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

Some introductory remarks on the CISG [*]

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

  1. Outline of the CISG
  2. Interpretation of the Convention
    1. Guidelines in Art. 7(1) CISG
    2. Standards of interpretation
  3. Working with the Convention
  4. "Legal scope of application"
    1. Basic principle
    2. Specific issues
      a) Validity
                  aa) General rule
                  bb) Error concerning the quality or the characteristics of the goods
                  cc) Fraud
                  dd) Errors concerning the other party's ability to perform
      b) Consideration?
      c) Property
      d) Personal injury
      e) Tort
                  aa) Contract and tort
                  bb) EC Product Liability Directive
      f) Precontractual liability
      g) Limitation
      h) Set-off
  5. Gap filling
    1. Basic principle
    2. Use of the Principles of International Commercial Contracts?
    3. In particular: burden of proof
  6. Interpretation of the declarations of the parties
    1. General rule
    2. Specific issues
  7. Usages and trade practices
    1. Practices and usages by consent
    2. Relevant international trade usages
    3. Specific issues

The present issue of the journal is specifically dedicated to the participants of the 14th Willem C, Vis International Commercial Arbitration Moot 2006/2007. The Moot usually combines procedural issues from the field of international commercial arbitration with substantive problems from contracts that are governed by the 1980 UN Convention on Contracts for the International Sale of Goods (CISG). The present article tries to introduce the participants to the CISG by dealing with a few general issues that may arise when working with the Convention.

The CISG is in force in more than 60 States from all parts of the world, among them both industrial nations and developing states. It has been widely applied in international commercial transactions in the past twenty years. More than 1700 decisions by state courts and arbitral tribunals have been reported so far; legal writing on the Convention is abundant.[1] It is therefore fair to say that the CISG has in fact been one of the success stories in the field of the international unification of private law.

The article will start by giving a very brief outline of the structure of the CISG (I) before dealing with the interpretation of the Convention (II). As the interpretation should be made in an "international" manner taking into account material from other states, the next part is aimed at showing how to obtain that material and, more general, "how to work" with the CISG (III). The next two parts (IV, V) are closely connected with each other: They try to identify the legal issues that the Convention actually governs or wants to govern ("the legal scope" of the Convention) and to describe the way in which any "gaps" should be filled. The final two parts of the article are concerned with the content of the contract concluded by the parties. They deal with the interpretation of the parties' declarations (VI) and with the incorporation of usages or trade practices (VII).

I. OUTLINE OF THE CISG

The CISG applies to contracts of sale of moveable goods between parties which have their place of business in different states when these states are contracting states (Art. 1(1) lit. (a) CISG) or when the rules of private international law lead to the application of the law of a contracting state (Art. 1(1) lit. (b) CISG).[2] Certain types of contracts are excluded from its scope of application by virtue of Art. 2 CISG. For instance most consumer sales will not fall under the CISG (cf. Art. 2 lit. (a) CISG).

With regard to the substantive issues, the CISG basically governs three areas: the conclusion of the contract, the obligations of the seller including the respective remedies of the buyer and the obligations of the buyer including the respective remedies of the seller. The CISG therefore provides both a substantial "law of sales" and a regulation of certain issues of the general law of contract, albeit limited to those international sales transactions which fall under its scope of application.

The Convention is divided into four parts:

(1) The first part (Art. 1-13 CISG) contains rules on its sphere of application (Chapter I, Art. 1-6 CISG) and a number of general provisions (Chapter 11, Art. 7-13 CISG).

(2) The second part (Art. 14-24 CISG) deals with the formation of the contract.

(3) The third part (Art. 25-88 CISG) is by far the most comprehensive part of the Convention. It is entitled "Sale of Goods" and provides the actual "sales law" of the Convention. It is subdivided into five chapters:

Chapter I (Art. 25-29 CISG) contains some general provisions which may be relevant throughout the entire sales law, in particular the definition of the notion of "fundamental breach" which will be relevant in particular as a precondition for the right to avoid the contract (cf. Art. 49, 64, 72 f. CISG).

Chapter II (Art. 30-52 CISG) deals with the obligations of the seller. After a general rule in Art. 30 CISG, Section I (Art. 31-34) deals with the delivery of the goods and the handing over of documents. Section II (Art. 35-44 CISG) deals with the conformity of the goods and with third party claims.

Finally, Section III (Art. 45-52 CISG) contains the core element of every sales law, the buyer's remedies for breach of contract by the seller. Art. 45(1) CISG provides: "If the seller fails to perform any of his obligations under the contract or this Convention, the buyer may: (a) exercise the tights provided in Art. 46 to 52 CISG; (b) claim damages as provided in Art. 74 to 77 CISG." This means that the buyer can resort to the following remedies: performance (Art. 46 CISG), including substitute delivery (Art. 46(2) CISG) and repair (Art. 46(3) CISG); avoidance of the contract (Art. 49 CISG); reduction of the purchase price (Art. 50 CISG); damages (Art. 45 lit. (b), 74 ff. CISG). There are several specific provisions for instalment contracts (Art. 73 CISG) and for cases of anticipatory breach of contract (Art. 72 CISG) which do, however, not [page 228] create new remedies, but rather modify the existing remedies. The most defining feature of the system of remedies in the CISG is that its aims at keeping the contract alive as long as possible in order to avoid the necessity to unwind the contract. The prime consequence of this is that termination of the contract will only be available as a remedy of last resort:[3] It will usually require that the breach committed by the seller was a fundamental one (Art. 49(1) lit. (a), 25 CISG); in cases of non-delivery, the buyer may also terminate the contract after having fixed an additional period of time ("Nachfrist", Art. 47 CISG) without success, Art. 49(1) lit. (b) CISG.[4]

Chapter III (Art. 53-65 CISG) has a similar structure: Art. 53 CISG states the buyer's obligations in a general way, Section I (Art. 54-59 CISG) deals with the obligation to pay the price, Section II (Art. 60 CISG) deals shortly with the obligation to take delivery and Section III (Art. 61-64 CISG) governs the seller's remedies for breach of contract by the buyer. The structure of the seller's remedies is similar to the structure of the buyer's remedies.

