Colloquies evidencing a lack of consensus as to
meaning of reference to good faith in Article 7
Colloquy at Diplomatic Conference on proposal
to make a more specific reference to good faith
Summary Records of Meetings of the First Committee
Thursday, 13 March 1980, at 3 p.m.
Chairman: Mr. LOEWE (Austria)
(. . .)
40. Mr. BONELL (Italy), introducing his delegation's proposal for a new article 6 [became CISG article 7 ] ter (A/CONF.97/C.1/L.59), said that there had been an exhaustive discussion in the UNCITRAL Working Group as to whether a reference should be included in the Convention to the principle of good faith which, in the view of some delegations, was liable to misinterpretation in an international instrument. His delegation had therefore added a reference to international co-operation to make it clear that only those aspects of the principle of good faith which were internationally acceptable would apply. The exact wording was open to discussion and a formula such as that proposed by the Norwegian delegation (A/CONF.97/C.1/L.28), might serve the purpose. In any case, article 6 [became CISG article 7 ] was not the appropriate place for a reference to a principle of major importance in international trade relations. A separate article was required.
41. Mr. ROGNLIEN (Norway) said that his proposal A/CONF.97/C.1/L.28 was that the reference to the observance of good faith should be transferred from article 6 [became CISG article 7 ] to article 7 [became CISG article 8 ]. He was not opposed in principle to the inclusion of such a reference, but it was not clear from the existing text of article 6 [became CISG article 7 ]how good faith was to be interpreted in practice to general rules of law. It might possibly mean, for example, that if a court were to find that one of the provisions of the Convention ran counter to the observance of good faith in international trade, it need not require it to be applied. As he saw it, the observance of good faith related not to the interpretation of the provisions of the Convention but rather to the contract between the parties, and its proper place was therefore under article 7(3) [became CISG article 8(3) ], which concerned intent. His proposal was similar to that of Italy (A/CONF.97/C.1/L.59), which also proposed the transfer of the reference to good faith to a separate article, but he was opposed to the reference in that proposal to the principle of international co-operation. Parties to a contract were not bound to further international co-operation, at least in their contracts of sale.
42. The CHAIRMAN pointed out that there was a proposal by Sweden (A/CONF.97/C.1/L.52) that article 7 [became CISG article 8 ] should be deleted. He asked representatives who were in favour of the proposal by Italy and Norway to indicate their support, so that a long discussion could be avoided.
43. Mr. KIM (Republic of Korea) said that, as far as the principle of the observance of good faith in international trade was concerned, a distinction should be made between three possible areas of application. The first area was the interpretation and application of the provisions of the Convention, the second (as in the Italian proposal) was the relationship between the parties to a contract of sale, and the third was the determination of the intent of such parties. He believed that the application of the principle of good faith should be restricted to the second area, namely, the relationship between the parties to a contract.
44. Mr. SAMI (Iraq) said he supported the Norwegian proposal, since he shared the view that the principle of observance of good faith should be applied not to the interpretation of the Convention but rather to the contract between the parties.
45. Mr. HJERNER (Sweden) said that the problem of wording the provision dealing with the need to observe good faith had been under discussion in the UNCITRAL Working Group for some considerable time, and the present text represented a delicately-balanced compromise. He did not think that the proposals by Italy and Norway added very much to the original formulation. In his view it was not really necessary to have any provision on the subject of observance of good faith, but if it were decided to include it he would prefer the existing text.
46. Mr. BUHOARA (Romania) said he had substantial difficulties with the Norwegian proposal. Although he could see some merit in the Italian proposal, he would prefer to see the existing text retained.
47. Miss O'FLYNN (United Kingdom) said that, although it was desirable that parties to a contract of sale should act in good faith towards one another in the formation and performance of their contract, she did not think it appropriate to add to the Convention a new article of uncertain meaning such as that proposed by Italy. The principles of good faith which the parties were called upon to observe were not defined; were they to be understood to be principles operating in all Contracting States, or only in those States where the buyer and seller had their places of business? What would happen if the two sets of principles were found to be mutually conflicting? In addition, the legal effect of the Italian proposal was unclear; although it was couched in mandatory terms, there was no provision for the application of sanctions in the event of failure by one of the parties to observe good faith. It was true that article 6 [became CISG article 7 ] made no provision for sanctions, either, but that article was directed towards the courts in the interpretation of the Convention, and not towards the parties to a contract. She was unable, therefore to support the Italian proposal.
