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Reproduced with permission of 26 Uniform Law Review (1996) 26-39


Michael Joachim Bonell [*]


It is no exaggeration to say that the United Nations Convention on Contracts for the International Sale of Goods (hereafter "CISG") represents a landmark in the process of international unification of law. Unanimously adopted in 1980 by a diplomatic Conference with the participation of representatives from 62 States and 8 international organisations, it has in the meantime been ratified by 45 countries from the five continents, including almost all the major trading nations. The importance of CISG is further demonstrated by the fact that the number of decisions rendered by both State courts and arbitral tribunals in its application is rapidly increasing.

The UNIDROIT Principles of International Commercial Contracts also appear to be extremely successful. One year after the Governing Council of UNIDROIT gave its imprimatur to their publication and recommended their widest possible distribution the Principles are already making their mark in the world's legal and business communities. Up to now more than 2000 copies have been sold world-wide, and in addition to the five official versions (English; French; German; Italian; Spanish) the text of the black letter rules of the UNIDROIT Principles has been translated into another eight languages.[1] Moreover, there are already reports of the first arbitral awards referring to them in one way or the other.[2]

Given the most favourable reception of both CISG and the UNIDROIT Principles and the important role which they are going to play in practice, the question arises as to the precise relationship between the two instruments. In particular, why did UNIDROIT take the initiative of preparing the Principles if CISG was doing so well? Is there not the risk that the two will compete with one another and create confusion and overlap? [page 26]

The purpose of this paper is to demonstrate that this is not so. After focusing on the different nature of the two instruments, i.e. the binding nature of CISG adopted in the form of an international convention, and the non-binding nature of the UNIDROIT Principles to be considered at most as a sort of international "Restatement" of contract law (Part I), Part II goes on to examine the content of the two instruments, while Part III investigates how and to what extent they may co-exist and possibly even support each other in practice.


(a) CISG: the best that could be achieved at legislative level

The adoption of CISG in 1980 was the culmination of some fifty years' work which started back in 1929, when the International Institute for the Unification of Private Law, acting upon a proposal by German comparativist Ernst Rabel, decided to undertake the necessary preparatory studies with a view to elaborating a uniform law for international sales contracts and to entrust this task to a special group of experts.

The fact that from the beginning it was taken for granted that the envisaged uniform rules were to be prepared in the form of a binding instrument should not come as a surprise. In those days legal positivism and the identification of law with State-made law were the dominant credo. As a consequence any attempt at unifying the law likewise could only take the form of uniform legislation agreed upon by States at an international level and which they subsequently had to introduce into their domestic legal systems.

There were those who, in view of the existence of a vast amount of contract clauses and practices developed by the interested business circles themselves in order to regulate their trade relationships in a satisfactory and, possibly, exhaustive manner, argued that any intervention by State legislators would run the risk of remaining a dead letter.[3] Yet such objections were not shared by the promoters of the unification project. To quote the same Ernst Rabel,[4] "such a project would not be without practical use. In the first instance, under the present system of commercial clauses, there are, and always will be, gaps. [...] But the merits of a uniform law would be even more manifest if it managed to regulate matters of mandatory law or matters which would at least partially fall outside the autonomy of the parties."

Preliminary drafts of a uniform law for the international sale of goods were prepared in 1935 and 1939. After work was suspended during the war two further [page 27] revised versions followed in 1956 and 1963, and in the meantime an additional draft uniform law dealing with the formation of international sales contracts was prepared. In 1964 a diplomatic Conference convened by the Government of the Netherlands at The Hague resulted in the adoption of two Conventions bearing on a Uniform Law on the International Sale of Goods (ULIS) and a Uniform Law on the Formation of Contracts for the International Sale of Goods (ULF) respectively. However, despite several decades of intensive efforts invested in their preparation, it appeared from the outset that the two Conventions would meet with little success: only nine States ratified them, seven of which belonged to Western Europe.[5]

Notwithstanding this, when, in 1968, the newly-established United Nations Commission on International Trade Law (UNCITRAL) decided to make a fresh start, the basic choice remained the preparation of a binding instrument. There was now even a further reason to insist on the legislative option. The unification process was no longer confined to a relatively small number of States with a rather homogeneous economic and social structure, but for the first time also involved the socialist countries of Eastern Europe and the newly independent nations in the so-called Third World. A common feature of most of these countries was a strictly centralised and planned economy. If they wanted to participate in international commerce, they had to provide special rules for their foreign trade relationships by granting their economic organisations basically the same freedom of contract enjoyed by their competitors from countries with market economies. Such a special legal regime could only be established through legislation, whether enacted unilaterally or - as in the case of international sales contracts - agreed at the international level.

