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Reproduced with permission of the author. This is a pre-publication version of the final article which was published at 6 Journal of Private International Law 417 (2010) available at Hart Publishing.

Green Eggs and Ham: The CISG, Path Dependence, and the Behavioural Economics
of Lawyers' Choices of Law in International Sales Contracts

Lisa Spagnolo

Keywords: Choice of law, norms, CISG, international sales law, behavioral economics, law and economics, opting out, bargaining strength, institutionalization, learning costs, game theory, group polarization, Vienna Sales Convention, satisficing, aspiration level, information costs, information asymmetry, moral hazard, market distortion, heuristics, unfamiliarity, herd behaviour, path dependence, agency costs, network effects, behavioural economics, cascades, social cascades, commodities, string transactions

JEL Classifications:   C70,C71,C72,D21,D23,D60,D61,D62,D63,D80,D81,D82,D83,F23,H30,H32,F42,K12,L14,A12,P45,N80


Why do lawyers in some jurisdictions continue to 'automatically' exclude the 1980 UN Convention on Contracts for the International Sale of Goods (CISG) in their choices of law for international sales contracts? Why do lawyers in other jurisdictions approach the decision very differently? Why do standardized commodity contracts universally opt out of the CISG?

This article identifies the key reasons for opting in or out of the CISG across jurisdictions and markets, and then turns to economics and psychology in order to expose the underlying causes for choices of law for international sales contracts.

A number of perspectives are utilized within this analysis: neoclassical economics, including agency costs, information costs, moral hazard and market distortion; rational decision making within game theory frameworks under different jurisdictional background conditions; behavioural economics, including notions of path dependence and satisficing; psychological and behavioural perspectives including heuristics and group polarization; and finally, the forces behind institutionalization of choices of law and network effects.

The breadth of this approach provides new insight into the reasons for choices of law, and enables a thorough analysis of current and future trends in exclusion of the CISG. The author concludes that choices of law in jurisdictions that presently overwhelmingly favour 'automatic' exclusion of the CISG will inevitably change.


We all know the story of Sam-I-Am and the grouch Knox.[1] The persistence of 'Sam I Am' eventually pays off, but for most of Dr Seuss's Green Eggs and Ham, Sam tries to persuade the rather irrationally negative Knox of the wonders of the culinary delight in question. Although lawyers don't generally face negotiations on top of trains and underwater, they do, at least in some jurisdictions, appear to display the same irrationality - or stubbornness -in being coaxed to taste the advantages of the UN Convention on Contracts for the International Sale of Goods, better known as the CISG or Vienna Sales Convention. Even though the CISG has been adopted by some 74 nations, in some places, notably common law jurisdictions such as the US, Australia and Canada, it has "barely registered on the consciousness" of lawyers.[2] When it comes to choices of law in international sales contracts in such jurisdictions, the majority of lawyers simply take the easy route and exclude the CISG - they 'opt out,' since if they don't, the CISG will apply by default.

While exclusion of the CISG can sometimes be justified by proper legal evaluation, well considered decisions do not account for the bulk of CISG exclusions, nor for variations in opt-out levels between market sectors and jurisdictions. It is to these issues that this article is addressed.

The CISG's aim was to provide a neutral alternative law designed specifically for international rather than domestic sales.[3] Rather than one or both parties being stuck with an unfamiliar law, it provides a level playing field - and thus a platform for more efficient contractual negotiations and dispute resolution.[4] There is, of course, a hitch -the CISG cannot hope to attain its goal of reducing transaction costs and facilitating trade if it is unused, untasted. The greater the rate of opt-outs, the less likely the CISG will achieve its aim. Thus frequent exclusion of the CISG stands as a prime threat to the efficiency gains promised by harmonization of international sales law.

In this article, I will analyse the fundamental economic and psychological causes behind the prevalence of opt-outs in some jurisdictions and markets. Section B begins with a brief overview of the positions taken in various jurisdictions in relation to exclusion of the CISG. Section C discusses evidence as to why those positions prevail, and turns to the commodities sector as an extreme example of opt-outs. The central part of the article is Section D which seeks to extensively explain how the current situation arose through psychological, economic, game theoretic and institutional perspectives. The same tools are then utilized once again to examine how potential processes of change may work in high exclusion jurisdictions to alter choices of law in the future.

While the frameworks in this article can help explain the reluctance to utilize other harmonized law such as the UNIDROIT Principles of International Commercial Contracts or Principles of European Contract Law, or indeed many other manifestations of lawyer behaviour, special features of the CISG such as its status as hard law make it a particularly useful case-study for the present discussion.


CISG exclusions are indeed quite common in certain jurisdictions. We have data of varying quality for a few jurisdictions.[5] In the US, various studies report between 55-71% of lawyers 'typically/generally' opt out.[6] In Germany around 45% of lawyers "generally/predominantly" opt out.[7] In Switzerland the figure is approximately 41%,[8] and 55% for Austrian lawyers.[9] However, it has been reported that just 37% of Chinese lawyers typically opt out.[10]

If it seems that there is not much difference between, say, 55% in the US and 37% in China, think again. Data reveals that the Chinese trend in favour of the CISG runs much deeper. Not only do Chinese lawyers "generally opt out" at comparatively lower rates, but the figure for those that "seldom or never" opt out is much higher - potentially up to 64%, compared with no more than 24% and 29% in Germany and the US.[11]

For present purposes then, I will categorize the US as occupying one end of the spectrum, that of prevalently 'blind' or 'automatic' opt-outs from the CISG in practice, and China at the other end, tantamount to being a 'pro-CISG' jurisdiction. Although we do not have data yet, Canada and Australia seem to be aligned with the American position.[12] Switzerland, Germany and Austria, in that order, appear to fall between the two extremes. My question is, why is it so?


