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Reproduced with permission from 18 Israel Law Review (1983) 309-326

Recent Developments in International Sales Law [*]

Peter Schlechtriem [**]

The title of my address promises more than I can keep. As a precaution, I should at least add a question mark to this title, because I want to discuss whether there are any noteworthy recent developments in international sales law at all, and whether or not they are desirable. By "international sales law", I understand Uniform Sales Law which is international for three reasons: first, because it applies to international sales; second, because it is in force in several countries; and finally, because it has been worked out "internationally", i.e., by lawyers from diverse legal backgrounds. What I am talking about, therefore, is Uniform Sales Law within the meaning of the Hague Uniform Laws on International Sales -- which are in operation also in Israel -- as well as the Sales Convention which was passed at a diplomatic conference in Vienna in 1980. As to developments I would like to give a short overview of the reception the Hague Uniform Sales Law has received in Germany.

I. Introduction

Before treating the topic "Uniform Sales Law" as described above, it is only fair to show where one stands. I am quite willing to admit that I am an advocate of international legal unification in the field of international commerce. This is so partly because -- as Jan Hellner [1] correctly pointed out -- as an "insider" I am biased in favour of such unification, and because I already took the usefulness of uniform conventions for granted quite some time ago. But in my defense, I may perhaps give some reasons that might -- next to a co-author's emotional responsibility for "his" law -- explain my positive bias a little better.

1. Historic experience seems to me to speak in favour of the development of a unified substantive law for international trade: Please allow me, therefore, to make a date from German history the starting point of this argument: 150 years ago, on January 1st, 1834, the so-called Deutscher Zollverein (German Customs Union) became effective, i.e., an agreement by the German states on the abolition of all internal customs duties. In the wake of this freedom from customs duties, there was a steep rise in trade; as a consequence, legal cases involving two or more municipal laws greatly increased in number. This in turn made the science of Private International Law flourish, and it is not accidentally that Friedrich Carl von Savigny's great opus on private international law, System of Modern Roman Law (vol. 8) was published in the year 1848.

But in those days, like today, private international law was not a genuine international and uniform system of distributing conflicts to the various possible domestic laws, but its results essentially depended upon where the case was brought to court. Therefore, the call for legal unification was already voiced at an early stage, and it found its first fulfillment in the German Bills of Exchange Act of 1848. In 1861, the General German Commercial Code followed; the German Civil Code which came into forge in 1900, also owes its birth not only to the emotional need to complete the national unity reached in 1871 with a uniform civil code, but also and preponderantly to the urgent economic demands for a uniform basis for all legal contacts and dealings.

It is not hard to find further proof of the need for legal unification with respect to the trade in goods, and for uniform sales laws created to meet these needs: The American UCC also came into being in the 1950s because commerce is severely hampered if a coherent economy is governed by diverse legal rules and conflict of law is one of the basic tools of a lawyer. And legal unification or, in any event, legal assimilation is not only a matter of federally organized countries with divergent private law systems in the several states like the United States or Canada, but it may also be useful for perfectly independent nation-states, as is shown by the Scandinavian Sales Laws.[2]

For these reasons, it is only logical that efforts to unify or at least assimilate the substantive law governing trade soon reached out beyond the borders of nation-states and geographically defined markets, and that the ambitious objective to unify the law on an international level developed. Again, the law of negotiable instruments served as vanguard; after two fruitless attempts in 1910 and 1912,[3] the Geneva Convention on the Law of Bills of Exchange was passed in 1930. At about the same time, in 1929, the foundation for a unification of the law of sales was laid: as is well known, Ernst Rabel in that year suggested the idea of a unification of sales law to Vittorio Scialoja, president of the International Institute for the Unification of Private Law in Rome (Unidroit) which had been created under the auspices of the League of Nations. In 1930, the council of directors of that institute appointed a committee composed of representatives of the four most important legal systems, namely the Anglo-American, Romanic, Scandinavian and German legal systems. Ernst Rabel was charged with delivery of a paper which he wrote after extensive comparative research and which was made accessible to the public in the form of his famous Das Recht des Warenkaufs in two volumes. To this very day, this work has formed the foundation for all unification in the law of sales which, after many attempts and conferences, finally gave birth to the Hague Sales Laws ULIS and ULFIS in 1964. For the Federal Republic, they came into force in 1974, and the experiences we have been able to make with this uniform law are an additional reason for me to judge the unification of sales law favourably.

Of course, the reasons which I thought I could cite for the necessity of legal unification or at least assimilation in the area of international trade in goods do not necessarily have to generate agreements like the Hague or the Vienna Conventions. The idea to obviate the insecurities in international trade by unifying the law of conflicts is still alive. At this point, I may perhaps remind you that, during the preliminary works for ULIS, two almost ideologically opposed camps fought each other over the issue whether the uniform sales law should apply on the basis of autonomous requirements of application, or only after previous application of the rules of conflict laws -- a debate that was finally decided in favour of autonomous applicability rules.