Yet the option in favour of uniform legislation inevitably restricted the drafters' room for manoeuvre. Due to the differences in legal tradition and at times, even more significantly, in the social and economic structure prevalent in the States participating in the negotiations, some issues had to be excluded at the outset from the scope of the envisaged instrument, while with respect to a number of other items the conflicting views could only be overcome by compromise solutions leaving matters more or less undecided.

As a result, CISG presents significant gaps and several rather vague and ambiguous provisions.

Thus, some categories of sale - among which are also transactions of considerable importance in international trade practice, such as sales of shares and other securities, of negotiable instruments and money, of ships and aircraft - are expressly excluded from its scope (cf. Article 2). But also in regard to ordinary sales contracts a number of important issues have not been taken into consideration. CISG itself expressly mentions the validity of the contract, the effect of the contract on the property in the goods (cf. Article 4) and the liability of the seller for death or personal [page 28] injury caused by the goods to the buyer or any other person (cf. Article 5). In addition, one may recall, for instance, the conclusion of the contract through an agent, the problems arising from the use by one or both of the parties of standard terms, or the impact which the different kinds of State control over the import and/or export of certain goods or the exchange of currency may have on the contract of sale as such or on the performance of any of its obligations.

Of the provisions laying down not too convincing compromise solutions between conflicting views some openly refer the definite answer to the applicable domestic law (cf., e.g., Articles 12 and 96 with respect to the formal requirements of the contract; Article 28 concerning the possibility of obtaining a judgment for specific performance; Article 55 with respect to the possibility of a sales contract being validly concluded without an express or implied determination of the price), while others use the technique of a main rule immediately followed by an equally broad exception thereby leaving the question open as to which of the two alternatives will ultimately prevail in each single case (cf., e.g., Article 16 dealing with the revocability of the offer; Articles 39 (1), 43 (1) and 44 as to the notice requirement in case of delivery of non-conforming goods or goods which are not free from third parties' rights; Article 68 concerning the transfer of risk where the goods are sold in transit); others still hide the lack of any real consensus by an extremely vague and ambiguous language (cf., e.g., the reference to good faith in Article 7 (1); the definition of "fundamental breach of contract" in Article 25; Article 78 concerning the right to interest on sums in arrears).

(b) UNIDROIT Principles: a kind of international "restatement" of contract law

It was both the merits and the shortcomings of CISG which prompted UNIDROIT to embark upon a project as ambitious as the Principles. In other words, if it had not been for the world-wide adoption of an international uniform sales law like CISG, any attempt at formulating rules for international commercial contracts in general would have been unthinkable. At the same time, it was precisely because the negotiations leading up to CISG had so amply demonstrated that this Convention was the maximum that could be achieved at the legislative level, which caused UNIDROIT to abandon the idea of a binding instrument and instead to take another road for its own project.

It was decided to repeat, at the international level, something on the lines of the Restatements of Law in the United States. A group of experts including representatives of all the major legal and socio-economic systems of the world was set up with the task of preparing "Principles of International Commercial Contracts". Most of the members were academics, some high-ranking judges or civil servants. They all sat, however, in a personal capacity and did not express the views of their Governments. The group appointed from among its members rapporteurs for each of the different chapters of the principals. The task of the rapporteurs consisted in preparing, after the necessary comparing studies, a first draft together with comments. These preliminary drafts were discussed by the group as a whole and accordingly revised by the rapporteurs. The group never considered itself exclusive but systematically sought [page 29] comments and observations from outside. To this effect, the successive drafts were circulated, together with a list of the issues which had proved most controversial, among academics and business circles world-wide.

Obviously, since the object of the exercise was no longer to unify domestic law by means of special legislation, but merely to "restate" existing international contract law, it was not imperative to take each and every law of every single country into account, nor was it necessary for every legal system to have an equal influence on each issue at stake. Whenever it was necessary to choose between conflicting rules, the criterion used was not merely arithmetical. In other words, what was decisive was not just which rule was adopted by the majority of countries but rather which of the rules under consideration had the most persuasive value and/or appeared to be particularly well-suited for cross-border transactions.

The results of these efforts are proving extremely satisfactory. The UNIDROIT Principles have been described by eminent experts as "a significant step forward in the globalisation of legal thinking",[6] "le travail le plus important réalisé pour organiser la juridicité du commerce international depuis les fameux Incoterms de la CCI",[7] "une expression particulièrement autorisée et valable de la lex mercatoria".[8]


(a) CISG an obligatory point of reference for the UNIDROIT Principles

In view of its intrinsic merits and world-wide acceptance, CISG was of course an obligatory point of reference in the preparation of the UNIDROIT Principles.