Chapter IV (Art. 66-70 CISG) deals with the passing of risk and is closely linked to the buyer's obligation to pay the price.

Chapter V (Art. 71-88 CISG) contains provisions common to the obligations of the seller and of the buyer. Section I (Art. 71-73 CISG) deals with anticipatory breach and instalment contracts. Section II (Art. 74-77 CISG) contains the extremely important rules on damages; this section is closely linked to Section IV (Art. 79-80 CISG) which governs the exemptions from the strict liability for damages that the Convention imposes on the parties. Section III (Art. 78 CISG) contains a short (and fragmentary) rule on interest. Section V (Art. 81-84 CISG) governs the effects of an avoidance of the contract and Section VI (Art. 85-88 CISG) deals with the preservation of the goods.

(4) The fourth part of the Convention (Art. 89-101 CISG) contains final provisions which deal in particular with the details of ratification etc., with possible reservations against certain parts or provisions of the Convention and with the entry into force of the Convention.

II. INTERPRETATION OF THE CONVENTION

As the CISG is an international legal instrument, the issue of interpretation requires special attention. The Convention itself gives some guidelines in Art. 7(1) CISG which have to be taken into account when trying to find the standards of interpretation that are admissible (2).

1. Guidelines in Art. 7(1) CISG

Art. 7(1) CISG provides a rule on the interpretation of the Convention which states that regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade. This rule gives three guidelines for interpreting the Convention:

The first guideline is its international character. In the first place, therefore, the Convention has to be interpreted autonomously. This means that the terms of the CISG should not simply be regarded as having the same meaning as identical terms that may exist in the domestic legal system. They should rather be given a "CISG-meaning", based on the structure and the underlying policies of the Convention as well as on its drafting and negotiating history. Of course, this autonomous interpretation may lead to the result that the CISG-term actually has the same meaning as a corresponding domestic term. One should, however, not jump to that conclusion too easily, but only after a careful analysis.[5]

The second guideline is the need to promote uniformity in the application of the Convention. The ideal would be a situation where every court or tribunal that has to apply the CISG would interpret its provisions in exactly the same way and with the same results. In practice, of course, this aim is hard to realize, in particular because there is no supranational court having the power to decide with binding effect on the correct interpretation of the Convention. The courts should, however, try to take into account foreign case law (and academic writing) as persuasive authority when interpreting the CISG.[6] In fact, the relevant material is being made available by several databases and publications which are easily accessible (cf. in more detail below, III) so that there is at least a reasonable basis for complying with the uniformity guideline. It seems as though courts are more and more willing to do so.[7]

The third guideline is the observance of good faith in international trade. The meaning of that rule is not quite clear.[8] The first problem that arises is how to find the relevant standards of "good faith". Given the principle of autonomous interpretation, it seems to be rather obvious that one should not simply transfer domestic good faith concepts (of which state anyway?) into the Convention. In theory, it may be possible, however, to discern from usages and trade practices (which the Convention recognises in principle, cf. Art. 9 CISG), from other international instruments and from case law and academic writing certain standards concerning fair and reasonable behaviour in international trade relations. The practical application of that idea will, however, prove difficult.

The second problem that arises with regard to the "good faith"-reference is to determine its exact purpose. It is submitted that the reference to good faith should not be used as a "super-tool" to override the rules and policies of the Convention whenever one regards the solution to a particular case or problem as inadequate. Art. 7(1) CISG actually grants the good faith principle a rather limited role as one of several guidelines that can be used when interpreting the Convention. The good [page 229] faith principle is therefore not established as a supreme rule towering over the ordinary provisions of the CISG, but has a rather limited function in the process of finding out what the CISG states. In the author's opinion, it is conceivable that the good faith guideline may influence the concrete result of the interpretation of a provision where the other methods of interpretation offer differing options.

2. Standards of interpretation

Taking the guidelines of Art. 7(1) CISG into account one easily reaches the conclusion that the forum state should not simply refer to its domestic standards when interpreting the Convention. On the other hand, recent studies [9] have shown that despite certain differences in terminology many legal systems use similar standards or tools when interpreting statutory texts.

In the author's opinion the following criteria may be used when interpreting the Convention, always on the understanding that they are applied with due respect for the guidelines of Art. 7(1) CISG, in particular for the principle of autonomous interpretation and for the international character of the Convention: the wording the provision (in particular in the official languages [10] of the Convention, i.e. Arabic, Chinese, English, French, Russian and Spanish, with possibly a slight preference for English as being the dominating language at the Vienna Conference [11]); the drafting and negotiating history, in particular the travaux préparatoires;[12] the purpose of the provision and the underlying policy; the position of the provision within the framework of the Convention (systematic approach).

The use of comparative legal analysis when interpreting the Convention raises intricate questions. As a starting point it is submitted that one should be rather careful in that respect.[13] The CISG is not necessarily the common denominator of an exercise in comparative law, but the result of a political negotiation process that aimed at establishing a workable and well suited instrument for international sales. Having said that, it is of course not impossible that comparative legal analysis may play a role in interpreting the Convention, for instance where a particular rule has been transferred into the Convention from one or several legal systems.

III. WORKING WITH THE CONVENTION

In the light of the principles of autonomous and internationally-orientated interpretation it may seem at first sight rather complicated to work with the Convention. On the other hand, this task is made easier by an extremely well developed system of databases and academic literature structuring the masses of material.

