E. Allan Farnsworth

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Reproduced with permission of 72 Tulane Law Review (1998) 1985-1994

The American Provenance of the UNIDROIT Principles

E. Allan Farnsworth [*]

  1. Introductions
  2. Risky business
  3. Lines of influence
  4. UNCITRAL and UNIDROIT compared
  5. Some clear examples
  6. Faux Amis
  7. Conclusion

I. Introduction

"These are better than my other meetings. Here we draft something." So said René David, the eminent French comparatist, of UNIDROIT Working Group meetings three decades ago. Now, three decades later, after scores of such meetings to draft something, we have UNCITRAL's Convention on Contracts for the International Sale of Goods (CISG or the Vienna Convention) and UNIDROIT's Principles of International Commercial Contracts (Principles).

As the United States delegate to UNCITRAL and a member of its Working Group on sales during the drafting of the Vienna Convention, and the American member of UNIDROIT's Governing Council and a participant in its Working Group on the Principles, I heartily endorse René's view of meetings that draft something. And I have been asked to say something about the influence of our two related domestic texts, the Uniform Commercial Code and the Restatement (Second) of Contracts, on those two international texts.

One of the delights of "meetings that draft something" is that the participants are free to borrow at will from other texts without fear of charges of plagiarism -- a freedom usually accorded only to the likes of great artists and composers.[1] Thus the Introduction to [page 1985] the UNIDROIT Principles states that "[f]or the most part [they] reflect concepts to be found in many, if not all, legal systems" and it unabashedly proclaims that, to the extent that the Principles "address issues also covered by CISG, they follow [with some adaptations] the solutions found in that Convention." The Principles do this with nary a quotation mark, a footnote, nor a reporter's note.[2] The same is true for the Vienna Convention.[3]


II. Risky Business

It may therefore be a risky business to search for the provenance of the provisions of these texts, all the more so since a participant's proposal to use language lifted from the domestic legislation of the participant's own country is rarely attractive in an international forum. There are, to be sure, a few exceptions where the provenance is clear. For example, no reader of the Vienna Convention who encounters the exclusion from its scope of "goods bought for personal, family or household use"[4] can doubt that it is based on the Uniform Commercial Code's definition of consumer goods as goods "used or bought for use primarily for personal, family or household purposes."[5] But identifying origins is rarely so simple. Take two basic questions often involved in the interpretation of uniform laws.

First, what weight if any is to be given to the circumstance that the law is a uniform one? Our Uniform Commercial Code says that one of its underlying purposes and policies is "to make uniform the law among the various jurisdictions."[6] The Vienna Convention says that in its interpretation "regard is to be had . . . to the need to promote uniformity in its application."[7] The UNIDROIT Principles echo the Convention in saying that in their interpretation "regard is to be had to [page 1986] . . . the need to promote uniformity in their application."[8] Is it safe to assume that the UCC inspired the latter two provisions? Or is it more likely that such a provision would find its way into any international uniform law quite without regard to what the Code says?[9]

Second, what is one to do if the uniform law is silent on the issue involved in the dispute? The Code gives two opposing answers: one may either look to the Code itself and apply it "liberally" to promote "its underlying purposes and policies,"[10] or one may look outside the Code and use "principles of law and equity" to "supplement its provisions."[11] The Convention provides a similar choice: one may either look to the Convention itself and interpret it "in conformity with the general principles on which it is based," or one may look outside the Convention and use "the law applicable by virtue of the rules of private international law" (i.e., conflict of law rules). The Principles track the first choice, urging that such issues not expressly settled by the Principles be settled "as far as possible . . . in accordance with their underlying general principles."[13] Again, one may question how safe it is to suppose that the parallelism is due to the inspiration of the Code.[14]

III. Lines of Influence

At this point it will be helpful to refer to a simple diagram to illustrate the lines of influence among the texts.[page 1987]

Bold face type is used to indicate that both the Uniform Commercial Code (Article 2) and the Vienna Convention have the force of legislation and that both are limited in scope to contracts for the sale of goods. Italics are used to indicate that neither the Restatement (Second) nor the Principles has the force of legislation and that neither is limited in scope to contracts for the sale of goods. The thickness of the arrows indicates the extent of the influence. Thus, with respect to the two questions just discussed, it is clear that the Convention influenced the Principles but much less clear that the Code influenced the Convention.[15] Similarly, while it is often clear that the Code influenced the Restatement Second, it is much less clear that the Code influenced the Convention (the dotted line suggests that the Code's direct influence on the Principles is relatively slight).

