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Reproduced with permission of 46 American Journal of Comparative Law, Supplement (1998) 347-360

American Law at the End of the 20th Century: U.S. National Reports to the XVth
International Congress of Comparative Law, Section III, Topic III.A.2

Part I

The UNIDROIT Principles of International Commercial Contracts: A New Approach to International Commercial Contracts

Arthur I. Rosett [a1]

  1. The Multiple Paths to Unification of Law
    -    Comparing UNCISG and the UNIDROIT Principles
    -    Regional Choice of Law Conventions
    -    National Code Revision
    -    Adoption of Uniform Private Rules
    -    How the UNIDROIT Principles fit into this Multilayered System
  2. Positive Codes or Principled Case-law?
  3. The UNIDROIT Principles and Legal Acculturation:
    Implications for Education and Ongoing Law Reform

This national Report consists of two parts that together may shed light on the significance of the UNIDROIT Principles of International Commercial Contracts.[1] In the accompanying part of this Report, Professor Michael Gordon provides important empirical insights into the limited extent that the UNCISG [2] has penetrated the legal consciousness and culture of the State of Florida and, by implication, other areas, during the decade since it became the law of the United States. From my vantage on the other end of the North American continent, I see no serious reasons to doubt Professor Gordon's major empirical findings. This part of our Report will examine some implications of Professor Gordon's observations from the perspective of The UNIDROIT Principles of International Commercial Contracts and the American experience. Baldly stated, if nobody knows that it is there, the law has little capacity to shape behavior. Our thesis is that the ongoing process of harmonization and reform of commercial and contract law throughout the world must find better methods to inform and persuade those who are engaged in international trade and their lawyers of the content and virtues of the system that is emerging.

The Principles provide a well-crafted statement of commercial contract law that, by its existence, demonstrates the extent to which this body of law already has been harmonized around the world. The UNIDROIT Principles persuasively demonstrate that it is possible to state a set of basic principles that critical representatives of all major legal systems can recognize and agree upon, and to do so in a form that is not too vague and general to be useful in the resolution of specific disputes. This fact alone is immensely valuable to those who [page 347] seek a structure to commercial contract law that can provide predictable and harmonious outcomes everywhere.

This part of the Report will assess the impact of the UNIDROIT Principles of International Commercial Contracts from three other related perspectives. First, the process of revision and harmonization of commercial law that is now going on around the world is taking a path quite different from that which many observers would have anticipated just a few years ago. Perhaps the most striking feature of this phenomenon is the multiplicity of projects through which it is said the law is to be unified. Unity through multiplicity sounds like a contradictory and counter- intuitive strategy. The appearance of the Principles provides a striking example of this multiplicity that deserves examination in the context of the American experience. This multiplicity of projects further complicates the difficulties of education and communication disclosed by Professor Gordon's survey. There is a confusing set of sources of law and several of them are much harder for the average lawyer to find than the UNCISG.

A second level of significance of the UNIDROIT Principles of International Commercial Contracts is suggested by the very use of the word "Principles". The project represents a reassertion of the centrality of forms of law that are softer than the classic positivistic code. The Principles are designed to guide and inform, but it is not contemplated that they will be adopted by nation-states as positive law through an explicit act of legislation. As the opening paragraph of the Introduction to the Principles states clearly:

"Efforts towards the international unification of law have hitherto essentially taken the form of binding instruments, such as supranational legislation or international conventions, or of model laws. Since these instruments often risk remaining little more than a dead letter and tend to be rather fragmentary in character, calls are increasingly being made for recourse to non-legislative means of unification or harmonisation of law."[3]

The approach of the Principles suggests that law consists not only of positive commands that dictate the outcome of specific disputes, but also includes a body of jurisprudence consisting of judge-made common law that reflects the pragmatic accretion of norm from experience. The Principles represent an attempt at a Restatement, a form familiar to American lawyers and one that presents new opportunities and challenges in an international context. The paragraph quoted also suggests that a Restatement approach may prove more successful than legislation in avoiding the unhappy fate that had befallen other "dead letter" international conventions. The paragraph [page 348] quoted is thus linked to Professor Gordon's observations regarding the fate of the UNCISG during its first decade. The soft law aspect of the Principles is not limited to its jurisprudential approach to judge-made law. It is also embodied in the emphasis on custom, trade usage and other rules that find their primary authority outside of the positive legislative command of the state, and in the heavy emphasis in the Principles on the private autonomy of the parties. The parties remain quite free to chose their own rules and to derogate from the substantive content Principles. The "rules" are in almost all cases no more than default rules to be applied when the parties fail to exercise their autonomous power to chose other rules. This is a far cry from the traditional view of the law as primarily the command of the state.