Numerous databases offer valuable services to lawyers having to apply the CISG. It is obviously a matter of personal preferences which of the databases one wants to use (primarily). In the author's experience, the following databases have been extremely helpful:

   -    Pace Database (<http://www.cisg.law.pace.edu>): offering structured information on case law, academic writing, travaux préparatoires (e.g. the so-called "Secretariat Commentary"), the status (Contracting States) etc., offering different search forms. Many of the foreign decisions are translated into English, many of the articles and books are available in full text.
 
   -    CISG-Online (<http://www.cisg-online.ch>), offering different search forms on case law and a similar (but somewhat more limited) content than the Pace Database. The advantage of this database is that every decision is numbered individually so that they can be easily identified. This is the reason why the present article quotes the decisions simply by reference to their CISG-Online Number (where available). CISG-Online also offers information on printed versions of the decisions and cross-references to English translations on Pace Database.
 
   -    UNITRAL Database (<http://www.uncitral.org>), featuring i.e. CLOUT (<http://www.uncitral.org/uncitral/en/case-law.html>), the official case law database of UNCITRAL, and the present status (Contracting States etc.) (<http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG_status.html>).
 
   -    Autonomous network of CISG Databases (<http://www.cisg.law.pace.edu/network.html#cp>): A network of national or regional databases on the CISG.

A very useful instrument for finding relevant case law on the CISG is the Draft UNCITRAL Digest which presents an overview of relevant case law on every article of the CISG. The Draft Digest has been prepared by eminent scholars in this area. The Draft Digest itself tries to limit itself to simply referring the content of decisions without trying to evaluate or criticise them. It has been published, however, together with the proceedings of a Conference at the University of Pittsburgh where scholars (including the persons charged with drafting the digest) commented on the Draft Digest and on the case law referred to there.[14]

Recently a private initiative of eminent scholars in the field has founded the "CISG-Advisory Council". Its aim is to promote the uniform application of the CISG by issuing opinions relating to the interpretation and application of the Convention on request (for instance of international organizations, professional associations and adjudication bodies) or on its own initiative. As of May 2006 the CISG-AC has issued five opinions.[15] The opinions of the CISG-AC are regularly published in journals (for instance in the present journal, "Internationales Handelsrecht (IHR)" which specialises on the CISG and related areas) and on the relevant websites (e.g. Pace, CISG-Online).

Commentaries are another rewarding source for interpreting the CISG. Commentaries in English are, for instance:

   -    Peter Schlechtriem / Ingeborg Schwenzer (Editors); Commentary on the UN Convention on the International Sale of Goods (CISG); 2nd ed. (2005). [page 230]
 
   -    John Honnold, Uniform Law of International Sales, 3rd ed. 1999).
 
   -    Cesare Massimo Bianca / Michael Joachim Bonell (Editors); Commentary on the International Sales Law; The 1980 Vienna Sales Convention; (1987).

IV. "LEGAL SCOPE OF APPLICATION"

Most of the questions that can arise with regard to a sales contract will be addressed and answered by the CISG. There are, however, certain issues which the CISG does not (want to) govern although they can be relevant with regard to the conclusion and performance of sales contracts. It is therefore necessary to draw the line between the issues that are governed and those issues that are not, or, in other words, to define the "legal scope" of the CISG.

1. Basic principle

The starting point for defining the legal scope of application is Art. 4 CISG:

"This Convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. In particular, except as otherwise provided in this Convention, it is not concerned with: (a) the validity of the contract or of any of its provisions or of any usage; (b) the effect which the contract may have on the property in the goods sold."

The first sentence of that provision gives a positive definition of the legal scope of application of the CISG: It governs the formation and the rights and obligations of the parties. As a rule of thumb, one can assume that the terms "formation" and "rights and obligations of the parties" have to be understood as covering everything that the Convention actually deals with, in particular in Art. 14-24 CISG and Art. 25-88 CISG but also in Art. 11-13 CISG (concerning form which could also be regarded as a matter of "formation" in its widest sense).

From that positive definition of the legal scope of the CISG one can deduct what is actually not governed by the Convention, i.e. those issues which neither belong to formation nor to the rights and obligations of the parties. By way of an example the second sentence of Art, 4 CISG gives two examples of areas which are not governed by the Convention: validity (lit. (a)) and the transfer of property (lit. (b)). A further exception is contained in Art. 5 CISG (personal injury and death). These lists are not exhaustive. Other matters may be outside the scope of the CISG without being named in Art. 4 CISG, for instance the limitation (prescription) of claims.

The interaction between the CISG and domestic remedies may lead to intricate questions.[16] Some aspects will be dealt with in the following part.

2. Specific issues

a) Validity

aa) General rule

At first sight, the treatment of validity 1ssues in the Convention seems to be rather straightforward. The second sentence of Art. 4 CISG actually names the "validity of the contract or of any of its provisions or of any usage" as one of the examples not governed by the Convention. On closer analysis, however, certain problems may arise. The first issue to be addressed is how to interpret the terms used in Art. 4 CISG. It is submitted that in line with the rule of Art. 7(1) CISG, these terms should be given an autonomous" "Convention-style" interpretation.[17] In other words, "validity" and "formation" do not mean what (the applicable) domestic law says, but have to be interpreted against the background of the CISG.