To the extent that the two instruments address the same issues, the rules laid down in the UNIDROIT Principles are normally taken either literally or at least in substance from the corresponding provisions of CISG; cases where the former depart from the latter are exceptional.[9]

Perhaps the most significant example of such departures is that the UNIDROIT Principles impose upon the parties a duty to act in good faith throughout the life of the contract, including the negotiation process,[10] while CISG, in contrast, expressly refers [page 30] to good faith only in the context and for the purpose of the interpretation of the Convention as such.[11]

Another instance is the provision according to which usages do not bind the parties whenever their application would be unreasonable.[12] As stated in the Comment, the reason for this limitation, which does not appear in CISG,[13] is that the application of a particular usage, though regularly observed by the generality of business people in a particular trade sector, may nevertheless be unreasonable in a given case, e.g., because of the special conditions in which one or both parties operate and/or the atypical nature of the transaction.[14]

Yet another example is the adoption of the "receipt" principle for every kind of notice, including the notice a party must give in order to preserve its rights in case of the other party's non-performance,[15] while according to CISG in the latter cases a delay or error in the transmission or the failure of the notice to arrive does not deprive the notifying party of the right to rely on that notice,[16] or the provisions allowing the valid conclusion of a contract even without the determination of the price,[17] a possibility which seems to be excluded under CISG.[18] Likewise, Art. 6.1.5 [page 31] of the UNIDROIT Principles stipulates, contrary to Art. 52 CISG, that the obligee may reject earlier performance unless it has no legitimate interest in so doing.[19]

Finally, Art. 2.11 of the UNIDROIT Principles on modified acceptance no longer contains a list of terms which are to be considered material modification of the offer,[20] and Art. 3.2, contrary to Art. 29(1) CISG, states in general terms that a contract is concluded, modified or terminated by the mere agreement of the parties without any further requirement.[21]

(b) UNIDROIT Principles - a more comprehensive instrument

Since the UNIDROIT Principles were not intended to become a binding instrument aimed at unifying national laws relating to international contracts, they were much less conditioned by the differences existing between the various legal systems. As a result, it was possible for them to address a number of matters which are either completely excluded or not sufficiently regulated by CISG.

Thus, in the chapter on formation, new provisions were included on the manner in which a contract may be concluded, on writings in confirmation, on the case where the parties make the conclusion of their contract dependent upon reaching an agreement on specific matters or in a specific form, on contracts with terms deliberately left open, on negotiations in bad faith, on the duty of confidentiality, on merger clauses, on contracting on the basis of standard terms, on surprising provisions in standard terms, on the conflict between standard terms and individually negotiated terms and on the battle of forms.[22]

Further, a whole chapter on validity was added which moreover is not restricted to the classical cases of invalidity, i.e. the three defects of consent such as mistake, fraud and threat, but also addresses the much more controversial issue of "gross disparity".[23] [page 32]

Equally new are, among others, the contra proferentem rule, the provision on linguistic discrepancies and that on supplying an omitted term in the chapter on interpretation,[24] the provision on implied obligations in the chapter on content;[25] those on payment by cheque or other instruments, on payment by funds transfer, on currency of payment, on the determination of the currency of payment where it is not indicated in the contract, on the costs of performance, on the imputation of payments, on public permission requirements and on hardship in the chapter on performance;[26] the provisions on the right to performance, on exemption clauses, on the case where the aggrieved party contributes to the harm, on interest rates and on agreed payment for non-performance in the chapter on non-performance.[27]

Yet it was not only because the UNIDROIT Principles were less hampered by the differences between the various domestic laws that they were able to deal with additional matters not covered by CISG. Another reason for the addition of new provisions was that the scope of the UNIDROIT Principles is not limited to sales contracts but also encompasses other kinds of transactions, above all service contracts.

Examples of provisions so conceived as to take into account the special problems connected with these other types of contract are those on the duty of co-operation between the parties, on the distinction between a duty to achieve a specific result and the duty of best efforts and the criteria for determining the kind of duty involved in a given case, on the determination of the quality of performance, on the order of performance, on putting an end to a contract for an indefinite period, and on the right to require performance not only of monetary, but also of non-monetary obligations.[28] Likewise, whereas CISG denies the buyer the right to terminate the contract if it is impossible for him to make restitution of the goods (with the sole exception of Art. 82(2)), the UNIDROIT Principles do not contain such a restriction but instead provide that upon termination of the contract both parties must make restitution and, if restitution in kind is not possible or appropriate, allowance should be made in money whenever reasonable.[29]


(a) CISG and the UNIDROIT Principles: no real competition

Clearly, since CISG only deals with contracts for the sale of goods, and the scope of the UNIDROIT Principles is much wider, no overlap can occur where contracts other than sales contracts are concerned. [page 33]

Yet even in respect of sales contracts, the two texts are not necessarily incompatible and indeed can even usefully support one another.

