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Use of the UNIDROIT Principles to help interpret CISG Article 11


Match-up of CISG Article 11 with counterpart provisions of UNIDROIT Principles


UNIDROIT Principles
Article 1.2 - No Form Required

CISG
Article 11

Nothing in these Principles requires a contract to be concluded in or evidenced by writing. It may be proved by any means, including witnessess.

Article 3.2 - Validity of Mere Agreement

A contract is concluded, modified or terminated by the mere agreement of the parties, without any further requirements.

A contract of sale need not be concluded in or evidenced by written and is not subject to any other requirement as to form. It may be proved by any means, including witnesses.

See also:

CISG
Article 29(1)

A contract may be modified or terminated by the mere agreement of the parties.

[The UNIDROIT articles displayed above are to be read in conjunction with the Official Comments on them as "the comments on the articles are to be seen as an integral part of the Principles" (UNIDROIT).]


To examine CISG provisions displayed above in their context, go to the full text of the CISG || To examine UNIDROIT Principles displayed above in their context, go to the full text of the UNIDROIT Principles


Editorial remarks

Commentary on the manner in which the UNIDROIT
Principles of International Commercial Contracts may
be used to interpret or supplement Article 11 of the CISG

Chantal Niggemann [1]
July 2004

a. Parties to international contracts need to be able to rely on their agreement. Therefore, they need to know whether there are any formal requirements which have to be met for their agreement or its amendment to be valid. Some jurisdictions ask for specific form or comparable requirements to be met for the validity of commercial sales contracts, whereas most legal systems opt for the rule of consensualism, i.e., freedom of form.

During the deliberations of UNCITRAL for the elaboration of the CISG, one of the most controversial issues at the Vienna Conference was whether or not the principle of freedom of form of article 15 ULIS should be incorporated in the text of the CISG. Finally, a compromise was adopted with freedom of form as a basic rule and the reservation clause of articles 12 and 96 CISG.[2] Where at least one of the parties to the contract has its place of business in a reservation State and a court of that State hears the case, the court must determine the law applicable to form according to its conflict of law rules, just as a court of another State, which did not adopt the CISG.[3]

Although the issue of freedom of form might as well have been regulated in Part II of the CISG dealing with the formation of the contract, it has been integrated as a general provision and, therefore, also applies in case a party has its place of business in a State that declared a reservation under article 92 CISG.[4]

The UNIDROIT Principles opted for unconditional freedom of form, which is expressed in articles 1.2 and 3.2 of the UNIDROIT Principles.[5]

b. Article 1.2 of the UNIDROIT Principles merely refers to the writing requirement of contracts, whereas Article 11 sentence one CISG states that the contract is not subject to "any other requirement as to form", i.e., not only writing requirements. However, this difference is only in appearance, since although article 1.2 of the UNIDROIT Principles mentions only the requirement of writing, it has to be extended to other requirements as to form.[6] Moreover, article 1.2 of the UNIDROIT Principles is to be seen in conjunction with article 3.2 of the UNIDROIT Principles, stating that a contract is concluded "without any further requirement".

Article 3.2 of the UNIDROIT Principles seems to go even beyond the scope of article 11 CISG, since in comparison to article 11 CISG, which names requirements "as to form", article 3.2 of the UNIDROIT Principles does not contain such a restriction. It is, however, undisputed that article 11 CISG also includes quasi-formal requirements such as consideration as is to be found in common law systems.[7] The commentary to article 3.2 of the UNIDROIT Principles makes it clear that are also excluded is the requirement of cause which exists in some civil law systems, as well as rules regarding so-called real contracts, which require the handing over of goods for their conclusion.[8] Although the exclusion of the cause requirement and the real-contract rules is not discussed under the Convention, the same should apply and they should be displaced by the principle of freedom of form of article 11 CISG.

c. Both the UNIDROIT Principles in article 1.2, second sentence, and the CISG in article 11, second sentence, make clear that the principle of freedom of form implies the admissibility of oral evidence in judicial proceedings. The language of both clauses is perfectly identical, as is their understanding in the commentaries.[9] Article 1.2 second sentence of the UNIDROIT Principles may, therefore, merely support the interpretation of article 11 sentence two CISG.

