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Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods

Professor Jacob S. Ziegel, University of Toronto
July 1981

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Article 8

(1) For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.

(2) If the preceding paragraph is not applicable, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.

(3) In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties.

COMMENT

1. Art. 8 is concerned with rules for determining the parties' intentions where their language or conduct is ambiguous or, quaere, where, to the knowledge of the other party, the first party was operating under a mistaken assumption of fact.

2. It is difficult to generalize about such a broad and ill-defined area. The objective theory of intention is one that is normally applied in Anglo-Canadian Law, [Waddams, The Law of Contract, pp. 94-95], but the theory cuts both ways and if an offeree actually knows or must have realized that the offeror has a different intention or was labouring under a mistake then he can scarcely argue that it was reasonable for him to rely on an objective interpretation of the other party's conduct. [ Smith v. Hughes (1871) L.R. 6 Q.B. 597]. Prima facie, therefore, art. 8(1) and (2) would appear to be compatible with common law doctrine.

3. It seems clear from the language of art. 8 that it applies to the interpretation of the contract as well as its formational phase. Cf. [Secretariat] Commentary, pp. 46-47. It may be questioned however whether in practice it is always easy to distinguish the intentions of the parties, objectively ascertained, from the intention of one of them. This will be particularly true where they have both signed or approved a writing. Subject to this caveat, Canadian common law appears to support the rule in art.8 (3). Cf. Waddams, op. cit., pp. 20-21. Note however that Anglo-Canadian law is more restrictive in admitting extrinsic evidence to interpret a concluded agreement which is not ambiguous and which is subject to the parol evidence rule.

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Pace Law School Institute of International Commercial Law - Last updated April 23, 1999
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