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GUIDE TO CISG ARTICLE 9

Secretariat Commentary (closest counterpart to an Official Commentary)


Guide to the use of this commentary

The Secretariat Commentary is on the 1978 Draft of the CISG, not the Official Text, which re-numbered most of the articles of the 1978 Draft. The Secretariat Commentary on article 8 of the 1978 Draft is quoted below with the article references contained in this commentary conformed to the numerical sequence of the Official Text, e.g., article 8 [draft counterpart of CISG article 9].

To the extent it is relevant to the Official Text, the Secretariat Commentary on the 1978 Draft is perhaps the most authoritative source one can cite. It is the closest counterpart to an Official Commentary on the CISG. A match-up of this article of the 1978 Draft with the version adopted for the Official Text is necessary to document the relevancy of the Secretariat Commentary on this article. See the match-up for this article for a validation of citations to this Secretariat Commentary. This match-up indicates that CISG article 9 is substantially identical to article 8 of the 1978 Draft.


Text of Secretariat Commentary on article 8 of the 1978 Draft
[draft counterpart of CISG article 9]   [Usages and established practices]

PRIOR UNIFORM LAW

ULIS, article 9. ULF, article 13.

COMMENTARY

1. This article describes the extent to which usages and practices between the parties are binding on the parties to the contract [or its formation].

[The addition of the phrase "or its formation" is the only difference between article 8 of the 1978 Draft and CISG article 9. At the 1980 Vienna Diplomatic Conference, "Mr. Farnsworth (United States of America) said that his draft amendment . . . stipulated the usages concerning the formation of contracts could also vary the provisions of the Convention. Examples might arise under [article 16], because it was conceivable that an offer might not be revocable, and under [article 18(1)] because silence could in certain cases, amount to acceptance" (OFFICIAL RECORDS, p. 264).]

2. By the combined effect of paragraphs (1) and (2), usages to which the parties have agreed are binding on them. The agreement may be express or it may be implied.

3. In order for there to be an implied agreement that a usage will be binding on the parties, the usage must meet two conditions: it must be one "of which the parties knew or ought to have known" and it must be one "which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned." The trade may be restricted to a certain product, region or set of trading partners.

[Réczei notes: "It is hard to imagine that for the examination of goods supplied to buyer 'international' usages should have come to be established. This is possible for goods which are traded and sold on the exchange (grain, wool, cotton, metals, etc.) where the quality standards have been defined and are controlled in conformity with exchange usages. In.the majority of sales contracts, however, the method of control is tied to the locality and may not only be of as many kinds as goods or commodities may be objects of the transaction, but depends on the package, quantity and many other circumstances. Unless the parties have agreed on the method of control, the application of local usages can hardly be avoided." Lásló Réczei,"The Rules of the Convention Relating to Its Field of Application and to its Interpretation", Potsdam Colloquium, August 1979 (Oceana 1980), p. 84.

[In its commentary on the language developed by the UNCITRAL Working Group, the International Chamber of Commerce stated: "It is regrettable that [this article] does not deal with local usages. It notes, however, that it is its understanding that even under, the present text so-called local usages are to be taken into consideration in some situations, e.g.where they are internationally known...." (UNCITRAL Yearbook VIII (1977), A/CN.9/SER.A., p. 148). Similarly, Honnold states: "A usage that is of local origin (the local practices for packing copra or jute, or the delivery dates imposed by arctic climate) may be applicable if it is 'widely known to and regularly observed by' parties to international transactions involving these situations. ..." (John O. Honnold,"Uniform Law for International Sales under the 1980 United Nations Convention", 2d ed., (Kluwer 1999) p. 178).

[Local customs, e.g., "customs of the port", can also have an impact. Even Incoterms (1990), which are in most other respects quite detailed, state: "Since [our standard] trade terms must necessarily be possible to use in different trades and regions it is impossible to set forth the obligations of the parties with precision. To some extent it is therefore necessary to refer to the custom of the particular trade place or to the practices which the parties themselves may have established in their previous dealings. ... It is of course desirable that sellers and buyers keep themselves duly informed of such customs of the trade when they negotiate their contract and that, whenever uncertainty arises, clarify their legal position by appropriate clauses in their contract of sale. ..." (ICC Publication No. 460, p. 8).]

4. The determining factor whether a particular usage is to be considered as having been impliedly made applicable to a given contract will often be whether it was "widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned." In such a case it may be held that the parties "ought to have known" of the usage.