Of pertinence to this report is the reality that soft law by its nature is harder to find and analyze than hard law. Discovering the law by reading the code is not a simple process, for the document must be read and interpreted in context. Nonetheless, the text provides a readily available starting point and a source of clear authority. Soft law, be it embodied in case law, private rules, or arbitral decisions is likely to be private law. Its inaccessibility is increased by the need to place statements of the law in some hierarchical setting. How authoritative is an interpretation by an Amtsrichter in Koblenz or a U.S. District judge in South Dakota when a trial judge in Florida is called upon to give meaning to Article 2.17 of the UNIDROIT Principles?

A third implication of the Principles is that harmonization of commercial contract law is not going to be accomplished by a single grand legislative event. What is emerging is a global legal culture, largely shaped by the dominance of global economic markets. The values of this legal culture will emerge not from a closed, axiomatic statement of principles, or commands from a sovereign, but through a reiterative jurisprudential process in which values accrete and gain acceptance over time in the articulation of reasoned decisions to specific disputes. The principles that emerge will not depend primarily on the positive authority of the state, but will be accepted to the extent that they embody the values of the global community that makes commercial contracts. That global community is expanding rapidly and becoming more diffuse as it grows bigger. Shared values are harder to specify as the old passes and the new has not quite arrived. Professor Gordon's survey may be explained in terms of an incomplete transfer in perception from the old regime to the new. Life is always changing; what do we do in the meantime when called upon to articulate values and expectations?

It is probably too soon to assess the extent that the Principles will be widely accepted as a source of governing norm in the resolution of international commercial disputes. We have not found any [page 349] American court cases that rely on the Principles as a ground for decision. It is not surprising that the Principles have not yet worked their way into reported judicial decisions in the United States. Certainly the problems of communication and education that continue to complicate the utilization of the Vienna Convention, as described by Professor Gordon, will present an equal or greater challenge to the wide use of the Principles. Undoubtedly, the level of familiarity and interest in the Principles is greater in the small community of international practitioners and arbitrators. Until recent years these experts have dominated international legal work. The mark of expertise was a command of a literature that often was inaccessible to non-experts. This dominance of the experts becomes less certain as international aspects appear in a broader range of transactions and become the work of all lawyers and judges. Indeed, it is this increased centrality of international transactions in the larger economy that has provided the major spur for harmonization of the law. In this setting, developing access and familiarity by a broader audience is a crucial aspect of law harmonization.

I. The Multiple Paths to Unification of Law

The process of legal harmonization in global economic markets has taken divergent forms, yet to our great benefit, a remarkable degree of coherence and agreement can be found in the underlying ideas, and most importantly, the outcomes of similar disputes through the use of these divergent forms. To fully understand the usefulness of the UNIDROIT Principles, we must appreciate how they fit into this emerging multi-layered structure that is becoming dominant.

Comparing UNCISG and the UNIDROIT Principles

The UNIDROIT Principles provide an important example of how the process of international commercial law unification has turned out to be quite different from the process that was contemplated a half-century ago, when its modern development began. The unification of the law that has been accomplished is not the result of the promulgation of a single, magisterial code, as those who began the long process that eventuated in the UNCISG might have supposed in the 1920's. Instead of one code, there are now several kinds of international conventions dealing with overlapping issues of commercial law. In important respects, these conventions appear to diverge in their approach, if they do not precisely conflict with each other.

