(A/CONF.97/C.1/L.31, L.33, L.43, L.50, L.52, L.53)
1. The CHAIRMAN said that as article 7 [became CISG article 8 ] was to be discussed paragraph by paragraph, the Swedish amendment (A/CONF.97/C.1/L.52) proposing that the article as a whole should be deleted, would be left till last. He suggested that the Italian proposal (A/CONF.97/C.1/L.50) to delete paragraph 1 should be considered first.
2. Mr. MICCIO (Italy) said his proposal was linked to the proposal submitted by his delegation the previous day to add an article 6 bis to the Convention. As the latter proposal had been rejected, he withdrew his amendment to article 7 [became CISG article 8 ].
3. The CHAIRMAN then suggested that the Committee should take up the amendments proposed by India and the United Kingdom (A/CONF.97/C.1/L.31, L.33).
4. Miss O'FLYNN (United Kingdom) reminded the meeting that her country had already indicated the reasons for the amendment in its written comments (A/CONF.97/8/Add.3); it seemed to her that to say that a party "could not have been unaware" of the other party's intent was to say that the party must have known what it was.
5. Mr. KUCHIBHOTLA (India) said that the expression "or could not have been unaware" in article 7 [became CISG article 8 ] was not well chosen. Article 8 [became CISG article 9 ] contained the expression "of which the parties . . . ought to have known", which was more objective. His delegation proposed that a similar expression should be used in article 7 [became CISG article 8 ], which would give the judge a better criterion for determining the parties' intent.
6. Mr. ROGNLIEN (Norway) commented that it was more difficult for a judge to determine what a party knew than to establish what a party "could not have been unaware of". The latter wording meant that a judge could not believe or accept, having regard for the circumstances which were in practice mostly external, that a party had not been aware of the other party's intent. It contained a stricter criterion than "ought to have known" but one that was hardly less objective. He supported the present text.
7. Mr. FARNSWORTH (United States of America) said that there was a big difference between the text of the draft Convention and the United Kingdom proposal. It was difficult to determine whether a party was aware or not of the other party's intent. The text of the draft Convention seemed clearer. The Indian proposal, however, seemed to him to improve the text and his delegation was prepared to support it.
8. Mr. BENNETT (Australia) was in favour of the United Kingdom proposal. It seemed to him that the Indian proposal would be difficult to accept, as the expression "ought to have known" implied a certain norm, i.e, an obligation. Other articles imposed obligations, but not articles relating to general interpretation.
9. Mr. WAITITU (Kenya) said that the Indian proposal went too far. It seemed to impose on one party the obligation to be aware of the other party's intent. His delegation did not wish the existing text of the draft to be changed.
10. Mr. HJERNER (Sweden) also found that the Indian proposal went too far. It seemed to him that the United Kingdom proposal was more easily acceptable, but he felt that interpretation should start from the ordinary sense of the terms and not from what one party felt or thought. The Conference might be guided by the example of the Vienna Convention on the Law of Treaties, which stated that a treaty should be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.
11. Mr. INAAMULLAH (Pakistan) noted that the discussion was turning on a question of the choice between the ideas expressed by the words "ought" and "can". The word "ought" had moral connotations which needed to be understood in the context of critical ethical philosophy. In Kantian philosophy "ought" had an absolute connotation as the categorical imperative. Later Kantian interpretation pointed out that an absolute "ought" was meaningless unless it involved a realistic and material possibility! As such, any meaningful interpretation of "ought" always implied "can". He asked the delegates to keep in mind the philosophical background of those two words when using them in a legal text. His delegation did not support either of the proposals submitted by the United Kingdom and India; it was in favour of the existing text of the draft.
12. Mr. SAMI (Iraq) said that both the terms used in article 7 of the draft Convention [became CISG article 8 ] and those used in the Indian proposal could lead to numerous problems of interpretation. The United Kingdom proposal seemed to him to be easier to apply, and his delegation therefore supported it.
13. Mr. MICHIDA (Japan), observing that representatives were divided over the United Kingdom proposal, reminded the meeting of the famous Peerless case. That had been the name of two different vessels and the purchaser of the cargo of the Peerless had relied on possible confusion between the two. With the existing text of article 7 [became CISG article 8 ], any confusion would have been impossible, as the purchaser "could not have been unaware" of the existence of two vessels of the same name. If the United Kingdom proposal was accepted, there would no longer be an objective criterion for settling such cases. For that reason his delegation could not support that proposal.
