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Published in Peter Schlechtriem ed., Einheitliches Kaufrecht und nationals Obligationenrecht, Baden-Baden: Nomos (1987) 305-341. Reproduced with permission of the author.

Conformity of Goods to the Contract Under the United
Nations Sales Convention and the Uniform Commercial Code

Professor Richard Hyland [*]

      [Introduction]

  1. The Difficulty of Uniformity
    1. The Scope of Non-conformity
    2. Express Conformity Requirements
    3. Implied Conformity Requirements
      1. Disclaimers
      2. Merchantability
      3. Fitness for a Particular Purpose
      4. Conformity to a Sample or Model
    4. The Buyer's Knowledge of Non-conformity
  2. A Strategy for Interpretation
    1. Two Principles
      1. The Contract Principle
      2. The Discussion Principle
    2. An Experiment in Application
      1. Express Conformity Requirements
      2. Disclaimers
      Conclusion

[INTRODUCTION]

The question this paper addresses is how to determine whether goods tendered by the seller conform to the contract when the contract is governed by the United Nations Convention on Contracts for the International Sale of Goods.[1] The elegant text of the Convention's conformity provision conceals a wealth of difficulty. The problems are due chiefly to the drafting technique: Rules were snipped from various domestic and international sales laws, altered slightly, and then pasted together. Neither the text of the Convention nor the provision's legislative history defines the policies the rules were designed to implement. The source sales laws also provide little assistance, largely because they themselves are often no more than random combinations of historical accretion and occasional legislative policy and offer neither a convincing nor even a coherent vision of the purpose of conformity rules in the private law of sales. Moreover, domestic sales laws are so bewilderingly varied that there can be little consistency in the interpretation of the Convention if courts impose their local views on the parties. The only potentially unifying factor is the international sales contract itself. I argue that there can be hope for uniformity only if the parties are both permitted and required to create their own obligations. Despite its appearance, this radically contractual interpretation of the Convention is not meant as a neoclassical revival of the 19th century commitment to party autonomy. It represents rather a pragmatic attempt to protect the Convention from the significant danger of divergent interpretation.

At this preliminary stage of reflection about the Convention, before it has gone into force and before courts have had the opportunity to interpret it, definitive answers are not easily forthcoming. Little more can be expected [page 305] than an analysis of the potential problems and a strategy for grappling with them. That is the goal here. The first section of the paper compares Article 35, the Convention's conformity provision, to the related area in American law, warranties of quality under the Uniform Commercial Code (the "UCC" or the "Code"), and, because the extent of the difficulties first becomes apparent upon a somewhat broader comparison, to the guarantee against latent defects found, somewhat differently, in the French and German civil laws. The comparison attempts to demonstrate that many of the difficult questions that arise under the common and civil laws will continue to arise under the Convention. The second section examines two of the principles upon which the Convention seems to be based, the contract principle and the discussion principle. The contract principle suggests that the Convention does not impose obligations on the parties but rather focuses on the contract as the sole source of conformity requirements. The discussion principle is designed to persuade the parties to particularize the material terms of their agreement. The remainder of the second part of the paper discusses two conformity problems in terms of this minimalist interpretive apparatus.

I. THE DIFFICULTY OF UNIFORMITY

This examination of the Convention's conformity requirements is designed to demonstrate that the Convention fails to resolve a number of difficult problems about which there is no consensus in comparative law. The analysis here generally follows the structure of Article 35. Article 35(1) provides that the seller must deliver goods of the quantity, quality and description required by the contract. Article 35(2) enumerates the characteristics the goods must possess unless the parties have agreed otherwise. Article 35(3) determines the effect on the seller's liability of the buyer's awareness of nonconformity. At the outset, however, there is difficulty with the scope of the conformity provision.

A. The Scope of Nonconformity

Although the Convention's drafters attempted to unify the buyer's remedies for breach of contract, the Convention's remedy provisions continue to rely on [page 306] the distinction between lack of conformity and nondelivery.[2] Moreover, special duties are imposed on the buyer when the seller's breach consists in the tender of nonconforming goods: The buyer loses the right to reply on the lack of conformity unless timely notice is given to the seller or the lack of notice is reasonably excused.[3] Furthermore, under the Convention on the Limitation Period, the point at which claims accrue -- and the prescription period begins to run -- differs according to whether the action is based on breach of contract, nonconformity, or breach of an express guaranty.[4] The question then arises how (and whether) to distinguish nonconformity from other breach of contract, particularly from the seller's failure to deliver the goods.

Comparative law offers little guidance. There are at least three approaches to the problem. As a practical matter, the UCC distinguishes between cases on which tender has been made and cases in which it has not. In all cases in which goods are tendered or delivered, the buyer must give notice in order to reject or revoke acceptance.[5] Through the UCC provides a special limitations rule for breach of warranty cases, actions both for breach or warranty and for other breach of contract are generally open for four years from the time the goods are or should have been tendered.[6] German law, on the other hand, has chosen not to draw the line at tender. Rather it differentiates between the tender of defective goods and the tender of the wrong goods. The two actions have dramatically different prescription periods.[7] As a result, this distinction -- [page 307] between aliud and peius -- has become one of the most vexed questions in German sales law.[8] The general principles seem to be the following. In a present sale, delivery is defective when the goods do not possess the qualities required by the contract, and it is wrong when the seller delivers goods other than those identified to the contract.[9] In a sale of fungible goods, the buyer generally may choose (subject to the shorter prescription period) either the remedies for nonconformity or those for nondelivery. However, when the goods vary so significantly from the contract description that the seller should understand that the buyer would be justified in rejecting, the buyer may resort only to remedies for nondelivery (subject to the longer prescription period).[10] Even the principles are in dispute, and there is little agreement among German scholars about the specific delimitation.[11] Finally, French law finds the distinction unnecessary. Because, under French law, sales remedies do not generally displace remedies from general contract law, French law provides no convincing distinction between nondelivery and nonconformity. [12] The buyer may sue for latent defects whenever the requirements for the action rédhibitoire are met, or, even if the bref delai has passed, the buyer may opt for the action for résolution (the French law equivalent of the action for rescission in case of breach), provided that action's requirements are met.[13] The question then is whether the Convention will borrow one of the domestic law solutions or whether its underlying principles point in yet another direction.

B. Express Conformity Requirements

Article 35(1) requires the seller to deliver goods of the quantity, quality and description "required by the contract."[14] The Convention does not define the term "contract," but the conformity provision makes clear that two different distinctions will be needed. First, preliminary negotiations must be distinguished [page 308] from the contents of the contract proper. Second, the Convention must also distinguish between conformity requirements expressly stated in the contract and those implied in the absence of disclaimer. The second distinction is needed for two reasons. First, the Convention expressly permits the disclaimer of implied conformity requirements but says nothing about a question that arises under the UCC, namely whether express conformity requirements may be disclaimed.[15] Second, although the buyer's knowledge that the goods do not conform to the contract may prevent implied conformity requirements from arising, it may not have the same effect on express requirements.[16] The task of choosing the appropriate distinctions under the Convention is made more difficult by the complexity of comparison in these questions. To some extent, both the UCC and German law make both distinctions, but the two distinctions are not of equal importance in each system.

The UCC distinguishes between elements of the bargain that are derived explicitly from the agreement ("as found in [the parties'] language") and those that are implied in the absence of disclaimer ("by implication from other circumstances").[17] Both are called warranties: the first are "express," the second "implied." The line between express and implied warranties is curiously untroublesome. The reason is that implied warranties are specifically enumerated in the Code. When warranties are tailored to the individual transaction, it is done by discussion, and the representations create express warranties. As a result, express warranties have become the residual category. American law has therefore developed significant expertise in distinguishing between representations that become part of the agreement (and therefore express warranties) and those that remain part of the preliminary negotiations and are not incorporated into the contract.

Under the UCC, express warranties are created by representations of quality in any of three forms -- the seller's affirmation of fact or promise relating to the goods, a description of the goods, or a sample or model of the goods -- provided the representation becomes "part of the basis of the bargain."[18] Express warranties may arise without the use of magic words (like "warrant") and even though the seller did not specifically intend to create a warranty.[19] [page 309]

They arise not only from the negotiations but also from representations in advertisements and other sales literature.[20] Because the Code thereby takes an extremely broad approach to the definition of the seller's express warranty obligations, sellers have attempted to limit their liability by means of a strict construction of the Code's language. They have fought along three fronts.

First, they have emphasized that, under the Code, no warranty arises when the seller merely expresses a view about the value of the goods or an opinion about or commendation of them.[21] Nevertheless, some courts view the seller's statements objectively, from the point of view of the buyer, and presume that representations constitute affirmations of fact (and yield warranty liability) unless "the buyer could only have reasonably considered the statement as a statement of the seller's opinion."[22] Second, the seller's representations must "relate to the goods." Representations concerning, for example, the availability of replacement parts, future costs of supplies, or potential profitability are not related to the goods and therefore create no express warranties.[23] Third, the representations must have become "part of the basis of the bargain." The term is not defined in the Code, and the case law is in great disarray.[24] The question is whether the seller's representation may become effective as an express warranty even if the buyer has not relied on it. The Official Comments to the Code state clearly that "no particular reliance" need be shown and that, once made, affirmations become part of the agreement unless clear affirmative proof to the contrary is made.[25] Nonetheless, many courts, some apparently unwittingly, still follow the reliance requirement from the Uniform Sales Act.[26] At stake is the extent to which representations made after the conclusion of the sales contract may constitute express warranties. The Code's Comments acknowledge the possibility;[27] the reliance requirement, of course, would generally prohibit it. Beside these technical difficulties, other problems, policy problems, abound. They are even more intractable. Seller's law would tend to construe the contractual requirements narrowly; a buyer would like all of the seller's representations to form part of the contract. The question is how to construct a meaningful distinction under the Convention. [page 310]

German law is preoccupied with the second distinction, between express and implied conformity requirements. In German law, implied conformity requirements are not specifically enumerated. Instead, the German Code introduces two general categories -- "defects" and "guaranteed characteristics" -- and provides an important difference in remedy for their breach: damages may be recovered when the goods fail to possess a guaranteed characteristic but, in many cases, not when they are simply defective.[28] Because the basis for damages is strict liability, guaranteed characteristics arise only in limited circumstances and are defined more narrowly than are express warranties under the UCC. Under German law, the seller's representation becomes a guarantee only when it constitutes a binding declaration of an intent to warrant that the goods will possess a certain quality.[29] The guarantee may extend beyond the physical characteristics of the goods to representations concerning their use and profitability, including their suitability for a particular purpose, such as export or leasing.[30] Defects, the equivalent of implied warranties, have become the residual category. They too involve not only the material characteristics of the goods, but also fitness for the purposes for which the goods were sold, their location and legal status. What constitutes a defect is not determined solely or even predominantly from the seller's representations but rather is implied from all the circumstances.[31] The distinction between preliminary negotiations and binding statements is therefore much less important.