There has now been almost a decade of experience with the UNCISG. Over forty nations have acceded to the Convention and collections of jurisprudence drawn from courts around the world are providing guidance on its interpretation and application. The UNCISG [page 350] pursues the strategy of harmonization by seeking a single worldwide formal statement of contract rules, which become the law applicable in transactions between parties from signatory states. UNCISG attempts to unify the law of international sales contracts by treating it as a freestanding body of positive rules, largely independent of national law on these subjects. The UNCISG attempts to unify the international law of sales by separating it from national law, which is left to deal with matters excluded from the scope of the Convention. In contrast, the UNIDROIT Principles start from the assumption that certain basic principles are shared by all legal systems. The UNCISG advances the process of harmonization by seeking agreement on a formal statement of the rules. Since it was not possible for the drafters to gain universal agreement on any of the truly difficult questions of commercial law, the UNCISG contains lacunae that require completion and explanation. Moreover, the UNCITRAL process, out of which the UNCISG developed, is episodic and provides only limited ongoing opportunities for revision of the UNCISG in light of experience with some of its less successful provisions.

Regional Choice of Law Conventions

A different approach is taken by the Rome [4] and Mexico City [5] Conventions, which are based on the assumption that every contract is grounded on a proper national law, which may be displaced to some extent only if the parties chose to do so by an exercise of private autonomy. When the parties do not chose to exclude the proper law, the harmonization of outcomes in transactions that have effects in more than one nation is accomplished by determining the proper national law and applying it under choice of law principles. Outcomes are unified when everyone agrees on how to select the correct national law. This approach seeks harmony, not in the promulgation of uniform substantive rules, but in the creation of a process for choosing among competing national and international rules, leaving the substance of each domestic system largely untouched. This approach would seem particularly useful in the many international transactions between sophisticated commercial parties, who can be expected to take care of their own interests and do not require the protection of governmental regulation. Such parties will take care of themselves and produce a more rational allocation of interests than can be expected from the state. It is doubtful, however, whether this approach will harmonize and approximate the rules applicable in other common [page 351] situations. National systems of law no longer present an insuperable barrier to trade under this approach, but harmonization is no longer a prime value.

National Code Revision

The same powerful economic forces and technological changes that mandate legal change in international transactions through international conventions are felt at the national level. As nations reconsider their own laws in response to those forces, they are likely to arrive at parallel conclusions, thus reducing the differences among the laws of these nations. This convergence can be observed in a number of national revisions of Civil and Commercial Codes and is apparent in the major effort in the United States to revise the Uniform Commercial Code.

In the United States the National Commissioners on Uniform State Laws and the American Law Institute are bringing to fruition a revision of the dozen parts of the Uniform Commercial Code (the UCC), particularly Article Two dealing with Sales. It is difficult to revise a code that has been a monumental success and has been incorporated in the laws of each of the fifty states. A recent draft of Article Two of the UCC [6] on sales contains more than 50 references to the provisions of the UNCISG, the UNIDROIT Principles, INCOTERMS and other international sources. The UNIDROIT Principles, in particular, are frequently used as a source for clear and workable definitions of concepts. This reflects the truth that, in economic terms, the lines between domestic and international transactions are being eroded within global markets. The result will be a harmonized legal approach to all similar commercial transactions. New formulations of the law are required to serve the purposes of that new order. A consequence of the reality is that each of these national revisions must take account of the global realities of trade and thus incorporates a harmonized approach to transactions.

Adoption of Uniform Private Rules

The UNIDROIT Principles, the UNCISG, the Choice of Law Conventions, and the UCC all recognize the centrality of party autonomy to commercial transactions and permit the parties to derogate in most instances from the law's provisions by contract. Emphasis on private, rather than state rules also is the core of the approach to [page 352] harmonization taken in numerous industries, trade practices, uniform contract forms, and trade association rules, that provide a secure foundation for common transactions and harmonize outcomes for these transactions throughout the world. The work of the International Chamber of Commerce is particularly noteworthy. The Uniform Customs and Practices on Documentary Credits (UCP) has provided a frequently updated workable set of rules for letters of credit and similar documents.[7] Transactions valued at billions of dollars are entered under these rules every day with few problems. World law on the subject has effectively been unified because almost every bank in the world incorporates these rules in its letter of credit documents. Intervention by government-made rules has been peripheral at best. The recent revision of Article Five of the Uniform Commercial Code on this subject indicates how few and how minor the problems left for legislation are.[8]

One reason for the success of the UCP has been the enthusiastic involvement of a small, well-defined group of participants in these transactions, the banks. A more general project to define trade contract terms in international sales (INCOTERMS) presents some of the same characteristics. The ability of the International Chamber of Commerce to regularly review and revise these definitions is impressive. They have anticipated and promptly moved to solve trade transaction problems very effectively. These transactions have ancient foundations in maritime practice, but they have been transformed by the growth of modern intermodal and containerized forms of maritime transport, computerized systems for the generation of trade documents, and the growth of air cargo services.