48. If the Committee should decide to delete or modify article 6 [became CISG article 7 ], she could support the Norwegian proposal, but would prefer to see the existing text retained.
49. Mr. MATHANJUKI (Kenya) said that he had serious doubts as to the possible effect of transferring the reference to the principle of good faith from article 6 [became CISG article 7 ] to article 7 [became CISG article 8 ]. There had already been a lengthy discussion on how the provision on that principle was to be formulated, and the wording of the existing article 6 [became CISG article 7 ] represented a compromise between various proposals. He did not think the Italian proposal expressed the concept as clearly as the original wording, and it referred only to the contract of sale, whereas article 6 [became CISG article 7 ] referred to the need to observe good faith in interpreting the Convention. He would prefer the original wording.
50. Mr. FARNSWORTH (United States of America) said he too preferred the existing text, which, while not perfect, represented a useful compromise. As had been pointed out, there was some degree of uncertainty as to how the concept of good faith was to be interpreted in an international context. In the discussion in the UNCITRAL Working Group, it had been found difficult to produce concrete examples of how the principle would be applied when proposals similar to the Italian one had been put forward. Although all would agree that, in theory, it was desirable to behave in good faith, he felt that a provision such as the one proposed would be uncertain and dangerous in practice.
51. Mr. EYZAGUIRRE (Chile) said he too preferred the existing compromise text. With regard to the Norwegian proposal, the interpretation of the Convention and the law of contract were two completely different issues, and with regard to the Italian proposal, the existing text of article 6 [became CISG article 7 ] already made explicit the general principles on which the Convention was based.
52. Mr. MASKOW (German Democratic Republic) said he agreed that article 6 [became CISG article 7 ] should remain unchanged. Some reference to the need to observe the principles of good faith should be included in the Convention, in order to allow some flexibility in interpreting its provisions in the interests of furthering international trade.
53. Mr. FRANCHINI-NETTO (Brazil) pointed out that good faith was already understood to be one of the underlying principles of law and was implicit in any legal transaction. He thought it unnecessary, therefore, to mention the principle in article 7 [became CISG article 8 ]. In view of the complexity of the two proposals that had been put forward, he would prefer to see the text of article 6 [became CISG article 7 ] remain unchanged.
54. The CHAIRMAN said that there appeared to be little support for the Norwegian proposal.
55. Mr. ROGNLIEN (Norway) said that, under those circumstances, he would withdraw his proposal.
56. The CHAIRMAN said that the Committee now had before it only the Italian proposal. In the absence of any objections, he would take it that there was a consensus, first, against the adoption of that proposal, and secondly, in favour of the retention of the existing reference to good faith in article 6 [became CISG article 7 ].
57. It was so agreed.
(. . .)
Diplomatic Conference colloquy on proposal to prohibit
parties from departing from obligation of good faith
Summary Records of Meetings of the First Committee
Wednesday, 12 March 1980, at 3 p.m.
(. . .)
(. . .)
53. The CHAIRMAN invited the Committee to discuss paragraph (1) of the Canadian amendment to article 5 [became CISG article 6 ] (A/CONF.97/C.1/L.10).
54. Mr. WAGNER (German Democratic Republic) said that he welcomed the idea contained in the proposed paragraph (1) but found the formulation unduly complicated. In order to simplify it, he proposed the deletion of the concluding phrase, beginning with the words "but the parties may . . ." and ending with the words "manifestly unreasonable".
55. Mr. SHORE (Canada) accepted that proposal.
56. Mr. WAITITU (Kenya) fully supported the Canadian proposal for article 5 [became CISG article 6 ], paragraph (1).
57. Mr. ROGNLIEN (Norway) said that he was not altogether satisfied with the proposed paragraph (1). The second sentence appeared to suggest that parties who agreed to exclude the Convention wholly might thereby be able to exclude "the obligations of good faith, diligence and reasonable care" prescribed by the Convention, even if such principles were to be contained in article 7 [became CISG article 8 ] or part II of the Convention.
58. Mr. HJERNER (Sweden) said that he could not support the Canadian proposal precisely because of the reference it made to the three principles mentioned by the previous speaker. He saw no mention anywhere in the draft of the principles of "diligence and reasonable care"; as for the principle of "good faith", it was mentioned only once, in article 6 [became CISG article 7 ], but in a totally different context.
59. Mr. SHORE (Canada) explained that the present text of article 5 [became CISG article 6 ] would enable the parties to a contract to exclude any provision of the Convention whatsoever. They ought not, however, to be able to exclude a provision such as that contained in article 6 [became CISG article 7 ], which required the parties to perform their contractual obligations in good faith. The same was true of the other two principles mentioned in the second sentence of the Canadian text.