Secondly, one has to bring the validity exception in line with the positive statement that "formation" issues (which may on a broad interpretation also be regarded as affecting the validity) are governed by the CISG. The predominant opinion correctly assumes that "formation" in the sense of the CISG is the so-called "external consensus", i.e. the mechanics of how the contract is concluded (e.g. by offer and acceptance).[18] This is what Art. 14-24 CISG actually deal with. Other matters that may affect the validity of the contract are, on the other hand, regarded as matters of "validity" which fall under the exception of Art. 4 lit. (a) CISG and are therefore not governed by the CISG. This is for instance true for the so-called "internal consensus", i.e. incapacity, fraud, mistake and within certain limits [19] also mistake and misrepresentation. Further examples would be validity issues arising from legislation such as legal prohibitions, ordre public, export bans etc.[20]

bb) Error concerning the quality or the characteristics of the goods

A different situation arises, however, when the buyer's error relates to the quality or the characteristics of the goods. Domestic legal systems will often allow the buyer to rescind the contract if he had been induced to conclude the contract by an error concerning essential characteristics of the goods. At first sight, this type of remedy seems to fall under the validity exception as it is concerned with the "internal consensus" and not with the "external mechanism". Several authors indeed take this position and argue that the domestic remedies for an error concerning the characteristics or the quality of the goods should remain applicable by virtue of Art. 4 lit. (a) CISG.[21]

It is submitted, however, that the buyer may not have recourse to the domestic remedies for errors concerning characteristics or qualities of the goods for two reasons: The first reason is a policy argument: In many cases where the goods [page 231] have been defective from the outset (i.e. already when the contract was concluded) there will also have been an error of the buyer in that respect (otherwise he would probably not have bought the goods, at any rate not for the normal market price). If one allowed the buyer to have recourse to the right to rescind under the applicable domestic law, the restrictions that the CISG imposes on the right to avoid the contract for defects of the goods (e.g. the notice regime under Art. 39 CISG, the exception in Art. 35(3) CISG, the fundamental breach requirement in Art. 49(1) lit. (a) CISG) could easily be undermined. This would not only lead to inadequate results but also impair the objective of a uniform interpretation of the Convention (cf. Art. 7(1) CISG). The second reason is a dogmatic one: If one accepts the submission that the term "validity" is not to be construed according to the standards of the applicable domestic law but as an autonomous concept, one will have to conclude that "validity" matters in the sense of Art. 4 lit. (a) are only those validity issues that are not positively governed by the Convention (cf. Art. 4 CISG, first sentence), i.e. that do neither concern the formation of the contract nor the rights and obligations of the parties. The question, however, of whether the buyer can rely on the defects of the goods in order to get out of the contract is one of the core issues of the system of remedies of the buyer (Art. 45 ff. CISG, in particular Art. 49 CISG). On should therefore follow the view [22] that the buyer cannot rely on domestic remedies for errors on the quality or characteristics of the goods in order to avoid the contract. To put it in other words: This issue is not a "validity" issue in the sense of Art. 4 lit. (a) CISG.[23]

cc) Fraud

A different situation arises, where the buyer has been induced to conclude the contract by fraud. In these cases the predominant opinion regards the domestic fraud remedies as applicable, even if the fraud related to the characteristics of the goods.[24] It is submitted that this is correct for the policy reason that the fraudulent seller does not deserve the protection that the CISG rules may grant him.

dd) Errors concerning the other party's ability to perform

Domestic remedies in cases where one party erroneously trusted in the other party's ability to perform the contract should be treated in the same way as errors concerning the characteristics of the goods: As this issue is addressed by the Convention in Art. 71 CISG, one should not regard it as a "validity" issue in the sense of Art. 4 lit. (a), but as governed by the Convention under the first sentence of Art. 4 CISG ("rights and obligations"). Domestic remedies for such cases should therefore not be regarded as applicable.[25]

b) Consideration?

Common Law systems know the requirement of "consideration", i.e. the rule that in principle the contract does not simply arise from the mere agreement of the parties but that the promising party must have received some "consideration" (e.g. profit, gain) for its offer. It is submitted that the domestic consideration requirement cannot be applied to contracts underlying the CISG. In fact, both the formation rules (Art. 14ff. CISG) and the rules on form (Art. 11 ff., 29 CISG) show that the Convention does not know the consideration requirement. One should regard this as a positive statement that consideration is not necessary. It would therefore not be correct to treat the consideration requirement as a "validity" issue and submit it to the domestic law according to Art. 4 Lit. (a) CISG.[26] This is, however, what one U.S. court [27] has done, while another U.S. court held that under the Convention, a contract for the sale of goods may be modified without consideration for the modification.[28]

c) Property

According to Art. 4 lit. (b) CISG the effect which the contract may have on the property in the goods sold is in principle not governed by the CISG. This means in particular that the question of how property in the goods is transferred to the buyer (e.g. by a separate agreement as in German law or simply with the conclusion of the sales contract as for instance in French law) will not be governed by the Convention but by the applicable (domestic) law, i.e. in most countries by the lex situs.[29] What is more, the proprietary aspects of security interests in the goods sold (e.g. retention of title) will in principle be governed by the applicable (domestic) law.[30]

d) Personal injury

Art. 5 CISG states that the Convention does not apply to the liability of the seller for death or personal injury caused by the goods to any person. The purpose of this provision is to avoid conflicts between the CISG and those domestic legal systems where product liability is not based on tort, but on contract.[31] Its application is, however, not limited to cases where the law of such a state is applicable. The provision generally excludes [page 232] claims for personal injury or death from the Convention if they were caused by the goods. The latter requirement probably means that cases where the buyer's injury does not result from (a defect of) the goods but from the seller's behaviour while delivering the goods will not fall under the Art. 5 CISG exception and will therefore be governed by the CISG.[32]

If the buyer himself is not injured, but if he is liable to his sub-purchasers for personal injury (or death) caused by the goods, the question will arise whether the buyer's recourse for damages against the seller will be excluded under Art. 5 CISG or not. It is submitted that the CISG should not be applied in those cases.[33] In fact, Art. 5 CISG explicitly covers "any" person's injury; it is therefore not limited to injuries caused to the buyer.[34]