14. Miss O'FLYNN (United Kingdom) replied that the objective criterion was stated in article 7 [became CISG article 8 ], paragraph 2, and that if paragraph 1 was not applicable, paragraph 2 would be.
15. The CHAIRMAN invited the Committee to vote on the United Kingdom proposal (A/CONF.97/C.1/L.33).
16. The proposal was rejected
17. The CHAIRMAN invited the Committee to vote on the Indian proposal (A/CONF.97/C.1/L.31).
18. The proposal was rejected.
19. Article 7 [became CISG article 8 ], paragraph 1, was adopted.
20. Mr. SHAFIK (Egypt) explained that his amendment (A/CONF.97/C.1/L.43) was not a purely drafting one but was intended to make clear what interpretation was to be given to the expression "that a reasonable person would have had in the same circumstances", which did not seem to be sufficiently defined by the criteria given in paragraphs 2 and 3.
21. Mr. STALEV (Bulgaria) said that his delegation appreciated the reasons for the Egyptian amendment and supported it.
22. Mr. ROGNLIEN (Norway) and Mr. SHORE (Canada) also supported the Egyptian amendment.
23. Mr. HERBER (Federal Republic of Germany) said that the Egyptian amendment was useful, even though he had some reservations as to the validity of the expression "acting in the same capacity" in the English text of the amendment.
24. Mr. FARNSWORTH (United States of America) said that he did not see the practical utility of the Egyptian amendment and would like clarification on the subject.
25. Mr. LI Chih-min (China) said that the Egyptian amendment defined the concept of a "reasonable person" better.
26. Mr. DABIN (Belgium) supported the Egyptian amendment, which was in line with the interpretation criteria of civil law systems. He explained for the benefit of the United States representative that if the qualification proposed in the Egyptian amendment was not added to the text, it would be the judge or arbitrator himself who would interpret the conduct of the party concerned.
27. Mr. PLUNKETT (Ireland) said that the existing text of paragraph 2 was sufficiently clear and that the expression "in the same circumstances" already met the concern expressed by the Belgian representative.
28. Mr. MANTILLA-MOLINA (Mexico) said that the wording proposed in the Egyptian amendment was nevertheless less abstract and more explicit.
29. Mr. FARNSWORTH (United States) said that he was not convinced by the arguments put forward by delegations supporting the Egyptian proposal. He did not see the utility of an amendment whose effect would be to base the interpretation of one party's conduct on a subjective element.
30. Mr. SHAFIK (Egypt) pointed out that his amendment had been submitted in French and that the English wording "acting in the same capacity" did not perhaps have quite the same meaning as the French wording "de même qualité". The latter phrase, which had a precise, not a general, meaning, referred to a person from the same background as the person concerned and engaged in the same occupation, the same trade activities for example.
31. The CHAIRMAN said that, if there was any divergence between the different language versions of the Egyptian proposal, the text of that proposal could be sent to the Drafting Committee to be brought in line with the original French text.
32. Mr. HJERNER (Sweden) said that the Egyptian amendment left some doubts as to who the reasonable person was who should serve as a criterion. Which party should be taken into account, the buyer or the seller? Furthermore, as had been pointed out by the Japanese representative, what was considered reasonable, for example, by an Indian trader, was perhaps not so considered by a trader from Liverpool. Bearing in mind those considerations, he himself preferred the existing text.
33. Mr. ROGNLIEN (Norway) said that, as he understood it, it was clear that the reasonable party was the second party who could not be unaware of the intent of the party concerned. In any case, what was important was that the text should be precise, and the Egyptian amendment was precise in that it referred to a reasonable person in the same situation and of the same occupation engaged in the same particular trade as the party concerned.
34. Miss O'FLYNN (United Kingdom) said that, for the reasons already given by the United States and Irish representatives, the Egyptian amendment was not expedient. She shared the doubts of the United States representative concerning the English text and emphasized that English law had no concept analogous to that contained in the Egyptian amendment.