Unifying the law of conflicts may certainly be the best or even the only solution where a unification of substantive law is not feasible, as with family law or the law of succession. The law of obligations in general and the law of sales in particular, however, are worth an attempt at substantive unification. Only if the unified substantive law, as applied by national tribunals, proved to drift apart, and if the coveted homogenity were never completely reached or were again lost, one should again turn to the second-best solution, the unification of the law of conflicts for international sales.[4]

2. It is quite another question whether the unification of substantive law is in good hands when entrusted to those institutions and persons which prepare and pass international conventions. In his comparison between the Scandinavian SGA and the Vienna Sales Law, Ole Lando is certainly right in pointing out that one of the reasons for the Scandinavian SGA's positive reception was that practitioners and business experts had exercised a decisive influence on its drafting.[5]

It will also have to be demonstrated that the sophisticated nicety of concepts is not always of benefit to an international sales law that has to be understood and put into operation by practitioners with the most diverse cultural and legal backgrounds. Clive Schmitthoff's idea to leave the development of the modern mercantile law up to the merchants and their organizations, like the Comité Maritime International, the International Chamber of Commerce and the United Nations Economic Commission for Europe, seems therefore to be tempting.[6]

On the other hand, I still remember the objection that was raised against Clive Schmitthoff at the 1983 Conference of the German Society for Comparative Law in Bonn: Please give us an example of an undisputed rule of lex mercatoria in force! In fact, the law that developed or is discernibly from internationally commercial clauses, commercial usages and practices seems to have some authority for certain selected branches of international commerce at best; even here, its scope of applicability is not only very small and limited to the participants in the particular trade, but it also and very rapidly becomes unclear and ill-defined in borderline cases, which is why it probably had better shy away from any tests of its' application by national tribunals and arbitration courts. Moreover, the sales law conventions leave a wide open space for the so-called "autonomous law of international commerce": like art. 9 ULIS and art. 2 ULFIS, art. 9 of the Vienna Convention also concedes priority to commercial usages and the practices which the parties have established between themselves, even though the Vienna Sales Law is a little more fainthearted and narrower in its respective formulation. Therefore, the lex mercatoria developed by commerce itself and the uniform law laid down in international conventions are not really alternatives between which one would have to choose, but they can apply simultaneously, each complementing the other.

II. The Hague Sales Laws and their Application in Germany

I remarked above that, according to my impression, the Hague Sales Laws and thus the idea of international unification of the law of sales have gained acceptance and proved a success in Germany. This observation was not only to explain my positive bias in favour of sales law unification, but it also gives me the opportunity to report some of the cases that German courts had to decide under ULIS and ULFIS; at the same time, I would like to learn to what extent this law has found acceptance in the practical operation of the courts in Israel and in the view of legal science.

1. At first, however, scepticism about ULIS and ULFIS was strong. It was expected that the parties would always opt out, i.e. agree that the Uniform Law should not govern their transaction. Even in 1980 a widely used German Handbook of International Contract Drafting [7] recommended that the parties should expressly exclude ULIS.

In addition it was predicted that the courts, unfamiliar with this new body of law, would try to interpret the respective agreements quite liberally in order to find an intention of the parties to opt out. Indeed, some courts did interpret, for instance, a reference to standard contract terms as implying that the parties agreed on the application of the domestic law of the party introducing the standard terms. The underlying theory was that, since the standard terms were aimed at modifying a domestic law, they thereby implied its application. But these decisions were exceptions. More often, the courts did apply the new rules, and we now have a string of decisions -- including decisions by the highest court (Bundesgerichtshof) -- dealing with the Hague Sales Law. There are decisions about the meaning of "place of business" in art. 1 ULIS, if there are several places of business of the parties -- in and outside of Contracting States;[8] about the definition of "promptly" under art. 11, 39 I ULIS;[9] about "foreseeable losses" under arts. 82, 86 ULIS,[10] about the place of performance for redelivery and restitution of the purchase money after avoidance of the contract,[11] the requirements for the notice of non-conformity of the goods,[12] the suspension of performance because of a deterioration in the other parties' ability to perform,[13] about the one year period of art. 49 [ULIS] to give notice of defects and the meaning of "exercising his right",[14] the applicable law in case of letters of confirmation,[15] to give just a few examples. It has also to be mentioned that the "relative friendliness towards Uniform Law" also showed in the liberal construction of the requirement "carriage from the territory of one State to the territory of another" in art. 1 para. I(a) ULIS.[17]

These decisions confirmed the hopes of those who had been in favour of such a uniform law, namely that it would really be applied and not become a dead letter in law books, being used mainly as a quarry for doctoral theses. They also revealed some of the problems inherent in uniform law -- issues not decided clearly enough to avoid doubt and speculation, unforeseen consequences and gaps. But the decisions also proved that in general, the courts had no difficulties in applying concepts which were not used in German law and with which the judges, therefore, were, unfamiliar.