The question then is whether either the German or the American distinction between express and implied conformity requirements recommends itself to the Convention. Functionally, the German distinction seems inappropriate. The Convention's remedy provisions, unlike those in German law, do not distinguish between breaches of the two types of conformity requirements. Under the UCC, the principal function of the distinction concerns disclaimers of warranty: express warranties are more difficult to disclaim than are implied warranties. But it is as yet uncertain whether that will also be the case under the Convention.[32] The Convention suggests that the effect of the buyer's knowledge of nonconformity may differ depending on whether the conformity [page 311] requirement is express or implied, but the extent of that difference has also not yet been established.[33]

C. Implied Conformity Requirements

Article 35(2) prescribes the qualities and characteristics the goods must possess in order to conform to the contract, unless the parties have agreed otherwise. It raises many of the same questions that arise under the UCC's provisions governing implied warranties. These include issues in four related areas: disclaimer (when is it clear that "the parties have agreed otherwise"?), merchantability (for what purposes would the goods "ordinarily be used" and what is the "manner usual" for their packaging?), fitness for a particular purpose (when is a particular purpose "expressly or impliedly made known to the seller" and what must be shown to prove the buyer's reliance?), and an implied requirement -- under the UCC it would be express -- that the goods conform to the sample or model (which qualities of the sample or model has the seller "held out to the buyer"?). Each question will be examined in turn.

1. Disclaimers

Article 35(2) establishes four qualities the goods must possess in order for them to "conform with the contract." It also expressly provides that the parties may derogate from the conformity rules if they have "agreed otherwise."[34] The question whether the parties have "agreed otherwise" will almost certainly arise with some frequency under the Convention. A typical case involves a disclaimer clause buried in the fine print of the seller's standard form invoice. When the buyer's purchase order constitutes the offer, the seller's invoice could be characterized as a purported acceptance. If the invoice contains additional or different terms relating to the quality of the goods, such as a clause disclaiming conformity requirements, the Convention characterizes it as a rejection and counter-offer.[35] If the buyer accepts the goods and uses them, that conduct may be construed as assent to the counter-offer.[36] Although the contract has been formed, the buyer may not [page 312] have noticed the disclaimer clause. The question arises whether the parties have "agreed otherwise."

There is one extremely grave challenge to uniformity here that no amount of legal construction can transcend. Even with respect to contracts governed by the Convention, domestic law will continue to regulate the substantive validity of disclaimer clauses.[37] The purpose of domestic validity rules is generally to prevent sellers from escaping liability in areas of particular public concern. For example, domestic disclaimer restrictions are especially severe in consumer transactions [38] and in situations in which there is a potential for personal injury.[39] These domestic rules do not threaten the Convention's uniformity because the Convention governs neither consumer sales nor the seller's liability for personal injury.[40] But many domestic sales laws limit the seller's right to disclaim warranties even for direct economic loss and even in commercial transactions. In some cases, only egregious results are prohibited.

Between merchants, German law prohibits only disclaimers that endanger the fundamental purpose of the sales contract.[41] In general, American law prohibits disclaimer clauses only when they are unconscionable.[42] In some legal systems, however, disclaimers are far more closely regulated. For example, French law virtually prohibits manufacturers or professional sellers from disclaiming liability for latent defects, even in contracts with merchant buyers, with the possible exception of buyers who are professionals in the [page 313] same specialty.[43] As a result of this extreme diversity in comparative law, there is quicksand here. An unwary seller may find that the law has completely restructured the bargain.

The relevant question is whether the Convention supplements these domestic validity rules with additional protection against unseen disclaimers. It may do so in two ways. First, the Convention may refuse to give effect to the disclaimer unless the parties have specifically agreed to it. Second, if disclaimers may be effective even if the buyer is unaware of them, the Convention may at least attempt to prevent surprise by requiring that the disclaimer be readily apparent. In American law, disclaimers, especially in contracts concluded by an exchange of printed order and invoice, are often ineffective unless the buyer specifically agrees to the liability limitation.[44] This buyer's protection is contained in the UCC's formation provisions and is therefore clearly displaced by the Convention's Article 19, which seems to permit a contract to be formed on the seller's terms, even though the buyer is unaware of them. Nonetheless, the UCC's result might be achieved under the Convention by an interpretation of the phrase "agreed otherwise" that would require more than a merely constructive agreement. However, the text of Article 35(2) does not indicate whether such an interpretation is permissible. The second question is whether the Convention should protect the buyer against surprise by requiring a readily apparent disclaimer. In general, under the UCC, no disclaimer is valid unless it is readily apparent.[45] Since the UCC's provision governing the disclaimer of implied warranties establishes standards for the formal validity of the disclaimer, it is displaced by the [page 314] Convention's Article 11.[46] Thus, if there are to be formal requirements for the validity of disclaimers, they must be found in the Convention itself. The question is whether they can be.

Protection of the buyer is not the only problem. Commercial transactions frequently occur between parties each of whom is capable of protecting its own interests. The parties may prefer enforceable disclaimers because they are necessary to allocate risk in a manner that makes the contract economically feasible. French industry has chafed under a system that does not fully permit the allocation of risk according to agreement.[47] For this reason, even legal systems that have a substantive policy against disclaimers in the field of consumer protection are otherwise especially careful to determine and respect the precise contours of the agreement.[48] Under the Convention, the question is whether disclaimers should be considered dangerous implements to be closely regulated or simply elements of the contract like any other.

It should not be forgotten that the stakes here are high. Lost profit from breach of warranty may amount to many times the purchase price of the goods.[49] Consequential damages, even as limited by the foreseeability principle,[50] may amount to dozens of times the purchase price.[51] Courts sympathetic to the buyer's plight will seek to raise the threshold for an effective disclaimer. Sellers will ask the courts to enforce the disclaimer literally as it is contained in the contractual documents. Without an authoritative gloss on the Convention's text, courts will be set adrift in one of the most policy-laden questions of modern sales law.

The last of the disclaimer difficulties concerns express conformity requirements. Article 35(2) permits the disclaimer of the Convention's implied conformity requirements if the parties have "agreed otherwise." There is no similar provision for the disclaimer of express conformity requirements. The [page 315] problem arises when the contract contains both representations of quality -- such as technical descriptions or other affirmations of fact -- together with a blanket disclaimer provision.[52] The UCC provides that words or conduct relevant to the creation of express warranties and words or conduct tending to limit such warranties must be construed consistently with each other, unless the construction would be unreasonable.[53] As a practical matter, whenever a court finds an express warranty, it does not permit the warranty to be overridden by a general disclaimer. On the other hand, a specific disclaimer may indicate that the representation was not made part of the basis of the bargain and that, as a result, no express warranty arose.[54] The interpretation of representations together with an inconsistent disclaimer presents difficult policy questions, particularly when the representation is prominent and the disclaimer hidden. Especially difficult questions arise in the case specifically contemplated in the Convention's Article 36(2), namely an express guarantee for a limited period of time. American courts examine a number of factors before approving such time limitations, including the proximity, in the written contract, of the guarantee clause to the time limitation, the length of the time period, and the nature of the goods sold. [55] The same problems will have to be resolved under the Convention.

This brief discussion of disclaimer law under the Convention suggests only some of the difficulties that will arise. Further comparison with the UCC suggests others. They include, for example, the extent to which course of dealing, course of performance, usage of trade,[56] or fixed expressions ("as is" or "with all faults")[57] may exclude or modify express or implied conformity requirements. In the end, the solution to the disclaimer issues will depend on which principles control the interpretation of contracts governed by the Convention.

2. Merchantability

The UN Convention has adopted the wording, but not the rationale, of the UCC's warranty of merchantability. The UCC implies a warranty that goods shall be of merchantable quality in any sale in which "the seller is a merchant [page 316] with respect to goods of that kind."[58] The warranty corresponds to a requirement as old as Hanseatic practice that goods be "of the quality of merchantware."[59] The Code enumerates six particular qualities that merchantable goods must possess, the most important of which are that they be "fit for the ordinary purposes for which such goods are used" and "adequately contained, packaged, and labeled as the agreement may require."[60] The traditional rationale for the warranty is that, given the seller's status as a merchant in goods of that kind, it is reasonable for the buyer to expect to receive merchantable goods.[61]

In similar language, the Convention includes in its definition of conforming goods the requirement that they be "fit for the purposes for which goods of the same description would ordinarily be used" and "contained or packaged in the manner usual for such goods or, where there is no such manner, in a manner adequate to preserve and protect the goods."[62] It may seem that the questions involved are relatively simple questions of fact: What are the purposes for which the goods would ordinarily be used? Are the goods fit for those purposes? How are they usually packaged?[63] But there is a difference between the Code and the Convention: the Convention's merchantability requirements are not restricted to goods sold by merchants in the trade.[64] With the elimination of the merchant prerequisite, the merchantability requirement is much more difficult to explain.

Of course, a buyer's expectations do not always depend on the status of the seller. For example, when a buyer purchases a bolt of fabric, whoever the seller, it is generally assumed that the cloth must be without holes or spots, even if nothing is said and even if there is no law against selling moth-eaten wares. Regardless of whether the seller is a merchant, "the ordinary buyer in a normal commercial transaction has a right to expect that the goods which are [page 317] purchased will not turn out to be completely worthless."[65] It simply goes "without saying,"[66] or, in the language of the merchant cases, it is the "purchaser's reasonable expectation,"[67] it partakes of "the common experience of life."[68] The same common sense idea was recognized during the preparation of the UN Convention.[69] The problem is that the law of contracts does not recognize "reasonable expectations," without more, as a basis of obligation. "The law and agreements are the two sources of obligation," [70] and one must be chosen as the fondement for the merchantability requirement. Though both solutions focus to some extent on the reasonable expectations of the parties, the two foundations place different weight on the agreement. If the merchantability requirement is derived ex lege, it is conceived as a legal guarantee of the buyer's expectations, a necessary supplement to the obligations undertaken by the parties themselves, a social decision that goods should not be sold at all unless they are fit for certain purposes. If, instead, the derivation is ex contractu, merchantability is established by the expectations of the parties as anchored in the agreement, by contract interpretation. In short, either merchantability consists of obligations imposed by law on the seller, or it is derived purely and simply from the agreement.