If Art. 5 CISG applies it will be for the private international law of the forum to designate the applicable law (and to decide whether it wants to do so by using the contractual conflicts rule or by using the conflicts rule for torts).

e) Tort

Tort claims of the buyer against the seller can raise difficulties in two respects: First, there is the general issue of the interaction between contract and tort (a). Secondly, a specific issue arises with regard to the EC Product Liability Directive (b).

aa) Contract and tort

Every legal system has to address the difficult question in how far a buyer who is damaged by the goods sold should be able to resort to tort remedies besides his contractual remedies. The answers may differ: One may regard the contractual claims as exclusive and bar tort remedies altogether (in order to safeguard the contractual requirements against more lenient tort rules), one may admit tort claims but submit them to the stricter contractual requirements (e.g. concerning the obligation to give timely notice of the defects) or one may simply allow tort claims ''as they are", i.e. without any interference by contract law. The solution to this issue will usually depend on how the contract rules and the tort rules within that legal system interact with each other, in particular on whether tort law is "needed" to fill inadequate gaps that contractual liability might leave.

If the sales contract is governed by the CISG, the matter is even more complicated because the international contractual regime of the CISG would in most cases face a domestic tort system (i.e. the tort law that the private international law rules of the forum regard as applicable), Any concurrence between the sales law of the CISG and a (usually domestic) tort system will therefore run a high risk of friction and discrepancies.

In so far as claims for personal injury or death in the sense of Art. 5 CISG are concerned, the matter is rather straightforward: As the CISG does not govern those claims at all, it should not have a say about the admissibility of domestic tort rules either.

Claims for damage to the buyer's property are more difficult to assess. The starting point is that as a rule those claims can be based on the damages rules of the Convention (on the understanding, of course, that the requirements of Art. 45, 74ff. CISG are met). The crucial question then is in how far the buyer may also rely on the applicable (domestic) tort law for those claims. This may for instance be advantageous for him if he has not complied with the notice requirement of Art. 39 CISG.

The predominant opinion seems to be that tort claims under domestic law are fully admissible and not subject to any (analogous application of the) restrictions of the CISG because tort claims are based on policy considerations which are different from the ones which underly contract law.[35] Some authors, on the other hand, argue that this might lead to a circumvention of the specific policy considerations of the CISG, in particular with regard to the notice requirement (Art. 39, 43 CISG), and that it might impair the uniform application of the Convention (Art. 7(1) CISG!) as it would be for the applicable (domestic) law to decide whether it wants to admit tort claims next to contractual claims.[36]

bb) EC Product Liability Directive

The EC Product Liability Directive 85/374/EEC [37] has given rise to some controversy with regard to its interaction with the CISG. The practical relevance of the dispute will probably be rather limited as most cases that fall under the Directive will not fall under the CISG by virtue of Art. 2 lit. (a) CISG.[38]

The debate centers on the question whether EC Directives prevail over the CISG as "international agreements" in the sense of Art. 90 CISG. In the author's opinion this is not the case because EC Directives need to be transformed into national law by the Member States and because they usually leave the Member States considerable room for regulating the details so that they cannot be assimilated to the type of international conventions that Art. 90 CISG has in mind.[39] It is submitted therefore that the national rules that transpose the EC product liability directive should not be given preferential treatment under Art. 90 CISG. Their application will therefore depend on the position one takes with regard to the general interaction between the CISG and domestic tort law (cf. a) above). [page 233]

f) Precontractual liability

Many legal systems impose certain duties on parties who enter into negotiations, even before the actual contract is concluded, for instance duties to inform, duties to protect the other side's health, duties to cooperate etc. These types of duties are often labeled "culpa in contrahendo". They may be sanctioned on the level of tort law or by an analogy to the contractual system of remedies. If the negotiations lead to a contract of sale that is governed by the CISG, the question will arise of whether such precontractual liability under domestic law can be invoked by the injured party or whether this is excluded by the Convention.

It is submitted that as the CISG does not provide a regime for the breach of precontractual duties, those domestic rules should in principle be applicable irrespective of the fact that the contract underlies the CISG. It is arguable, however, that there may be exceptions to that principle: In particular, if the seller has (innocently) induced the buyer to conclude the contract by not (correctly) informing him about certain defects of the goods and if the applicable domestic law sanctions this behaviour as breach of a precontractual duty, there are good arguments for letting the CISG prevail over the domestic law.[40] In fact, this scenario squarely falls into the Convention's system of remedies for non-conformity. It would not be a fortunate result if the specific policy considerations of the CISG (e.g. the notice requirement or the fundamental breach doctrine) could be undermined by a more lenient domestic regime of culpa in contrahendo. The situation in fact very much resembles the one where the buyer relies on a mistake in order to rescind the contract and where -- according to the view taken here -- a recourse to the domestic law of mistake should also be barred.[41]

g) Limitation

The CISG does not govern the issue of limitation (prescription). There is a UN Convention on the Limitation Period in the International Sale of Goods of 1974 (as amended by the Protocol of 1980) [42] which has not been ratified by all Contracting States to the CISG.[43] The requirements for the application of the UN Limitation Convention are similar, but not identical to the CISG.[44]

If the UN Limitation Convention is binding for the court deciding the dispute and if the requirements for the application of the UN Limitation Convention are met, this Convention will apply. If this is not the case, it will be for the private international law of the forum to designate the applicable law.[45]

h) Set-off

It is submitted that set-off is not covered by the CISG and that it is neither possible to deduct from Art. 84(2) CISG a general principle (Art. 7(2) CISG) [46] which could give enough guidance to regulate the intricate questions every law on set-off has to answer.[47] It will therefore be for the private international law of the forum to designate the applicable rules to set-off.