To begin with, notwithstanding the world-wide acceptance of CISG it might still occur that a sales contract is entered into between two parties not situated in Contracting States, thereby escaping the scope of application of CISG. In such cases there could be room for applying the UNIDROIT Principles as an alternative set of internationally uniform rules, either because of an express choice to this effect by the parties themselves or because a reference in the contract to "general principles of law" or the "lex mercatoria" or the like as the governing law is considered to be equivalent to a reference to the UNIDROIT Principles.[30]

On the contrary, whenever the requirements for the application of CISG exist, CISG will normally take precedence over the UNIDROIT Principles in view of its binding character.

It is true that according to Art. 6 CISG, parties may exclude the Convention wholly or in part. While there may be cases where parties choose to replace individual articles of CISG by the corresponding provisions of the UNIDROIT Principles which they consider to be more appropriate, an exclusion of CISG in its entirety in favour of the UNIDROIT Principles is, at least for the time being, rather unlikely. As a matter of fact, parties do quite often exclude CISG, but this is generally because they are afraid of the uncertainties surrounding the application of any novel instrument. In such cases, they will prefer the safety of domestic law rather than venture into the application of something as novel as the UNIDROIT Principles, whatever their intrinsic merits.

(b) UNIDROIT Principles as a means of interpreting and supplementing CISG

Yet even in cases where the international sales contract is governed by CISG, the UNIDROIT Principles may serve an important purpose.

According to Art.7(1) CISG, "[i]n the interpretation of this Convention regard is to be had to its international character and to the need to promote uniformity in its application [...]"). [page 34]

So far, the principles and criteria for the proper interpretation of CISG have had to be found each time by the judges and arbitrators themselves. The UNIDROIT Principles could considerably facilitate their task in this respect.

For example, the criteria laid down in Art.7.3.1 of the UNIDROIT Principles for the determination of whether or not there has been a fundamental breach of contract, may be used for a better understanding of the rather cryptic manner in which this important concept is defined in CISG. Indeed, in addition to the general criterion laid down in Art.25 CISG, i.e. the fact that the non-performance substantially deprives the aggrieved party of what it was entitled to expect under the contract, provided the other party could not reasonably have foreseen such result, paragraph 2 of Art.7.3.1 indicates as further factors to be taken into account in each single case whether strict compliance with the non-fulfilled obligation is of essence under the contract, whether the non-performance is intentional or reckless, whether the aggrieved party has reason to believe that it cannot rely on the other party’s future performance, and finally whether the defaulting party would suffer disproportionate loss as a result of the preparation or performance if the contract is terminated.

Equally, Art.7.1.4, which as mentioned above expressly states that the right of the non-performing party to cure its own failure may be exercised notwithstanding the fact that the aggrieved party has given notice of termination of the contract, may be invoked in order to resolve the doubts which in this respect exist under the corresponding Art.48 CISG.[31]

Another example may be found in paragraph 1 of Art.7.4.9 which, by expressly stating that the right to interest is independent of whether or not the non-payment of the sum of money due is excused, provides an answer to a question which Art.78 CISG leaves open.[32]

Finally, reference may be made to paragraph 4 of Art.7.1.7 which, by expressly mentioning among the remedies not affected by the occurrence of an impediment preventing a party from performance the right to terminate the contract, to withhold performance and to request interest on money due, but not the right to performance, makes it clearer than does the corresponding provision in CISG [33] that as to this latter [page 35] remedy the solution has to be found in each single case, in accordance with the criteria laid down for its availability in general.

Yet besides clarifying unclear language, the UNIDROIT Principles may also be used to fill veritable gaps found in CISG.