One of the differences Rabel saw between the seller's common law merchantability obligations and the civilian guaranty against latent defects was the source of the seller's obligation. On the Continent, according to Rabel, there seems never to have been doubt that the seller's obligation to respond for defective goods arises ex lege. In his view, Anglo-American law, on the other hand, has tended to consider the will of the parties to be the source of all contractual -- including warranty -- obligations.[71] Rabel himself preferred the ex lege derivation of the merchantability requirement, largely because of his belief that a warranty is necessarily distinct from a promise.[72] It made sense to him to say that the seller promises to transfer to the buyer possession and title [page 318] to the seller's horse because, in the civil law, if the seller refuses, performance can be specifically enforced.[73] But it made no sense to say that the seller promises that the horse is healthy, even when the promise is express, because, if the horse is not, the seller can be forced to pay damages but cannot be forced to cure the horse. In the common law, however, because damages are the primary remedy for every breach of obligation, Rabel's argument is no proof at all. To a common lawyer, the seller's warranty obligation seems no different from any other obligation.

Rabel believed that the civil and common laws were converging in their understanding of the nature of warranty obligations. He believed that the common law was in the process of abandoning the "fiction" that warranty obligations can be derived from the will of the parties and was moving toward the open recognition that warranty requirements represent a legal supplement to the contractual obligations directly assumed by the parties.[74] Rabel was correct about the convergence but wrong about the direction. The modern tendency is towards a contractual interpretation of the merchantability obligation, both in Continental doctrine and in American warranty law. The dominant German view, in both case law and scholarship, is that the notion of "defect" should be interpreted "concretely" or "subjectively."[75] According to this interpretation, goods are defective when they do not possess the characteristics the parties assumed they possessed at the moment the contract was concluded. In other words, German law does not seek to impose obligations on the parties. Instead, it resolves questions both of guaranteed characteristics [76] and of normal defects [77] by means of contract interpretation. In French law as well, contract interpretation determines whether the goods are defective. Though the French case law seems to avoid the theoretical discussion, the doctrine views the matter in terms of the intent of the parties.[78] Also under the UCC, merchantability requirements are derived from the sales contract. Each of the six requirements turns on an interpretation of some element of the contract -- the contract description, the agreement, or [page 319] statements made on the packaging.[79] As the Official Comments make clear, "the whole purpose of the law of warranty is to determine what it is that the seller has in essence agreed to sell."[80] Neither in American nor in the civil law do the conformity rules mandate an absolute standard of merchantability; there is rather only the understanding that the contract is sovereign. The question remains whether the UN Convention should incorporate this modern evolution toward a contractual understanding of the merchantability requirement.

3. Fitness for a Particular Purpose

Under certain circumstances, the Convention requires that goods be fit for the particular purpose for which the buyer acquires them. The requirement arises when three conditions have been met: (1) the purpose was expressly or impliedly made known to the seller, (2) the buyer in fact relied on the seller's skill and judgment, and (3) the buyer's reliance was reasonable.[81] Both the seller's knowledge and the buyer's reliance raise difficult questions of interpretation.

There is no problem when the buyer expressly and clearly informs the seller of the purpose for which the goods are to be used. The difficulty arises when the seller should be aware of the buyer's particular purpose but in fact is not.[82] Under the UCC, the seller's actual knowledge is irrelevant. Absent disclaimer, the seller is held to the implied warranty of fitness for a particular purpose whenever, at the time of contracting, the seller has "reason to know" both of the particular purpose for which the goods are required and of the buyer's reliance on the seller's skill and judgment.[83] What results is a tort-like construction based on the seller's negligence in permitting the buyer to rely to the buyer's detriment on the seller's expertise.[84] On the other hand, both civil law codifications and previous versions of international sales law establish a contractual basis for the warranty, though they do not always condition the existence of the warranty on the seller's actual knowledge. German law holds the seller responsible for defects that eliminate or reduce the fitness of the [page 320] goods for "the use contemplated by the contract."[85] French law considers it the seller's responsibility whenever the defect renders the goods unfit for "the use for which they were destined."[86] Though French doctrine is divided, it seems that, to be liable, the seller must have at least some knowledge of the buyer's purpose.[87] Rabel's draft sales conventions and the 1956 Draft Hague Sales Convention follow the German text,[88] speaking of "a special purpose contemplated, expressly or tacitly, by the contract."[89] The provision in the Uniform Law on the International Sale of Goods (ULIS) is virtually identical.[90] Behind all of these texts is the idea that the seller guarantees fitness for the buyer's particular purpose when that purpose becomes part of the agreement, either expressly or impliedly.

Against this background, the proper interpretation of the Convention's fitness requirement is unclear. By incorporating almost verbatim the current version of the British Sale of Goods Act, the Convention seems to condition the guarantee on the seller's actual knowledge.[91] The knowledge may come to the seller either "expressly" from the buyer's statements or "by implication" from the contract. The question is whether the Convention 's fundamental principles confirm such strong prerequisites for the fitness requirement.

The Convention's seemingly straightforward reliance requirement -- the buyer must actually have relied on the seller's skill and judgment, and the reliance must have been reasonable -- also proves exceedingly difficult to interpret. Actual reliance is difficult to prove directly, and no set of presumptions can make the necessarily fine distinctions. Under the UCC, for example, a finding that the buyer has less skill and judgment than the seller may indicate that there has been actual reliance,[92] but that finding certainly does not end the inquiry. If the buyer participates in the selection, inspects the goods or the manufacturer's literature before purchase, chooses the manufacturing process,[93] provides the specifications,[94] or insists on a particular brand,[95] there [page 321] may have been no reliance. However, if the seller indicates that the brand is adequate for the buyer's purposes, the buyer may have relied. Questions will also arise concerning the reasonableness of the buyer's reliance. Under the Convention, reliance may be unreasonable when the seller does not possess sufficient skill and judgment, when the buyer's skill and judgment are superior, or when the seller is unaware that the buyer is relying.

It is equally uncertain who need prove the buyer's reliance. Under the UCC, where the reliance requirement expresses the tort-like underpinning of the fitness warranty, the buyer carries the burden of proof on the reliance issue.[96] The result would be quite severe if the Convention were to adopt a similar rule. The buyer would then have to prove both that the seller actually knew of the buyer's purpose (the UCC requires only that the seller had reason to know) and that the buyer's reliance was reasonable in all respects (the UCC requires only that the seller had reason to know of the reliance). Moreover, if the fitness requirement is simply an elaboration of contractual intent, the reliance requirement does double duty with the requirement of actual knowledge. Honnold has therefore suggested that the burden of proof on the reliance issue shifts to the seller once the buyer demonstrates that the seller was aware of the particular purpose.[97]

In other words, the proper construction of the fitness requirement depends on its fondement. If the Convention's fitness provision represents a tort-like, ex lege protection for the buyer, the buyer will have to show the seller's negligence (reason to know of the buyer's purpose), causation (reliance in fact), and damage. If the requirement sounds in contract, all that should be necessary is either the seller's actual knowledge or some other indication that fitness was part of the agreement. The riddle can be resolved only by reference to the Convention's fundamental principles.

4. Conformity to a Sample or Model

The remaining implied conformity requirement in the Convention is that the goods "possess the qualities of goods which the seller has held out to the buyer as a sample or model."[98] This provision raises two questions: the first regards its characterization as an implied rather than as an express conformity requirement; the second is the difficulty in determining which qualities of the sample or model are determinative. [page 322]

The Convention rejects the modern trend in comparative law and regards representations based on a sample or model as implied rather than express conformity requirements. Rabel roundly criticized the common law sales acts for making conformity to the sample or model an implied warranty.[99] Under the UCC, representations based on a sample or model are considered express warranties and arise only when they become part of the basis or the bargain.[100] (Though the display of samples or models raises a presumption in favor of warranty,[101] American courts refuse to enforce the warranty when it is unclear whether the parties meant for the goods to conform to the sample or model.[102]) The German Civil Code also characterizes as express the guarantee that arises from a sale according to a sample or model.[103] As a practical matter, even the Convention's requirement that the goods conform to the sample or model will more closely resemble an express than an implied conformity requirement, for it is directly based on the seller's representations. It arises only when goods are "held out ... as a sample or model,"[104] that is, in situations in which the required conformity between the goods and the sample or model might as easily be considered "required by the contract."[105]

The legislative history provides no hint of the reason for the characterization of the sample or model requirement as implied. In fact, it is doubtful that the drafters focused on the potential consequences. For example, the Convention explicitly provides that implied conformity requirements may be disclaimed, while, as discussed above, nothing is said about the disclaimer of express conformity requirements.[106] If the Convention follows disclaimer practice under the UCC, that are implied requirements will be easier to disclaim than those that are express, and sample or model requirements will fare less well under the Convention than under the Code. Moreover, the Convention provides that implied conformity requirements do not attach when, at the conclusion of the contract, the buyer "knew or could not have been unaware" that the goods do not conform to the sample or model, while, as discussed [page 323] below, nothing is said about the effect of the buyer's knowledge on express conformity requirements.[107] If the buyer's knowledge negates implied but not express conformity requirements, the sample or model requirement will again suffer from its systematic placement in the convention.[108] The question is whether the collocation is justified.

The second major difficulty concerns the fact that goods possess an infinite number of characteristics, and it is occasionally difficult to determine which are illustrated by the sample or model.[l09] The question may be easier, for samples, if they are defined, as they are in the UCC, as "actually drawn from the bulk of the goods which is the subject matter of the sale."[110] Conformity to the sample might then reasonably be understood to mean only that the sample was in fact drawn from the goods offered for sale and that the sample was fairly drawn.[111] Models, however, as defined in the UCC, are not drawn from the bulk of the goods. They are offered for inspection when the subject matter is not at hand.[112] Models may range from crude approximations to detailed replicas. They may be meant to portray one, several, many, or all of the characteristics of the goods. Under the UCC, the model's meaning and implications turn on the bargain, as determined from the language and circumstances.[113] German law, apparently, employs a more objective test and requires that the goods conform to those characteristics of the sample or model that, as determined according to good faith, are essential.[114] This is yet another matter that will have to be settled under the Convention.