5. Since usages which become binding on the parties do so only because they have been explicitly or implicitly incorporated into the contract, they will be applied rather than conflicting provisions of this Convention on the principle of party autonomy [see footnote 1]. Therefore, the provision in ULIS article 9, paragraph 2, that in the event of conflict between an applicable usage and the Uniform Law, the usages prevail unless otherwise agreed by the parties, a provision regarded to be in conflict with the constitutional principles of some States and against public policy in others, has been eliminated as unnecessary.

6. This article does not provide any explicit rules for the interpretation of expressions, provisions or forms of contract which are widely used in international trade and for which the parties have given no interpretation [see footnote 2]. In some cases such an expression, provision or form of contract may be considered to be a usage or practice between the parties, in which case this article would be applied (OFFICIAL RECORDS, p. 19).

[Bergsten states:

"From one point of view a trade usage has a strong resemblance to a statute. ... Nevertheless, a usage is not legislation. If it binds a party, it does so either because he has assented to it, in which case it is clearly part of the contract, or because a person who engages in business must expect to follow the basic patterns followed by others who engage in that business. It is always open to a party to specifically state that he refuses to do so and a specific contract provision in conflict with a usage would constitute such a refusal on the part of both parties.

"In a very real sense, that leads to a hierarchy of norms. The highest level is the contract itself, to the extent it covers the matter. Next come usages which are applicable to the contract. In third place comes the law, in this case the Convention. The hierarchy may seem familiar. Contract breaks usages; Usages break Convention.

"When viewed this way there seemed to be an inversion of the hierarchy. While freedom of contract may lead to a recognition that the norms in the Convention are supplementary and should be overridden by the express will of the parties, it seemed less acceptable that abstract norms in the form of usages should be accorded a higher normative standing than the provisions in the Convention.

"Nevertheless, that was the result of article 9 of ULIS. After having provided in paragraph 1 that parties are bound to usages they have made applicable to their contract, paragraph 2 provided that 'They shall also be bound by usages which reasonable persons in the same situation as the parties usually consider to be applicable to their contract. In the event of conflict with the present Law, the usages shall prevail unless otherwise agreed by the parties.'

"This result may have been acceptable for uniform law which, with all its pretentions to world-wide applicability, was basically conceived by and could be expected to be ratified by Western European States. The reasonable persons mentioned in the provisions were the same Western European businessmen and lawyers who had created most of the usages in question. It is understandable that developing countries and the socialist States of Eastern Europe were not willing to accept such a broad application of usages to the contract.

"The solution adopted in the UNCITRAL Convention had two elements to it. The first was that there are only two types of norms known to the Convention, the terms of the contract and the Convention itse1f. Those usages which are found to be applicable are considered to be part of the contract. In my view this change was more cosmetic than substantive, but it did eliminate certain concerns.*

"The usages considered to be part of the contract are, according to article 9, those of 'which the parties knew or ought to have known and which in international trade [are] widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.' The test is twofold. There is a subjective test that the parties to the contract knew or ought to have known of the usage. There is an objective test that the usage is widely known and regularly observed. Both tests must be met. But the major change from ULIS is that there is a subjective test at all. Freedom of contract also means knowing the content of the contract to which you are being held accountable or, at least, that you individually ought to have known of it. This is not to deny, of course, that there can be a wide range of judgment as to which usages a given merchant ought to know about. This subjective test may be particularly difficult to apply to a large corporation or to a State trading enterprise, but that is a general problem with any subjective test in modern commerce." Eric E. Bergsten, "Basic Concepts of the UN Convention on the International Sale of Goods", in P. Doralt, ed., Das UNCITRAL-Kaufrecht zum Vergleich zum Österreichischen Recht (Vienna: Manzsche Verlags und Universitätsbuchhandlung, 1985), pp. 20-21.]
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*Enderlein & Maskow state: "This somewhat strange juridical construction of a fictitious agreement constitutes a compromise between these States whose aim was to have a normative validity of usages, hence validity brought about directly by virtue of law, and those which would have wanted to permit only the application of agreed usages. But in the end, the result in its substance comes close to a normative validity, which is even strengthened by the fictitious character of an agreement, because on grounds of party autonomy the agreement is on top of the hierarchy of the sources determining the substance of a contract. ..." Fritz Enderlein & Dietrich Maskow, "International Sales Law" (Oceana 1992), p. 68.


FOOTNOTES

1. Article 5 [draft counterpart of CISG article 6].

2. Article 7 [draft counterpart of CISG article 8] provides rules for the interpretation of statements made by and other conduct of a party.


Pace Law School Institute of International Commercial Law - Last updated August 29, 2006
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