The key factors in choices of law in international sales contracts, specifically the decision to opt in, default into, or exclude the CISG, can be summarized as: unfamiliarity, learning costs, bargaining strength, and substantive concerns.

1. Unfamiliarity

Obviously this is what drives Mr Knox's proclaimed dislike of verdant or porcine delicacies. Lawyer unfamiliarity with the CISG seems to vary markedly depending on jurisdiction. Baseline awareness rates are perhaps most telling: from around 44% in the US,[13] to much lower rates in Germany,[14] Austria [15] and in Switzerland, where it was recently reported that less than 2% had lawyers were unaware of it.[16] Anecdotally, it is said to "barely register[] on the consciousness" of Canadian lawyers,[17] is not at all well known in Australia,[18] and is currently in what has nicely been described as a "sleeping beauty slumber" in New Zealand.[19] Where lawyers are completely unaware of the CISG, it may apply by default if no choice is made, or by choice of law of a Contracting State without exclusion of the CISG.[20] Dire unfamiliarity in some jurisdictions can be contrasted with the very good familiarity found in China and Denmark.[21]

A less extreme form of unfamiliarity exists when a lawyer knows of the CISG, but has insufficient familiarity to properly determine whether it is the better choice for a given situation. Even where baseline familiarity levels are very high, the depth of familiarity will naturally vary between lawyers,[22] and can range from simply knowing it is 'something to be excluded' to something more, but still too sketchy to enable any meaningful assessment of advantages and disadvantages.[23]

Unfamiliarity has long been blamed for opt-outs,[24] and rightly so. A small survey indicated that possibly 16% of US lawyers exclude the CISG "principally" due to unfamiliarity,[25] and insufficient familiarity seems significant in choice of law decisions in other jurisdictions too.[26] Further, these figures might under represent the extent to which unfamiliarity drives exclusion, since in many more cases it is a significant but not leading reason.[27]

2. Learning Costs

There are significant costs involved in becoming proficient in any area of law. One reason for excluding the CISG is the cost in terms of time and effort to become familiar with it, as Ziegel has pointed out.[28] Flechtner argues large upfront investment in familiarization 'start up' costs can be amortized over long periods.[29] There is much evidence to support the idea that the initial costs of becoming familiar with the CISG, or learning costs, are significant in choices of law.[30]

How significant learning costs are for an individual lawyer will depend on which jurisdiction the lawyer is in. Arguably, learning costs are much higher in some jurisdictions than others, for three reasons: education, dispute exposure and influence on domestic law.

Obviously, exposure to the CISG at law school influences preferences for opting out amongst lawyers.[31] In countries where study of the CISG is compulsory, well-integrated within texts, or examinable, lawyers tend to be more familiar with it. China, Denmark, and also Germany fit at least some of these criteria.[32] In China, the CISG is part of the compulsory curriculum, and examinable for profession qualification within the national bar exam.[33] Exposure in law school is minimal in Australia, New Zealand, Canada and Italy, where familiarity is anecdotally low, at least amongst domestic lawyers.[34] There are some signs of improvement in US law schools.[35]

In jurisdictions producing greater quantities of CISG dispute work, there are bound to be more lawyers who have made the investment in familiarization with the CISG. China is producing many CISG cases.[36] I have argued elsewhere that a tentative correlation can be observed between rates of CISG exclusion and dispute work exposure in lawyers by using case numbers as a proxy.[37] Even allowing for underreporting and size, Canadian, US and Australian lawyers are relatively rarely involved in CISG dispute work.[38] By contrast, 70-78% of German, Austrian and Swiss lawyers have encountered the CISG in dispute work.[39] Not only are such lawyers forced into familiarity, but they are in a better position to appreciate their ability to amortize learning costs.

Finally, where domestic law has been influenced by or modelled on the CISG, lawyers might (justifiably or otherwise) perceive CISG learning costs as lower.[40] This situation exists to an increasing degree in many parts of the world, notably including China and increasingly, the EU member states.[41]

It is the combination of these three elements: educational coverage and imperative, extent of dispute work exposure, and whether domestic law has been influenced by the CISG, that will ultimately determine the learning costs facing lawyers in a particular jurisdiction. Learning costs obviously influence familiarity; familiarity in turn affects learning costs. The point at which a jurisdiction balances the inverse relationship between them in turn predisposes the jurisdiction's legal profession toward or against exclusion of the CISG. For example, in 'pro-CISG' China where opt-out propensity is lowest, all three combine to reduce learning costs: high compulsory levels of forced exposure at law school, frequent dispute work and a domestic legal regime shaped on the CISG. By contrast, in Australia, Canada, and the US, all three combine to produce high learning costs: low levels of exposure in law school, little dispute work, and domestic regimes untouched by the CISG's influence. Consequently, higher exclusion rates appear to exist in these jurisdictions.[42]

My contention is that familiarity is driven by learning costs, and taken together, they explain the greater reluctance of lawyers in some jurisdictions to properly consider the CISG in choices of law. To some lawyers, the eggs look a far more palatable yellow, while others face a less appealing green! However, reduced learning costs and improved familiarity alone cannot guarantee lower exclusion rates.[43]

3. Bargaining Strength

Bargaining strength probably influences choice of law in at least 26% of cases.[44] A counterparty with superior bargaining strength frequently gets its preferred choice of law, just because it can. Even if the lawyer acting for the weaker party wants the CISG to apply, the lawyer will often have little choice.[45]

However, bargaining power can also work the other way.[46] A stronger 'pro-CISG' party can insist on the CISG.[47] There has been a relative increase in bargaining power of Chinese traders in recent years, and corresponding relative decrease in other countries. This means more often than not, that Knox-like 'automatic' exclusion preferring lawyers from jurisdictions like the US increasingly face more powerful Chinese parties whose Sam-like lawyers might insist on the CISG.