I would like to add a personal experience. In April 1981, I attended a conference of commercial court judges on the subject of the Uniform Sales Law. During the discussions with participants who had already applied ULIS, I learned that almost all of them were in favour of this Act -- they felt it was a great relief that the uncertainties of conflict-of-law rules could be avoided by application of ULIS; they also considered its substantive provisions, especially those regulating the obligations of the seller and the respective remedies of the buyer, to be much better suited for transnational sales contracts than the rules of our own domestic sales law.

2. Perhaps even more significant than the positive reception the Hague Sales Laws found in legal practice is the response they had in legal science, above all their repercussions upon the further development of German substantive sales law. The preliminary works on sales law unification by Ernst Rabel's Berlin institute had already had a strong influence on the scientific discussions around German civil law: insights into the nature of the seller's liability that had been won in the process of preparing Das Recht des Warenkaufs and which were disseminated by Ernst Rabel's disciples, helped to overcome certain historically founded shortcomings of the statutory regulation.[18] Ever since the Hague Sales Laws came into force, not only a host of specialized articles and monographs but also more comprehensive commentaries have been published and the big treatises on the German law of obligations discuss the uniform sales law and compare it to the domestic substantive law.[19] Even more striking is the interest lawmakers take in the uniform sales law as a model for a fundamental reform of the present law of obligations. The structural concept of the uniform sales law had already been reflected in the federal government's 1976 bill on a Travel Contracts Act.[20] This bill, which had provided for the travel agent's liability in case of malperformance in a way decisively different from the traditional structure of the Civil Code, and which was expressly modeled on the Hague Sales Law, has, it is true, been thoroughly modified and adapted to the Civil Code's general concepts of malperformance when the Bundesrat (the second chamber of Parliament) turned out to be critical of the first draft. But the idea of taking the Hague Sales Law provisions on breach of contract as a model for a reform of our Civil Code is still alive, nonetheless. Above all, the proposal on the reform of the German law of obligations that was presented by Ulrich Huber on behalf of the Federal Ministry of Justice, is closely modeled on the Hague Uniform Law.[21] It is also safe to assume the Ministry of Justice's Commission on the Reform of the Law of Obligations that began its' work a few weeks ago, will take the uniform laws as a reference in its deliberations.

The reason I mentioned these details of the Hague Uniform Laws' influence upon the domestic German legal developments was that they seem to evidence yet another function of international sales law unification -- a function that Jan Hellner has described as the function of a lingua franca.[22] The introduction of the Uniform Sales Laws means that lawyers in those countries that have put these uniform laws into force, are forced to venture on a new conceptual language and new dogmatic structures. This not only makes it easier to communicate with lawyers from different legal systems, but it also furthers -- and at times forces -- the receptiveness of other possible solutions and arguments. Thus the necessity to understand and apply the uniform law might achieve what was sometimes denied legal comparison and its representatives in Germany: for example, to enable a better understanding of the rule limiting damages to the foreseeable damage as a yardstick for risk distribution, or to make more plausible the liability and its limits where, in the case of malperformance, the debtor shall be exonerated.

3. Of course, the value which the uniform sales law has as a model for codifications and their reforms, and above all its usefulness where it has to be applied directly, largely depend on how it stands the test of practice. This is where every argument pro or contra sales law unification on an international level has to begin: If the uniform sales law by its clarity and freedom from contradictions reduces friction, if it prevents quarrels and conflicts, it should be welcomed. If, however, it cannot live up to this self-imposed task in a satisfactory way, the sceptics are right in the end. Let me show you some sore points that have been uncovered by the courts and in the discussions on the Hague Uniform Sales Laws:

a) As mentioned already, the courts have during the first few years repeatedly been concerned with cases where the contractual exclusion of the uniform sales law was at issue. The parties' contract terms had either expressly referred to "German law", or they had provided for modifications that were clearly modeled on the German Civil Code, e.g. a retention of title clause. From such provisions, the courts at times deduced a tacit exclusion of the Hague Sales Law. Meanwhile, however, the view has gained ground that a reference to German law does not necessarily mean an exclusion of ULIS, and that modifications modeled on the Civil Code do not at the same time express an intention of the parties to opt out of ULIS.[23]

b) One headache in transnational dealings is caused by the so-called lois d'application immédiate which not only disturb the jurisdiction selecting operation of conflicts rules, but which may also play a disastrous role with respect to unified substantive law. They can even penetrate the uniform sales law via art. 8 ULIS. Art. 5 sub. 2 has exempted cogent domestic rules on instalment sales from the operation of the uniform law, but in the meantime, the number of cogent consumer-protection provisions has substantially increased. Difficulties are not so much raised by those cogent rules that prohibit certain transactions and declare transactions violating this ban to be void, because such situations are clearly subject to art. 8. They are, however, presented by rules that do not declare a contract void because of certain provisions, but that cogently prescribe a certain content.