35. Mr. KHOO (Singapore) said that article 7 [became CISG article 8 ] was simple in structure. The first paragraph gave the criteria by which a party's conduct was to be interpreted when the other party was aware of the intent of the party concerned. The personal element thus played an important role in that paragraph. Paragraph 2, on the other hand, was applicable when there was any doubt about the conduct of the party concerned and introduced an objective element of appreciation. The Egyptian amendment destroyed the balance between the subjective and the objective elements and was consequently unacceptable to the delegation of Singapore.
36. Mr. EYZAGUIRRE (Chile) said that, in principle, the existing text was sufficient to permit the judge to interpret the conduct of the party concerned. However, the Egyptian amendment added useful information by specifying that it was a matter of parties having the same background and the same occupation or field of trade, and it deserved to be supported.
37. Mr. ADAL (Turkey) said that the Egyptian amendment was useful but that the English version of the text was not clear from the legal point of view and should be referred to the Drafting Committee.
38. Mr. SHORE (Canada) also pointed to a legal divergence in the English and French versions of the Egyptian proposal.
39. Professor MATTEUCCI (UNIDROIT) said that a well-known legal author had criticized ULIS for having abused the word "reasonable". According to that author, the adjective could be applied to a period of time or to behaviour but not to a person, who had always to be assumed to be reasonable.
40. Mr. TRÖNNING (Denmark) said he could support the Egyptian amendment if, after the words "acting in the same capacity", the words "as the other party" were added.
41. The CHAIRMAN put the Egyptian proposal to the vote on the understanding that, if it were adopted, the text would be sent to the Drafting Committee for it to find a satisfactory wording in English, with due regard for the Danish representative's proposal.
42. The Egyptian proposal (A/CONF.97/C.1/L.43) was rejected.
43. Mr. MEHDI (Pakistan) submitted his delegation's amendment to paragraph 2 of article 7 [became CISG article 8 ] (A/CONF.97/C.1/L.53) and explained that he proposed to add the word "unavoidably" to that paragraph in order to narrow down the subjective criteria for interpretation which were given therein and to facilitate the task of the arbitrator or judge. If his proposition was adopted, there was no reason why it should not be sent to the Drafting Committee so that the texts could be harmonized in the different languages.
44. The Pakistani proposal was rejected.
45. Article 7 [became CISG article 8 ], paragraph 2 was adopted.
46. Mr. HJERNER (Sweden), introducing his delegation's amendment (A/CONF.97/C.1/L.52), said that the discussion had shown that there were wide differences of view on the question dealt with in the article. In his opinion, it was neither necessary nor useful to set forth new rules for the interpretation of contracts, which might be contrary to those established in section 3 of the Vienna Convention on the Law of Treaties. That was why his delegation had proposed that article 7 [became CISG article 8 ] should simply be deleted.
47. Mr. DABIN (Belgium) said that the International Chamber of Commerce in Paris had expressed an opinion similar to that of the representative of Sweden. The discussion had shown that it was difficult to set out in the Convention rules for the objective interpretation of the conduct of the parties. In that respect, the criteria depended mainly on the concepts contained in the general law of contracts and not only on the law relating to international sales. Those concepts were expressed in different terms depending on the legal formulas: in French, it was the notion of "in good faith (de bonne foi)"; in German law, the terms "kennen" and "kennen müssen" were to be found, and so forth. The expression "personne de même qualité", which had been translated into English as "person acting in the same capacity", had meant different things to the representatives of different States. Consequently, he thought it useless to try to find a formula to cover all legal systems in the Convention.
48. Mr. FARNSWORTH (United States of America) explained that the objections he had raised to the Egyptian amendment to paragraph 2 did not mean that he was generally opposed to article 7 [became CISG article 8 ] and, in fact, they were aimed solely at the English version of the text. He thought that article 7 [became CISG article 8 ] should be retained, because it was of practical use in solving the particularly complex problems posed by contracts.
49. Miss O'FLYNN (United Kingdom) agreed with the representative of Sweden that it was not useful to introduce rules of interpretation of the conduct of parties into the draft Convention. Article 7 [became CISG article 8 ] raised substantive problems and her delegation was concerned that the more subjective tests in paragraph 1 might take precedence over more objective tests in paragraph 2. She therefore supported the Swedish proposal to delete article 7 [became CISG article 8 ].