According to Art.7(2) CISG "[q]uestions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based [...]".[34]

So far it has been each judge's or arbitrator's task case by case both to determine those general principles and from the general principles to derive the solution for the specific question to be settled. This latter task could be facilitated by resorting to the UNIDROIT Principles. The only condition which needs to be satisfied is to show that the relevant provisions of the UNIDROIT Principles are the expression of a general principle underlying CISG.[35]

For example, Arts. 6.1.7 , 6.1.8 and 6.1.9 of the UNIDROIT Principles may provide an answer to the questions, not expressly settled in CISG, of whether, and if so under what conditions, the seller is entitled to pay by cheque or by other similar instruments, or by a funds transfer, and in which currency payment is to be made. One of the general principles on which CISG is based is that of reasonableness.[36] The duty of the parties to act in a reasonable manner clearly underlies the rule laid down in Art.6.1.7, according to which the obligor may pay in any form used in the ordinary course of business at the place for payment, but cheques or other similar instruments are accepted by the obligee on condition that they will be honoured. The same may be said of the rule contained in Art.6.1.8 whereby, if the obligee has made known its bank account number(s), payment may be made by a funds transfer to such account(s); or of the rule stated in Art.6.1.9, according to which, even if a monetary obligation is [page 36] expressed in a currency other than that of the place for payment, payment may be made in that latter currency unless, apart from an agreement to the contrary between the parties, that currency is not freely convertible.

Other provisions of the UNIDROIT Principles which may be used in order to fill in gaps in CISG are paragraphs 1 and 2 of Art.7.4.9 on interest and Art.7.4.12. CISG expressly settles neither the question of the time from which the right to interest accrues or of the rate of interest to be applied, nor that of the currency in which to assess damages. Yet as the principle of full compensation can be considered to be a general principle underlying CISG, these gaps may well be filled by the above-mentioned articles of the UNIDROIT Principles which are inspired by the same principle. Indeed, Art.7.4.9, by stating that the aggrieved party is entitled to interest from the time payment is due (paragraph 1) and that the applicable interest rate shall be the average bank short-term lending rate to prime borrowers prevailing for the currency of payment at the due place of payment or, where no such rate exists at that place, the same rate in the State of the currency of payment, or in the absence of such a rate at either place the appropriate rate fixed by the law of the State of the currency of payment (paragraph 2), clearly intends to make sure that the interest to be paid covers to the greatest possible extent the loss actually suffered by the aggrieved party as a consequence of the non-payment of the sum of money due.[37] The same is true of Art.7.4.12, according to which damages are to be assessed either in the currency in which the monetary obligation was expressed or in the currency in which the harm was suffered, whichever is more appropriate.

Finally, reference is made to Arts.2.15 and 2.16 of the UNIDROIT Principles, which by making a party who negotiates or breaks off negotiations in bad faith liable for the losses caused to the other party, and by imposing upon the parties a duty of confidentiality with respect to confidential information given in the course of negotiations irrespective of whether or not a contract is subsequently concluded, may be used in order to settle important questions of precontractual liability not covered in CISG. Indeed, both provisions are expressions of the general duty to act in good faith as laid down in Art.1.7 and which, at least in the opinion of some commentators, is also a general principle underlying CISG.[38] [page 37]

(c) UNIDROIT Principles and CISG side by side

In view of the more comprehensive nature of the UNIDROIT Principles, parties may well wish to apply them in addition to CISG for matters not covered therein. To this effect, they may include a clause in the contract which might read as follows: "This contract shall be governed by CISG, and with respect to matters not covered by this Convention, by the UNIDROIT Principles of International Commercial Contracts".

The difference between the role attributed to the UNIDROIT Principles under such a clause and the role which, as has been shown, they may play under Art. 7(2) CISG is, at least in theory, clear. Under Art. 7(2), the UNIDROIT Principles merely serve to fill in any lacunae to be found in CISG, i.e. to provide a solution for "[q]uestions concerning matters governed by [CISG] which are not expressly settled in it [...]" and with respect to which recourse to domestic law is permitted only as a last resort. By contrast, by virtue of parties’ reference to the UNIDROIT Principles of the kind described above, the latter are intended to apply to matters actually outside the scope of CISG and which otherwise would fall directly within the sphere of the applicable domestic law.

Given the special nature of the UNIDROIT Principles the impact of such a reference is likely to vary according to whether a State court or an arbitral tribunal is seized of the case.

State courts will tend to consider the parties' reference to the UNIDROIT Principles as a mere agreement to incorporate them into the contract and to determine the law governing that contract on the basis of their own conflict-of-law rules.[39] As a result, they will apply the UNIDROIT Principles only to the extent that the latter do not affect the provisions of the proper law from which the parties may not derogate. This may be the case, for instance, with the rules on contracting on the basis of standard terms (cf. Arts. 2.19, 2.22) or on public permission requirements (cf. Arts. 6.1.14, 6.1.17). On the other hand, the rules relating to validity (cf. Chapter 3) or to the court’s intervention in cases of hardship (cf. Art. 6.2.3) will only be applied to the extent that they do not run counter to the corresponding provisions of the applicable domestic law.