III. The U.N. Sales Law

1. Unfortunately, the Hague Sales Law has not met with the expected -- and well deserved -- international reception. The reason for this is probably not to be found in the partially negative criticism from legal scientists [24] but it basically lies in the complications of world politics. The Socialist countries as well as the countries of the Third World (with the exception of Gambia) kept themselves at a distance, both arguing that the Hague Sales Law was essentially a law of the western industrialized nations, building on their traditions and tailored to their needs. Especially the view which is widespread in developing countries, that the Hague Sales Law favoured the sellers of industrial products, created an unfavourable climate for a broader acceptance of this law, and it caused even European countries, out of regard for the developing countries, to refuse to adopt ULIS even though they contributed considerably to its drafting, i.e. France and the Scandinavian countries. Nevertheless, the endeavours for a worldwide unification of sales law were not yet stranded. In 1966, the general assembly of the United Nations, at the initiative of Hungary, passed Resolution No. 2205 providing for the establishment of the U.N. Commission on International Trade Law (UNCITRAL) which in turn charged a working group with the drafting of a new convention. This renewed attempt at unifying sales law was not begun on a tabula rasa; the Hague Sales Law was taken as the basis for the work which aimed at creating a sales law that should be acceptable to as many countries as possible.[25] In 1976, a first draft (the Geneva draft) was presented; in 1977, UNCITRAL passed it on its 10th session in Vienna with some modifications (Vienna draft).[26] A draft convention on the formation of sales contracts was passed and integrated into the substantive sales convention on UNCITRAL's 11th session in New York in 1978 (New York draft). The Secretary General then passed this draft on to the governments of the member states for comments before it formed the basis of the Vienna conference's discussions This conference took place in March/April 1980 with 62 countries participating.[27]

Since then, the convention has been signed by about 20 countries and ratified by 6 countries. According to the information at my disposal, one may fairly assume that the amount of ten ratifications, requisite for the convention to become effective, will be reached by the end of 1984. Of course, it is an open question whether this will guarantee the convention a wider acceptance than the Hague Sales Law enjoyed. As in the case of the Hague law, the political situation will probably be more crucial than the convention's quality. As yet, the Federal Republic has hesitated to start the ratification process. As far as I know, two reasons are responsible for this lack of enthusiasm: The Federal Republic had been among the first countries to ratify the Hague Sales Law; this time, our government apparently wants to avoid hurrying on ahead and then being left alone. It is waiting, therefore, for the common market countries to take joint action, or at least for the most important trading partners to adopt the U.N. Sales Law. Another reason may be found in the fact that ratification of the U.N. Convention would imply an obligation to denounce the Hague Sales Law agreements; thus, the unification which was partly achieved in the trade with Italy, the Benelux countries, Israel and also England would have to be abandoned. Germany is willing to do this only when and if these countries adopt the convention for their part, which may be doubtful, at least in the case of Great Britain.

2. For the scientific world, the issue of the quality of the U.N. Sales Law as compared to the Hague Sales Law and domestic laws, is at the centre of all discussions. Let me present and compare, therefore, some of the characteristics of the two uniform laws.

As compared to the Hague Sales Law, the Vienna convention has substantially simplified the prerequisites for its application. It only requires the parties to have their places of business in different states. Thus, the place where the contract has been made and performed no longer matters, as was the case under the Hague law. On the other hand, the emphasis put on the places of business in "Contracting States" has obviated the reproach made to ULIS, that it extended its purview in an unreasonable way.[28]

However, the Vienna Sales Law provides for its application not only where the parties have their places of business in different Contracting States -- to which it must be added that in the case where a party has several places of business, art. 10 has the place of business with the closest relationship to the contract prevail, thus obviating a problem of the Hague Sales Law with which the Federal Supreme Court has already been concerned.[29] Rather, the convention also applies when the rules of private international law lead to the application of the law of a Contracting State. This extension of the scope of applicability via conflicts rules was unusually controversial in the Vienna conference; at the last minute, a reservation was agreed upon that allows the ratifying states not to enact this provision when putting the U.N. Sales Law into operation.