One might expect that these different kinds of conventions, private rules and national codifications would be competitive and exclusive of each other. Were that the case, the task would be to pick and chose among them, settling on the one solution that offers overall the best advantages and imposes the most acceptable costs. But that is not how the development of the new commercial law has worked out. Instead, as each vehicle has been constructed each has been applauded and adopted by most national legal cultures. Most of the world has adopted a number of these vehicles and no one seems overly concerned by the apparent divergences in their approaches. In practice these different vehicles usually are not competitive, but are mutually supportive and supplementary of each other. The choice is not between them, but how to use all of them productively. These vehicles may incorporate different approaches, but they largely [page 353] share a common sense of the best outcome to practical problems that arise frequently. If we use them wisely, they work together and support each other.

How the UNIDROIT Principles fit into this Multilayered System

The UNIDROIT Principles are not intended to operate in isolation or in direct competition with the other forms of harmonizing commercial law. On the contrary, the Principles support and coordinate the other layers of law. The UNIDROIT Principles seem likely to prove useful in a variety of functional settings. The Principles provide a coherent approach to many of the practical issues that arise in commercial practice and they are likely to harmonize outcomes when they have influence. More particularly, the UNIDROIT Principles supply interpretive guidance regarding the provisions of CISG [9] They support the reexamination of national law and supply common-sensical approaches to problems that have long eluded common sense. UNCISG does not provide a complete code for international sales. Within the limited ambit of its application its rules are paramount although subject to party derogation, but many lacunae exist. The UNIDROIT Principles provide a powerful took for filling the gaps. The "soft" quality of the Principles, makes them a good source of purposeful and inductive interpretation not so clearly provided in the positive statements of the UNCISG. In this respect the Principles can be expected to make UNCISG more workable and a more supple tool of commercial law.

The Principles also provide substance and structure to international practice as a source of law. The Principles are said to be a Restatement of International commercial law and what is being restated is the lex mercatoria. The UNIDROIT Principles thus provide substance to international practice as a source of law; they give content to the claimed existence of a lex mercatoria. Again, the broad focus and sense of purpose of the Principles will provide a helpful guide to judicial and arbitral interpretation of contract clauses and finally, should assist the parties in contract drafting, negotiation, and the adjustment of agreements during performance. The Principles will undoubtedly prove useful as descriptive guides for judicial and [page 354] arbitral interpretation of contract clauses. In reading an international contract the interpreter will benefit from the availability of sensible principles that provide a basis for inferring party intent. Finally, the UNIDROIT Principles will assist parties in contract drafting, negotiation and adjustment during performance to frame their concerns in clearer terms. One good way to assess the worth of the UNIDROIT Principles is to consider their potential for promoting harmonization in a legal context that will continue to seek harmony along a large number of divergent paths.

II. Positive Codes or Principled Case-law?

To many American lawyers, the Restatement approach taken by the UNIDROIT Principles is likely to be familiar and comfortable. It is reminiscent of the strategy used successfully during the first half of this century by the American Law Institute to harmonize the diverse strands of state common law. It resembles the approach instilled in American lawyers from their first days of legal education. The case orientation has contributed to the emergence of national law schools and, eventually, to the reduction and accommodation of divergent traditions in state law. This orientation emphasizes law as defined by how contested cases are likely to be decided, not how abstract norms are stated. The notion that the law is derived from experience encourages persons from different traditions to replace emphasis on trying to reach agreements regarding "principle" with reaching agreements on how disputes should come out. Such agreements are often easier for lawyers to reach. Such agreements are also likely to reduce the undesirable gap between the way principled lawyers tend to think disputes should be resolved and how their businessperson clients think disputes should be accommodated.