The situation is different if the parties agree to submit their disputes arising from the contract to arbitration. Arbitrators are not necessarily bound to base their decision on a particular domestic law.[40] Hence they may well apply the UNIDROIT Principles not merely as terms incorporated in the contract, but as "rules of law" governing the contract together with CISG irrespective of whether or not they are consistent with the particular domestic law otherwise applicable. The only mandatory rules arbitrators may take into account, also in view of their task of rendering to the largest possible extent an effective decision capable of enforcement, are those which claim to be applicable irrespective of the law otherwise governing the contract ("loi d’application nécessaire"). Yet the [page 38] application, along with the UNIDROIT Principles, of the mandatory rules in question will as a rule not give rise to any true conflict, given their different subject-matter.[41]


The remarkable success encountered by both CISG and the UNIDROIT Principles demonstrates that they were the right instruments at the right time, and that they each have their own raison d'être. With respect to international commercial transactions different from sales contracts, there is virtually no risk of a clash between the two instruments, given the restricted scope of CISG. Yet even within the ambit of sales contracts, there is, at least at this point, no real competition between the two. In view of the important function which the UNIDROIT Principles may fulfil side by side with CISG, they not only do not threaten CISG's role but indeed, seem likely to enhance its prestige. [page 39]


* Professor of Law, University of Rome I "La Sapienza"; Legal Consultant, UNIDROIT.

1. Arabic, Chinese, Croatian, Slovak, Dutch, Hungarian, Bulgarian, Russian. The Arabic, Chinese and Russian translations, together with the five official language versions, are reproduced as Annexes to M.J. BONELL, An International Restatement of Contract Law, Transnational Juris Publications, Inc., Irvington, New York (1994).

2. For a summary of five of these awards, cf. M.J. BONELL, Un "Codice" Internazionale del Diritto dei Contratti, Giuffré, Milan (1995), pp. 194-196 -- In addition, there is already a substantial amount of legal writings on the UNIDROIT Principles: cf. infra, Bibliography.

3. Cf. in particular H. GROSSMANN-DOERTH, Das Recht des Uberseekaufs (1930), I, p. 67 et seq.; but see also, among others, E. LAMBERT who according to Rabel has expressed directly to him the same kind of objections: cf. E. RABEL, Die Arbeiten zur Vereinheitlichung des Kaufrechts, Jahresbericht der juristischen Gesellschaft zu Berlin 1931, 28-45 (34).

4. E. RABEL, Observations sur l'utilité d'une unification du droit de la vente au point de vue des besoins du commerce international, Institut International pour l'Unification du Droit Privé 1935, Projet I, 119-127 (120).

5. Belgium, Federal Republic of Germany, Italy, Luxembourg, Netherlands, S. Marino and UK; the non European States were Gambia and Israel.

6. J.M. PERILLO, UNIDROIT Principles of International Commercial Contracts: The Black Letter Text and a Review, 43 Fordham Law Review (1994), p. 281 et seq. (p. 282).

7. Ph. KAHN, Principles relatifs aux contrats du commerce international, Journal de Droit international, 1994, p. 1115.

8. P. LALIVE, L'arbitrage international et les Principes UNIDROIT (paper presented at the colloquium on "The UNIDROIT Principles of International Commercial Contracts: An International 'Restatement' of Contract Law", held in Rome, 6-7 October 1995).

9. According to J.M. PERILLO, op. cit. p. 283) "[t]o the extent that the two documents cover the same ground, Principles is a better, more mature document".

10. UNIDROIT Principles, Art. 1.7.

11. Art. 7(1) CISG. -- According to J. M. PERILLO, op. cit., 287 "[o]ne of the improvements in Principles over CISG rules is Article 1.7". Also A. S. HARTKAMP, Principles of Contract Law, in: Towards a European Civil Code, Hartkamp A.S. / Hesselink M.W. / Hondius E.H. / du Perron C.E. / Vranken J.M.B. (eds.), Martinus Nijhoff Publishers, Dordrecht 1994, p. 37 et seq. (p. 44) states that "[t]he rule of Article 1.7 constitutes a marked improvement compared to Article 7 CISG [...]".

12. UNIDROIT Principles, Art. 1.8(2).

13. See Art. 9(2) CISG; see also Art. 4 CISG which expressly excludes from the scope of the Convention "the validity of [...] any usage". According to A. S. HARTKAMP, The UNIDROIT Principles for International Commercial Contracts and the United Nations Convention on Contracts for the International Sale of Goods, Asser Institute (ed.), Comparability and Evaluation. Essays on Comparative Law, Private International Law and International Commercial Arbitration, Nijhoff Publishers, 1994, p. 85 et seq. (p. 88) "[i]n order to protect parties from developing countries against usages unknown to them because they were developed in industrialised countries, Art. 9(2) CISG requires that the parties 'knew or ought to have known' the usage. The Principles seek to accommodate their interest more directly by protecting parties against the application of unreasonable usages. The latter approach is better since it is preferable to strike out clauses deemed unreasonable in the circumstances of the case rather than to exclude the application of the conditions as such on account of more or less subjective considerations relating to a party's knowledge of their content."