50. Mr. WAGNER (German Democratic Republic) said that the existing text of article 7 [became CISG article 8 ] did not give rise to major differences of views on the interpretation of contracts. It was a balanced compromise and deserved to be retained.
51. Mr. BENNETT (Australia) said he agreed with the representative of the United States that article 7 [became CISG article 8 ] was a useful one because it would be of material help in interpreting the Convention and provided a number of elements which could be used as a basis for defining the intentions of the parties. However, no similar provision existed in the common law countries, due to the prohibition of "parol evidence", a rule which should be amended in respect of international trade.
52. Mr. BLAGOJEVIC (Yugoslavia) said that he too considered that article 7 [became CISG article 8 ] was useful and should be included in the general conditions for contracts of sale because it made it possible to introduce a certain degree of uniformity.
53. Mr. SAMI (Iraq) said that article 7 [became CISG article 8 ], as a whole, established a set of rules for interpretation, and that the third paragraph rounded off the set. It should not therefore be deleted; its maintenance would introduce a unifying element in the rules of trade law.
54. Mr. HERBER (Federal Republic of Germany) said that the deletion of article 7 [became CISG article 8 ] would leave a gap in the Convention which would have to be filled by reference to national law. His delegation was thus strongly opposed to its deletion.
55. The Swedish proposal (A/CONF.97/C.1/L.52) to delete article 7 was rejected.
The meeting was suspended at 11.25 a. m. and resumed at 11.50 a.m.
(A/CONF.97/C.1/L.6, L.l9, L.23, L.24, L.34, L.40, L.44 and L.64)
56. The CHAIRMAN pointed out that the draft amendments to article 8 [became CISG article 9 ] all referred to paragraph 2, except for that of Egypt, which proposed the addition of a new paragraph.
57. Article 8 [became CISG article 9 ], paragraph 1, was adopted.
58. Mr. LI Chih-min (China), introducing his delegation's draft amendment (A/CONF.97/C.1/L.24), said that its purpose was to make the text more precise by adding the word "reasonable" before "usage".
59. Mr. ROGNLIEN (Norway) pointed out that subparagraph (a) of article 4 [became CISG article 4 ] should not be overlooked in that connection. If a usage was not reasonable, it might not be valid under the applicable law. The point was whether or not a usage was valid. If it was not, it was unnecessary to ask whether it was reasonable.
60. Mr. BENNETT (Australia) said he admitted that, when the parties had agreed to be bound by a usage, that usage was applicable to the contract. However, care should perhaps be taken not to widen the scope of that provision in the absence of agreement by the parties. A party unfamiliar with a law might be regarded as bound by a usage of which he was quite unaware. Paragraph 2 already laid down certain conditions for the application of usages, but the qualification proposed by the Chinese delegation made the text more consistent with the principles of common law. His delegation thus supported the proposal.
61. Mr. HERBER (Federal Republic of Germany) said he recognized that the usage applicable to the contract should of course be reasonable, but was reluctant to admit that that idea should be expressed explicitly. For a usage to be applicable, it should exist and be recognized as being valid. If it was not reasonable, or if, for example, it was contrary to public order, it would not be a usage. However, the existence of such a provision in the Convention might give a free rein to interpretations and create difficulties. His delegation was thus unable to support the Chinese draft amendment.
62. Mr. BOGGIANO (Argentina) said he had some doubts as to the advisability of tackling the question of the validity of usages, in view of the first paragraph of article 4 [became CISG article 4 ]. He also found it difficult to imagine an unreasonable usage. If the conditions set forth in article 8(2) [became CISG article 9(2) ] were fulfilled, there would be no reason to consider the case of a usage which was not reasonable. His delegation was thus unable to support the Chinese proposal.
63. Mr. SAMI (Iraq) said he noted that article 8 [became CISG article 9 ] tended to clarify the presumed will of the contracting parties. Failing express agreement to the application of a usage, paragraph 2 merely set forth the conditions under which it could be assumed that that usage should be followed. His delegation had difficulty in imagining an unreasonable usage and wondered if it would be the duty of judges or arbitrators to take a decision on that point. In view of those difficulties, it was unable to support the Chinese proposal.