When the Principles are referred to as an International Restatement of Contract Law,[10] it is implied that they seek to capture the essence of the governing rule on a subject without attempting a formal codification. They provide a somewhat looser textured statement of guiding principles than can always be captured by a positive statement of controlling law. The UNIDROIT Principles place less emphasis on the conceptual rules or on the choice of law, and more on the spirit and supporting purposes that should determine the outcomes of particular kinds of commercial disputes. The basic principles as stated by Professor Bonell are: i) freedom of contract,[11] ii) [page 355] openness to usages,[12] iii) favor contractus,[13] iv) observance of good faith and fair dealing,[14] and the avoidance of unfairness.[15]

This approach focuses on the reality that the parties to these disputes are less interested in theory than they are in outcome, that they have less of an investment in systematic rules than they have in the vindication of expectations that arise in all commercial transactions. When a principle is implicated, it suggests the appropriate outcome. The job of the judicial or arbitral decision maker then is to vindicate that interest in the outcome and the path to that result may differ in different situations.

A Restatement of General Principles is needed alongside international conventions, national codes, and private trade rules precisely because the multiplicity of approaches is unlikely to go away. Moreover, formal and positivistic codes and conventions do not offer the same hope of harmony when the tension to be resolved is between differing traditions and cultures. In this setting it is rarely possible to gain quick and wholehearted agreement on formally stated values.

III. The UNIDROIT Principles and Legal Acculturation:
       Implications for Education and Ongoing Law Reform

Professor Gordon's study describes an important problem. The study suggests that twenty years after it was signed and promulgated by an international diplomatic conference sponsored by the United Nations, and a ten years after it was acceded to by the United States and became part of the supreme law of the land, the UNCISG is largely unknown to crucial legal audiences in Florida. Many respondents were not only unaware of the content of UNCISG, they were rather hostile to the notion that there should be any such International Convention to displace local law. To the extent that Professor Gordon's findings typify the situation in Florida and other states, they strongly suggest a limitation on enforcement of the law. If people don't know that the law exists it is predictable they will not know that it applies to their transactions and that they must take positive action to derogate from it to avoid its application. To the extent that the substance of the law is unknown and is application is deemed inconceivable by judges, it is safe to predict that law will not be applied and enforced. It is said that "ignorance of the law is no excuse," but such ignorance certainly does reduce the likelihood of law observance.[16] [page 356]

The multiple approach to harmonization increases the difficulty of enforcing the law. If lawyers and judges, not to mention clients are unaware of the UNCISG, which has the official approval of the United Nations and the United States Senate, how muck less likely are these audiences to be aware of the half dozen other forms of law that have been described in this report, and how unlikely are they to be able to compare their subtle differences. The multiple approach may have advantages (I think it does) and it may be inevitable in a polycentric world (it probably is), but then the focus of comparative law should be to consider how to clarify and simplify the law so it can be understood in a united but diverse world.

The tendency toward private rule making and public law making by private experts outside of familiar legislative channels presents additional risks. All law need not be positive and embodied in formal commands of the state, but a concern for democratic responsibility demands sensitivity to law that is made in private, by persons who are not answerable through a governmental hierarchy or popular election. The simple fact is there is not much popular participation or even knowledge of technical law making. Nor are modern legislatures in a position to debate and frame a commercial code. Throughout the world such tasks are delegated to experts, either within ministries of government or in international bodies like UNCITRAL or UNIDROIT, or to private bodies like the American Law Institute, The National Conference of Commissioners on Uniform State Laws, or the International Chamber of Commerce. The legislature may ratify the laws adopted by such specialized groups, but only mischief would result from too much tinkering in a political forum. American lawyers are likely to be particularly troubled by these features of the international law harmonization process because they are reminiscent of the recent troubles with private law making presented by recent episodes in the American Law Institute and in the revision process of the Uniform Commercial Code. For generations the Institute has enjoyed a deserved reputation for disinterested public service. All humans are creatures of their background and experience, but the work of the Institute has been grounded on a tradition of selfless public service. Yet not everyone interested in these high-minded projects is so disinterested. Special interest groups exist and in recent years they have hired lawyers and scholars to promote their view. It is certainly their right for these groups to make their voices heard, but such activities raise the possibility that some of the most earnest participants in the process are not speaking from the passion for justice and truth but because they are being paid to espouse a view that serves the narrow interests of a client. In more than one [page 357] instance distinguished observers have expressed the fear that the private law making process had been captured by those most likely to be subject to its regulation.