14. Comment 5 to Art. 1.8.

15. UNIDROIT Principles, Art. 1.9. The solution is explained by R. HYLAND, On Setting Forth the Law of Contract: A Foreword, in 40 The American Journal of Comparative Law (1992), p. 541 et seq. (p. 548) as follows: "From the point of view of risk allocation, all that is important is who can best prevent the loss. Since only the party who sends the notice can take the necessary precautions, it therefore makes sense to place the risk of loss on that party".

16. See Art. 27 CISG. The CISG approach is critized by A. S. HARTKAMP, The UNIDROIT Principles for International Commercial Contracts and the United Nations Convention on Contracts for the International Sale of Goods, cit., p. 89, who in support of the solution adopted by the UNIDROIT Principles recalls that CISG itself contains a number of exceptions to the rule of Article 27, such as Arts. 47(2), 48(4), 63(2), 65(1)(2), 79(4).

17. UNIDROIT Principles, Arts. 2.2 and 5.7.

18. See Arts. 14 and 55 CISG. For an attempt to reconcile these two apparently conflicting provisions of CISG see, however, G. EÖRSI, in M.J. BONELL-C.M. BIANCA, Commentary on the International Sales Law, Milan 1987, p. 406 et seq.

19. On this point, HARTKAMP, The UNIDROIT Principles for International Commercial Contracts and the United Nations Convention on Contracts for the International Sale of Goods, cit., p. 92, observes that "[t]he CISG rule does not contain the qualification relating to a legitimate interest in rejecting an early performance, but it seems to me that the same follows from Article 7, paragraph 1 (good faith)."

20. See, in contrast, Art. 19(3) CISG according to which "[a]dditional or different terms relating, among other things, to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or the settlement of disputes are considered to alter the terms of the offer materially". According to Comment 2 to Art. 2.11, "[w]hat amounts to a 'material' modification cannot be determined in the abstract but will depend on the circumstances of each case [...]. An important factor to be taken into account in this respect is whether the additional or different terms are commonly used in the trade sector concerned and therefore do not come as a surprise to the offeror".

21. By contrast Art. 29(1) CISG expressly admits the validity of a mere agreement only with respect to modification and termination by agreement of the contract. The broader rule contained in Art. 3.2 is explained in Comments 1-3 by the fact that in commercial dealings consideration, "cause" or other similar prerequisites traditionally required by various domestic laws for the valid conclusion of the contract, are of minimal practical importance since in this context obligations are almost always undertaken by both parties.

22. Cf. UNIDROIT Principles, Arts. 2.1, 2.12, 2.13, 2.14, 2.15, 2.16, 2.17, 2.19, 2.20, 2.21 and  2.22, respectively.

23. Cf. UNIDROIT Principles, Arts. 3.4-3.9 and 3.10, respectively.

24. Cf. UNIDROIT Principles, Arts. 4.6, 4.7 and 4.8, respectively.

25. UNIDROIT Principles, Art 5.2.

26. Cf. UNIDROIT Principles, Arts. 6.1.7-6.1.9, 6.1.10, 6.1.11, 6.1.12, 6.1.14-6.1.17 and 6.2.1-6.2.3, respectively.

27. Cf. UNIDROIT Principles, Arts. 7.2.1-7.2.5, 7.1.6, 7.4.7, 7.4.9 and. 7.4.13, respectively.

28. Cf. UNIDROIT Principles, Arts. 5.3, 5.4-5.5, 5.6, 6.1.4, 5.8 and 7.2.2, respectively.

29. UNIDROIT Principles, Art. 7.3.6(1).

30. Thus, for instance, a contract for the delivery of machinery concluded between an English company and an Iranian governmental agency referred to not further defined "principles of natural justice" as the law governing the contract. When requested to determine the precise meaning of such a choice-of-law-clause, an ICC arbitral tribunal found that it had to be understood as an implicit reference to the UNIDROIT Principles, since they reflect the general legal rules and principles enjoying wide international consensus: for further information on this remarkable decision rendered in spring 1995 and not yet published, see P. LALIVE, op. cit. (supra n.6)

31. This article, while expressly stating that the seller's right to cure is "subject to Art. 49", which deals with the termination of the contract by the buyer, does not clarify the exact relationship between the seller's right to cure and the buyer's right to terminate. On the different views expressed in this respect both in the course of the preparation of the article in question and after its final approval, see, also for further references, J.O. HONNOLD, Uniform Law for International Sales under the 1980 United Nations Convention, 2nd ed., Deventer 1991, p. 375 et seq.

