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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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VII. USAGES AND TRADE PRACTICES

It is self-evident that trade usages and trade practices may play an important role in international sales contracts. Art. 9 CISG recognises this fact. In its two paragraphs the provision distinguishes between two different methods of making usages or practices binding on the parties.

1. Practices and usages by consent

Art. 9(1) CISG states that the parties are bound by any usage to which they have agreed and by any practices which they have established between themselves. In short, the provision states that the parties are bound by usages and practices to which they have agreed (explicitly, implicitly or by conduct).[80] The provision therefore specifically formulates what would result from the application of Art. 6 CISG and Art. 8 CISG anyway.[81] As the "incorporation" of the usages under Art. 9(1) CISG is in the last resort based on the consensus of the parties and -- unlike under Art. 9(1) CISG -- not on their "international recognition", it does not matter whether the usages are local, regional, national or international.[82] It is submitted that the formation of the consensus required by Art. 9(1) CISG should be assessed according to the rules of Art. 8, 14 ff. CISG or according to the general principles deriving from these provisions.[83]

2. Relevant international trade usages

Art. 9(2) CISG goes somewhat farther. It essentially states that, unless otherwise agreed, relevant international trade usages (which are defined more closely as being widely known to and regularly observed by parties to contracts of the type involved in the particular trade concerned) will be binding on the parties [84] if they knew or ought to have known of these usages. The provision may give rise to difficult problems: In fact, if the usage is widely known in the relevant trade, most parties doing business in that area ought to have known of that usage. It is, however, conceivable that this may not be so in exceptional cases so that the requirement of "know or ought to have known" is not redundant.[85] A further question arises with regard to regionally limited usages. The predominant opinion seems to be that as a rule only those parties can be bound by [page 237] those usages which either are located in that geographical area or which are continuously doing business there.[86] It is submitted that this rule will in most cases be correct, but that one should not "invent" a specific requirement in that respect. In fact, this rule will usually simply flow from the requirement that the usage must be recognised in the "particular trade" and from the requirement that the parties "knew or ought to have known" it.

3. Specific issues

Whether a usage exists in the relevant trade and whether it is widely accepted will usually be a question of fact, not of law.[87] The burden of proof for the existence of the usage should be placed on the party that relies on it.[88]

The "validity" of any usages that may be relevant is not governed by the CISG. This is clearly stated by Art. 4 lit. (a) CISG. The validity will therefore be a matter for the applicable domestic law (as determined by the private international law of the forum).[89] It is submitted, however, that validity problems will rarely arise with regard to trade usages; an example for such an issue is the case where the usage infringes mandatory rules of the applicable domestic law.[90] It should further be noted that as mentioned above -- the formation of the consensus that is required under Art. 9(1) CISG is not covered by the validity exception.

If there is a binding usage or practice in the sense of Art. 9 CISG, it will usually take precedence over the provisions of the Convention.[91] It is further submitted that a usage or practice binding under Art. 9(1) CISG will usually take precedence over a usage binding under Art. 9(2) CISG as that provision explicitly states that it is subject to the parties' agreeing "otherwise".[92] For the same reason one should normally assume that usages or practices should give way to conflicting terms in the contract.[93]

Several legal systems know a rule or a trade usage that silence as a response to commercial letters of confirmation (purporting to confirm the content of oral agreements) amounts to an acceptance of the content of those letters. The CISG does not contain such a rule. It is further submitted that one cannot find a general principle (Art. 7(2) CISG) to that effect as the basic rule under the CISG is that silence in itself does not amount to an acceptance (Art. 18(1) CISG). In the author's opinion therefore, any usage that may exist in certain countries, regions or branches can only become relevant under the CISG by virtue of Art. 9 CISG.[94] In the case of Art. 9(2) CISG, this will usually require that the relevant usage is known both where the seller and where the buyer have their place of business (or continuously do business),[95] as mentioned above (b).