IV. UNCITRAL and UNIDROIT Compared

At this point it may also be helpful to note some important differences between UNCITRAL and UNIDROIT. While the Working Group in UNCITRAL was relatively large (perhaps a score or more of participants when swelled by observers), that in UNIDROIT was relatively small (perhaps ten until expansion near the end). While the setting in UNCITRAL was formal (delegates arranged behind placards with names of their countries and simultaneous interpretation in four languages), that in UNIDROIT was [page 1988] informal (with no interpretation and easy give and take).[16] While the atmosphere in UNCITRAL was political (because delegates represented governments, which were grouped in regional blocs),[17] that in UNIDROIT was apolitical (because participants appeared in their private capacity).[18]

The impact of the American presence and other participants' responses to it differed greatly between the two organizations, despite the fact that in each case I was the American delegate. I arrived at the UNCITRAL meetings less than a decade after the 1964 diplomatic conference at The Hague, where the American delegation, arriving at the eleventh hour, had expressed its dissatisfaction with the text of the Uniform Law on the International Sale of Goods.[19] The warmth of my reception can be gauged from three questions that were put to me. Why had my government sent me and not my Columbia colleague Willis Reese (he being internationally known as the Reporter for the Restatement (Second) of Conflict of Laws)? Had I written a "real" book (as distinguished from a mere collection of cases)? And why did I bother to make proposals since the United States would never ratify the resulting text anyway (given our behavior at The Hague)? By the time I arrived at the UNIDROIT Working Group on the Principles, I was an "other self": Reporter for the Restatement (Second) of Contracts, author of a "real" book, and citizen of a country that had become a major player in this arena by its prompt ratification of the Vienna Convention.[20] In addition, I was particularly welcome as the first common law participant in what had begun as a Eurocentric civil law exercise.[21]

It should also be noted that as the American at both UNCITRAL and UNIDROIT I had two great advantages not possessed by any [page 1989] other participant. First, my native tongue was English. Although UNCITRAL had simultaneous interpretation of the daily proceedings, drafting commonly took place in the evenings and other off hours when interpretation was unavailable, and by informal consent everything, including the drafting itself, was in English. At UNIDROIT the Working Group's proceedings came to be entirely in English.[22] Second, unlike any other common lawyer, I came with texts in statutory form: the Uniform Commercial Code [23] and the Restatement (Second) of Contracts. No decision of a common law tribunal -- not even the House of Lords -- was as persuasive as a bit of blackletter text.

V. Some Clear Examples

Before turning to some examples of the possible effects of such blackletter text on the UNIDROIT Principles, I will mention a few clear examples of American influence. First, the Principles abandoned the use of the pronoun "he." When I joined the Working Group, I pointed out that the draft's frequent use of "he" would give it a dated appearance, at least in the United States. Second, the Principles dropped the use of "debtor" in reference to the party furnishing the transaction's characteristic obligation and substituted "obligor."[24] When I joined the Working Group, I explained that the civil law usage that describes the party who is to perform services as the "debtor" (and the party that is to pay for them as the "creditor") would confuse lawyers unfamiliar with this usage. Third, the Principles adopted the practice, common in the Restatement, of listing "factors" relevant to the application of a rule [25] and incorporated captions, comments, and illustrations closely conforming to the Restatement style.

Here are a few examples in which the influence of Restatement (Second) blackletter law can clearly be seen in the Principles. The first [page 1990] involves the right to assurance of due performance. The UNIDROIT Principles elaborate this right, which the Vienna Convention also confers,[26] by providing that "[a] party who reasonably believes that there will be a fundamental non-performance by the other party may demand adequate assurance of due performance," suspend performance in the meantime, and terminate the contract if assurance is not provided.[27] This text reflects language, derived from the Uniform Commercial Code [28] and incorporated in the Restatement (Second), providing that if "reasonable grounds arise to believe that the obligor will commit a [serious] breach by non-performance . . ., the obligee may demand adequate assurance of due performance," suspend performance in the meantime, and terminate the contract if assurance is not provided.[29] The provenance of the comparable language in the Principles is evident.