V. GAP FILLING

1. Basic principle

As we have seen in the preceding paragraph, the "legal scope of application" of the CISG is in principle defined by Art. 4 CISG: The CISG governs the formation of the contract and the rights and obligations of the parties. Accordingly, Art. 14 ff. CISG provide specific rules on formation, and Art. 25 ff. CISG provide specific rules on the rights and obligations of the parties.

As, however, no legislator is perfect and as the provisions of .the CISG sometimes had to take the form of a compromise between differing positions of the negotiating states, there will be certain questions which are not specifically solved by the CISG although they fall into its legal scope of application (i.e. concern the formation of the contract or the rights and obligations of the parties). A good example for such an "internal gap" of the Convention is the place of performance for money claims. In so far as the buyer's obligation to pay the contract price is concerned, Art. 57 CISG provides a detailed rule on the place of performance. In so far as other money claims (for instance the seller's obligation to pay back the price after an avoidance of the contract, Art. 81(2) CISG) are concerned, however, there is no specific rule on the place of performance.

Of course the drafters of the Convention could simply have shrugged their shoulders and left the "gap-filling" to the applicable (domestic) law. They did, however, not do so, but decided on a more Convention-based approach which is now contained in Art. 7(2) CISG: Questions concerning matters governed by the CISG which are not expressly settled in the CISG are to be settled in conformity with the general principles on which the CISG is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law (of the forum). This means that when one is faced with a situation as the one above [48] one should first check whether there is a general principle underlying the CISG that provides the answer to the problem before resorting to the applicable (domestic) law.

In practice, gap-filling with the help of general principles of the CISG is quite frequent. Several general principles have been identified in an abstract manner by courts and academic writing, among them the principle of party autonomy (derived from Art. 6 CISG), the principle of freedom of form (derived from Art. 11 CISG), the principle of favour contractus (meaning that avoidance of the contract should only be granted as a last resort, derived from Art. 49, 64 CISG), the principle of full compensation (subject of course to the foreseeability rule of Art. 74 CISG).[49] What is more, the predominant opinion finds a general principle concerning the burden of proof in the Convention (see below 3). [page 234]

Such abstract enumerations may help to develop a "feeling" for the underlying policies of the CISG, but they should not be regarded as ready-made instruments for handling the specific issues of the case at hand. In fact, the question of gap-filling by using general principles should be addressed separately for each specific "gap".[50] It is further submitted that when "finding" the general principle, one should try to draw parallels to existing provisions. In the example mentioned above one could for instance regard Art. 57 CISG as an expression of the general principle that monetary obligations are to be performed at the place of business of the monetary creditor unless the parties have agreed otherwise.

2. Use of the Principles of International Commercial Contracts?

It is a very controversial issue whether the Unidroit Principles of International Commercial Contracts [51] may be used as "gap filling material" for the CISG under Art. 7(2) CISG.[52] The Unidroit Principles themselves explicitly "offer" that possibility as their preamble states that they may be used (inter alia) to supplement international uniform law instruments. In fact, this has been done in arbitral practice.[53] It is submitted, however, that although it may be as such desirable and reasonable, the use of the Unidroit Principles for gap-filling under Art, 7(2) CISG is hard to justify. In fact, Art. 7(2) CISG makes it clear that the gap has to be filled by recourse to general principles which are to be found within the CISG. The use of provisions from an external instrument which came into existence considerably later than the CISG is not really in line with that rule.[54] This does not mean, however, that the Unidroit Principles cannot play any role in the gap filling process: So they can be used to corroborate a principle that one has already deduced from the Convention.[55] What is more, it may be possible to argue that both the CISG and the Unidroit Principles draw their fundamental policy decisions from the same common ground so that it might happen that the Principles actually state a general principle that underlies the CISG as well although it has not been clearly formulated there. Even this line or argument will, however, require that one finds some indication of the principle in question within the CISG itself.

What is more, provisions of the Unidroit Principles may find application to CISG-governed contracts on other grounds.[56] They may be applicable for instance as part of usages or practices under Art. 9 CISG, by virtue of a choice of "law" by the parties (the details of course being subject to the private international law of the forum) or as an expression of the good faith principle which is contained in Art. 7(1) CISG.[57]

3. In particular: burden of proof

It is submitted (albeit disputed) that the issue of burden of proof falls within the legal scope of the Convention, but is (in most provisions) not expressly settled there. It is therefore an internal gap that should be closed by reference to the general principles of the CISG.[58] It is further submitted that one can deduct such general principles on the burden of proof from several provisions, in particular from Art. 79, 25 and Art. 2 lit. (a) CISG: The basic rule on the burden of proof is that the party who wants to use a provision of the CISG in order to gain advantage from it has to prove that the factual preconditions of that provision are met.[59] The burden of proof may shift if the Convention so stipulates or in other exceptional cases (for instance where it would be excessively burdensome for that party to adduce the necessary evidence whereas it would be easy for the other side to do so).

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").

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]


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.

1. As for databases on the CISG see below III. Works frequently cited in the present article are: Ferrari / Fletchner / Brand, The Draft UNCITRAL Digest and Beyond, Cases, Analysis and Unresolved Issues in the U.N. Sales Convention (2004); Münchener Kommentar zum Bürgerlichen Gesetzbuch, Band 3, 433-610, CISG, 4. ed. (2004); Schlechtriem / Schwenzer, Commentary on the UN Convention on the International Sale of Goods (CISG), 2nd English ed. (2005); Schlechtriem / Schwenzer, Kommentar zum Einheitlichen UN-Kaufrecht -- CISG -- 4th German ed. (2004); Staudingers Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, Wiener UN-Kaufrecht (CISG) (2005).

