Reproduced with permission of the American Bar Association from 29 International Lawyer 525-554 (1995)
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"For the purposes of this Convention: (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. . . ."
When an enterprise has multiple branches, therefore, one must inquire which branch has "the closest relationship to the contract and its performance. " Presumably the same inquiry would be made when an enterprise acts in a foreign jurisdiction through an agent permanently resident there. The absence of a definition of "branch" creates difficulties principally when an enterprise's presence in a foreign country is less than permanent.
Illustration. Seller is a New York manufacturer of electrical kitchen equipment. Buyer is a French department store. Seller has a sales agent who resides in the United Kingdom and travels throughout Europe for most of the year. While in Paris, the sales agent and Buyer sign a written agreement that Buyer will buy 1,000 electric orange juicers from Seller. The juicers were manufactured in the United States and, at the time of the sale, sit in a duty-free warehouse in the United Kingdom. If Seller performs the contract from the United States, the Convention will govern. If, on the other hand Seller performs the contract through a "branch" in the United Kingdom, the Convention will not apply automatically. To the extent the sales agent has authority to act without specific approval from U.S. headquarters, the stronger the case that Seller is acting through a U.K. branch that is "the closest relationship to the contract and its performance." Here, of course, the sales agent and Buyer could avoid this difficulty by explicitly agreeing to make the Convention applicable (or to exclude it).
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