D. The Buyer's Knowledge of Nonconformity

A final question regards the Convention's exclusion of liability for nonconforming goods when, at the time the contract was concluded, the buyer either "knew or could not have been unaware" that the goods failed to comply with the Convention's implied conformity requirements.[115] The use of the [page 324] phrase "could not have been unaware" clearly indicates that the issue is not the buyer's negligence: The buyer is under no duty to examine the merchandise, even in a present sale.[116] Yet questions arise: When the seller requests the buyer to examine the goods, can the buyer, by refusing the examination, subject the seller to liability for nonconformity? Comparative law provides no easy answer to the question.

In French law, the seller is liable only for defects that are not apparent (vices caches). When the seller has informed the buyer of the defect or when the buyer should have examined the goods, the seller is not responsible.[117] The buyer's duty to examine the goods is thus greater under French law than under the Convention and is not limited to cases in which the seller has requested the examination. In German law, on the other hand, the buyer has a duty to inspect only in limited circumstances, such as when the seller, the circumstances, or a third party indicate that defects may be present. Otherwise, German law generally permits the buyer not to inspect, but instead to rely on the seller's representations.[118] Thus, in the absence of particular circumstances, such as the seller's warning that the goods may be defective, the buyer presumedly need not inspect, even if requested to do so by the seller. The UCC does not specifically address the question of the buyer's knowledge of nonconformity. The Official Comments suggest that the seller who discloses the presence of material, hidden defects may not be liable.[119] As far as [page 325] inspection is concerned, the Code mentions two cases in which implied warranties do not arise with regard to defects that an examination ought to have revealed, namely when the buyer either has examined the goods as fully as was desired before concluding the contract or has refused to examine the goods when the opportunity presented itself.[120] The Code's Comments indicate that the buyer has not "refused to examine" the goods unless the seller has demanded a full examination, thereby putting the buyer on notice that the buyer assumes the risk of defects that an examination ought to reveal.[121] The skill of the particular buyer and the other circumstances surrounding the inspection -- including the kind of tests possible at the moment -- determine the extent to which the buyer assumes the risk for latent defects.[122] As the Comments indicate, the question is essentially one of contract interpretation, going "to the nature of the responsibility assumed by the seller at the time of the making of the contract."[l23] Thus, there will be no easy agreement on the circumstances under which the buyer "could not have been unaware" of the lack of an implied conformity requirement. When the seller requests full inspection and the buyer refuses, French and American law would probably decide that the buyer should have inspected. German law would require the buyer to inspect only in limited circumstances. Each of the approaches is reasonable; neither is preferred by the text of the Convention. Article 35(3) refers explicitly only to implied conformity requirements. It might therefore be asked whether the buyer's knowledge of defects may exclude the seller's liability under the express conformity requirements as well. It seems clear both from the provision's text and from the discussions at Vienna that the drafters intended Article 35(3) to apply only to the Convention's implied conformity requirements.[124] However, related principles may still apply to express warranties. In both the common and the civil laws, express conformity requirements are sometimes excluded when the buyer either knew of the defect or was offered the opportunity to examine the [page 326] goods. Under French law, the buyer who is aware of a defect may not recover for it.[125] It would seem therefore that the buyer's knowledge, at the time the contract is concluded, of the absence of an agreed-upon characteristic of the goods would preclude the seller's liability. The buyer's duty to inspect under French law probably applies equally to qualities expressly required by the contract. Similarly, under German law, the buyer who knows of the absence of a guaranteed characteristic may not hold the seller for nonconformity.[126] However, in the case either of a guaranteed characteristic or of a defect which the seller guaranteed would not be present, the buyer who does not actually know of the problem may recover, even if the buyer was grossly negligent for failing to inspect.[127] Within the framework of the UCC, it is unclear what consequences should be ascribed to the buyer's knowledge that the goods do not conform to the seller's express representations. In some situations, the buyer's knowledge may prevent the representations from becoming part of the basis of the bargain.[128] In others, the seller's representations may cause the buyer to believe that the goods will be brought into conformity with the contract before they are tendered.[129] The same ambiguity prevails when the buyer, aware of the seller's representations, has carelessly examined the goods without actually discovering the defect: the seller's representations may have lulled the buyer into a false sense of security.[130] Thus, comparative law does not provide precise contours for the exclusion of express conformity requirements when the buyer is aware of the nonconformity. Again the Convention's solution will depend on its underlying principles.

This first section has examined some of the significant issues of interpretation raised by the Convention's conformity provision. Others, of course, remain.[131] But two aspects of the interpretation problem are already clear. First, many domestic sales laws, despite the considerable differences among them, will recognize themselves in the UN Convention's conformity provision. If each interprets the provision from its own standpoint, there will be [page 327] little uniformity. Second, the Convention does not answer, or even attempt to answer, all questions that might arise under an international sales contract. Instead, its rules are guidelines, indications of the Convention's spirit and underlying principles. The next section elaborates two of those principles and attempts to apply them to two of the difficulties raised by the Convention's conformity provision.

II. A STRATEGY FOR INTERPRETATION

Difficulties in the interpretation of the Convention are to be resolved by reference to "the general principles on which [the Convention] is based."[132] There will be significant problems both with the elaboration and the application of the general principles. Of course, the Convention does not contain a section devoted explicitly to those principles. The principles must be elaborated inductively from the individual rules. One difficulty with the elaboration is that a virtually infinite number of principles can be found to explain any set of rules. And even when a principle is discovered, it is difficult to establish whether the drafters intended it to control all similar situations or whether they wished to limit its application to those situations in which it expressly appears. Moreover, it has been clear, at least since Holmes, that principles, even once firmly established, do not decide cases.[133] One of the fundamental insights of modern jurisprudence on both sides of the Atlantic is that principles are frequently employed not so much to make a decision as to support it once it has been made.[l34] But that also does not mean that the quest for principles underlying the Convention's rules is fruitless, nugatory. Principles may point to fundamental similarities that otherwise would go unnoticed and to solutions that seem to work well in other contexts. Such [page 328] principles are especially useful when they are process -- rather than result-oriented, for they then serve to channel rather than end the discussion.

For all of these reasons, what follows is not an attempt to "resolve," by recourse to general principles, the difficulties inherent in the Convention's conformity provision. Rather it is a preliminary dialogue with the Convention, an attempt to understand its sense of itself, a thought experiment. It begins by framing the difficulties with the conformity provision as two conceptual issues. It then examines the Convention for an indication of how similar problems are resolved in other contexts and formulates the Convention's solutions in terms of two basic principles. Finally, it discusses the issues that arise in applying the two principles to two of the difficulties raised by the conformity provision.

A. Two Principles

Many of the problems with the Convention's conformity provision can be understood as concrete manifestations of two conceptual difficulties. The first question concerns the source of the conformity obligation, specifically whether it is imposed by law or derived from the agreement. To this problem, the Convention seems to respond with what might be called simply "the contract principle": The parties' rights and obligations are established exclusively by the international sales contract. The second problem concerns the dynamic of the agreement process, particularly the proper criteria for deciding when a statement or act should produce legal consequences. The Convention's response to this question seems to be what could be called "the discussion principle": A party who wishes to rely on an ambiguous statement or act must first attempt to clarify it.

1. The Contract Principle

At bedrock lies the following question: Who determines the extent of the conformity obligation? On one level, the obligation is promulgated by international agreement. But the question is whether the Convention imposes the conformity obligation as a matter of policy -- for example, to protect unwary buyers and innocent third parties -- or whether it has simply created an analytic device for the interpretation of international sales contracts. To this question, the Convention seems to respond with "the contract principle": The parties' rights and obligations are established exclusively by the international sales contract. In other words, the conformity provision is not a matter of substance but rather a series of questions to ask of the contract. It is in this sense that party autonomy may be considered the Convention's dominant [page 329] theme, "a theme of deeper significance than may be evident at first glance."[135] In order to avoid the policy questions and to remove all state interest in the matter, problems susceptible to protective legislation have been excluded from the Convention's sphere of application -- consumer sales, rights of third parties, validity of the contract, liability for death or personal injury.[136] As a result, maximum scope has been accorded to the sales contract. Business decisions have been left to the business people. Within the scope of the Convention, they are their own legislators.

The contract principle was expressly discussed during the drafting sessions and is embedded at several places in the text of the Convention. Early in the negotiations, one delegate took the position that the role of the Convention is to impose obligations on the parties.[137] The idea was firmly rejected.[138] As a result, the Convention provides that the seller must deliver goods of the quantity, quality and description "required by the contract."[139] The seller must hand over documents at the time and place and in the form "required by the contract."[140] The buyer must pay the price (absent contrary local laws and regulations) "as may be required under the contract."[141] Most importantly, the Convention provides that the parties may choose the law to govern their contract, exclude the application of the Convention, or derogate or vary the effect of any of its provisions.[142] The breadth of their freedom to construct their own obligations is emphasized by its single limitation: the parties must respect the writing requirement in the Convention's formation provisions.[143] [page 330] In fact, during the drafting process, the UNCITRAL Working Group explicitly recognized that the contract principle governs the conformity provision: "the overriding source for the standard of conformity is the contract between the parties."[144]

By focusing attention on the sales contract rather than on legal provisions with a millennial tradition of idiosyncratic interpretation, the contract principle performs the functions required by the Convention's interpretation provision: it safeguards the Convention's international character and promotes uniformity and good faith in international trade. [145] Although, in the end, legal interpretation is always an expression of a sense of policy and justice, interpretation may nonetheless prove more uniform when policy is removed as an explicit consideration. Views concerning which responsibilities the seller must undertake or whether implied warranties may be disclaimed represent social, economic, and political compromises. These compromises do not coincide across national boundaries. If there is to be uniformity in interpretation, the influence of local policy choices must be avoided.

It is worth emphasizing that the justification for the contract principle is pragmatic. The contract principle offers a potential for uniformity in a world of varied and competing policy goals in the domestic laws of sales. The argument is not intended to suggest that states are without power to impose their visions on the parties, or that the source of all contractual obligation is the will of the parties, or that party autonomy is the most desirable foundation for the law of contract. The contract principle is designed simply as an expedient to meet one of the most important goals of both the business and the legal communities, namely that like cases by treated alike.

2. The Discussion Principle

The second basic conformity problem concerns the criteria for ascertaining when statements or acts should produce legal consequences. The question arises constantly: When does an express representation become part of the basis of the bargain? When is a disclaimer effective? When has the buyer effectively communicated a particular purpose to the seller?