The issue of the influence accorded to cogent domestic rules -- which had already been regarded as problematic in the Hague Sales Law -- has also been taken care of in the U.N. Sales Law without, however, having been definitely settled: on the one hand, art. 2 lit.a in principle excepts consumer purchases from the scope of the convention so that consumer-protection legislation in particular cannot collide with the U.N. Sales Law; on the other hand, this attempt at delimitation, too, raises new problems since domestic legislation on consumer protection does not necessarily use the same criteria for consumer purchases as art. 2 lit.a of the U.N. law, namely goods bought for personal, family or household use. Where, for instance, national legislation particularly protects small-scale businesses by setting up cogent rules like a right of cancellation or certain formal requirements for contracts, it remains unclear whether these national regulations have to step back where the U.N. Sales Law applies.

Another problem which had not been completely solved by the Hague Sales Law either lies in the borderline between unified sales law and the domestic law of torts. This problem may gain relevance where domestic tort rules protect purely economic interests, such as where there is a tort of misrepresentation which can, under certain circumstances, settle a loss resulting from defects in the goods. It is even more relevant for the question whether and to what extent the rules on products liability are comprised by or excluded from the scope of the law of sales.

Thus, there is a clear overlap with the liability rules of the uniform sales law. In art. 5, the U.N. law tries a delimitation by excluding damage claims for death or personal injury caused by the goods from the convention's purview. It is still doubtful, however, what to do with property damage caused by defects of the goods; thus, whether -- as in the old example from the digests (D.19.1.13 pr.) -- the buyer of sick cattle can recover for the loss of his healthy herd only according to the uniform sales law, or whether he can have recourse to the domestic law of torts in a case where he has failed, for example, to give timely notice.

3. It is considered an important advantage of the uniform sales law that it consolidates the remedies of the parties. Although ULIS started out from the basic concept of breach of contract, it regulated the buyer's remedies in connection with the various obligations of the seller and their possible breach not always being particularly clear about them.[30] In contrast to that, the U.N. convention has grouped the obligations of the seller and the buyer in two sections and all the remedies in two other sections.[31]

As an example for the convention's shortcomings which can be attributed to the desire to simplify and shorten, Hellner has cited the "symmetrical" regulation of the seller's remedies in case of the buyer's breach, and he has analyzed in detail the seller's situation in those cases where the buyer does not pay or accept the goods.[32]

According to this analysis, it is disquieting that the seller can always insist on full payment of the purchase price whereas he would have to have his own behaviour considered if he claimed damages: he can recover the full price even if he would have been able to resell the goods rejected by the buyer without difficulties and without great loss, or if he could have stopped construction of the machinery ordered by the buyer in time and thus avoided bigger losses.[33]

It is unclear whether the seller is prevented from requiring payment during an additional period of time that he has fixed for performance by the buyer.[34] Equally, there is no certainty as to the threshold of avoidance of the contract because of non-payment of the purchase price, in other words, the effect of non-payment as a "fundamental breach of contract".[35] It would be easy to extend the list of Hellner's points of criticism. I think, however, that when interpreting a new law, one can always find or invent situations in which the application of this law at first seems to be difficult and which case law and legal science will have to smooth out. I also believe that all of Hellner's critical questions can be answered.

The lacking "duty to mitigate the damage" of the seller who insists on payment of the price, can be construed as a duty of loyalty whose breach gives the buyer a damage claim; this claim can be deducted from the purchase price to the same amount as a damage claim of the seller would be reduced by an account of his contributory negligence. The demand for payment of the purchase price during an additional period of time fixed for performance by the buyer surely seems to be possible; art. 63(2) is only meant to prevent the seller from avoiding the contract during that additional period. In case of non-payment or delay in payment, there may be "fundamental breach" if the parties had agreed upon a fixed date of payment, particularly if the buyer was bound to pay by redeeming a debt which the seller had with a third party, for instance a bank, on a fixed and agreed-upon day.

4. This desire for simplification and increased comprehensibility which was so important to the drafters of the U.N. convention, also prompted them to abandon the concept of "delivery" in which ULIS had encoded several issues. As is well known, the concept of delivery had been developed by Ernst Rabel in order to have one central category for the completion of performance as well as for the passing of risk. The drafters of the Convention gave up this highly pointed key notion which had always been difficult to handle; instead, they kept the issues of performance and passing of risk totally apart and used simple descriptive words instead of a legal concept which was in need of definition itself. As far as I can see, this change as against ULIS has not been criticized by anybody, and it probably has to be considered as progress.