We might already be experiencing a taste of what is to come. US opt-outs are arguably slowly decreasing.[48] Flechtner commented in 2007 that more "front end" queries from US lawyers were coming his way, rather than simply reactionary litigation queries.[49] There are also signs of trends moving away from exclusion in Germany and Italy, although opt-outs are nonetheless still prevalent.[50] Further, comments in surveys and anecdotal accounts indicate a Chinese influence.[51] 'Pro-CISG' Chinese lawyers are more likely to want the CISG to apply, and their clients are more likely to possess enough economic clout to ensure it does.

4. Substantive Concerns

In his analysis of the causes of opt-outs, Prof. Ziegel refers to three rationales for exclusion, and elaborates upon "legal" reasons of coverage and reservations by Contracting States.[52] There are misconceptions, still fuelled by US courts, about a scarcity of CISG cases.[53] Lower familiarity levels inevitably leverage an unwarranted impression of uncertainty. Some concerns are indeed rational. I do not intend to go through them here, but they are significant. The CISG is not the right law for every deal, nor was it ever intended to be.

5. Market Sector

Not every choice of law is negotiated. Sometimes the decision is effectively pre-ordained by standard form contracts designed and sanctioned by industry bodies. Trade associations involved in particular commodities publish and update standard terms which are then commonly used for trade in that commodity.[54] Universal exclusion of the CISG in commodities contracts, usually in favour of English law, has been widely noted.[55] Examples include the rules of FOFSA and GAFTA.[56]

In commodity markets, the influence of the trade association upon choice of law is profound. Learning costs or familiarity of either side will be inconsequential, since the preferences of individual lawyers or parties matter little. It follows the substantive suitability of the CISG as opposed to English law will usually have no bearing on choice of law in individual commodities transactions. However, its comparative substantive suitability is (or should be) relevant to the trade associations that design standard form contracts.

There is debate on the suitability of the CISG for commodities markets. Commodities trade has been singled out by some as a transaction for which the CISG is inappropriate, on the basis of substantive features such as good faith, the strict test for termination in fundamental breach, cure, price reduction, and method of damages calculation.[57] These are said to make the CISG less certain and precise than English law.[58]

The legal certainty offered by English law is held up as particularly suited to commodities transactions, including "hair trigger" availability of termination.[59] One such proffered feature is the 'perfect tender rule,' whereby the buyer can reject goods or documents that do not strictly conform.[60] Absent from English law is a general principle of good faith.[61] Although the harsh nature of easy termination allows buyers in falling markets to take opportunistic advantage of trivial non-conformities,[62] the strictness of the law is said to enable parties to quickly ascertain their position without legal advice.[63] To quote Macdonald in a different context, the argument is that for commodities, a "Toyota bright line" law can be more effective than a more nuanced legislative "Lamborghini."[64] Professor Bridge points to the "symbiotic" development of a century of English caselaw and the standard forms used in commodities markets, which grew side-by-side with the English sales law developed in those cases, the implication being that there is a seamless relationship between them, resulting in certainty.[65]

Others argue the CISG can easily accommodate commodity transactions. They contend its choice does not threaten legal certainty because the commercial context of commodities trade dictates,[66] even if not expressly agreed, that time and documentary performance is "always of the essence" so that delay or non-conforming documentary performance is necessarily fundamental, and termination is more readily available than for other transactions.[67] They assert the right to cure will not arise for commodities contracts because cure would normally cause the buyer unreasonable inconvenience,[68] such as inability to immediately on-sell obligations, a key characteristic of string transactions.[69] Thus the CISG would operate in a manner similar to the perfect tender rule for commodities.[70] It has been convincingly argued the tools for damages under the CISG are well suited to commodities.[71] Unlike English law, the CISG has provisions regarding delivery of documents as it was always envisaged that it would be capable of application to documentary sales.[72] The CISG has previously shown itself adaptable to widespread express terms.[73]

Other issues are yet to be debated, such as the manner in which the CISG treats the interlocking nature of string contracts, particularly the effect on rights to physical delivery for intermediate buyers when commodity sales on CIF terms are linked by transfer of a notice of appropriation. Another issue is the effect of events hindering performance. Standard terms detailing the effect of what might otherwise be events excusing performance pursuant to Art. 79 will undoubtedly vary the effect of that provision in the same way as they presently prevail over the English doctrine of frustration.[74]

While it is true that English law has developed symbiotically with commodities trade, it may always have given the appearance of being stricter than it was in fact,[75] and its relative suitability may be slowly subsiding. The so-called perfect tender rule was always subject to limitations,[76] and its strictness as a "hair trigger" for termination is somewhat deceptive.[77] EU law has made noticeable inroads into English law, and although so far this has not had an impact on commodities [78] its future influence is yet to be seen - and will certainly become significant if the DCFR were adopted.[79] The requirement of documentary conformity is also not crystal clear; it is not always readily apparent to parties whether a term is a condition or warranty,[80] and development of the third category of intermediate terms for which serious or substantial breach is required before termination is justified has complicated the clear 'bright line.'[81] Waiver, the principle of inconsistent behaviour and rules on express contrary terms further dilute the rigour of English law and therefore its relative suitability.[82] It is at least arguable therefore, that substantive differences are not significant.