The Convention offers a preliminary response to these questions in the Article 8 rules for the interpretation of a party's statements or other conduct. The first rule is a relatively straightforward application of the contract principle: when [page 331] one party knows or could not be unaware of the other's intent, that intent governs.[146] The problems arise, of course, in the remaining situations. In those cases, according to Article 8, one party's statements and conduct "are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances."[147] All relevant circumstances, including the negotiations, established party practice, usages and subsequent conduct, are to be taken into account.[148]

The UNCITRAL Working Group recognized early in the drafting process that the concept of the reasonable person represents a substantive standard.[149]

As the term is used in the common law of torts, for example, it suggests carefully elaborated rules for conduct, rules that cannot be derived simply from the notion of a human being endowed with reason. If left without further guidance, courts might turn to local standards as a guide to the behavior appropriate to a reasonable person in the circumstances.

In order to avoid variant interpretation, the Convention seems to rely on what could be called "the discussion principle": A party cannot rely on an ambiguous statement or act without first attempting to clarify it. The purpose of the principle is to encourage the parties to discuss openly and explicitly as many as possible of the contract's material terms. By encouraging the parties rather than the courts to resolve the difficulties, the discussion principle gives maximum scope to the agreement. Article 21(2) offers an example of the discussion principle: when an offeror receives a late acceptance and it is clear that, under normal circumstances, the acceptance would have arrived in a timely manner, the acceptance is effective unless the offeror immediately notifies the offeree that the offer has lapsed. The Convention's drafters interpret the provision as an instance of the requirement of good faith.[150] However, the provision might be read more literally to indicate that a party who falls to clarify an ambiguity when the opportunity presents itself may not subsequently take advantage of the ambiguity.[151] From this point of view, the late acceptance provision is closely related to the plethora of Convention rules [page 332] that require notice to the other party when an ambiguity develops in the contractual relationship.[152] When read together with the contract principle, the discussion principle suggests that courts should encourage parties to an international sales contract to discuss the material terms of the contract openly and resolve them clearly, and that the courts should then give effect to the agreement the negotiations produce.

It might be argued that the parties do not wish to be told to sit at a table and negotiate the details of their agreement. Otherwise, they would not need a sales law. Once they are able to agree on the price and the quantity, the argument might run, they prefer that the law take care of the rest. But that is rarely what the parties to a sales contract desire. Neither party wishes the law to decide the parties' obligations for itself. Not only are the law's answers unpredictable, expensive, and late, they may be based on policy considerations that are unrelated to the specific transaction. The proof that the particulars are important, even in the fast-paced commodity market, is that many trade associations establish the terms for contracts between their members in elaborate detail.[153] Since the Convention governs sales of all types of goods, it cannot offer an equivalent attention to detail, but, through the discussion principle, it can encourage the parties themselves to develop the necessary detail.

A second possible objection is that the discussion principle seems to take with one hand what the contract principle offers the parties with the other. The contract principle stands for the proposition that the law does not impose obligations on the parties. The discussion principle does nothing if not impose the obligation to speak and clarify. The answer to this objection is that the law can avoid imposing substantive obligations only to the extent it guarantees a procedure for contract formation. If the parties leave everything to a [page 333] background regime, the courts will have to elaborate one. Under the Convention, there is serious risk that the regime would be elaborated differently in each country. To avoid the problem, the parties must be encouraged to come to terms themselves, to turn into business decisions what otherwise would be policy decisions for the courts.

B. An Experiment in Application

It would be illusory to think that the contract and discussion principles alone could unsnarl the tangled thicket of difficulties implicit in the Convention 's conformity provision. But the two principles do provide a starting point for the discussion. When examined in light of the two principles, the provision seems to cover two types of situations. In one case, a party wishes to benefit from a communication that emanates from the other party. In such a case, the problem is to encourage the recipient to raise potential ambiguities during the negotiations. In the second situation, the party emitting the communication wishes to draw legal consequences from it. There the problem is to encourage that party to assure that the other party actually gains knowledge of its contents. The seller's express representations are examples of the first case; disclaimers are examples of the second. This section attempts to apply the two principles to those two problems.

1. Express Conformity Requirements

Buyer and Seller negotiate. Seller sends catalogues, brochures, technical specs, and letters from satisfied customers. Buyer calls and inquires further. Seller assures Buyer that the goods will fulfill Buyer's needs. Seller also mentions that the goods will be profitable for resale, that they have been shown to stand up well under rough treatment, and that they need very little upkeep. What is more, repair and accessories for the goods are readily available in most countries. In short, there is no better product on the market. Buyer decides on the quantity and orders by reference to the catalogue number and price. Seller initials the order form and returns a copy to Buyer. Contract? Fine. But what is "required by the contract"? Article 8(2) is the place to start. Seller's statements will be interpreted according to the understanding of a reasonable person in Buyer's shoes. Some of the statements clearly create contractual requirements. Others are certainly just Seller's jive. But even the reasonable buyer will not know how [page 334] seriously to take many of the statements. After the deal has gone awry, it is up to the court to look at the doubtful statements, hold Seller to some, discard others as irrelevant, and award damages.

Under this reading of Article 8, the burden of clarity rests squarely on the seller. Of course it is reasonable, even desirable, to prevent the seller from saying more than is meant. A buyer relies on such statements and may pay a premium for the qualities the seller appears to promise. The difficulty is that the burden of clarity rests solely on the seller. That causes two problems. First, since anything said may be held against the speaker, the seller has only two choices: either be clear or be quiet. A thoughtful seller, especially once burned, will understand that the less said the better. My printseller in Paris has learned the same lesson: when I ask her a question, she simply stares at me. It is maddening. The rule encourages the seller to withdraw and avoid the discussion. The second problem is that the buyer too has no incentive to speak. As long as the clearly binding statements assure satisfactory quality, the buyer has everything to gain by remaining silent. After all, the court before which the matter is tried may have a generous concept of the reasonable buyer. So both the buyer and the seller adopt a strategy of silence. It is a dialogue between the dumb, and the courts, each somewhat differently, will have to make sense of it later.

To some extent, the contract and discussion principles provide an alternative. The contract principle emphasizes that neither the courts: the Convention, the Contracting States, the public, nor third parties have any interest in the extent of the express conformity requirements. All that is important is that the matter be settled ahead of time so that a court interpreting the contract is not tempted to decide for the local favorite. The discussion principle is designed to encourage parties to discuss the material terms of their agreement openly and to resolve them clearly. (Conformity questions are, of course, material terms.[154]) Whenever the seller's statement is reasonably ambiguous, the discussion principle would require the buyer to raise the matter. The buyer who fails to do so may not take advantage of the statement. In other words, the reasonable person of Article 8(2), as informed by the discussion principle, is not a purely passive recipient of information but rather an active participant in the negotiations.

The discussion principle encourages discussion but creates difficulties of its own. For one, it overturns the clear presumption of Article 8(2) and places virtually the entire burden on the buyer, the party with the "last clear chance" [page 335] to provoke a discussion.[155] In many cases, the seller need not be especially careful with the phrasing. It is exasperating that there seems to be no workable rule that would place the burden of the discussion equally on both parties. Second, it is difficult to communicate to the business world a clear idea of when the buyer need respond. "Reasonable ambiguity," of course, is a standard that may vary significantly depending on the court that applies it.

Nonetheless, despite its disadvantages, the discussion principle may still be preferable to the unadulterated reasonable person standard of Article 8(2). Although the discussion principle seems to turn the tables on the buyer, as a practical matter, it often improves the buyer's position. By learning to speak, the buyer living under a less protective sales law is able to replicate pro-buyer sales regimes. When the buyer's sales law would consider the seller's statements to be non-binding expressions of opinion, the buyer can change the situation by raising the issue. The seller may be willing, in fact accustomed, to consider such matters to be express conformity requirements. If, instead, the buyer were not encouraged to respond, the standard would be fixed by reference to the understanding of a reasonable person from a much less satisfactory regime.

The second advantage of the discussion principle is that it avoids the hall of mirrors. For the "reasonable person" is an illusion. At the outset, the reasonable buyer's understanding will be limited by the background of domestic law and practice. Later, the buyer will gain international experience and learn to understand the context in which sellers operate. The reasonable buyer then will understand the seller's communications partially from a domestic standpoint and in part from an insight into the seller's system. But the seller also understands something of the buyer's world. The buyer's understanding of the seller's intent may have to take account of the seller's understanding of the buyer's system. This presents an asymptotic approach to a situation in which both parties are perfectly aware of the other's system, and each finds it impossible to understand the other.

2. Disclaimers

It would be difficult to exaggerate the fascination with disclaimer questions in the American law of sales. Formation questions in general occupy pride of place in American contracts law. The underlying question, of course, is why, and on what terms, courts should enforce contracts. For example, part of the [page 336] discussion about the mailbox rule, of exquisite urgency to the common lawyer, involves the determination of when a party who is unaware of the existence or the terms of a contract may, nonetheless, be bound. The disclaimer of implied warranties presents the same problem. The parties have every right to depart from the UCC's warranty rules, but is specific agreement required? Is the buyer required to read and understand every word of the seller's invoice? The UCC has responded to the difficulty with two rules that resolve only some of the difficulties and seem to create more than they solve. One formation rule requires the seller in many cases actually to bring the disclaimer to the buyer's attention.[156] The other rule generally requires disclaimers of implied warranties to be readily apparent.[157] In contrast, the Convention declares simply that the conformity requirements obtain, "[e]xcept where the parties have agreed otherwise." To an American lawyer, the Convention's formulation is enchantingly insouciant.

Buyer thumbs through Seller's catalogue, finds the needed items, and orders: "20 widgets. $2000. Please ship immediately." The order is on Buyer's purchase order form. Nothing is said about warranties. Upon arrival, Seller's sales rep picks the order out of the routing box, types the information on Seller's standard form invoice and acknowledgment, sends a copy to the shipping department, another to Buyer, and keeps a copy in the file. Seller's form contains much information. The print is gray and extends almost to the edge of the page. The paragraphs are numbered but without headings. The following sentence appears in the middle of a paragraph at the bottom of the page: "ALL GOODS SOLD WITHOUT WARRANTIES, EXPRESS OR IMPLIED, AND SUBJECT TO THE TERMS ON REVERSE SIDE." There are two relevant paragraphs on the back of the form:

1. Due to the variable conditions under which these goods may be transported, stored, handled, or used, seller hereby expressly excludes any and all warranties, guaranties, or representations whatsoever. Buyer assumes risk for results obtained from use of these goods, whether used alone or in combination with other products.