2. Several states, however, have declared a reservation against the application of the rule in Art. l(1)(b) CISG under Art. 95 CISG.

3. See for instance (German) Bundesgerichtshof, 3 April 1996, <http://www.cisg-online.ch> Nr. 135; (Swiss) Bundesgericht, 28 October 1998, <http://www.cisg-online.ch> Nr. 413; (Austrian) Oberster Gerichtshof, 7 September 2000, <http://www.cisg-online.ch> Nr. 642; Müller-Chen, in: Schlechtriem / Schwenzer Commentary, Art. 49 Nr. 2; Schlechtriem , in: Schlechtriem / Schwenzer Commentary, Art. 25 Nr. 21a; Fountoulakis, Internationales Handelsrecht (IHR) 2003, 160, 161.

4. For more detail see P. Huber, CISG -- The structure of remedies, to be published in Rabels Zeitschrift für ausländisches und internationales Privatrecht (RabelsZ) 2007.

5. See in more detail Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 7 Nr. 10 ff.

6. Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 7 Nr. 12.

7. See for instance some of the Italian decisions which contain an impressive amount of comparative and international sources, e.g. (Italian) Tribunale di Vigevano, 12 July 2000, <http://www.cisg-online.ch> Nr. 493.

8. See Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art.7 Nr. 17 f.

9. See in particular Vogenauer, Die Auslegung von Gesetzen in England und auf dem Kontinent, Beiträge zum ausländischen und internationalen Privatrecht, 2001.

10. Cf. the Final Clause of the Convention.

11. Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 7 Nr. 21 f.

12. See for instance the publications in the Official Records, in the UNCITRAL Yearbooks and on <http://www.uncitral.org>, <http://www.cisg.law.pace.edu>.

13. For a rather cautious approach see also Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 7 Nr. 26.

14. See Ferrari / Fletchner / Brand, The Draft Digest and Beyond, 2004.

15. For more detail see the introductory article by the Secretary of the CISG-AC, Loukas Mistelis: <http://www.cisg.law.pace.edu/cisg/CISG-AC.html#l>.

16. See for instance Ferrari, The Interaction between the United Nations Conventions on Contracts for the International Sale of Goods and Domestic Remedies (Rescission for Mistake and Remedies in Torts), to be published in Rabels Zeitschrift für ausländisches und Internationales Privatrecht (RabelsZ) 2007.

17. Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 4 Nr. 7; Ferrari, in: Schlechtriem / Schwenzer (4th German ed.), Art. 4 Nr. 6. t: But see also the differing opinions of Lessiak, Österreichische Juristenblätter (Ost.JBI.) 1989, 487, 492 f.; Hartnell, 18, Yale Journal of International Law (1993), 1, 45; U.S. District Court S.D.N.Y., 10 May 2002, <http://www.cisg-online.ch> Nr. 653 ("Geneva Pharmaceuticals Technology Group vs. Barr Laboratories").

18. (Austrian) Oberster Gerichtshof, 22 October 2001 and 6 February 1996, <http://www.cisg-online.ch> Nr. 613 and 224; Ferrari, in: Schlechtriem / Schwenzer (4th German ed.), Art. 4 Nr. 15.

19. But see the issue of errors concerning the goods below.

20. Ferrari, in: Schlechtriem / Schwenzer (4th German ed.), Art. 4 Nr. 18 f.

21. Lessiak, Österreichische Juristische Blätter JBI) 1989, 487 ff.; Neumayer, Recht der Internationalen Wirtschaft (RIW) 1994, 99, 101 f.; see also Hartnell, 18 Yale Journal of International Law (1993), 77.

22. P. Huber, Zeitschrift für Europäisches Privatrecht (ZEuP) 1994, 585, 597 ff.; P. Huber, in: Münchener Kommentar zum Bürgerlichen Gesetzbuch, Art. 49 Nr. 22; Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 4 Nr. 13; Ferrari, in: Schlechtriem / Schwenzer (4th German ed.), Art. 4 Nr, 22 ff.; Honnold, Uniform Law für International Sales, 3rd ed. (1999), Nr. 240; Magnus, in: Staudinger Kommentar zum Bürgerlichen Gesetzbuch, Art. 49 Nr. 43; (German) Landgericht Aachen, 14 May 1993, <http://www.cisg-online.ch> Nr. 86. The Austrian Supreme Court may also have thought in this direction, see (Austrian) Oberster Gerichtshof, 13 April 2000, Praxis des Internationalen Privatund Verfahrensrechts (IPRax) 2001, 149, 151 f. = <http://www.cisg-online.ch> Nr. 576.

23. For a different line of argument leading to the same result see Ferrari, in: Schlechtriem / Schwenzer (4th German ed.), Art. 4 Nr. 26 ff.

24. Ferrari, in: Schlechtriem / Schwenzer (4th German ed.), Art. 4 Nr. 25; Magnus, in: Sraudinger Kommentar zum Bürgerlichen Gesetzbuch, Art. 4 Nr. 52; P. Huber, in: Münchener Kommentar zum Bürgerlichen Gesetzbuch, Art. 45 Nr. 23.

25. See Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 4 Nr. 13.

26. See in more detail Viscasillas , in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 259 f., with further references; see also Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 16 Nr. 2.

27. U.S. District Court, Southern District of New York, 10 May 2002; <http://www.cisg-online.ch> Nr. 653 ("Geneva Pharmaceuticals Technology Group vs. Bart Laboratories").

28. U.S. District Court, Western District of Michigan, 17 December 2001, <http://www.cisg-online.ch> Nr. 773 ("Shuttle Packaging Systems vs. Tsonakis").

29. Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 4 Nr. 18.