In any event, the sheer dominance of any particular law in a market sector undoubtedly and drastically clouds perceptions of its substantive merit as choice of law.[83] Additionally, it seems probable that there are more than purely substantive reasons for the decisions of trade associations to opt out of the CISG, a point to which I will return later.[84]


Each lawyer viewing the choice of law decision is faced with a different combination of factors. For some, a combination of low learning costs, high familiarity and strong bargaining power makes a choice of the CISG more likely. For others, low familiarity levels fuelled by high learning costs will predispose them to irrational opt-outs. For present purposes it is useful to surmise that these factors have led to 'pro-CISG' China on the one hand, and on the other, the 'automatic' opt-out jurisdictions of Canada, Australia, and so far, the US. Of course, there are at least two sides to an international sales contract. This section examines the interactions and dynamics of lawyers and counterparties on choice of law in terms of behavioural economics, psychology, neoclassical economics and game theory and then finally examines the special situation of institutionalization of choice.

The frameworks of neoclassical and behavioural economics are well known. Neoclassical economics proceeds on the basis that perfectly competitive markets efficiently optimize expected utility. It assumes parties make rational choices on the basis of perfect information in the absence of market distortions caused by information costs, transaction costs and externalities.[85] Implicitly, rational choice theory assumes actors make decisions on the basis of a cost-benefit analysis.[86] Its so-called rival, behavioural economics, attacks the assumption of rational choice and perfect information.[87] Behavioural economics draws on cognitive psychology to give insight into what appear to be irrational choices in the real world.

Rational choice theory still has useful predictive qualities,[88] provided its limitations are acknowledged. Behavioural economics and cognitive psychology provide nuances that reflect real life complexities, but for this reason can lack predictive power. Institutional economics draws together elements of neoclassicism with structural constraints.[89] Since each offers benefits, I will draw on them all to analyse how unfamiliarity, learning costs, bargaining strength and institutionalization contribute to choices of law.[90]

The practice of 'automatically opting out' of the CISG involves a choice of law excluding application of the CISG without proper consideration as to whether it is the more appropriate law for the transaction in question. In jurisdictions displaying both high levels of preference for exclusion and high unfamiliarity, it is likely that a great deal of 'automatic' or 'blind' opting out is going on. This is arguably true of the US, and probably so in Australia and Canada.

In neoclassical terms such decisions can be described as irrational because they are based on imperfect information and do not involve cost-benefit analyses. A choice of the CISG can bring many advantages.[91] Consequently, it is inevitable that such decisions frequently (but not always) result in suboptimal choices of law. Despite its suboptimality, 'blind' opting out has shown remarkable persistence - but why is the most interesting question.

1. Path Dependence

Businesses are unlikely to ponder choices of law in everyday transactions. Intervals between seeking legal redrafts of general conditions can be characterized as periods of 'path dependence'. Path dependence occurs when people are "locked-into" suboptimal choices because of a historical path of events.[92] By relying on what they have done in the past such choices violate the neoclassical assumption of deliberative, rational choice.[93] Effectively the decision maker ignores any potential gains from more suitable law.[94]

Legal advice is an information cost for business.[95] When clients seek legal input into drafting their standard or individual contract terms, the lawyer is paid to determine the best choice of law in a rational manner, by exercising his/her professional judgement. It is at this point that 'automatic' opt-outs become a serious legal and ethical issue. For lawyers, opting out as a means of avoiding an unfamiliar law is no more than an abdication of professional responsibility. The CISG offers advantages over domestic law in many situations.[96] Even if a client prefers or insists on exclusion, the lawyer has a duty to advise on the advantages forgone to ensure the client makes an informed choice.[97] By not even considering whether or not the CISG is appropriate in the circumstances, lawyers act against their client's best interests.[98] The path dependent lawyer also risks liability for malpractice [99] and reprimand by the lawyer's professional practice body.

An excluding lawyer might argue their client receives an advantage from the lawyer's expertise in their own domestic law relative to the other party's lawyer. Nonetheless the very same ethical dilemma is involved. The lawyer cannot seriously contend the preferred choice, even with the advantage of relative expertise, is superior unless the lawyer is sufficiently familiar with the substantive, strategic and systemic advantages of choosing the CISG.[100] Until then, the assessment is purely guesswork, and merely glosses the 'blind' exclusion.

Learning effects and switching costs are a key characteristic in path dependent behaviour.[101] The existence of 'automatic opt outs' in high exclusion jurisdictions have become self-reinforcing informal institutions. Lawyers can obtain increased returns by sticking with familiar law since they have already invested in that knowledge. Pressure to look at unfamiliar alternatives will be resisted because it depreciates their existing human capital.[102]

Signs that lawyers are making 'automatic' choices to exclude the CISG can be detected in choice of law clauses. A number of cases demonstrate choices made in ignorance of the CISG. In the US case of Asante Techs., Inc. v PMC-Sierra, Inc.,[103] the choices of law in each side were respectively:

"APPLICABLE LAW. The contract between the parties is made, governed by, and shall be construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein, which shall be deemed to be the proper law hereof." "

APPLICABLE LAW. The validity [and] performance of this [purchase] order shall be governed by the laws of the state shown on Buyer's address on this order."(the buyer's address was shown as in San Jose, California).

The court correctly held the CISG applied because it is the law of the Canadian province of British Columbia, and the US state of California. No doubt the decision came as a shock to those who drafted the clauses, who (if they at all turned their mind to the matter), had probably felt they had opted out.

A more subtle and telling example of the exclusion reflex exists in the wording of a choice of law clause in the recent Australian case of Olivaylle Pty Ltd v Flottweg GmbH,[104] where the relevant document contained a retention of title clause and then the following phrase:

"Australian law applicable under exclusion on UNCITRAL law."

The drafters seemed to grasp that selection of Australian law would have led to the CISG, but did not understand that opting out of the CISG requires clear intent.[105] The Federal Court of Australia had to resort to a number of indicators before it eventually concluded there was an intention to exclude the CISG.[106] However, the imprecise attempt indicates a high degree of unfamiliarity, to the extent of being unable to accurately identify the CISG.