5. Another example of a "simplification" in the U.N. sales law is its abandonment of "ipso facto avoidance". As you know, ULIS had ipso facto avoidance ensue in a number of situations in order to prevent states of suspense and thus to keep a party affected by a breach of contract from speculating at the expense of the party in breach.[36] In contrast to that, the U.N. convention requires the affected party to make a declaration to that effect in all cases where a breach of contract justifies avoidance of the contract. Contrary to Jan Hellner's critical comments also on this point,[37] here are good reasons for this abandonment of "ipso facto avoidance". On the one hand, it may be uncertain whether the requirements for ipso facto avoidance were satisfied; a dispute on this may create a burdening insecurity for the parties on what to do next. On the other hand, the argument that the party loyal to the contract might speculate at the expense of a party in breach, must be refused with reference to the duty to mitigate damages: the party that unreasonably delays effecting a covering sale or purchase and therefore gets a lower price than would otherwise be possible, may have to take responsibility for this delay.[38]

6. The criticism of various solutions of the U.N. Sales Law frequently employs a comparison with one or several domestic sales laws in order to show the disadvantages of the uniform law. This is certainly legitimate, but in the face of criticism thus substantiated, it is necessary to point out the conditions under which a uniform sales law comes into being: its drafters hardly ever invent new solutions that have never been tried out before, but they avail themselves of those solutions that they find in their respective national laws and, insofar as they are trained in legal comparison, in other legal systems they have access to. But each individual drafter is usually an expert only in his own legal system, and he is therefore likely to prefer and find better the solutions offered by his own system. The committees, working groups, etc. have to choose among the different solutions offered or, more often, find a compromise. What's more, some delegates may see themselves as the representatives of certain interests -- a situation that probably came up more frequently in the drafting process of the U.N. convention than in the preliminary works for ULIS. After all, the idea to replace ULIS with a new U.N. Sales Law had from the beginning been motivated by the intention to make good certain disadvantages felt or claimed by some countries, thus to have more regard to their interests. In the Vienna conference, it was, e.g. the block of the so-called Group of the 77, i.e. the developing countries from Africa, Asia and Latin America, that sometimes supported a joint policy of interests which complicated or hindered solutions that were considered adequate by other delegates from East and West.

For the solution of such conflicts of interest -- which, to be sure, come up and must also be bridged when creating national laws -- a convention offers several alternative ways:

a) Forcing the acceptance of the solution favoured by the majority is out of the question because this would put the convention's acceptability in jeopardy; it should be mentioned that countries outvoted in Vienna more than once threatened to leave the conference if their interests were not adequately taken into consideration by way of compromise.

b) At times, one can overcome a situation like this only by not solving issues at all, or by adopting contradictory provisions that conform with the intentions of the various interest groups. Of course, a uniform law is of necessity devaluated by such measures. The U.N. Sales Law unfortunately contains examples for this reaction: it was not possible, for instance, to find a solution for the issue whether a sales contract can be validly formed even without agreeing on a determined or at least determinable price. As you know, art. 57 ULIS upholds a contract even if it leaves the purchase price open; in such a case, the price generally charged by the seller at the time of the conclusion of the contract prevails. In the Vienna conference, the Soviet Union and some Third World countries wrongly opposed such a solution which only favours the seller; as a consequence, it came to the strange contradiction between art. 14 that requires an offer to fix or make provision for determining the price, and art. 55 that, in the absence of any price determination, refers to the price generally charged at the time of the conclusion of the contract for such goods. Another example: There were also irreconcilable, ideologically as well as economically motivated convictions on the issue of the payment of interest for outstanding debts, in particular the purchase price: some Islamic countries, for instance, rejected an obligation to pay interest for religious reasons. Others thought a provision dealing with interest payments was unnecessary because one could always claim any lost capital gains as damages. Also disputed was the relevant market for the rate of interest: The essence of the matter was that the Socialist countries as creditors did not want to content themselves, as far as their receivables were concerned, with their own internal -- low -- rates of interest; they wanted to benefit from the interest rates charged in the countries of their Western debtors whereas the Western countries, for their part, thought the interest rates in the respective creditor countries should prevail. Art. 78 finally contained a bad compromise: it states that there is an obligation to pay interest, but the details of this obligation are left up to the domestic law called upon by the rules of private international law. This is especially true for the chargeable amount of interest, but it will also apply to the case where the domestic law called upon by conflicts rules prohibits the taking of interest altogether.

c) Another possible way to exclude irreconcilable antagonisms consists in adopting reservation clauses that expressly leave certain substantive issues up to domestic law. In this respect, the U.N. Sales Law deserves praise since it contains but a few reservation clauses, e.g. in regard to form requirements.