30. (German) Obetlandesgericht Koblenz, 16 January 1992, <http://www.cisg-online.ch> Nr. 47; Federal Court of Australia, South Australian District, Adelaide, 28 April 1995, CISG Online Nr. 218; U.S. District Court, Northern District of Illinois, 27 March 2002, <http://www.cisg-online.ch> Nr. 696 ("Usinor Industeel vs. Leeco Steel Products").

31. Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 5 Nr. 1.

32. Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 5 Nr. 5.

33. Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 5 Nr. 7; Farrari, in: Schlechtriem / Schwenzer (4th German ed.), Art. 5 Nr. 8. But see the decision of (German) OLG Düsseldorf, 2 July 1993, <http://www.cisg-online.ch> Nr. 74 where the court may have been inclined to apply the CISG to such claims (albeit without having to decide the issue and without actually discussing it so that the precedential value of the decision seems to be rather doubtful).

34. Farrari, in: Schlechtriem / Schwenzer (4th German ed.), Art. 5 Nr. 8.

35. Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 5 Nr. 10; Farrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p.96, 103 f.; Farrari, in: Schlechtriem / Schwenzer (4th German ed.), Art. 5 Nr. 12; Magnus, in: Staudinger Kommentar zum Bürgerlichen Gesetzbuch, Art. 5 Nr. 13. This was also the position of the German courts concerning the predecessor of the CISG (ULIS): (German) Bundesgerichtshof, 28 November 1994, Praxis des Internationalen Privatund Verfahrensrechts (IPRax) 1996, 124; (German) Oberlandesgericht München, 9 August 1995, Praxis des Internationalen Privatund Verfahrensrechts (IPRax) 1997, 38.

36. Herber, in: Festschrift für P. Schlechtriem (2003), p. 207 ff.; Honnold, Uniform Law for International Sales, 3rd ed. (1999), Nr. 73.

37. Official Journal 1985 L 210 p. 29.

38. Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 5 Nr. 11, Note 25.

39. P. Huber, in: Münchener Kommentar zum Bürgerlichen Gesetzbuch, Art. 90 Nr. 2. For a more detailed analysis -- also with regard to other EC Directives where the overlap may be more significant -- Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 90 N. 12 ff. But see also the differing opinion of, for instance, Siehr, in: Honsell, Kommentar zum UN-Kaufrecht (1997), Art. 90 Nr. 7.

40. P. Huber, in: Münchener Kommentar zum Bürgerlichen Gesetzbuch, Art. 45 Nr. 24 f.; Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 4 Nr. 23.

41. The situation is different, of course, where the seller acts fraudulently. In these cases, he does not deserve the protection afforded by an exclusive application of the CISG.

42. For a commentary see Müller-Chen, in: Schlechtriem / Schwenzer, Commentary, Annex II.

43. For the status see <http://www.uncitral.org>.

44. See in more detail Art. I ff. CISG. Limitation Convention, in particular Art. 3(1) CISG which is similar to Art. 1(1) CISG.

45. See Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 4 Nr. 21 with further references.

46. But see also the differing view of Magnus, in: Staudinger Kommentar zum Bürgerlichen Gesetzbuch, Art. 4 Nr. 47.

47. Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 4 Nr. 22a.

48. I.e. that one finds oneself within the legal scope of the CISG without there being a specific CISG rule on the problem at hand.

49. For more detail see Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 60 ff.; Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 7 Nr. 30.

50. Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 7 Nr. 30.

51. For further information on the Unidroit Principles see <http://www.unilex.info>. A similar issue arises with regard to the Principles of European Contract Law.

52. For a more detailed discussion of that issue see Ferrari, Juristenzeitung (JZ) 1998, 12; Ferrari, in: Schlechtriem / Schwenzer (4th German Edition), Art. 7 Nr. 59 ff.; Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 169 f.; Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 7 Nr. 30.

53. See Arbitral Award, ICC 8128/1998, <http://www.cisg-online.ch> Nr. 526.

54. Ferrari, in: Ferrari / Flechtner / Brand, The Draft Digest and Beyond, p. 169 f.

55. Ferrari, in: Ferrari / Fletchner / Brand, The Draft Digest and Beyond, p. 170. Examples in case law are: (French) Cour d'Appel Grenoble, 23 October 1996, <http://www.cisg-online.ch> Nr. 305; Arbitral Award, Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirschaft in Österreich SCH 4366, 15 June 1994, <http://www.cisg-online.ch> Nr. 691.

56. Examples where the Principles have been referred to in practice (albeit without precisely stating on which basis) are: Arbitral Award, ICC 9117/1998, 1 March 1998, <http://www.cisg-online.ch> Nr. 777; Arbitral Award, ICC 8117/1997, 1 December 1997, <http://www.cisg-online.ch> Nr. 750.

57. Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 7 Nr. 36.

58. But see for a different view (burden of proof governed by the applicable domestic law): (Swiss) Bezirksgericht Saane, 20 February 1997, <http://www.cisg-online.ch> Nr. 426; Arbitral Award, ICC 6653, 1 January 1993, t <http://www.cisg-online.ch> Nr. 71; Khoo, in: Bianca/Bonell, Commentary on the International Sales Law, The 1980 Vienna Sales Convention (1987), Art. 2 Nr. 3.2.

59. See Ferrari, in: Ferrari/Fletchner /Brand, The Draft Digest and Beyond, p. 164; Schlechtriem, in: Schlechtriem / Schwenzer, Commentary, Art. 4 Nr. 22; (German) Bundesgerichtshof, 9 January 2002, <http://www.cisg-online.ch> Nr. 651; (Italian) Tribunale di Vigevano, 12 July 2000, <http://www.cisg-online.ch> Nr. 493.

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.

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.


Pace Law School Institute of International Commercial Law - Last updated January 22, 2007
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