. Even if one, as we do, does not want to limit this principle to the interpretation of the Convention, this does not mean it should be turned into the criterion for the validity of rules to be followed otherwise. (The situation is different in interpreting practices - note 5 of Article 7). After all, a Chinese proposal requiring usages to be reasonable (O.R., 89 fol) was rejected so that the necessary corrections have to be left to a large extent to the rules of validity of national law. Insofar as there are customary rights which meet the criteria of paragraph 2, they would have to be considered as a usage in the meaning of the CISG. The same goes for local customs which are accepted internationally as being valid for that trading place (similarly Honnold, 148; Bonell/BB, 109; more reserved Schlechtriem, 28).

[8] [knew or ought to have known the usage]

This feature is largely redundant (critical also Huber, 428, and the Indian delegate at the diplomatic conference, O.R., 266, who both go still further, and Bydlinski/Doralt, 77) because, if usages fulfill the requirement described in note 9, the parties have to recognize them as a rule. Only in very rare, exceptional cases one will be able [page 69] to permit that a party invokes that he did not know, nor ought to have known, the rules which meet the remaining requirements (e.g. a factory which regularly does not participate in transactions abroad buys, as an exception, a machine abroad which is traded according to international usage). On the other hand, it is not sufficient that the parties positively know certain rules, but that those rules are not widely known for the individual characteristics must be cumulative.

[9] [usage which in international trade is widely known]

This criterion is the most relevant of all. It will be assumed, in any case, that such usages are widely known in international trade which are known to the relevant business circles in the majority of countries which also belong to different groups of countries, hence in particular developed and developing countries. In a concrete case it may, however, suffice that the usages are known in the relevant business circles of those States where the parties have their places of business. But they must be known there as rules governing international trade and not just domestic transactions.

The applicable usages need not generally be valid for all contracts; it is a sufficient but also necessary requirement that they relate to sales contracts of the respective kind. The types of sales contracts, i.e. the subcategories, are divided according to the goods sold. Accordingly, the usages for trade in machinery and plants; raw materials or specific raw materials; foodstuffs etc. are applied to the respective contract. But the type of contract can also be determined according to whether the contract is one for single delivery or for delivery by instalments; whether it is a short-term or long-term contract; whether delivery is against cash or credit; or whether it is a tender or a direct transaction. The category of goods traded is also an important criterion for the determination of the decisive branch; but here also other requirements are to be considered like, e.g. the use of the goods sold (sales to re-sellers - e.g. dealers - on the one hand, and to final consumers, on the other).

[10] [usage which is regularly observed]

Contrary to the view held by Huber (428), we do not consider this characteristic superfluous, but rather very important. It may very well occur, for instance, that specific rules, which are applied in industrialized countries, are known but not applied in developing countries. Their agreement can then not be assumed, except for contracts between parties from industrialized countries.

[11] [usage fictitiously agreed when meets requirements]

When a rule meets the requirements explained under notes 8-10 their application is fictitiously agreed. Since this refers to the INCOTERMS, the Uniform Customs and Practices for Documentary Credits and the Uniform Rules for Collections, they are applied without taking a decision on whether they are usages at all. The [page 70] above-mentioned rules are rules of interpretation which require a specific stipulation in the contract (use of a specific trade term, of specific conditions of payment). If it is not determined at the same time which is the decisive interpretation; e.g. merely FOB, named port of shipment, then it is governed by the INCOTERMS and not by national usages or laws. Part of the problems with which Article 9, paragraph 3 ULIS deals (interpretation of expressions, clauses or forms), which in spite of relevant requests at the diplomatic conference did not find its way into the CISG (O.R., 89 fol), can be solved in this way (similarly Secretariat's Commentary, 19). Article 8, paragraph 2 can also be consulted in this context (Schlechtriem, 29). [page 71]

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