Lawyers who 'automatically' opt out inevitably make frequently suboptimal choices involving efficiency losses for their clients. In the US, Canada and Australia, uninformed and inefficient choices by lawyers may be more common than in other jurisdictions. The exclusion in Olivaylle [107] was probably one such suboptimal choice. The contract contained terms for something akin to a Nachfrist and allowed for 'price reduction,' concepts for which the CISG is perfectly adapted but which are foreign to Australian contract law - so much so that the court actually drew upon the CISG in construing the contract, although it was not applicable per se.[108] Ultimately, the choice of law ran the risk that the court in its discretion might have chosen not to refer to the CISG for guidance, and consequently could have interpreted the clause in a manner not intended by the parties. The obvious appropriateness of the CISG as a choice of law in this case underscores the knee-jerk nature of the CISG's exclusion.

2. Agency, Heuristics & Moral Hazards

One can cynically view the lawyer's behaviour in 'blind' opt-outs as simply a matter of self-interested rational choice by an agent seeking to maximize short-term gains by earning the same fee without investment in learning costs, and without losing business. In high opt-out jurisdictions, lawyers might feel that there is not much chance of clients being alerted to the inadequacy of their advice, given that so few of their peers are familiar with the CISG.[109] They might therefore prefer to run the risk rather than invest in familiarity.[110] Or, they might be willing, but not have the time. Either way, it is the client who unwittingly bears the detrimental effect of any inefficient choice of law.

The problem is really one of information asymmetry.[111] Where CISG unfamiliarity is high, lawyer and client interests unfortunately diverge.[112] The thought process of the lawyer who simply opts out due to unfamiliarity is not at all obvious to the client, who relies on the lawyer's 'expertise.'[113] The complexity of the problem makes it difficult and costly to monitor the quality of services for all but highly sophisticated clients with the time and expertise to critically evaluate such choices in-house.[114] However, for most clients this is not a feasible solution to what is a classic principal-agency problem. In neoclassical terms, the information asymmetry creates a market distortion.[115] Presuming the lawyer cannot recover learning costs from the client,[116] there is a risk that the bargain will not be mutually advantageous.[117] In any event, the gap between client perceptions of lawyer expertise and the reality of lawyer unfamiliarity or shirking precludes optimal allocative efficiency in the jurisdiction's legal services market because the true nature of the bargain is not reflected in pricing of legal fees.[118] Further, the client in receipt of inexpert advice bears the brunt of potentially suboptimal choices of law.[119]

The above presents an unflattering picture of lawyers as callous, ruthless and unethical. However, the reality, while no more flattering, is at least less calculating. In truth, where familiarity is low, the lawyer's decision is probably a simple function of unfamiliarity and path dependence. If the lawyer is completely unaware of the CISG, it will be a case of ignorance, not one of cutting corners. If he knows of it but only has a low level of familiarity, imperfect information can still cloud his judgment. He may be unaware of the advantages his client will lose by opting out, harbour unwarranted substantive concerns or an exaggerated perception of uncertainty in its outcomes.[120] Conversely, there may be an underestimation of choice of forum risks.[121] If a choice of forum clause fails to attain the intended result, it may affect the efficacy of the choice of law. The chosen law may unexpectedly become a foreign law to be proven as fact and applied by a tribunal unfamiliar with that law; both a costly and risky exercise. Further, in such jurisdictions, there may be an element of personal reputational risk, discussed further below.[122]

Past choices of law are irrationally attractive due to a cognitive bias known as the status quo bias.[123] It has been empirically demonstrated that this cognitive bias undermines one of the foundational elements underlying rational analysis and Coasian theory.[124] Potential losses from change are overestimated, while potential gains tend to be underestimated. An example given by Goldstein & Gigerenzer [125] is the neophobia of rats. They instinctively know everything they have eaten to date has, necessarily, failed to kill them, hence their reluctance to eat anything new. Without wishing to compare our noble profession to rodents, lawyers in certain jurisdictions have an irrationally inflated fear of the CISG.[126] It is a case of 'green eggs and ham.'[127] The unfamiliarity heuristic will be heightened if the lawyer never encountered the CISG in law school, or it looks very different from local domestic law, or because he has never encountered it in dispute work (or all three) -so their risk averse rule of thumb is to opt out, if the other party will let them.

We can dig a little deeper into the decision making process. Like many highly complex decisions, choices of law must often be made quickly, in less than ideal conditions.[128] Rather than optimize utility, we tend to cope with complexity by simplification of decision making strategies. Sticking to what has served us well in the past is one such strategy. Under constraints of limited time, knowledge and capability, every lawyer employs "bounded rationality"[129] to streamline decision making.[130] There is nothing wrong with that, provided the shortcut or heuristic fits the jurisdictional environment in which the lawyer practices.[131]

The 'automatically' excluding lawyer is making do, or "satisficing."[132] Like the rat, the lawyer prefers to stick to the familiarity of 'generally opting out.' Satisficing is one form of bounded rationality, employing a particular heuristic, the aspiration level, as the satisfaction threshold.[133] Rather than search for the "sharpest needle in the haystack," the decision maker settles for 'one which is sharp enough' for sewing.[134] Once this aspiration is achieved in a particular deal, no further thought is given to potential alternative choices of law.[135]

Aspiration levels serve to reduce search costs in complex problems by limiting outcomes to a confined number considered 'OK.'[136] The outcomes sought will depend upon prior aspiration levels and how difficult or easy it was to achieve them in the past.[137] Aspiration levels can comprise a single outcome.[138] In high opt-out jurisdictions this is likely to be a singular preference to exclude the CISG in favour of a more familiar domestic law. As an automatic preference, aspiration level or heuristic,[139] this achieves the lowest possible information search costs.[140] The lawyer's position as an agent combined with similarly low aspirations on the part of opposing lawyers creates the perfect environment for this shortcut to flourish [141] despite the suboptimal outcome in many cases for one or both clients.[142]

On a day-to-day basis, the decision may be primarily intuitive. Conflicts of interest often arise from subconscious decisions as the process is prone to bias self-interest.[143] Lawyers may seek ex post to rationalize this habitual behaviour on the basis of firm policy, or that "everyone else" in the high exclusion jurisdiction does it,[144] hence the underlying ethical dilemma may actually go unrecognized.[145]

Whether by design, by less calculated satisficing, or by intuitive subconscious decision making, the front end lawyer operating in a highly unfamiliar jurisdiction is in fact behaving efficiently, at least from his own perspective, since he avoids learning costs but earns the same fee.[146] If risks remain low and no other pressure comes to bear, he maximizes (his own) utility in the short term. But this behaviour might be far less than rational in the longer term.

