(a) if a party has more than one place of business, the place of business is
that which has the
closest relationship to the contract and its performance, having regard to
the circumstances
known to or contemplated by the parties at any time before or at the
conclusion of the
contract;
(b) if a party does not have a place of business, reference is to be made to
his habitual
residence.
Scholarly writings on this article
- Selected monographs and anthologies (English language)
- Selected law journal articles and other commentaries
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Words, phrases and concepts
- "closest relationship". Winship advises that "the term 'closest relationship always admits a certain degree of doubt." He states:
"It is never easy to assess such a relationship, and not only for the purposes of CISG. For instance, where the applicable law has to be applied in the absence of choice, reference is frequently made to the law of the country with which the contract is 'most closely connected." But what does this phrase mean? the Convention on the Law Applicable to Contractual Obligations provides that in the absence of choice a contract will be governed by the law of the country with which it is most closely connected (Art. 4). This is followed by a large variety of presumptions, such as the country where the party is to effect the 'characteristic' performance, or the country of the habitual residence, central administration, principal place of business, or business other than the principal place of business. Th[at] Convention goes on to provide that these connecting factors do not apply if the characteristic performance cannot be determined and that the presumptions be disregared it it apears from the circumstances as a whole that the contract is more closely connected with another country. Does this embarras de richesses provide guidance? There is little doubt that the test of 'closest relationship' or 'connection' is far from unambiguous; anybody could refer to the connection which serves his purposes best. "Mutatis mutandis the situation is by and large the same in respect of Article 10. . . . [However], Article 10(a) does provide some guidance to the interpretation of 'closest relationship'. The place of performance may in many cases be most relevant since 'there is a necessary link between the place of business and . . . the performance of the contract'. In other cases the circumstances known to or contemplated by the parties before or at the conclusion of the contract may be decisive. Thus the relevant place of business is that which is the most favorable from the point of view of the contract and its performance. This sound reasonable even if it is not the stone of wisdom. There may also be other aspects to be taken into consideration; perhaps the most important is not to abandon the international character of the contract which could bar the homeward trend. If the main place of business is taken into consideration instead of closest relationship, what is essentially a domestic transaction may be converted into an international transaction and vice versa. . . ." Peter Winship, in: Nina M. Galston & Hans Smit eds., International Sales: The United Nations Convention on Contracts for the International Sale of Goods (Matthew Bender 1984) 2-28/29 [citations omitted].
Editorial remarks (Editor: Albert H. Kritzer). Many of us when we draft contracts have been accustomed to "boilerplate" language that identifies each party by its principle place of business or place of incorporation. For purposes of the CISG, the recommended approach is to identify in your contract the place of business that is most relevant for purpose of the contract and its performance.
the transitory agent. Honnold states: "During the preparation of the Convention, some delegates were concerned lest 'place of business' be construed to extend to a hotel room or other temporary place where a travelling agent might conduct negotiations. Referring to a 'permanent' place of business presented drafting difficulties, and most delegates concluded that temporary sojourns would not establish a 'place of business'. The term that corresponds to 'place of business' in the official French text is etablissement and in the official Spanish test is establecimiento -- words that seem to be inconsistent with a temporary stopping place. Moreover, . . . Article 10(a) points to the place of business "which has the closest relationship to the contract and its performance"; the Convention's use of 'place of business' in the context of Articles 24, 31(c), 42(b) and 69(2) shows that this term refers to a place for the continuing conduct of business." John O. Honnold, Uniform Law for International Sales (Kluwer 1999) 132 [citations omitted].
- reasonableness: Although not specifically mentioned in this article, reasonableness is a general principle of the CISG
Pace Law School Institute of
International Commercial Law
- Last updated January 22, 2001
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