64. Mr. GOLDSTAJN (Yugoslavia) said he supported the Chinese proposal despite the fact that the existing text was already clear on the point. It should not, however, be forgotten that there would be new countries and enterprises entering the international market which would not be familiar with the usages of international trade. It should also be remembered that international arbitrators were often laymen or professional persons belonging to certain associations and that the sole remedy was, as a last resort, supervision by the national courts, which also supervised international arbitration.
65. Mr. DABIN (Belgium) said that the matter would perhaps be clearer if the Chinese delegation could quote one or more examples of unreasonable usages.
66. Mr. LI Chih-min (China) said, in connection with the relationship between articles 4 and 8 [became CISG article 4 and CISG article 9 ], that article 4 drew attention to the question of the validity of usages, which was justifiable in chapter 1 which defined the scope of the Convention, whereas article 8 [became CISG article 9 ] covered usages themselves, whether reasonable or not. In reply to the question by the Belgian representative, he reminded him that meetings of UNCTAD were being held at Geneva on the elimination of restrictive trade practices. Trade restrictions imposed by certain trade practices could be called unreasonable.
67. Mr. INAAMULLAH (Pakistan) said he agreed that the very existence of a usage implied recognition of its reasonableness. However, he could see no reason why it should not be stated in the text that the usage should be reasonable, in order to protect the seller and the buyer.
68. Mr. TRÖNNING (Denmark) supported the Chinese draft amendment.
69. The CHAIRMAN invited the Committee to vote on the Chinese amendment.
70. The Chinese amendment (A/CONF.97/C.1/L.24) was rejected.
71. Mr. BLAGOJEVIC (Yugoslavia) explained that he had voted in favour of the Chinese amendment since, in his view, it should constitute a step forward towards the recognition of usages established with the consent of all peoples, whereas commercial usages to date had been formed by a restricted group of countries only whose position did not express worldwide opinion.
72. Mr. ANDRUSCHIN (Byelorussian Soviet Socialist Republic) said that he approved the draft Convention as a whole, because he was convinced that, when adopted, it would contribute to the establishment of the new economic order and the improvement of international economic relations. The Czechoslovak draft amendment to article 8(2) [became CISG article 9(2) ] would provide a useful clarification, since the usages referred to concerned questions which were not governed by the Convention.
73. Mr. KOPAC (Czechoslovakia) said that, although he was well aware that article 8 [became CISG article 9 ] was regarded as being the result of a compromise, he had grave doubts about its content and the principles it set forth. The wording of the article implied that in all cases, usages had precedence over the Convention. That principle was valid when it was a question of usages which the parties had agreed to apply in accordance with paragraph 1 of the article, but that was not the case when it was merely a question of usages to which they were considered to have impliedly referred, as set forth in paragraph 2. To give precedence to usages in the latter case would be tantamount to reducing the scope of the Convention. If the existing text of paragraph 2 were retained, a party which noted that certain provisions of the Convention were contrary to its interests would be tempted to substitute a usage which was unknown to the other party. Usages were often vague and their existence could be proved only by experts, whose opinions often differed. It should not be forgotten also that the buyers and sellers from some countries, particularly those from the developing countries, had not participated in the establishment of usages and would yet be bound by them, even if those usages were contrary to the Convention. It therefore seemed logical to limit the usages covered by paragraph 2 to those which were not contrary to the Convention, unless the parties decided otherwise.
74. He also hoped that trade terms would be the subject of a special provision and in that connection thought that the Egyptian draft amendment (A/CONF.97/C.1/L.44) might serve as a basis for discussion.
75. Mr. MANTILLA-MOLINA (Mexico) expressed serious doubts as to the advisability of the Czechoslovak proposal. Any specific usage known to the parties should override the Convention because, if the parties decided to conform to a usage, it was because it responded to their needs with respect to a given contract. The problem was slightly more delicate when the usage was not known, but the solution should be the same because knowledge and consequently agreement by parties with regard to that usage was presumed.
76. He also thought that the use of the word "and" in the second paragraph of article 8 [became CISG article 9 ] in the phrase "widely known to, and regularly observed by" was excessive and should be replaced by "or".