d) The most dangerous way to bridge antagonisms is a third possibility which unfortunately had been used extensively at the Vienna conference and during the preliminary work: instead of choosing between hard and fast rules, one can adopt general clauses or exceptions to the main rule that are couched in vague and flexible terms. Examples of such evasive solutions are to be found also in the Hague Sales Law, for example in its provision regarding the revocability of the offer: since its drafters were unable to decide between the various common law systems, on the one hand, and some continental legal systems, on the other, they made a compromise: an offer can be revoked so long as the revocation does not violate the principles of good faith or the standards of fair dealing among merchants. The same problem came up in UNCITRAL, and it was again solved by way of compromise.[39]

Of course, the use of such "undefined concepts" as "reasonable", "unreasonable", "fair" etc., in a law can be justified where it is necessary to leave the courts enough scope for the appraisal of specific problems. And the divergent appraisals of such problems by the courts can be tolerated as long as they refer only to the consideration of facts, and as all too blatant divergencies can be corrected by a common court of appeals. In an international uniform law, however, the danger cannot be denied that such undefined concepts might turn into a gate of entry for national legal concepts and for a drifting apart of the unified law so that all that is left in the end is a purely verbal unification. The use of such undefined legal concepts is even more disastrous where they have been utilized in order to paper over divergent views, thus where, in other words, the implementation of clear and workable rules would have been possible but failed as a result of the opposition of certain interest groups. Let me give you a particularly notorious example of this danger: provisions requiring the buyer to give timely notice of a defect in the goods, cutting off his remedies in case he fails to give this notice, are designed to protect the seller. He should be able to regard a transaction as final after a certain or a stated time, thereby relieving him of the need to keep records and evidence on hand for years in order to defend himself against claims from the buyer. But such a hard and fast rule can cause hardship to the buyer who, perhaps without his fault, may have failed to send such a notice within the required time. The controversy about a notice requirement at times threatened the successful outcome of the Vienna conference. The compromise worked out in the end held on to the notice requirement but alleviated its consequences by allowing a buyer who has not given notice within two years some remedies if he has a "reasonable excuse" for his omission. But what may be regarded as a reasonable excuse? Unfortunately, there are quite a lot of examples to be found for such solutions where instead of a reasonable drafter we find a "reasonable man" as the yardstick.

IV. Summary

Nevertheless. it would not be justified to pass a negative judgment on the U.N. Convention at this time, even when bearing in mind the prediction that the numerous compromises can break down in the application of the law, and that divergent interpretations will rapidly have the gained legal uniformity present itself as a verbal facade. According to my impression, the fate of this uniform law as well as that of ULIS, its reliability and the confidence the business world has in the calculability of its results, will decisively depend on whether and to what extent the national courts called upon to apply the convention are willing to put national legal concepts and the interest of domestic parties last in the interest of the coveted uniformity of the law of sales. It is essentially a matter of redeeming the appeal of art. 7 of the convention: "In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade."

This appeal alone, however, is not enough; for its realization, it needs certain institutions that can organize and supervise its enforcement. Of course, it is tempting to think primarily of a supreme court that could prevent divergent interpretations. But I still want to be so optimistic as to hope that the preservation of legal uniformity by the persuasive power of arguments is almost of equal value as a control of legal uniformity by a supreme court. I think, in other words, that when applying and analyzing a uniform sales law, practice and legal science alike will not fail to take into consideration what lawyers from other countries have to say, and that the courts can be expected, if not to follow the theory of stare decisis, in any event to have benevolent regard to foreign court decisions on the matter. Thus, it seems to me that the principal problem is not so much the readiness to have oneself persuaded by better arguments of courts and lawyers in other countries but the possibility to know them in the first place. We are dealing with a problem of information; already for the Hague Sales Law, it would be most desirable to have an international case reporter that would make court decisions accessible to lawyers in all those countries in which ULIS and ULFIS are in force. But even below the level of such an organized exchange of information, possibilities exist or should be created to get to know other lawyer's views. I believe that your invitation is one of these possibilities, and I hope I have made a halfway appropriate use of it.


FOOTNOTES

* Lecture given on February 29th, 1984 at the Faculty of Law, The Hebrew University of Jerusalem, presented here in original form.

** Professor of Law, Albert-Ludwigs-University, Freiburg, W. Germany.

1. Hellner, "The UN Convention on International Sales of Goods – an Outsider’s View," in festschrift für Stephan riesenfeld (1983) S. 72.

2. For details see Hellner, Köprätt (1982): The first drafts of a uniform sales law were published in 1894; the Swedish version of the SGA was put into force in 1905, the Danish one in 1906 and the Norwegian one in 1907.

3. 1st and 2nd Hague Conference of the Law of Bills of Exchange.