60. Mr. FARNSWORTH (United States of America) said that, like the Swedish representative, he could not support the Canadian amendment. An a contrario interpretation would suggest a general obligation of good faith.
61. Mr. KIM (Republic of Korea) said that the Canadian proposal was unacceptable as a matter of principle. The exclusions covered by article 5 [became CISG article 6 ] were confined to the contractual obligations between the parties. There could be no question, for example, of excluding article 2 on the scope of application of the Convention, or the principle of good faith.
62. Mr. DABIN (Belgium) said that there were many provisions besides those of good faith, diligence and reasonable care that were fundamental. They included article 23 [became CISG article 25 ] on fundamental breach, article 37 [became CISG article 39 ], paragraph (2), on the obligation to give notice, article 44 [became CISG article 48 ] on the right to remedy failure to perform and article 65 [became CISG article 79 ] on exemptions.
63. The CHAIRMAN asked if the Committee wished to adopt paragraph 1 of the Canadian amendment (A/CONF.97/C.1/L.10) as sub-amended by the German Democratic Republic.
64. Noting that a substantial majority was against the proposal, he said that if there were no objections, he would take it that the Committee rejected it.
65. It was so agreed.
(. . .)
Diplomatic Conference colloquy on proposed
reference to pre-contractual liability
Tuesday, 18 March 1980, at 3 p.m.
(. . .)
77. The CHAIRMAN drew attention to the proposal by the German Democratic Republic (A/CONF.97/C.1/L.95) for a new article to be added to part II.
78. Mr. PLUNKETT (Ireland) asked whether the proposal envisaged that compensation would be payable even if no contract had been concluded, or if a contract had been concluded, whether it should be payable for something other than breach of contract.
79. Mr. MASKOW (German Democratic Republic) replied that it was the essence of his proposal that compensation for expenses could be claimed even if there were no contract.
80. Mr. BONELL (Italy) strongly supported the proposal. His delegation had already submitted a proposal along similar lines. The existing text of the Convention did not take sufficiently into account cases where no contract was concluded but the parties had engaged in detailed negotiations at the precontractual stage. Such cases needed regulation because of the risk that one of the parties might abuse its position and act in such a way as to damage the interests of the other party. He thought the drafting of the proposal could be improved, notably by the deletion of the phrase "in the course of the preliminary negotiations", and also by the inclusion of a phrase to cover the situation in which the party had not necessarily had expenses, but had suffered damage. He suggested that an ad hoc working group be set up to produce an agreed text.
81. Mr. SCHLECHTRIEM (Federal Republic of Germany) sympathized with the object of the proposal but considered it much too far-reaching. Such a general clause might change some of the solutions of the draft, e.g., the provisions dealing with the obligations of the parties or with the revocability of the offer. It would touch on the problem of form requirements and would also affect matters outside the scope of the Convention such as the avoidance of the contract for errors, or the authority of agents.
82. Mr. BENNETT (Australia) said that he had great difficulty with the proposal. It referred to a failure in duty to take reasonable care, a notion that was not found anywhere else in the Convention. It was not clear what was the standard of reasonable care that was envisaged. The problem was an important one and not merely one of drafting.
83. Mr. KRISPIS (Greece) said he was inclined to support that view. He wondered whether there was any connection between the concept of reasonable care and the concept of good faith in general.
84. Mr. DABIN (Belgium) supported the proposal of the German Democratic Republic which should serve to resolve some difficult issues, e.g., the confidential nature of technological information, raised by the conclusion of international contracts where preliminary negotiations were lengthy. He admitted that the draft Convention before them did not in fact cover the pre-contractual phase other than the most standard of its aspects, the making of a specific offer and its corresponding acceptance. Although the proposal raised some difficult issues, they might be resolved by discussion in a working group.
85. Mr. DATE-BAH (Ghana) could not accept the proposal, which he saw as a further attempt to import the concept of good faith into the Convention, a concept which had caused great difficulty to the common law countries. It had been agreed as a compromise to introduce that concept into article 6 [became CISG article 7 ], but it was not appropriate in the present context.
86. The CHAIRMAN said that as there appeared to be a majority against the proposal by the German Democratic Republic (A/CONF.97/C.1/L.95), he would, if there was no objection, consider it rejected.
87. It was so agreed.
(. . .)