The second example involves good faith performance. The Vienna Convention, as is well known, resulted in an awkward compromise under which good faith is relevant to "the interpretation of this Convention," but there is no explicit requirement of good faith in the performance of a contract governed by the Convention.[30] The UNIDROIT Principles, however, impose an obligation to "act in accordance with good faith and fair dealing in international trade."[31] It would be difficult not to recognize the relation of this provision to that in the Restatement (Second), which speaks of "a duty of good faith and fair dealing" in the performance of a contract,[32] and which is derived in turn from the Code's requirement of good faith performance.[33] [page 1991]

The third example involves omitted terms. According to an article of the Principles entitled "Supplying an omitted term," if "the parties to a contract have not agreed with respect to a term which is important for a determination of their rights and duties, a term which is appropriate in the circumstances shall be supplied."[34] Plainly, the provenance is the Restatement (Second) provision captioned "Supplying an Omitted Essential Term," which states that if "the parties to a . . . contract have not agreed with respect to a term which is essential to a determination of their rights and duties, a term which is reasonable in the circumstances is supplied."[35]

VI. Faux Amis

At times, however, the superficial similarity of language is misleading. No introduction to the French language would be complete without the traditional list of faux amis -- those false friends in English and French whose superficial similarity belies their different meanings.[36] Here are two pairs of faux amis from the Principles and the Restatement (Second).

The first pair involves contract interpretation. According to the Principles, a party's manifestation is to be interpreted "according to that party's intention if the other party knew or could not have been unaware of that intention."[37] Note the resemblance to the language of the Restatement (Second), which states, with some qualification, that a party's manifestation is to be interpreted in accordance with that party's meaning if the other party "knew the meaning attached by the first party" or "had reason to know the meaning attached by the first party."[38] Yet the Restatement (Second) cannot have influenced the Principles, because the language of the Principles clearly follows that of the Convention and the Convention's language antedates that of the Restatement (Second). It is based on UNIDROIT's otherwise unsuccessful draft of a uniform law on the validity of a contract for the sale of goods (it was a meeting of a UNIDROIT Working Group on [page 1992] this draft at which René David made the remark quoted above).[39] The provenance of the language in the Principles is therefore not that of the Restatement (Second) but that of the UNIDROIT draft by way of the Convention.

The second pair of faux amis involves consequential damages. A casual reader of the UNIDROIT Principles would have little doubt as to the provenance of the language that limits a party's liability to "harm which it foresaw or could reasonably have foreseen at the time of the conclusion of the contract as being likely to result from its nonperformance."[40] This formulation of the familiar rule from Hadley V. Baxendale [41] looks suspiciously like that of the Restatement (Second), which excludes liability for "loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made."[42] But a glance at the Vienna Convention discloses language virtually identical to that in the Principles, limiting damages to "loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract . . . as a possible consequence of the breach of contract."[43] And a glance at ULIS reveals that the text approved at The Hague in 1964, long before the Restatement (Second) formulation appeared, contained almost identical language, limiting loss to that "which the party in breach ought to have foreseen at the time of the conclusion of the contract . . . as a possible consequence of the breach of the contract."[44] The provenance of the language in the Principles is therefore not the Restatement (Second), but rather ULIS, by way of the Vienna Convention.[45] [page 1993]

VII. Conclusion

It is, therefore, a risky though not unrewarding business to speculate on the provenance of the provisions of either the Vienna Convention or the UNIDROIT Principles. I hope that this exercise has shown both the risks and rewards, and has cast at least some doubt on the old simile that likens inquiry into the making of legislation to inquiry into the making of sausages and suggests avoidance of both.

