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Reproduced with permission of Internationales Handelsrecht (6/2006) 228-238, published by Sellier, Eruopean Law Publishers

excerpt from

Some introductory remarks on the CISG [*]

Prof. Dr. Peter Huber, LL.M. (London), Mainz

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VI. INTERPRETATION OF THE DECLARATIONS OF THE PARTIES

1. General rule

Art. 8 CISG provides rules on how to interpret statements, declarations or conduct of the parties. The wording of this provision only refers to the interpretation of the parties' individual statements. It is submitted, however, that they should also apply to the interpretation of "the contract" as such, i.e. to determine its content.[60] [page 235]

The first step in the interpretation process is a subjective approach which is contained in Art. 8(1) CISG: Statements or conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was. The second part of the provision is very important. It means that the subjective intent of the "declaring party will only be relevant in two situations: First, where the other party knew it. This would amount to a "subjective meeting of the minds" and it is submitted that in such a case there will be no objective modification. Thus, if both parties mean the same thing although -- objectively -- they used the wrong expression for it, their common intention will prevail irrespective of what an objective outsider might have understood (falsa demonstratio non nocet).[61] The second situation where the subjective intent of the declaring party will be relevant is where the other party "could not have been unaware" of it. By using that term, the Convention uses an objective filter in order to protect the other party.[62] It is submitted that the term "could not have been unaware" is equivalent to gross negligence.[63]

If Art. 8(1) CISG is not applicable (e.g. because the real intent of the declaring party cannot be discerned) Art. 8(2) CISG provides for an objective test: The standard of interpretation is the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.[64] As it will often be difficult to prove the actual intent of the declaring party (let alone a common intent of both parties), Art. 8(1) CISG will be considerably more important in practice than Art. 8(1) CISG.[65] The standard set in Art. 8(2) CISG is that of a reasonable person in the other party's shoes.[66] As a consequence, it may be irrelevant how the addressee in question actually understood the declaration (or the conduct).[67]

Irrespective of whether the subjective rule or the objective rule applies, Art. 8(3) CISG names certain elements that " should be given due consideration: the negotiations, practices which the parties have established between themselves, usages and any subsequent conduct of the parties. Two points deserve specific attention in this respect:

First, the fact that the negotiations may be taken into account shows that the CISG does neither know nor allow the so-called parol evidence rule which is part of the law of several Common Law countries and which prevents the judge from taking into account extrinsic evidence (like oral statements or previous correspondence) if the contract was concluded in writing.[68] The predominant opinion [69] and several U.S. courts [70] share the view that there may be no recourse to the parol evidence rule if the contract is governed by the CISG. A further argument in favour of this view can be derived from Art. 11 CISG which states that a contract of sale may be proved by any means, including witnesses. It is submitted, however, that the parties may agree on the exclusion of extrincic evidence (thereby reaching similar results as the parol evidence rule), for instance by so-called Merger Clauses or Entire Agreement Clauses. Such agreements would in principle be covered by Art. 6 CISG, second alternative, which allows the parties to derogate from or modify the effect of the provisions of the Convention.[71]

Secondly, the reference to the subsequent conduct of the parties may need some explanation. It is submitted that this rule does not mean that the parties can unilaterally change the content of their agreement by subsequent behaviour. It simply means that their subsequent conduct may be taken into account in order to find out what their intentions were at the time when they made the declaration or concluded the contract.[72]

If, for example, A delivers goods to B on the basis of an oral agreement and if B accepts the goods, uses parts of them, complains about the quality of other parts and finally even asks for an invoice (without specifying whether the invoice should be for the entire shipment or only for the used parts), this behaviour will make it difficult for B to argue that he did not want to conclude a binding sales contract.[73] If the transport clause that the parties have used in their contract is not clear as to who should bear the transport risk,[74] the fact that the seller got a transport insurance policy may indicate that he believed himself to bear the transport risk.[75] [page 236]

2. Specific Issues

There is a discussion about whether the Convention embodies a "contra proferentem" rule. This rule which is part of many domestic legal systems states that doubts as to the meaning of a statement are to be resolved against the drafter. The rule has its major field of application where standard terms are used, but it is not limited to those cases.

Undoubtedly, the Convention does not explicitly state such a rule. It is submitted, however, that the application of Art. 8 CISG will lead to similar results as the contra proferentem rule.[76] In fact, unless the recipient knows the actual intent of the declaring party (Art. 8(1) CISG, first alternative), the interpretation will always have to be made according to an objective standard from the perspective of the recipient.[77] If the statement is not clear, this will usually not lead to the understanding that is more favourable to the declaring party.

International contracts often give rise to the language issue: In how far can statements or declarations be effective if they are not drafted in the recipient's language? The predominant opinion correctly tries to answer that issue by using the rules on interpretation in Art. 8 CISG. It is submitted that the basic rule should read as follows: The statement must be in the language of the contract [78] or -- under the requirements of Art. 9 CISG -- in a language that is accepted by a usage or practice in the relevant trade. This approach would be consistent with the objective criteria that both Art. 8(1) CISG ("could not have been unaware") and Art. 8(2) CISG ("reasonable person ...") set. There may, of course, be exceptions to this principle: This may be the case where the recipient has shown by his conduct that he "accepts" communication in another language (for instance by replying to it several times without objecting to the use of that other language).[79] In the light of the first alternative of Art. 8(1) CISG another exception might be appropriate if the recipient actually understood the statement that was made in another language; in fact it seems to be at least arguable that the recipient then "knows" the actual intent of the declaring party so that there is no room for going to the objective criteria ("could not have been unaware", "reasonable person"). [page 237]

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FOOTNOTES

* The present article is based on the introductory chapter of Peter Huber / Alastair Mullis, The CISG -- A new textbook for students and practitioners, which will be published by Sellier, European Law Publishers in spring 2007.