77. Mr. BOGGIANO (Argentina) said that, in his view, the Convention undoubtedly gave precedence to the principle of the autonomy of the will of the parties. If that principle was fully applied, the parties could decide, expressly or even impliedly, to apply a usage to a contract, all the more so because article 8(2) [became CISG article 9(2) ] admitted agreement to the contrary by the parties, which exactly corresponded, at least in the understanding of his delegation, to the provisions of article 5 [became CISG article 6 ] which permitted the parties to derogate from the Convention both expressly and impliedly. The protection given in the Convention to the principle of autonomy led him to think that the Czechoslovak proposal was unacceptable.
78. He preferred not to express an opinion on the last comment by the representative of Mexico for the moment, because he did not yet understand whether it was a drafting or a substantive amendment.
79. Miss O'FLYNN (United Kingdom) said that she could not support the Czechoslovak proposal because her delegation considered that the parties should be bound by any usage which complied with the provisions of article 8(2) [became CISG article 9(2) ], even if it was not compatible with the Convention. The conditions set forth in that paragraph were strict enough to protect parties which did not know of a given usage.
80. Mr. MEDVEDEV (Union of Soviet Socialist Republics) said that since the Convention was to govern the relations between buyer and seller, it should be clear and precise and in that respect the Czechoslovak proposal was an improvement. It concerned usages which were not covered by the Convention and over which the Convention should prevail. The Soviet delegation thus supported the Czechoslovak proposal.
81. The CHAIRMAN invited the Committee to vote on the Czechoslovak amendment.
82. The Czechoslovak amendment (A/CONF.97/C.1/L.40) was rejected.
83. The CHAIRMAN requested the representative of France to introduce his draft amendment (A/CONF.97/C.1/L.23) which would not be discussed or put to the vote because it was merely a drafting amendment to article 8(2) [became CISG article 9(2) ].
84. Mr. PLANTARD (France) said that in fact it proposed to delete a repetition in the French text, which would bring it closer to the English text.
85. Mr. ROGNLIEN (Norway) and Mr. SEVÓN (Finland) said that the French draft amendment should be sent to the Drafting Committee where such questions should be resolved.
86. The CHAIRMAN invited the Committee to vote on the French amendment.
87. The French amendment (A/CONF.97/C.1/L.23) was adopted.
88. Mr. FARNSWORTH (United States of America) said that his draft amendment (A/CONF.97/C.1/L.6) did not call for any special comment. It stipulated that usages concerning the formation of contracts could also vary the provisions of the Convention. Examples might arise under article 14 [became CISG article 16 ], because it was conceivable that an offer might not be revocable, and under article 16(1) [became CISG article 18(1) ] because silence could, in certain cases, amount to acceptance.
89. Miss O'FLYNN (United Kingdom) and Mr. SHAFIK (Egypt) supported the United States proposal.
90. Mr. KIM (Republic of Korea) said it was unnecessary to speak of formation in article 8 [became CISG article 9 ] because the Convention covered contracts for international sales and the word "contract" could be taken to include its formation.
91. Mr. PLANTARD (France) pointed out that the United States proposal would remove the French text still further from the English one, which he thought was a nuisance although he was not yet in a position to assess the consequences. The French text made no mention of the contract or its formation. He was quite satisfied with the general wording of the text and would prefer that it were not changed. To satisfy the United States, it might perhaps be better to bring the existing English text into line with the French text, which was a matter of drafting.
92. The CHAIRMAN said he wondered if it was merely a question of drafting, because it was necessary to decide which text was the right one.
93. Mr. FARNSWORTH (United States of America) said that he personally could quite easily agree to give the English text a more general character and to delete the reference to the contract.
94. Mr. MICHIDA (Japan) supported that proposal.
95. Mr. ROGNLIEN (Norway) said that he was not in favour of the idea of simplifying the text of article 8(2) [became CISG article 9(2) ], because it was very important for the text to be precise. Usage was now considered to be part of the contract and that wording implied that usages were included whenever the provisions of the Convention referred to the contract.
96. Mr. HERBER (Federal Republic of Germany) pointed out that, logically, usage could be involved in the formation of contracts, even at the very beginning of the relations between the seller and the buyer. He would prefer the French text to be brought into line with the English text and requested that the idea of the formation of contracts should be maintained in the United States draft amendment. It was for the Drafting Committee to find a satisfactory formula.