32. For the same solution as laid down in Art. 7.4.9(1) of the UNIDROIT Principles see, e.g., B. NICHOLAS, in C.M. BIANCA -- M.J. BONELL, op. cit., p. 570; H.H. EBERSTEIN in E. von CAEMMERER -- P. SCHLECHTRIEM, Kommentar zum Einheitlichen UN-Kaufrecht - CISG, 2nd ed., 1995, p. 645.

33. Cf. Art. 79(5) CISG, the generic language of which ("Nothing in this article prevents either party from exercising any right other than to claim damages under this Convention") may be misunderstood as if the remedy of specific performance were always available in situations covered by Art. 79: see on this point, also for further references, J.O. HONNOLD, op. cit., p. 551 et seq.

34. Only in the absence of such general principles does the same article permit as a last resort reference to the domestic law applicable by virtue of the rules of private international law.

35. This appears to have been overlooked by U. DROBNIG, The Use of the UNIDROIT Principles by National and Supranational Courts (paper presented at the colloquium on "Les contrats commerciaux internationaux et les nouveaux Principes UNIDROIT: Une nouvelle lex mercatoria?", organised by the ICC Institute of International Business Law and Practice in Paris, 20-21 October 1994), p. 8, when he rejects the idea of resorting to the UNIDROIT Principles in the context of Art. 7 CISG, arguing that "[a]rt. 7 para 2 refers for matters governed by the Convention to the general principles on which the Convention is based [...]. And if there are no such principles, the provision refers to the law applicable by virtue of the rules of private international law [...]. Thus there does not seem to be any room for recourse to the UNIDROIT Principles". A favourable view of the possible use of the UNIDROIT Principles in interpreting and supplementing CISG is taken, on the other hand, by S.N. MARTINEZ CAZON, A Practitioner's View of the Applicability of the UNIDROIT Principles of International Commercial Contracts in Interpreting International Uniform Laws, (paper presented at the 25th IBA Biennial Conference held in Melbourne, 9-14 October 1994), p.3, F. ENDERLEIN, The UNIDROIT Principles as a Means for Interpreting International Uniform Laws, (paper presented at the 25th IBA Biennial Conference held in Melbourne, 9-14 October 1994), p. 12.; A. M. GARRO, The Gap-Filling Role of the UNIDROIT Principles in International Sales Law: Some Comments on the Interplay between the Principles and CISG, in 69 Tulane Law Review (1995), p. 1149 et seq., in particular p. 1152 ss.; U. MAGNUS, Die allgemeinen Grundsatze im UN-Kaufrecht, RabelsZeitschrift 1995, p. 469 et seq. (pp. 492-493).

36. M.J. BONELL, in C.M. BIANCA -- M.J. BONELL, op. cit., p. 80.

37. There are already two arbitral awards rendered under the International Court of Arbitration of the Federal Chamber of Commerce in Vienna which, following the same line of reasoning, expressly refer to the UNIDROIT Principles in determining the applicable rate of interest with respect to two sales contracts governed by CISG: see Schiedsspruche SCH 4318 and SCH 4366 of 15 June 1994: in Recht der internationalen Wirtschaft 1995, p. 590 ss., note by P. SCHLECHTRIEM (p. 592 ss.).

38. See, also for further references, M.J. BONELL, in C.M. BIANCA -- M.J. BONELL, op. cit., p. 84 et seq. As to the possible implications of the principle of good faith referred to in Art. 7 CISG with respect to the formation of sales contracts governed by the Convention, see M.J. BONELL, Formation of Contracts and Precontractual Liability under the Vienna Convention on International Sales of Goods, in Formation of Contracts and Precontractual Liability, p. 157 et seq. (p. 166 et seq.).

39. For more on this point, cf. M.J. BONELL, An International Restatement of Contract Law, 1994, p. 121-123.

40. See M.J. BONELL, An International Restatement of Contract Law, 1994, p. 123 et seq.

41. One of the few potential examples of such conflict may be where arbitrators have to decide between the law of the place of payment imposing the payment in local currency and the different solution provided for in the UNIDROIT Principles that otherwise governs the contract.

Pace Law School Institute of International Commercial Law - Last updated October 9, 2008
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