Can this situation of automatic exclusion path dependence, with its concomitant legal services market failure and suboptimal choices of law for clients continue indefinitely in jurisdictions like the US, Canada and Australia? I don't think so. In many market sectors, the ability of lawyers to continue avoiding learning costs may be eroded over time. There could be a change in the (rational) cost-benefit balance, something that might alternatively be described as a change in the environment in which the (behavioural) heuristic must work.[147]

From where might the impetus for this change spring? It is possible clients might begin in increasing numbers to litigate for malpractice or professional bodies receive complaints. If one looks at the quality of some CISG cases in some jurisdictions, then one is tempted to think this will happen sooner rather than later.[148] However, a much more likely prospect is the forced internalization of learning costs due to interaction with stronger 'pro-CISG' players.

3. Polar Herds, Critical Mass & Game Theory

To explain how change through internalization of learning costs might occur,[149] it is necessary to first locate the forces behind the current situation in high exclusion jurisdictions, circumstances which will be referred to as 'Scenario One' for present purposes. Game theory and notions of group polarization can help clarify how the norm of automatic exclusion came to be widely accepted in high opt-out jurisdictions in the first place. Later in section 4.4, the circumstances will be adjusted to create 'Scenario Two' and reanalysed.

(a) Group Polarization & the Norm of Automatic Opt-Outs

The concept of a 'social cascade' is often used to describe norm creation within society. Social cascades depict the process of adoption of widespread beliefs, not necessarily involving any processes of deliberation.[150] "Group polarization," on the other hand, observes the tendency for groups of like-minded people to migrate toward a more extreme view than those initially held by individual group members following group deliberations.[151] Errors are 'amplified' within groups.[152] Groups have informational influence on their members: individuals tend to defer to views expressed by other group members either because they are persuaded by, or wish to be part of the majority.[153] One reason is that group discussion tends to be asymmetrical:[154] as pre-existing views are continuously reinforced by discussions,[155] the 'pool' of acceptable views shrinks; consequently counterviews are repressed, and thus healthier aggregation of all knowledge held by group members is prevented.[156] Notably, informational influences are only effective where individuals possess little or no private information upon which they could reach their own conclusions.[157] There is safety in numbers, and sticking with the majority allows one to at least "share the blame"[158] if proven incorrect. The second reason group deliberations lead to extreme views is the existence of social pressure, particularly reputational sanctions.[159] Even if an individual knows the group view is wrong, the individual may go with the flow rather than risk sanctions, disapproval or even hostility of the group.[160]

The overall effect is one of a decrease in variance between members of a deliberating group, and reinforcement of an extreme view, which may in fact be wrong.[161] The effect is observed amongst groups of experts,[162] so law firms and the legal profession are not immune. In particular, CISG unfamiliarity plays a role of key importance in the process of polarization where a jurisdiction or a law firm is seen as a 'deliberative group.'

On this basis, we can analyse the current situation in Scenario One jurisdictions with low levels of familiarity. Individual lawyers armed with little or no private CISG knowledge from law school or elsewhere, and faced with high learning costs are prone to absorb the informational signals of the law firm majority inherent in firm precedents or pro forma contracts that invariably exclude the CISG, and the neophobic attitudes of their colleagues. Automatic exclusion of the CISG is within the 'acceptable' pool of views in such a law firm. Pro-CISG views are not, and thus go unheard. Even a lawyer armed with high levels of familiarity may deliberately choose not to stand against the majority and risk peer sanction by speaking against the 'party line,' out of concern for his own reputation, epitomized by the perception that to do so would be 'sticking one's neck out.'[163] Whilst a small number might receive some CISG training at university,[164] once within firms in high opt-out jurisdictions they will repeatedly encounter unfamiliar and negative attitudes in senior lawyers cemented in firm proforma contracts containing exclusion clauses. These underline an informally institutionalized practice within the firm. In such circumstances, a junior lawyer is likely to perceive the issue, but unlikely to raise the matter with a conservative senior partner.

Reputational concerns are heightened by "affective ties" between the lawyer, his firm and profession through jurisdictional affiliation, reputational capital, and promotional opportunities.[165]

Thus the norm of blindly opting out, although extreme and suboptimal, can persist within a group such as a firm or jurisdiction, even if it is palpably irrational.[166] This explains why in some jurisdictions blind exclusion is achieved and maintained as a group status quo.

(b) Game Theory & the Strategy of Automatic Opt-Outs

Even presuming rational choice, the need for individual lawyers to invest in learning costs to obtain CISG familiarity may contribute to a 'collective action problem.'[167] Collective action problems arise whenever others can obtain 'free rides' from another's investment, such that the investor might not recoup the cost or obtain all the benefits.[168] Free rides are positive externalities,[169] because they benefit those who have not invested in the cost. Their existence can create a disincentive to invest. Are lawyers who have not yet invested in CISG familiarity rationally discouraged from doing so by an inability to gain from their investment? I will confine the following analysis to the position of an individual lawyer working within a law firm in a predominantly opt-out jurisdiction such as Canada, the US or Australia. Of course, in reality, many will be oblivious to the advantages of investment in CISG familiarity. However, in arguendo, I will presume some minimal appreciation of potential advantages.