d. According to article 6 CISG, the parties are of course also free to agree, orally or in writing, on specific form requirements to be met for the validity of the contract and which might also to be applied for modifications and/or termination.[10] This is also expressed in article 2.13 of the UNIDROIT Principles, and the illustrations contained in the Official Comments to article 2.13 of the UNIDROIT Principles may be helpful in the interpretation of article 11 in this respect.[11] In this regard and concerning written modification clauses, please refer to the Editorial remarks regarding article 29 CISG.

e. In case one of the parties confirms the content of a contract, whereby such confirmation contains additional or different terms, the question arises whether such terms may become part of the contract in case the confirmation is not in writing, i.e., whether article 11 CISG and the concept of freedom of form also applies to such confirmation. The CISG does not explicitly deal with this issue. In case the rules for Commercial letters of confirmation (kaufmännisches Bestätigungsschreiben) apply, e.g., as usages by which the parties are bound (see article 9 CISG), scholars and tribunals tend to ask for a written confirmation,[12] whereby article 2.12 of the UNIDROIT Principles deals with such a confirmation and explicitly requires it to be in writing.

f. Article 11 CISG only applies to the formation of the contract, not to its modification or termination as does article 3.2 of the UNIDROIT Principles. With regard to the manner in which the UNIDROIT Principles may be used to interpret or supplement aarticle 29 CISG for modifications and termination, please see the Editorial remarks regarding article 29 CISG.

g. As a result it can be said that the intent of article 11 CISG is reproduced in article 1.2 read in conjunction with 3.2 of the UNIDROIT Principles. Thereby, the Official Comments of articles 1.2 and 3.2 of the UNIDROIT Principles support the interpretation of article 11 CISG. In addition, articles 2.12 and 2.13 of the UNIDROIT Principles assist the further interpretation of freedom of form under article 11 CISG.

[See also commentary by the author on this subject in: John Felemegas ed., An International Approach to the Interpretation of the United Nations Convention on Contracts for the International Sale of Goods (1980) as Uniform Sales Law, Cambridge University Press (2006) 62-64]


FOOTNOTES

1. Legal Counsel at Techem Energy Services GmbH & Co. KG, an international service provider in the field of measuring and billing of energy and water consumption with its place of business near Frankfurt am Main, Germany.

2. Schlechtriem, Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods, 1986, p. 43 subs., available at <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem.html>.

3. Schlechtriem in v. Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht -CISG-, 3rd ed. 2000, Art. 12 at marginal note 2 with further citations; Melis in Honsell, Kommentar zum UN-Kaufrecht, 1997, Art. 12 at marginal note 4.

4. Magnus in Staudinger, Kommentar zum BGB - Wiener UN-Kaufrecht (CISG), 1999, Art. 11 at marginal note 6; Witz in Witz/Salger/Lorenz, International Einheitliches Kaufrecht, 2000, Artt. 11-12 at marginal note 2; Heuzé, La vente internationale de marchandises, 1992, at note 196; see also Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed. 1999, Art. 11 at note 127.1.

5. This principle of freedom of form may, however, be overridden by mandatory rules of the applicable law, see article 1.4 of the UNIDROIT Principles and note 2 of the Official Comments of article 1.2.

6. Official Comments on articles of the UNIDROIT Principles, article 1.2 at note 1.

7. Witz, loc. cit., Artt. 11-12 at marginal note 5; Schlechtriem in v. Caemmerer/ Schlechtriem, loc. cit., Art. 11 at marginal note 11; Magnus, loc. cit., Art. 11 at marginal note 9; see also Secretariat Commentary Art. 27 note. 2 referring to article 29 CISG.

8. Official Comments on articles of the UNIDROIT Principles, article 3.2 at notes 2 and 3. With regard to the requirement of cause, other effects which may derive from it such as its illegality are not concerned.

9. Schlechtriem in v. Caemmerer/Schlechtriem, loc. cit., Art. 11 at marginal notes 12 and 13 with further reference; Official comments on articles of the UNIDROIT Principles, article 1.2 at note 1.