Another issue arises where the parties used a trade term from the INCOTERMS without however explicitly referring to the INCOTERMS (e.g.: "CIF Rotterdam" instead of "CIF Rotterdam (INCOTERMS 2000)". It has been held in case law that as a rule such a clause should be construed as referring to the INCOTERMS.[96] This view has been criticised for not taking into account that national legal systems may ascribe different meanings to those terms than the INCOTERMS do.[97] It is submitted that the solution to this problem should be found by adhering to the rules of Art. 9 CISG. The applicability of the INCOTERMS in such cases would therefore depend either on the kind of "consensus" meant in Art. 9(1) CISG or on the requirements of Art. 9(2) CISG.

The same principles should apply when considering whether the UNIDROIT Principles of International Commercial Contracts can be regarded as usages in the sense of Art. 9 CISG. The answer will therefore have to be found on a case-by-case basis.[98] [page 238]

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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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80. See Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 192.

81. Schmidt-Kessel, in: Schlechtriem / Schwenzer, Commentary, Art. 9 Nr. l.

82. Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p.194; Schmidt-Kessel, in: Schlechtriem / Schwenzer, Commentary, Art. 9 Nr. 6; see also (Austrian) Oberster Gerichtshof, 15 October 1998 and 9 March 2000, <http://www.cisg-online.ch> Nr. 380 and Nr. 573.

83. Schmidt-Kessel, in: Schlechtriem / Schwenzer, Commentary, Art. 9 Nr. 7.

84. The provision uses a fiction: The parties are considered to have these usages impliedly made applicable to their contract or its formation.

85. Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p, 201.

86. See (Austrian) Oberster Gerichtshof, 21 March 2000, <http://www.cisg-online.ch> Nr. 641; Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 201 with further references.

87. See (Austrian) Oberster Gerichtshof, 21 March 2000, <http://www.cisg-online.ch> Nr. 641; (German) Oberlandesgericht Dresden, 9 July 1998, <http://www.cisg-online.ch> Nr. 559.

88. (German) Oberlandesgericht Dresden, 9 July 1998, <http://www.cisg-online.ch> Nr. 559; Schmidt-Kessel, in: Schlechtriem / Schwenzer, Commentary, Art. 9 Nr. 20; Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 204 f.

89. For more detail see Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 194 f., pointing out that this may also be the law applicable to a trade center which has such usages (e.g. a seaport or an exchange).

90. Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 4 Nr. 16.

91. (Austrian) Oberster Gerichtshof, 21 March 2000, <http://www.cisg-online.ch> Nr. 641; Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 197, 199.

92. Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 199, where he furthermore discusses the interesting case that two usages which are binding under Art. 9(2) CISG lead to conflicting results and submits that the usage which is more closely connected to the contractual relationship should take precedence; but see for a different opinion in that respect (the usages cancelling each other out): Bonell in: Bianca / Bonell, Commentary on the International Sales Law, The 1980 Vienna Sales Convention (1987), Art. 9 Nr. 2.2.

93. (German) Oberlandesgericht Saarbrücken, 13 January 1993, <http://www.cisg-online.ch> Nr. 83; Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 199.

94. (German) Oberlandesgericht Frankfurt, 5 July 1995, <http://www.cisg-online.ch> Nr. 258; see also (Swiss) Zivilgericht Basel-Stadt, 21 December 1992, <http://www.cisg-online.ch> Nr. 55 which regarded the requirements of Art. 9 CISG as fulfilled in the case at hand.

95. See (German) Oberlandesgericht Frankfurt, 5 July 1995, <http://www.cisg-online.ch> Nr. 258.

96. U.S. District Court, Southern District of New York, 26 March 2002, <http://www.cisg-online.ch> Nr. 615 ("St. Paul Guardian Insurance Company and Travelers Insurance Company, as subrogees of Shared Imaging, Inc. VS. Neuromed Medical Systems & Support, GmbH, et al."); (Italian) Corte di Appello di Genova, 24 March 1995, <http://www.cisg-online.ch> Nr. 315; Arbitral Award, Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, 6 June 2000, <http://www.cisg-online.ch> Nr. 1249.

97. Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 203.

98. Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 204.


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