7. This invoice or acknowledgment contains all of the terms of this purchase or sale. If these terms are unacceptable, Buyer must so notify seller at once.[158] [page 337]

When the acknowledgment arrives, a clerk in Buyer's purchasing office stamps it "Received" and places it on the "Arrival" spindle. Three days later, the goods are delivered to Buyer's loading dock. They are unloaded, and the dock clerk routes the invoice that accompanies the goods to the payment office. Buyer pays for the goods, uses them, finds them seriously defective, and sues for damages. What result under the Convention?

As I understand it, the place to begin is Article 19. Seller's reply purports to be an acceptance but contains what might be considered either additional or different terms relating to the quality of the goods. It therefore constitutes a rejection and counter-offer. Under Article 18(1), the offeree's acceptance and use of the goods may indicate assent and constitute an acceptance of the counter-offer. The terms of the contract are clearly those contained in the counter-offer. The only question is how to interpret them. Article 8 indicates that they are to be interpreted according to the understanding of a reasonable person in Buyer's shoes. There is certainly no ambiguity: one glance at the invoice makes it clear that all warranties have been disclaimed. Yet the matter was not actually brought to Buyer's attention. The results are those of the much criticized Roto-Lith case.[159] The question is whether the contract and discussion principles provide an alternative.

The contract principle conveys its simple message: neither the Convention nor the courts have any interest in whether warranties are or are not disclaimed, provided, of course, that the parties agree on the matter. Here the drafters have chosen their words carefully: "where the parties have agreed otherwise." For the contract to be sovereign, there must be agreement on the material terms. The contract principle is forced to retreat whenever one party seeks to impose on the other. In such cases, local protectionist policies may stake a greater claim. Thus, the successful operation of the discussion principle is crucial to an acceptable solution.

It is elementary that there can be no meaningful discussion if one of the parties is unaware of a material term of the proposed agreement. In the context of disclaimers, where it is the seller and not the buyer who seeks to rely on the seller's communication, the discussion principle makes clear that the seller can benefit from the communication only if a serious attempt is made to bring it to the buyer's attention. For this purpose, a readily apparent disclaimer in a standard form invoice would not always suffice. The question is not simply the size of the print and its placement on the form. The problem is [page 338] that a seller cannot expect to negotiate with a clerk in the buyer's purchasing department. The matter must be brought to the attention of a representative of the buyer who has the authority to discuss and resolve the issue.

Here too the alternative is not without its difficulties. The first problem is the standard to be used to judge whether the buyer is aware of the disclaimer. The discussion principle would bite most deeply if the standard were a subjective one, if no disclaimer were effective unless the buyer's representative actually knew of the disclaimer and had the opportunity to respond -- if, for example, the seller were required to reach the responsible party by telephone and discuss the disclaimer. But the subjective standard is unworkable. Many sellers would probably find the effort not worth the candle, especially if repeated international telephone calls were necessary. Moreover, if the seller could not ship before calling the buyer, the efficiency of the whole operation would be significantly impaired. Finally, of course, a purely subjective standard would guarantee that no buyer would ever read the contract.

Probably the best that can be achieved is reasonableness, despite its many problems: the seller must make the disclaimer in such a manner that it would actually be brought to the attention of a reasonable buyer. For example, the seller might include a personal note to the purchasing arid shipping agents indicating that the shipment should not be opened or used until a responsible representative of the buyer has had the opportunity to examine the invoice. The same message might be written on the packaging. The result would be an interpretation of Article 8(2) that requires that both the content of the disclaimer and the manner in which it is communicated meet the needs of a reasonable buyer.

The remaining question is whether it is legitimate to dilute the strong language of the Convention's formation provisions in order to accommodate the discussion principle. Article 19 clearly gives the last shot to the counter-offeror. It might be argued that the discussion principle should operate within the framework of that provision. For example, the buyer should be encouraged to read the mail and contribute to the discussion by assuring that material provisions in the operative contractual documents are not ignored. It might be much easier for the buyer to organize a routing system that brings such matters automatically to the attention of the purchasing representative than it is for the seller to attach bells and whistles to the counter-offer. In other words, the last clear chance approach might just as easily apply here. On the other hand, it seems inefficient to require the buyer's representative to pore over forms om which the legally relevant language is unrecognizable. These are not lawyers. They have no special love for fine print. The question is which of these considerations should determine the burden of discussion. [page 339]

CONCLUSION

The first part of the paper has sought to convey two ideas. First, the Convention's conformity provision amalgamates rules from domestic and international sales laws without creating a coherent vision. As a result, it will provoke a discussion for which there is little preparation and, especially given the diversity in comparative law, few clearly acceptable solutions. Second, the Convention's conformity rules resemble provisions in domestic sales laws that differ markedly from each other. The resemblance may tempt some legal systems to interpret the Convention as though it were domestic law. The second part of the paper investigated the possibility of elaborating general principles from the text of the Convention. The general principles provide solutions, but those solutions present difficulties of their own.

Implicit in all of this is a certain melancholy. Although the Convention's conformity provision has identified broad similarities in domestic sales laws and formulated them in a straightforward manner that most merchants will understand, it leaves the traditional difficulties and inconsistencies unresolved. Of course, the law is tradition, but it also aspires to unity and vision. Otherwise its scholars would not lament its quiescence with such plangency -- the forms of action that we have buried but that still rule us from their graves,[l60] the "awesome relics of the dead past" that continue to populate sales law codifications.[161] The real question is the law's vocation for change. Is there no way to improve things in the law? Does no path lead from tradition to utopia?[page 340]

Principal Works Cited

Ghestin, Conformité et garanties dans la vente (Paris 1983). Honnold, Uniform Law for International Sales (Deventer 1982). Larenz, Schuldrecht II/l (ed. 13 München 1986).

Jauernig ([-editor]), Bürgerliches Gesetzbuch (ed. 4 München 1987). Mazeaud (-de Juglart), Leçons de droit civil III/2 (ed. 6 Paris 1984).

Official Records, United Nations Conference on Contracts for the International Sale of Goods (Vienna, 10 March -11 April 1980), U.N.Doc. A/CONF.97/19 (New York 1981).

Palandt (-[editor]), Bürgerliches Gesetzbuch (ed. 42 München 1983).

Planiol & Ripert (-Hamel), Traité pratique de droit civil français X (ed. 2 Paris 1956).

Rabel, Das Recht des Warenkaufs II (Berlin & Tübingen 1958).

Special Project, Article Two Warranties in Commercial Transactions: 64 Cornell L. Rev. 30-273 (1978).

The author would like to thank Susan Bender, Klaus Burmeister, Dr. Franz Bydlinski, Michael Fischl, Patrick Gudridge, Jeremy Paul, and Steven Winter for their perceptive comments and suggestions.

Diskussion

Die Diskussio zu diesen Themen fand am Nachmittag unter dem Vorsitz von Herrn Schlectriem tatt.

Vorsitz am Nachrnittag: Professor Dr. Peter Schlechtriem, Freiburg,

Der vorsitzenke weist auf die Veräng des vorgesebenen Programms bin und erteilt zutlächst Herrn Sevón, Helsinki, das Wort, der als Direktor f¨r Gesetzgebung im finnischen Justizministerium über die Neufassung der skandinavischen Kaufrecbte bericbtet.


FOOTNOTES

* University of Miami School of Law.

1. United Nations Convention on Contracts for the International Sale of Goods, U.N. Doc. A/CONF.97/18 Annex I (1980) [hereinafter UN Convention]: Official Records 176, 178-92, reprinted in 19 Int'l Legal Materials 668, 671-99 (1980). (A list of the principal works cited appears at the end of the paper. All translations are my own.)

2. As a rule, the buyer may avoid the contract only when the seller's failure to perform amounts to a fundamental breach of contract. See UN Convention art. 49(1)(a). However, if the seller's failure constitutes "non-delivery," the buyer may set a Nachfrist and, if the seller fails to perform, avoid the contract. See id. Art. 49(1)b); Schlechtriem, Uniform Sales Law (Vienna 1986) VI.B.6.c at 78. Furthermore, though the buyer may generally require the seller to perform specifically, when "the goods do not conform to the contract" the buyer may require the delivery of substitute goods only if the lack of conformity constitutes a fundamental breach of contract. See UN Convention art. 46(1)-(2).

3. See UN Convention arts. 39, 44; Schlechtriem, The Seller's Obligations Under the United Nations Convention on Contracts for the International Sale of Goods 6-2; International Sales: The United Nations Convention on Contracts for the International Sales of Goods ch. 6 (eds. Glaston & Smit) (New York 1984).

4. See United Nations Convention on the Limitation Period in the International Sale of Goods arts. 8-11, 23, U.N. Doc. A/CONF.63/15 (1974); Official Records, United Nations Conference on Prescription (Limitation) in the International Sale of Goods (New York, 20 May -- 14 June 1974) (New York 1975) 101, 102-03.

5. See UCC §§ 2-602(1) and comment 1 (seasonable notice required to effect rejection); 2-607(3)(a) (reasonable notice required after discovery of breach); 2-608(2) (notice required to revoke acceptance).

6. See id. § 2-725(1)-(2). The UCC has no abbreviated limitations period.

7. Compare BGB § 477 1 (action for defective goods prescribes in six months) with id. § 195 (action for breach of contract, including nondelivery, prescribes in 30 years). When both parties are merchants, the importance of the distinction is reduced (but not eliminated) because both actions are generally subject to a requirement of timely examination and notice. See HGB §§ 377-78. Moreover, in the case of fungible goods, both actions are frequently subject to the shorter prescription period. See Palandt (-Putzo) § 477 no. l(d)(cc).

8. See, e.g., Fabricius, Schlechtlieferung und Falschlieferung beim Kauf: JuS 1964, 1-11,46-53.

9. See Larenz § 41 II e.

10. See id. § 41 III.

11. See Medicus, Biirgerliches Recht (ed. 10 Koln 1981) nos. 318-41.

12. "[H]idden defect, defect in assent, nonconformity constitute characterizations whose contours are badly defined and frequently confused in all types of sales." Mazeaud (-de Juglart) no. 980.