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60. Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 175 f.; Schmidt-Kessel, in: Schlechtriem / Schwenzer, Commentary, Art. 8 Nr. 3. For an example in the practice of the courts see (Swiss) Bundesgericht, 22 December 2000, <http://www.cisg-online.ch> Nr. 628.

61. Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p.177; Schmidt-Kessel, in: Schlechtriem / Schwenzer, Commentary, Art. 8 Nr. 22.

62. Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 177.

63. Magnus, in: Staudinger Kommentar zum Bürgerlichen Gesetzbuch, Art. 8 Nr. 12; Ferrari, Internationales Handelsrecht (IHR) 2003, 10, 12 (pointing out correctly that the relevant time for assessing whether there was gross negligence should be the moment when the declaration becomes effective).

64. For examples of the application of Art. 8(2) CISG in practice see Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 181 ff., and Draft Digest on Art. 8, p. 545 ff.

65. See Ferrari , in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 178 f. with numerous references to case law; Ferrari, Internationales Handelsrecht (IHR) 2003, 10, 12; Schmidt-Kessel, in: Schlechtriem / Schwenzer, Commentary, Art. 8 Nr. 19; Honnold, Uniform Law für International Sales, 3rd ed. (1999), Nr. 107.

66. Schmidt-Kessel, in: Schlechtriem / Schwenzer, Commentary, Art. 8 Nr. 19.

67. Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 179 f.

68. The same result should be reached for the related Plain Meaning Rule, cf. in more detail CISG-AC Opinion 3 Nr. 1.3, 3, Internationales Handelsrecht (IHR) 2005, 81 ff. = Pace Database = CISG-Online Database.

69. See CISG-AC Opinion 3 Nr. 1.2, 2, Internationales Handelsrecht (IHR) 2005, 81 ff. = Pace Database = CISG-online Database with further references; Schmidt-Kessel, in: Schlechtriem / Schwenzer, Commentary, Art. 8 Nr. 32; Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 186.

70. See for instance U.S. Court of Appeals (11th Circuit), 29 June 1998, <http://www.cisg-online.ch> Nr. 342 ("MCC-Marble Ceramic Center, Inc. VS. Ceramica Nuova D'Agostino, S.p.A."); U.S. District Court, Southern District of New York, 6 April 1998, <http://www.cisg-online.ch> Nr. 440 ("Calzaturificio Claudia S.n.c. vs. Olivieri Footwear Ltd."). But see also U.S. Court of Appeals (5th Circuit), 15 June 1993, <http://www.cisg-online.ch> Nr. 89 ("Beijing Metals & Minerals Import/Export Corp. v. U.S. Business Center, Inc.").

71. For more detail see CISG-AC Opinion 3, Internationales Handelsrecht to (IHR) 2005, 81 ff. = Pace Database = CISG-Online Database.

72. Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 187; Schmidt-Kessel, in: Schlechtriem / Schwenzer, Commentary, Art. 8 Nr. 50.

73. For a similar scenario see: (Swiss) Bezirksgericht St. Gallen, 3 July 1997 , <http://www.cisg-online.ch> Nr. 336.

74. As often is the case in Germany with the clause "frei ...".

75. For a similar scenario see: (German) Oberlandesgericht Karlsruhe, 20 November 1992, <http://www.cisg-online.ch> Nr. 54. For another example see: (Austrian) Oberster Gerichtshof, 10 November 1994, <http://www.cisg-online.ch> Nr. 117. For further references see: Schmidt-Kessel, in: Schlechtriem / Schwenzer, Commentary, Art. 8 Nr. 51.

76. For similar approaches see: Honnold, Uniform Law for International Sales, 3rd ed. (1999), Nr. 107.1 ff.; Schmidt-Kessel, in: Schlechtriem / Schwenzer, Commentary, Art. 8 Nr. 47 ff.; (German) Oberlandesgericht Celle, 24 May 1995, <http://www.cisg-online.ch> Nr. 152. But see also for a more sceptical approach: Ferrari, Internationales Handelsrecht (IHR) 2003, 10, 15; Witz, in: Witz / Salger / Lorenz, Commentary, Art. 8 Nr. 15 (to standard terms and conditions).

77. Cf. "could not have been unaware", "reasonable person ...".

78. This could be the language which has been designated by the parties as the language of the contract or of the negotiations. It could also be the language that the parties have used so far during their negotiations.

79. For similar approaches in case law see: (Austrian) Oberster Gerichtshof, 17 December 1993 and 31 August 2005, <http://www.cisg-online.ch> Nt. 828 and Nr. 1093; (German) Landgericht Kassel, 15 February 1996, <http://www.cisg-online.ch> Nr. 190; (Belgian) Rechtbank van Koophandel Hasselt, 2 June 1999, cf. <http://www.cisg.law.pace.edu>; see also (German) Oberlandesgericht Hamm, 8 February 1995, <http://www.cisg-online.ch> Nr. 141 and (German) Landgericht Heilbronn, 15 September 1997, <http://www.cisg-online.ch> Nr. 562 (although both decisions are in the author's opinion not quite clear as to whether they are -- with regard to the language issue actually based on the Convention or on principles of domestic law). For similar approaches in legal writing see: Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 188 f.; Ferrari, Internationales Handelsrecht (IHR) 2003, 10, 13, f.; Schmidt-Kessel, in: Schlechtriem / Schwenzer, Commentary, Art. 8 Nr. 41 f.

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