Game theory can help explain collective action problems. It maps out rational choices where outcomes are contingent upon the combined choices of all decision makers.[170] CISG investment decisions are multidimensional because they yield consequences for the lawyer, law firm, clients and profession.

At a societal level, in a predominantly opt-out jurisdiction, expenditure on 'start up' costs is a good thing. Accumulation of expertise within the profession benefits all clients as better quality advice becomes more widely available. For clients, the result is more efficient choices of law [171] and more accurately priced legal services.[172] Investment also improves competitiveness of the profession vis-à-vis professions in other jurisdictions, to the benefit of all lawyers within it. In this sense, investment in learning costs benefits all clients and the whole profession.

In high automatic opt-out jurisdictions a bold lawyer might capture an innovator's 'early mover advantage.'[173] The lawyer would expect to capture some of his client's efficiency gains through higher fees.[174] Beside ethical benefits of providing proper advice, he may perceive concurrent reduction of risks such as potential malpractice actions or professional body complaints. However, the picture is not so rosy. Even when aware of these potential benefits, the individual's latent cognitive biases may be reinforced if his peers do not value investment in CISG familiarity. Such a situation is highly likely in Scenario One. Despite the irrationality of the group norm,[175] this makes the CISG a less feasible choice simply because it requires deviation from the safety of the "herd."[176] The irony is that each lawyer has a professional and ethical responsibility to consider the CISG as a legal tool whenever suitable to the transaction at hand, and thus an obligation not to be blindly led by 'the mob mentality' or by his own unfamiliarity.[177] Yet in reality, deviation from firm norms risks disapproval and endangers career opportunities if the lawyer is viewed by the firm as too radical.[178] Informal institutionalization of 'automatic' opt outs within a firm might make the practice very hard to resist. The risk of a client law suit might pale into distantly contingent irrelevance compared to the immediate wrath of one's peers.[179]

The firm could choose to invest directly in CISG learning costs directly by making training available. A firm indirectly decides whether or not to invest in the way it structures rewards and sanctions, and by how it values firm skills and expertise. Organizations reward successes far less than they punish failures.[180] This means that successes flowing from individual investment like increased fees and improved firm skills will be undervalued and consequently rewarded only mildly, unless of course the firm also decides to invest (directly or indirectly). On the other hand, downsides of exposure to liability will be overinflated by the firm, but its perspective will differ: if it decides to invest, it probably correctly anticipates that the firm risks exposure to liability due to unfamiliarity with the CISG; whereas if it decides against investment, it may not appreciate this problem. In fact, it may wrongly perceive CISG choices of law as increasing firm exposure to liability. The firm's reputation within a conservative profession must also be considered: the firm will overvalue losses and undervalue gains from changes to its reputational status quo within the profession.

If neither the lawyer nor the firm know in advance with absolute precision whether the other will in future decide to invest, the result is a typical game.[181] In the well known Prisoner's Dilemma, two prisoners must independently decide whether to remain silent or testify against the other prisoner (and hope the other stays silent).[182] In the Herder Problem, two farmers can choose to place further cows on a communal meadow, or act for the greater good by refraining.[183] The classic Prisoner's Dilemma is a one-off game, while the Herder Problem is replayed each year.

The 'choice of law game' is notionally played each time the lawyer drafts a choice of law clause. Interests of individual lawyers and their firms overlap, resulting in a non-zero sum game.[184] The sequence of play is assumed to be simultaneous, in a two-player, one-shot game.[185] Although relevant immediate decisions are made by the lawyer and his firm, long-term payoffs are also borne by the jurisdiction's clients generally as a group and the jurisdiction's legal profession as a whole. However, when acting purely rationally to maximize their own payoffs these longer-term generalized payoffs do not influence the decision makers themselves, nor do they carry consequences for them, thus individual lawyers and firms are not treated as representatives of the jurisdiction's clients as a whole nor of the jurisdiction's profession as a general group.[186]

The following table sets hypothetical values for the purposes of illustration. The purpose of Table 1 is to present Scenario One as a backdrop for comparison with changes in Scenario Two in the following section 4.4. The payoffs for the lawyer are on the left side of the bracket; those of the firm in the centre; and further, payoffs appear on the right side separately for the jurisdiction's clients and profession as a generalized group.

(3, 1, +20)
(0, 3, +20)
(2, 0, -20)
(1, 2, -20)

What does game theory really tell us about Scenario One? Cooperative investment by both lawyer and firm is obviously optimal if we include effects on all clients and the profession generally, since this produces the best outcome for society as a whole (+24 units). This is also the best outcome when confined to the collective perspective of just the firm and lawyer (+4 units). Nonetheless, when each decision maker looks at the decision self-interestedly, they will probably conclude investment is not a good idea.

From the firm's perspective, non-investment is better no matter what the lawyer decides - it is the firm's dominant strategy. Using the values assigned in Table 1, if the lawyer invests, the firm is better off not investing (3 units instead of 1); the same is true if the lawyer does not invest (2 units rather than 0). Thus non-investment is the firm's optimal strategy. After all, it can save the training expenses, and still reaps the (undervalued) benefits if the individual lawyer goes ahead.

The lawyer might prefer to invest, but fears the consequences if the firm does not do likewise. Distortions in firm's perception of risks and benefits and imposition of firm sanctions could overshadow the lawyer's gains in increased fees and reduced exposure to liability, and might preclude recapture of the individual's investment in learning costs. Conversely, under the non-investment strategy, the lawyer potentially still stands to receive a modest free ride should the firm invest from reduction in exposure due to availability of CISG expertise in colleagues, without the risk of incurring the wrath of firm imposed sanctions from going it alone.