10. Honnold, loc. cit, Art. 11 at note 127; Schlechtriem in v. Caemmerer/Schlechtriem, loc. cit., Art. 11 at marginal note 16; Melis in Honsell, loc. cit., Art. 11 at marginal note 3; Rajski in Bianca/Bonell, Commentary on the International Sales Law, 1987, Art. 11 at note 3.1.

11. Official Comments on articles of the UNIDROIT Principles, article 2.13 at note 2.

12. Schlechtriem in v. Caemmerer/Schlechtriem, loc. cit., Art. 11 at marginal note 6; Civil Court Basel, judgment dated 21 December 1992, in application of Austrian and Swiss legal rules regarding writings in confirmation, in BJM 1993, p. 310 subs.


Official Comments on Articles of the UNIDROIT Principles cited

Comments reprinted with permission from UNIDROIT

 

ARTICLE 1.2

(No form required)

Nothing in these Principles requires a contract to be concluded in or evidenced by writing. It may be proved by any means, including witnesses.

COMMENT

1. Contracts as a rule not subject to formal requirements

This article states the principle that as a rule the conclusion of a contract is not subject to any requirement as to form. Although the article mentions only the requirement of writing, it may be extended to other requirements as to form. The rule also covers the subsequent modification or termination of a contract by agreement of the parties.

The principle, which is to be found in many, although not in all, legal systems, seems particularly appropriate in the context of international trade relationships where, thanks to modern means of communication, many transactions are concluded at great speed and are not paper-based.

The first sentence of the article takes into account the fact that some legal systems regard formal requirements as matters relating to substance, while others impose them for evidentiary purposes only. The second sentence is intended to make it clear that to the extent that the principle of freedom of form applies, it implies the admissibility of oral evidence in judicial proceedings.

2. Possible exceptions under the applicable law

The principle of freedom of form may of course be overridden by the applicable law. See Art. 1.4. National laws as well as international instruments may impose special requirements as to form with respect either to the contract as a whole or to individual terms (e.g. arbitration agreements; jurisdiction clauses).

3. Form requirements agreed by the parties

Moreover, the parties may themselves agree on a specific form for the conclusion, modification or termination of their contract. In this context see Arts. 2.13, 2.17 and 2.18.

 

ARTICLE 3.2

(Validity of mere agreement)

A contract is concluded, modified or terminated by the mere agreement of the parties, without any further requirement.

COMMENT

The purpose of this article is to make it clear that the mere agreement of the parties is sufficient for the valid conclusion, modification or termination by agreement of a contract, without any of the further requirements which are to be found in some domestic laws.

1. No need for consideration

In common law systems, consideration is traditionally seen as a prerequisite for the validity or enforceability of a contract as well as for its modification or termination by the parties.

However, in commercial dealings this requirement is of minimal practical importance since in that context obligations are almost always undertaken by both parties. It is for this reason that Art. 29(1) CISG dispenses with the requirement of consideration in relation to the modification and termination by the parties of contracts for the international sale of goods. The fact that the present article extends this approach to the conclusion, modification and termination by the parties of international commercial contracts in general can only bring about greater certainty and reduce litigation.

2. No need for cause

This article also excludes the requirement of cause which exists in some civil law systems and is in certain respects functionally similar to the common law "consideration".

Illustration

1. At the request of its French customer A, bank B in Paris issues a guarantee on first demand in favour of C, a business partner of A in England. Neither B nor A can invoke the possible absence of consideration or cause for the guarantee.

It should be noted however that this article is not concerned with the effects which may derive from other aspects of cause, such as its illegality. See comment 2 on Art. 3.3.

3. All contracts consensual

Some civil law systems have retained certain types of "real" contract, i.e. contracts concluded only upon the actual handing over of the goods concerned. Such rules are not easily compatible with modern business perceptions and practice and are therefore also excluded by the present article.

Illustration

2. Two French businessmen, A and B, agree with C, a real estate developer, to lend C 300,000 French francs on 2 July. On 25 June, A and B inform C that, unexpectedly, they need the money for their own business. C is entitled to receive the loan, although the loan is generally considered a "real" contract in France.


Pace Law School Institute of International Commercial Law - Last updated January 5, 2007
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