When a community is small and homogeneous, its leaders are likely to be relatively few and readily identifiable. Group cohesion is likely to be high and identity of individuals with the group will be strong. In such a setting, the leaders can be relied upon to leave their private interests at the legislative door, to suppress the promotion of special interest in the name of broader community interests. What we are experiencing now is a vast expansion and diffusion of the commercial and legal community that does business globally. Interests are more diverse, ill-defined, and more often deals are between strangers with differing values and assumptions. In such a setting, it is harder to put aside particular interests for a greater good that is increasingly ill-defined. Apparent agreements may involve linguistic sleight of hand rather and shared values. To the extent that private law making is becoming the common method of international law, these concerns will need to be addressed. An important first question is whether those involved in the private group drafting the law fairly represent the range of constituents within the larger community with an interest in the subject matter.

Private law making poses another distinct problem that is more closely related to Professor Gordon's concerns. The process and the product must be open and visible to all. If private rules will frame public law, there must be the widest dissemination of the content and background of those private rules. One consequence of private law making is that unlike governmental documents, they may create a colorable claim for copyright of the law. The notion of asserting copyright to the products of the private rule making is antithetical to the requirements of broad public education. Yet both the American Law Institute and the International Chamber of Commerce assert copyright over the publication of their rules and demand substantial royalties from authors and teachers who seek to include the Restatements or Uniform Customs and Practices in teaching materials. I note that even the official UNIDROIT edition of the Principles bears a copyright notice, although I am not aware that the Institute has interfered with the free use of the text for educational purposes.

In essence what we are confronting are consequences of the ways both the law and the times are changing. This is the story of an expanding commercial community in an expanding global market. It is always difficult to make law in rapidly changing times. During such change values are uncertain and not shared by the whole community. The tendency is to be conservative in making legal rules in such a setting. While we wait for values to be clarified, the law is stated as a default rule, that leaves the parties to transactions free to change it [page 359] by agreement. Repeat players and experts are in a good position to chose the rules most suited to their special needs in such a situation, but if the community affected by the rules is large, an by definition if it is global, the opportunity to chose rules will be lopsided and operate to the disadvantage of many with a claim to the law's protection. A partial response that can be seen in UNCISG is to tendency to carve out a special class of contract or issues for special treatment not subject to the free derogation of legal rules. This can be seen in the treatment of consumers and the reservation of "unconscionability" and "mandatory rules" for national treatment.

Professor Gordon's Report is a challenge to every legal educator to discover ways to make our students aware of an increasingly voluminous and complex body of rules to govern an important area of economic activity. The Report also presents a challenge to those officials and private leaders who are engaged in harmonizing world commercial law. Dissemination of information regarding the project is not an incidental aspect of the work to be safely left to staff. It is of the essence.

Finally, if the difficulties in the path of dissemination are substantial then certain structural features of the legal rules become unacceptable. If, as Professor Gordon's study suggests, a decade after its adoption, the UNCISG is largely unknown, then it is also unacceptable that the UNCISG makes so much turn on whether the parties to an international sales transaction take specific steps to avoid the application of the Convention's rules. I am told that many, if not most, sophisticated American lawyers now routinely advise their clients to opt out of UNCISG. There are simply too many pitfalls, booby traps and murky abysses, too many unpredictable lacunae not yet definitively settled by universally recognized judicial interpretation. As was predicted more than ten years ago, it is the unsophisticated business person, unfamiliar with the provision of UNCISG and unaware that it applies to their transactions, that is most likely to be hurt by the problems with the UNCISG.[17]

Fortunately, the UNIDROIT Principles because of its soft law qualities does not present similar dangers. Underlying the UNIDROIT Principles is a faith that normative statements can gain legitimate authority grounded on their persuasive coherence, without [page 359] the formal force of positive state law or supranational conventions. Since parties to commercial contract will continue to have the choice of derogating from the rules and electing other rules to govern their transaction, the significance of the Principles will depend on their capacity to persuade consumers of the law to chose them because they are seem correct and because they help the parties reach useful results. To gain that capacity to persuade consumers we are going to have to learn how to do a much better job of informing those who will use the law of its content and processes. [page 360]


FOOTNOTES

a1. Arthur I. Rosett is Professor of Law, University of California, Los Angeles.