13. See Cour Paris 15 act. 1986, D. 1986.J.334 conclusions Paire; Planiol & Ripert (-Hamel) no. 126.

14. UN Convention art. 35(1).

15. Compare id. art. 35(2) with id. art. 35(1); see text at notes 52-55, infra.

16. See UN Convention art. 35(3); text at notes 124-30, infra.

17. UCC § 1-201(3).

18. See id. § 2-313(1)(a)-(c); Special Project 44-45. Under the Code, descriptions, samples, and models may become part of the basis of the bargain whether made by the buyer or the seller. Affirmations of fact and promises become express warranties only if made by the seller. Compare UCC § 2-313(1)(a) with id. § 2-313(1)(b)-(c).

19. See UCC § 2-313(2).

20. See Palmer v. A.H. Robins Co., 684 P.2d 187, 208 (Colo. 1984)(en banc).

21. See UCC § 2-313(2); see also PelI City Wood, Inc. v. Forke Bros. Auctioneers, Inc., 474 So.2d 694 (Ala. 1985) ("the trucks are in good condition").

22. See Keith v. Buchanan, 220 Cal. Rptr. 392, 396 (Cal. App. 1985).

23. See Royal Business Machines v. Lorraine Corp., 633 F.2d 34, 42 (7th Cir. 1980).

24. See Murray, "Basis of the Bargain": Transcending Classical Concepts: 66 Minn. L. Rev. 282-325, 304 (1982).

25. See UCC § 2-313 comment 3.

26. See Murray, supra note 24, at 291-305 and the cases cited; cf. Unif. S.A. sec. 12.

27. See UCC § 2-313 comment 7.

28. Compare BGB § 462 with id. § 463. When the seller is at fault, conscquential damages are sometimes available, regardless of the type of nonconformity, under the doctrine of positiv Vertragsverletzung. See Jauemig (-Vollkommer) § 459 IV 6(a).

29. See Larenz § 41 I b.

30. See id.

31 See id. at 44.

32. See text at notes 52-55, infra.

33. See text at notes 124-30, infra.

34. See UN Convention art. 35(2).

35. See id. art. 19(1) & (3).

36. See id. art. 18(1).

37. See id. art. 4(a).

38. See, e.g., France: D 78-464 of 24 March 1978 (application of ch. IV of L 78-23 (10 Jan. 1978) concerning the protection and information of consumers of products and services) art. 2, D. 1978.Leg.228; Germ. West: AGB-Gesetz §§ 9, 11 nos. 10-11 (1976); USA: Magnuson-Moss Warranty -- Federal Trade Commission Improvement Act of 1975, 88 Stat. 2183, 15 U.S.C. §§ 2301-12 (1982).

39. See, e.g., France: C.travail art. L. 233-6 (machines with a potential for causing physical harm to workers); USA: UCC § 2-719(3) (limitation of consequential damages for injury to the person resulting from the use of consumer goods is prima facie unconscionable); Restatement (Second) of Torts § 402A (1965) (strict liability in tort for a merchant seller when a consumer or a consumer's property suffers physical harm from a defective product in unreasonably dangerous condition).

40. See UN Convention arts. 2(a), 5.

41. See AGB-Gesetz § 9 II.

42. See UCC § 2-302. Though the definition of unconscionability is disputed, the Code's Official Comments indicate that it includes cases of "oppression or unfair surprise" or terms that are "contrary to the essential purpose of the agreement." See id. comments 1 and 2; see also, e.g., A & M Produce Co. v. FMC Corp., 186 Cal. Rptr. 114 (Cal. App. 1982). The Code permits limitation of remedies for breach of warranty (a question it considers analytically different from disclaimer), so long as limitations to consequential damages are not unconscionable, see UCC § 2-719(3); Durham v. Ciba-Geigy Carp., 315 N.W.2d 696,700 (S.D. 1982), and so long as the remedies do not thereby fail of their essential purpose. See UCC § 2-719(2) and comment 1; see also Eddy, On the Essential Purposes of Limited Remedies: The Metaphysics of UCC § 2-719(2): 65 Cal. L. Rev. 28-93 (1977).

43. See Ghestin nos. 253-63,273-76 and the cases cited.

44. See UCC § 2-207. The actual rule is difficult to discern because the section was so poorly drafted. The section was designed to deal with a form acceptance that purports to modify terms in a form offer. The cases generally involve the seller's attempt to disclaim warranties. The reasoning differs somewhat depending on whether the seller, who is often the offeree, does or does not make the acceptance expressly conditional on the buyer's assent to the disclaimer, but the practical result is generally the same in the two cases. If acceptance is not made expressly conditional on the buyer's assent to the disclaimer, the acceptance forms a contract. Since the disclaimer would "materially alter" the terms, see id. comment 4, it does not become part of the contract. If acceptance is made expressly conditional, the acceptance does not form a contract. See id. § 2-207(1). However, if the seller ships the goods, the buyer's acceptance and use of the goods would conclude the contract. See id. § 2-204(1). The contract will contain those terms upon which the writings of the parties agree together with the Code's gap-filler provisions. Id. § 2-207(3). Since, at least arguably, the writings do not agree with respect to warranties -- warranties are implied into an offer otherwise silent on the question -- the Code's implied warranty provisions will prevail. As a result, a seller may be certain that a disclaimer will become part of the contract only if it is called to the buyer's attention and the buyer expressly assents.

45. See UCC § 2-316(2).

46. It has been argued that the UCC's disclaimer requirements are questions of validity that fall outside the scope of the UN Convention. See Note, Disclaimers of Implied Warranties: The 1980 United Nations Convention on Contracts for the International Sale of Goods: 53 Fordham L.Rev. 863-87 (1985). Honnold had previously presented arguments to the contrary, namely that the term "validity" should not be interpreted to include every domestic rule that denies full literal effect to a contract provision. See Honnold no. 234. Both authors ignore the fact that, even if UCC § 2-316(2) concerns the validity of disclaimer clauses, it concerns formal rather than substantive validity. Though questions of substantive validity are left to domestic law, UN Convention art. 4(a), questions of formal validity are preempted by Article 11.

47. See Ghestin no. 273; Malinvaud, Pour ou contre la validité des clauses limitatives de la garantie des vices caches dans la vente: J.C.P. 1975.I.2690 no. 1.

48. See, e.g., BGH 22 Feb. 1984, NJW 1984, 1452.

49. See Chatlos Systems, Inc. v. National Cash Register Corp., 670 F.2d 1304 (3d Cir. 1982).

50. See UN Convention art. 74.

51. See Mieske v. Bartell Drug Co., 593 P.2d 1308 (Wash. 1979)(en banc).

52. See, e.g., Alan Wood Steel Co. v. Capital Equip. Enterprises, 349 N.E.2d 627, 635 (Ill. App. 1976) ("descriptions are approximate and intended to serve as a guide").

53. See UCC § 2-316(1).

54. See Special Project 170-73.

55. See id. 173-76.

56. Compare UCC §§ 2-316(3)(c), 1-205 with UN Convention art. 9; d. Special Project, 202-06.

57. See UCC § 2-316(3)(a); Special Project 191-96; Rabel 190-93.

58. See UCC § 2-314(1).

59. See Rabel 164.

60. See UCC § 2-314(2)(c) & (e).

61. See Special Project 98.

62. See UN Convention art. 35(2)(a) & (d). By their language, both the Code and the Convention avoid the much-disputed difficulty in French law concerning whether a precise defect must be proven in addition to a lack of ordinary fitness. See France: Ghestin nos. 10-11; USA: Anderson, Uniform Commercial Code III (Rochester 1983) §§ 2-314:69 to 2-314:91.

63. See Special Project 79.

64. Honnold justifies the elimination of the merchant restriction "in view of the character of international sales" and the exclusion of consumer sales from the scope of the Convention. See Honnold no. 225. However, neither the character of international sales nor the buyer's purpose is relevant. The question is rather whether the seller has the necessary expertise to be held to the merchantability standard.

65. Int'l Petroleum Servs. v. S & N Well Serv., 639 P.2d 29,32 (Kan. 1982) (merchant case).

66. Honnold no. 225.

67. Van Wyk v. Norden Laboratories, 345 N. W.2d 81,84 (Iowa 1984).

68. Morrison's Cafeteria v. Haddox, 431 So.2d 975,979 (Ala. 1983).

69. See Secretariat, United Nations Commission on International Trade Law (UNICITRAL), Commentary to the Draft Convention art. 33 no. 5: Official Records 32 ("The standard of quality which is implied from the contract must be ascertained in the light of the normal expectations of persons buying goods of this contract description.").

70. Cambacérès, Rapport fait à la Convention Nationale (1794): Fenet, Recueil complet des travaux préparatoires du Code civil I (Paris 1827) 99, 108.

71. Rabel 161.

72. See id. 106.

73. Cf. Germ. West: BGB § 241; Palandt (-Heinrichs) no. 1 preceding § 275; France: Mazeaud (-Chabas), Leçons de droit civil II/1 (ed. 6 Paris 1978) no. 934.

74. See Rabel 161-62.

75. See generally Larenz § 41 I a & b and the sources cited.

76. See BGH 3 Nov. 1982, NJW 1983, 217 ("Whether, by the indication "BMW 1602" the defendant guaranteed a particular characteristic of the automobile is a question of contract interpretation.")

77. See BOH 22 Feb. 1984, NJW 1984, 2287 ("There is a defect in the sense of § 459 I BGB when the actual condition of the goods sold varies from what was agreed to in the sales contract. ...")

78. See Ohestin nos. 10-11; Mazeaud (-de Juglart) no. 981; Planiol & Ripert (-Hali1el) no. 129.

79. See UCC § 2-314(2).

80. Id. § 2-313 comment 4.

81. See UN Convention art. 35(2)(b).

82. Cf., e.g., Agricultural Servs. Ass'n v. Ferry-Morse Seed Co., 551 F.2d 1057, 1065 (6th Cir. 1977) (the seller should have realized, from the large quantity of seed ordered, that the buyer intended to resell).

83. See UCC § 2-315.

84. Cf. British Misrepresentation Act, 1967, sec. 2(1) (damages for innocent misrepresentation during contract formation).

85. See BGB § 459 I.

86 See CC art. 1641.

87. Compare Mazeaud (-de Juglart) no. 981 with Planiol & Ripert (-Hamel) no. 129; see also Ghestin nos. 10-11, 144, 197.

88. See Rabel 171.

89. See Rabel, Projet d'une Loi Internationale sur la Vente (1935) art. 42(2): Rabel 374-94, 381; Rabel, Projet d'une Loi Uniforme sur la Vente Intemationale des Objets Mobiliers Corporels (1939/51) art. 37(b): Rabel 395-415, 401; Projet d'une Loi Uniforme sur la Vente Internationale des Objets Mobiliers Corporels (1956) art. 40(4): Rabel 416-41, 424.