In closing, I should note that René David was right for another reason. One of the delights of meetings that draft something is that others may later use what one has drafted, as the Vienna Convention used a bit of the text that we drafted when he made his remark. I will leave to others whether either the Vienna Convention or the UNIDROIT Principles are useful sources of inspiration for our domestic law, in particular the proposed revision of Article 2 of the Uniform Commercial Code.[46] [page 1994]


FOOTNOTES

* Alfred McCormack Professor of Law, Columbia University.

The bracket phrase page followed by a number is used to identify the page number of the original publication.

1. Take, for example, Puccini's use of our national anthem in Madam Butterfly. This freedom from charges of plagiarism may also apply to "workday prose," at the other end of the creative spectrum. See Janny Scott, My Words? Yours? Whose Are They? Publishers Wonder if Workaday Prose Really Can Be Plagiarized, N.Y. Times, Apr. 14, 1997, at D1 (discussing accusations of plagiarism in John Heidenry, What Wild Ecstasy: The Rise and Fall of the Sexual Revolution (1997)).

2. The Vienna Convention did not cite sources because it was thought inadvisable to single out a few of the world's many legal systems for citation in the Principles. A similar project to draft European principles, which deals with a more restricted universe of legal systems, does cite sources. See Commission on European Contract Law, Principles of European Contract Law -- Part I: Performance, Non-Performance and Remedies (Ole Lando & Hugh Beale eds., 1995).

3. Comments were prepared for the draft of the Convention that went to the Diplomatic Conference in Vienna, but it was not possible for the Conference to deal with them, and they were not approved and do not reflect the changes made in Vienna.

4. United Nations Convention on Contracts for the International Sale of Goods, U.N. Doc. A/CONF.97/18, Annex I, art. 2(a) (1980), reprinted in 19 I.L.M. 668 (1980) [hereinafter C.I.S.G.].

5. U.C.C. § 9-109(1) (1996).

6. U.C.C. § 1-102(2)(c).

7. C.I.S.G. art. 7(1).

8. UNIDROIT Principles art. 1.6(1)(1994).

9. It may be relevant that there was no such provision in the Uniform Law on the International Sale of Goods (ULIS), the predecessor of CISG, which was drafted without American involvement.

10. U.C.C. § 1-102(1).

11. U.C.C. § 1-103.

12. C.I.S.G. art. 7(2).

13. UNIDROIT Principles art. 1.6(2).

14. It may be relevant that ULIS article 2, contrary to the Convention, provided that generally rules of private international law "shall be excluded for the purposes of the application of the present Law." Uniform Law on the International Sale of Goods art. 2 (1964), reprinted in 3 I.L.M. 855 (1964) [hereinafter U.L.I.S.].

15. Indeed, a few members of UNIDROIT's Governing Council were troubled by the failure of the Principles to slavishly repeat all of the relevant language of the Convention. The careful reader will note that, as the result of a compromise to accommodate these members, the Introduction states merely that the Council is "offering the UNIDROIT Principles to the international legal and business communities" and does not state that the Council has "approved" them.

16. When I joined the UNIDROIT Working Group, participants spoke in either English or French, and it was assumed that everyone understood both. As the group expanded to include more non-Europeans, discussions took place in English.

17. The influence of the "industrialized," the "developing" and the "socialist" countries was rarely entirely absent.

18. On only one occasion, however, did I ever receive written instructions from the United States government at UNCITRAL. On that occasion I was asked to draft my own instructions, which were later sent back to me from Washington with only one change -- the name "Kissinger" on a signature line.

19. My understanding is that while John Honnold, who was so ably to manage the Secretariat arm of UNCITRAL during its work on sales, was the personification of tact at The Hague, this was not true for Soia Mentschikoff.

20. The ratification by the United States, Italy, and the People's Republic of China gave the Convention the ten ratifications necessary for it to take effect.

21. Originally styled "Progressive Codification of International Trade Law," the project had little support from the common law members of UNIDROIT's Governing Council.

22. See supra note 16 and accompanying text.

23. Admittedly, the prolixity of the Code and its plethora of definitions makes it seem a different sort of text than the typical civil law code. Nevertheless, many delegates at UNCITRAL and virtually all of the participants at UNIDROIT were familiar with it. At UNCITRAL, a member of the Soviet delegation had translated the Code into Russian, a member of the Japanese delegation had taught from it at an American law school, and on occasion delegates commissioned me to purchase copies at my law school bookstore when meetings were held in New York.