1. Sometimes referred to in this report either as "the UNIDROIT Principles" or simply as "the Principles."

2. The United Nations Convention on Contracts for the International Sale of Goods is sometimes referred to as "the UNCISG" or "the Vienna Convention."

3. UNIDROIT, Principles of International Commercial Contracts vii (1994).

4. The European Convention on the Law Applicable to Contractual Obligations (1980)(The "Rome Convention").

5. Organization of American States, Inter-American Convention on The Law Applicable to International Contracts approved March 17, 1994 at the Fifty Inter-American Specialized Conference on Private International Law (The "Mexico City Convention").

6. The Draft I am referring to is American Law Institute, Uniform Commercial Code Revised Article 2. Sales (Council Draft No. 2. November 1, 1996). It should be noted that the comments and notes do not take final form under the practice of the American Law Institute until there is agreement on the text and the Reporter has had an opportunity to exercise his or her discretion to revise the notes. That process is likely to go on for several years more.

7. International Chamber of Commerce, ICC Uniform Customs and Practice for Documentary Credits (ICC Publication No. 500, 1993).

8. The Revised Article Five was promulgated by the Commissioners on Uniform State Laws in 1995 and has been promptly adopted by the legislatures of a number of states. It became the law in California, for example, on January 1, 1996.

9. In their survey of the jurisprudence worldwide under the UNCISG, the Professors Del Duca calculate that 42 of the 142 UNCISG reported as of early 1996 deal with the determination of the rate of interest applicable to late payment by the buyer or to the refund of a purchase price due to the seller. Del Duca & Del Duca, "Practice under the Convention on International Sale of Goods (CISG): A Primer for Attorneys and International Traders (Part II)," 29 Uniform Commercial Code Law J. 99, 105 (1996). This issue involves a gap in UNCISG Article 78, on which its drafters were unable to agree, which appears to be very adequately clarified by the UNIDROIT Principles, Article 7.4.9. The history of UNCISG Article 78 is traced by Professor Barry Nicholas in Bianca & Bonell, Commentary on the International Sales Law 568-71 (1987).

10. M. J. Bonell, An International Restatement of Contract Law: The UNIDROIT Principles of International Commercial Contracts (1994) (referred to hereinafter as Bonell).

11. Bonell, Chapter 4. UNIDROIT Principles, Art. 1.1; 1.5. This principle includes both the right of parties to freely enter contracts and the right to exclude the application of most legal rules and chose the rules that will govern their relationship.

12. Principles, Art. 1.8, 4.3, 5.2, 5.6, 5.7

13. The Principle that contract interpretation should seek to preserve and favor the validity of the contract whenever possible. Art. 2.1 2.12, 2.14, 2.22 3.2, 7.1.4.

14. Art 1.7, 2.15, 3.5, 3.10, 4.8, 5.8

15. Art. 2.20, 2.21, 3.8, 3.9, 3.10, 4.6, 7.1.6

16. Ignorance of the law may not be an excuse, yet it may not be malpractice creating liability for damages for a lawyer not to know the law, or at least so the Supreme Court of California opined in a case involving the technical Rule Against Perpetuities. Lucas v. Hamm, 56 Cal.2d 583 (1961).

17. For the sophisticated international trader the Convention holds few perils. Article 6 permits sophisticated parties to draft their way out of any undesirable provisions or to choose not to be governed by the Convention at all. It is the small, unsophisticated dealer who is most likely to assume that the same rules apply to all sales, whether foreign or domestic, and who is least likely to have a lawyer to advise the exclusion of the Convention by contract. Individuals of this kind are most likely to find themselves burdened with unknown or unknowable rules. Rosett, "Critical Reflections on the United Nations Convention on Contracts for the International Sale of Goods," 45 Ohio S. L.J. 265, 303 (1984).


Pace Law School Institute of International Commercial Law - Last updated September 13, 2005
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