90. See ULIS art. 33(1)(e).

91. Cf. British Sale of Goods Act. 1979, sec. 14(3).

92. See Special Project 92.

93. See id. 91.

94. See UCC § 2-316 comment 9; Consolidated Supply Co. v. Babbit, 534 P.2d 466 (Idaho 1975).

95. See UCC § 2-315 comment 5.

96. See Crawford v. Gold Kist. Inc., 614 F. Supp. 682 (M.D. Fla. 1985).

97. See Honnold no. 226.

98. UN Convention art. 35(2)(c).

99. See Rabel 154-55; cf. British Sale of Goods Act, 1893, sec. 15(2)(a); Unif.S.A. sec. 16(a). British law continues to characterize the warranties created by the sale by sample as implied warranties. See British Sa!e of Goods Act, 1979, sec. 15.

100. See UCC § 2-313 (l)(c).

101. See id. § 2-313 comment 6.

102. See, e.g., Kopper Glo Fuel, Inc. v. Island Lake Coal Co., 436 F. Supp. 91, 95 (E.D. Tenn. 1977).

103. See BGB § 494.

104. See UN Convention art. 35(2)(c).

105. The Convention expressly contemplates only the situation in which the seller holds out the sample or model to the buyer. When the buyer produces the model, the seller's assent may create an express conformity requirement.

106. Compare UN Convention art. 35(2) with id. art. 35(1); see text at notes 52-55, supra.

107. See UN Convention art. 35(3); text at notes 124-30, infra.

108. Nonetheless. there may be some limitation even to express conformity requirements when the buyer is aware of the nonconformity. See text at notes 124-30, infra.

109. See Special Project 58-59.

110. See UCC § 2-313 comment 6.

111. See Thrall v. Renno, 695 S.W.2d 84 (Tex. App. 1985); Plasco, Inc. v. Free-Flow Packaging Corp., 547 F.2d 86 (8th Cir. 1977).

112. See UCC § 2-313 comment 6.

113. See Am tel, Inc. v. Arnold Industries, 31 UCC Rep. 48, 56-57 (D.Conn. 1980).

114. See Palandt (-Putzo) § 494 no. 2.

115. See UN Convention art. 35(3).

116. See Honnold no. 229.

117. The seller is liable neither for apparent defects nor for those that the buyer is able to discover. CC 1642. French courts require buyers to use reasonable diligence in examining the goods. The diligence required is determined in light of several factors, including the buyer's technical competence, the nature of the defect, the circumstances surrounding the inspection, and the nature of the goods. See Ghestin nos. 15-20; Mazeaud (-de Juglart) no. 982. In some cases, defects have been considered apparent, despite the buyer's own inability to discover the defect, if the buyer should have consulted an expert. See Planiol & Ripert (-Hamel) no. 130. Rabel believed that the inspection requirements in French law were too severe and noted that they have often been softened in the case law. See Rabel 173-74.

118. The seller is not liable for defects of which the buyer was aware at the time the contract was concluded. BGB § 460 sent. 1. The buyer must be aware not only of the defect but also that the defect makes the goods unfit. See Larenz § 41 I d 2; Rabel 173. When, due to the buyer's gross negligence, the buyer ignores the defect, the seller is liable only if the defect was fraudulently concealed or its absence was guaranteed. BGB § 460 sent. 2. In general, gross negligence is not present when the buyer simply relies on the seller's representations and does not inspect. See Palandt (-Putzo) § 460 no. 3(b). As a rule, the buyer is also not required to seek expert advice. In certain circumstances, however, failure to inspect may amount to gross negligence. Those circumstances include the buyer's superior technical competence, the purchase of certain goods of which inspection is usual, and particular indications that the goods may be defective. See id. § 460 no. 3(e)(aa).

119. See UCC § 2-314 comment 3. The Comment indicates that, even when the seller is not a merchant and the warranty of merchantability therefore does not attach, the underlying reason of the present section and the provisions on good faith, impose an obligation that known material but hidden defects be fully disclosed." The implication is that the same duty applies to merchants and, if fulfilled, successfully defeats warranty liability. The contrary construction, however, is equally appealing. By disclosing the presence of a defect, the seller is attempting to disclaim the warranty of merchantability. Disclaimers must generally mention the term "merchantability." See id. § 2-316 (2)-(3),

120. See UCC § 2-316(3)(b).

121. See id. §2-316 comment 8; see also Special Project 197-202.

122. See UCC §2-316 comment 8.

123. Id.

124. See Official Records (1981) 207,426-27 (Mr. Rognlien (Norway".

125. Ghestin no. 14.

126. See Jauernig (-Vollkommer) § 460 no. 2 (a)(aa). The seller who promises to cure the problem before delivery is liable under the normal rules for breach of contract and not under the rules governing defects. See Larenz § 41 I d (2) in fine.

127. See Jauernig (-Vollkommer) § 460 no. 3 (c)(cc).

128. See Indust-Ri-Chem Laboratory v. Par-Pak Co., 602 S. W.2d 282, 293 (Tex. Civ. App. 1980).

129. See Special Project 66; Michiana Mack, Inc. v. Allendale Rural Fire Protection Dist., 428 N.E.2d 1367 (Ind. App. 1982).

130. See Special Project 66-67,201-202; UCC § 2-316 comment 8.

131. For example, the Convention lacks rules to interpret the cumulation or conflict of warranties. Cf. UCC § 2-317; Special Project 206-12.

132. See UN Convention art. 7(2).

133. "General propositions do not decide concrete cases. The decision will depend on a judgment or intuition more subtle than any articulate major premise." Lochner v. New York, 198 U.S. 45, 76 (1905) {Holmes, J., dissenting).

134. "This is a pragmatic world. Most major premises still are dictated by a conclusion needed and already fixed." Llewellyn, The Bramble Bush {New York 1960) 82. See also Heck, Begriffs-jurisprudenz und Interessenjurisprudenz: Grundriss des Schuldrechts ("Tübingen 1929, reprinted Aalen 1974) 471-82, 477 ("In such cases, the norm is first constructed according to its practical consequences and then presented as a deduction from a concept formed for precisely this purpose.").

135. Honnold no. 2.

136. See id. no. 74; cf. UN Convention arts 2(a), 4, 4(a), 5.

137. The Tunisian representative expressed the view that the party-autonomy provision in ULIS should be deleted or modified "in such a manner that the parties would not have the right to modify essential elements of the contract. ..." See 2 UNCITRAL Y.B. 43-44 (1972). He argued that the principle of party autonomy had lost much of its value due to increasing state intervention in the economy and also that party autonomy would permit the stronger party to impose its will on the weaker party. Id.

138. The representative from the United Kingdom replied that "free negotiations were still the basis upon which international trade was conducted, and that abolition of freedom of contract would frustrate the natural evolution of commercial practice to meet changing situations and new demands and thereby impede the development of international trade." Id. 44. The provision, of course, was retained in the UN Convention. See UN Convention art. 6.

139. See UN Convention art. 35(1). According to Article 30, the seller's obligations regarding conformity, the documents, and the transfer of property are governed "by the contract and this Convention." The purpose of the provision is to assure that, when they are not excluded or eliminated, the Convention's provisions are considered to be enforceable obligations. See also id. arts. 45(1), 53, 58(1), 59.61(1).

140. See id. art. 34.

141. See id. art. 54.

142. See id. art. 6.

143. See Honnold no. 74; cf. UN Convention art. 12 sent. 2.

144. 7 UNCITRAL Y.B. 107-08 3 (1976).

145. Cf. UN Convention art. 7(1).

146. See id. art. 8(1).

147. Id. art. 8(2).

148. Id. art. 8(3).

149. See 2 UNCITRAL Y.B. 60 (1972).

150. "[G]ood faith probably would be promoted by a liberal application of provisions like Articles 9.2) and 21(2), which require a party to inform another who is known to be subject to a misapprehension." Honnold no. 95. See also UNCITRAL Secretariat, Commentary to the Draft Convention art. 6 no. 3: Official Records 18.

151. After all, this is not actually a case of "misapprehension." The offeree is aware that no contract can be formed unless either the acceptance reaches the offeror in a timely manner or the offeror chooses to accept the acceptance. See UN Convention arts.18(2), 21(1).

152. Within a reasonable time after the buyer discovers a lack of conformity or a third-party claim. notice must be provided to the seller. UN Convention arts. 39(1), 43(1). When the seller requests that the buyer indicate whether the seller's performance will be accepted, the buyer who does not reply within a reasonable time is bound to accept the performance. See id. art. 48(2)-(3). Each party loses the right to avoid the contract if notice of intent to do so is not given within a reasonable time. Id. arts. 49(2).64(2). If the buyer is to specify certain features of the goods and fails to do so in a timely manner. the seller may make the specification, provided the buyer is notified. The buyer in turn must notify the seller to prevent the specification from becoming binding. Id. art. 65. A party who suspends performance must give immediate notice to the other party and must continue with performance if the other party provides adequate assurances. Id. art. 71(3). Similar provisions concerning notice and adequate assurances apply to anticipatory repudiation. Id. art. 72(2). A party who is unable to perform due to an impediment must give notice to the other party. Id. art. 79(4). To the extent possible, a party who intends to sell goods in performance of the duty to preserve them must also give notice. Id. art. 88(2).

153. See. e.g., National Institute of Oilseed Products, Trading Rules (1984-85).

154. See UN Convention art. 19(3).

155. Cf. Prosser & Keeton, Law of Torts (ed. 5 St. Paul 1984) § 66 (last clear chance rule in tort law).

156. See UCC § 2-207; note 44. supra.

157. See UCC § 2-316 (2).

158. Cf. Roto-Lith, Ltd. v. F.P. Bartlett & Co., 297 F.2d 497, 498-99 (1st Cir. 1962).

159. See id.; cf. Murphy & Speidel, Studies in Contract Law (ed. 3 Mineola 1984) 195-96 (criticism of the decision).

160. Maitland. The Forms of Action at Common Law (1909)(Cambridge 1979) 1.

161. Rabel, The Hague Conference on the Unification of Sales Law: 1 Am. J. Comp. L. 58, 61 (1952).


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