4. Even in that case, I don’t think the old Hague Convention on the Law Applying to the International Sale of Movable Goods from June 15, 1955, which the Federal Republic never ratified, should be revived; rather, the approach to unify the conflicts rules for contractual relationships in general, as pursued in the EEC-Convention on the Law Applying to Contractual Relationships from June 19, 1980, should be taken up on an international level.

5. See the reviews by Ole Lando in (1983) 31 Am. J. Com. L. 731 ff., 732.

6. See The Unification of the Law of International trade, 1965, and "Das neue Recht des Welthandels," (1964) 28 RabelsZ 47ff.

7. Sandrock, Handbuch des internationalen Vertragsrechts, vol. 1, p. 399.

8. BGH 2.6.82, NJW 82, 2730.

9. Ibid.

10. See BGH 24.10.79, WM 80, 36 = IPRax, 81, 96, comment Weitnauer IPRax 81, 83; see also LG Essen v.10.6.80, MDR 81, 148 as to "Inkassokosten" as losses (yes).

11. BGH 22.10.1980, IPRax.81, 129 comment Schlechtriem, IPRax.81, 113.

12. LG Braunschweig 16.11.1982, RIW 1983, 371 f.

13. OLG Hamm 18.10.1982, NJW 83, 523 ff.

14. OLG Saarbrücken 4.7.79, RIW 81, 702 = NJW 80, 2648.

15. OLG Hamburg 9.7.1980, RIW 81, 262 f.

16. See Magnus, "Europäische Kaufrechtsvereinheitlichung" (1981) 45 RabelsZ 151.

17. BGH 28.3.1979, BGHZ 74, 193 = NJW 79, 1779.

18. As a typical example, take Ernst V. Caemmerer’s influential article "Falschlieferung" in festschrift für Martin Wolf (1952) 3 ff., which rendered possible, once and for all, the breakthrough of the so-called subjective concept of defect and thus the incorporation of the seller’s liability for defective goods into the general category of breach of contract.

19. See Larenz, Lehrbuch des Schuldrechts, vol. 2, (12th ed., 1981) § 45a, p. 144 ff.

20. Bill of May 6, 1976, BTDrs. 8/736; for the legislative history of this Act see Bartel, NJW 1979, 1384.

21. Ulrich Huber, "Vertragsbruch," in Gutachten und Vorschläge zur Reform des deutschen Schuldrechts, vol. 1, p. 647 ff.

22. Hellner, op. cit. supra n. 1 at 76.

23. See Hamm 18.10.82, IPRax 83, 231 = NJW 83, 523 = WM 82, 1445; BGH 23.9.1979, NJW 1979, 1779.

24. Cf. Honnold, "The Uniform Law for the International Sale of Goods, The Hague Convention of 1964" (1965) 30 L. & Contemp. Prob. 326; Nadelmann, "The Uniform Law on the International Sale of Goods: A Conflict of Laws Imbroglio," (1964-5) 74 Yale L.J. 449.

25. Cf. Herber, RIW 1974, 578 f.

26. For the drafts see (1976) 7 UNCITRAL Yrbk. 89 ff.; (1977) 9 UNCITRAL Yrbk. 15 ff.

27. Cf. (1980) II UNCITRAL Yrbk. 37, 149 ff.

28. In ULIS, the Federal Republic had made use of the reservation of art. 3 of the basic convention and enacted a different text which also made the application dependent on "places of business in Contracting States"; as far as I know, Israel ratified ULIS without this reservation.

29. Cf. BGH 2.6.82, NJW 82, 2730.

30. Cf. Hellner, op. cit. supra n. 1, according to whom the relationship between delivery at the right place and delivery at the right time, respectively the breach of these obligations, lacked clarity.

31. For the advantages of this concentration, see Huber, "Der UNCITRAL – Entwurf eines Übereinkommens über internationale Warenkaufverträge," (1979) 43 RabelsZ 416.

32. Hellner, op. cit. supra n. 1 at 86 ff.

33. Art. 61 ULIS has a different solution for the case where the seller demands full payment even though the goods would have been easy to resell: The seller cannot claim payment of the purchase price if it is in conformity with usage and reasonably possible for the seller to resell the goods – in that case there is ipso facto avoidance of the contract (art. 61 sub. 2).

34. Hellner, op. cit. supra n. 1 at 90.

35. At 91.

36. Cf. arts. 25, 26 (1) cl. 2 (2), 30 (1) cl. 2 (2).

37. Cf. Hellner, "Ipso facto Avoidance," in Festschrift für Weitnauer (1980) 85 ff.

38. Cf. Schlechtriem, Einheitliches UN-Kaufrecht (J.C.B. Mohr (Siebeck), Tübingen 1981) 92.

39. See art. 16 (2) (b).


Pace Law School Institute of International Commercial Law - Last updated December 7, 1998
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