24. See UNIDROIT Principles art. 1.10 (1994) (defining "obligor" in English, "débiteur" in French, "deudor o deudora" in Spanish, and "schuldner" in German; the substitution of "obligor" was made only in the English version).

25. See, e.g., UNIDROIT Principles arts. 3.10 ("Gross disparity"), 4.3 ("Relevant circumstances [in interpretation]"), 5.5 ("Determination of kind of duty involved"), 7.3.1 ("Right to terminate the contract").

26. CISG article 71 provides that a party that has suspended performance on the ground that it has become apparent that the other party "will not perform a substantial part of his obligations . . . must continue with performance if the other party provides adequate assurance of his performance."

27. UNIDROIT Principles art. 7.3.4.

28. See U.C.C § 2-609 (1996) ("When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance. . . .").

29. Restatement (Second) of Contracts § 251 (1981).

30. C.I.S.G. art. 7(1). See the discussion by Bonell in Commentary on the International Sales Law: The 1980 Vienna Sales Convention 68-71 (C.M. Bianca & M.J. Bonell eds., 1987).

31. UNIDROIT Principles art. 1.7(1).

32. Restatement (Second) of Contracts § 205.

33. UCC § 1-203 imposes an "obligation of good faith" in the performance of a contract, and UCC § 2-103(1)(b) provides that in the case of a merchant this includes "observance of reasonable commercial standards of fair dealing in the trade." The influence of the Restatement (Second) terminology, which includes "fair dealing," is indicated by the French text, which says simply "bonne foi." The term bonne foi is considered to include fair dealing.

34. UNIDROIT Principles art. 4.8.

35. Restatement (Second) of Contracts § 204. For another interesting area of overlap, compare UNIDROIT Principles art. 2.20 ("Surprising terms") with Restatement (Second) of Contracts § 211 ("Standardized Agreements"). Both deal with the situation in which a party assents to a contract with standard terms containing a term that the party "could not reasonably have expected" (as the Principles put it) or that the party would not have assented to "if he knew what the writing contained" it (as the Restatement puts it).

36. For example, what is in French a conference is in English not a conference, but a lecture, and what is in French a lecture is in English not a lecture but a reading.

37. UNIDROIT Principles art. 4.2(1).

38. Restatement (Second) of Contracts § 201(2).

39. See E. Allan Farnsworth, Commentary on the International Sales Law: The 1980 Vienna Sales Convention 95-97 (C.M. Bianca & M.J. Bonell eds., 1987) (discussing Draft of a Law for the Unification of Certain Rules Relating to Validity of Contracts of International Sale of Goods art. 3 (UNIDROIT Etude XVI/B.Doc.22 U.D.P. 1972)).

It is possible that the draft was influenced by my awareness of another Restatement (Second) provision already in existence. Restatement (Second) § 20 ("Effect of Misunderstanding"), a section in the early chapter on formation, deals with the infamous "case" of the ships "Peerless".

40. UNIDROIT Principles art. 7.4.4 ("Foreseeability of harm").

41. 156 Eng. Rep. 145 (Ex. 1854).

42. Restatement (Second) of Contracts § 351 ("Unforseeability and Related Limitations on Damages").

43. C.I.S.G. art. 74.

44. U.L.I.S. art. 82.

45. It is, of course, possible that the ULIS language might have been influenced by the earlier language of the first Restatement § 330, which limited damages to "injuries that the defendant had reason to foresee as a probable result of his breach when the contract was made." Restatement of Contracts § 330 (1932).

46. I think that the adaptation of the German concept of Nachfrist, found in both the Convention and the Principles, is something that deserves serious consideration in any revision of our domestic law. See E. Allan Farnsworth, 2 Farnsworth on Contracts § 8.19a (2d ed. 1998). Other candidates for scrutiny include the provisions on fundamental breach, precontractual liability, and hardship.


Pace Law School Institute of International Commercial Law - Last updated May 24th, 1999
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