The result is that for the lawyer, the best strategy is less clear. If the firm does invest, the lawyer would be slightly better off also having invested (3 units instead of 2). Yet if the firm does not invest, it would be slightly better for the lawyer not to have invested (1 unit rather than 0). Thus the riskier strategy for the lawyer is to invest. The investment strategy can either go very well or very badly, yielding either 3 or 0 units, whereas a non-investment strategy earns at worst 1 unit, at best 2 units. On balance, the lawyer may avoid the riskier strategy. Moreover, if the lawyer thinks the firm is unlikely to invest, a reasonable guess given the prevailing norm in the jurisdiction, then on average, non-investment is sensible: e.g. if the anticipated likelihood of firm investment is 30%, expected gains from investment are just 0.9 compared with 1.3 units from non-investment.[188] Thus a rational individual lawyer would not invest in learning costs. The exception to this conclusion would exist if the lawyer believes the firm is likely to invest, however, this is implausible in Scenario One.

Therefore the probable outcome of the game in Scenario One is that neither firm nor lawyer will invest. Non-investment by both lawyer and firm is the singular Nash equilibrium solution to the game, although suboptimal when viewed collectively for the players themselves, and for society.[189]

Unlike the prisoners, who cannot communicate and have no second chances, the farmers replay the game every year.[190] This can vastly change the nature of the game. The difference is in repetition and communication.[191] The farmers can agree to prevent overgrazing. Likewise, our choice of law game is repeated with each choice of law decision, so the possibility of cooperation and learning arises.[192] The lawyer can seek to influence outcomes by persuading peers of the irrationality of automatic CISG exclusion and the incorrectness of perceived payoffs by the firm.[193] Unfortunately, law firms probably do not 'communicate' in the game theory sense.[194] In trying to persuade peers, the lawyer might incur the very sanctions he/she seeks to change. It might be added that, given the lawyer's ties to the firm and profession, this is not a situation where ultimatum games apply.[195]

Consequently, conditions in high opt-out jurisdictions are ripe for 'excess inertia,' despite the fact societal benefits outweigh costs.[196] Without cooperation, one might conclude high exclusion jurisdictions are doomed to self-perpetuating automatic opt-outs.

4. Iteration, Networks & External Shocks

In the long-term, it is doubtful that the decision not to invest in learning costs will continue to be viable. International trade, by its nature, involves interaction between lawyers from various jurisdictions. Jurisdictions that predominantly prefer to opt out cannot completely inoculate themselves from all CISG exposure. The effect of this exposure is described in this section as Scenario Two.

As more individual lawyers encounter the CISG due to dealings with pro-CISG counterparties, a situation of increasing returns or "network effect" of increasing returns [197] can slowly arise - CISG familiarity may become increasingly valued in high opt-out jurisdictions as more lawyers are marginally familiarized in the course of practice at the front end.

Over time, the existence of stronger pro-CISG bargaining parties can slowly change the atmosphere in the decision making environment. But how does a firm or entire profession arrive at a new norm?

(a) Group Polarization - Environmental Change & New Norms

External shocks can change a group view. At some point after an external shock the group will reach a critical mass or "tipping point"[198] whereby a new view prevails as the norm.[199] A paradigmatic shift can be triggered by changes to incentives or perspectives.[200] In essence, this is exactly what happens when network effects flowing from encounters with a stronger pro-CISG jurisdiction such as China make familiarity increasingly valuable. The process of group deliberation begins again, but this time gradually reversing the previous view and arriving at a new one. Societal cascades may spread the new norm across the jurisdiction's profession by similar processes, even without deliberation.[201]

Like game theory, behavioural science emphasizes the frequency of repetition.[202] Obviously the frequency with which jurisdictions deal with counterparties from pro-CISG jurisdictions affects the speed with which network effects lead to revaluation of CISG skills. In turn, this affects the time taken to reach the point of critical mass at which blind opt-outs are rejected in favour of a new norm. Indeed, in a decision making environment of frequent exposure to pro-CISG counterparties, decision makers will rapidly appreciate the long-term danger of losing business if they dared not invest in CISG 'start up' costs.[203] Firms are also more likely to perceive unfamiliarity as a threat to competitiveness. In path dependence theory, this can be viewed as a critical juncture whereby firms become willing to break with locked-in practices of 'blind' opt-outs in favour of new approaches.[204]

(b) Game Theory - Altered Cost-Benefits & New Strategies

When forced to deal with the CISG, even at low levels, firms are effectively forced to invest in familiarity. Over time, one can argue this should cause firms to slowly reassess and adjust sanctions and incentives. Under such circumstances, individual lawyers investing in learning costs are assured of recapture through higher fees and more frequent CISG transactions, allowing them certainty of amortization. These effects combine to alter the cost-benefit structure, with the consequence that new rational strategies will dominate the game.

The different structure is attributable to the firm's new appreciation of the true nature of risks and rewards of familiarity and changes in the jurisdictional environment relating to firm reputation. Additionally, even low level forced exposure to the CISG has a flow on effect on learning costs, reducing the size of direct training costs, while simultaneously rendering more apparent to firms the potential upside in terms of increased fees. Even where the firm decides not to invest, increased frequency of CISG exposure provides the lawyer an opportunity to recapture investment costs through increased fees. A non-investing firm might still hold some distorted views, while others might be revised in light of the new environment. Thus even a non-investing firm might react neutrally to investment by individual lawyers eg. by not imposing sanctions, while perhaps still undervaluing benefits.

Consequently, the hypothetical risk-reward structure under a new norm might look more like Table 2 in a jurisdiction having frequent contact with pro-CISG jurisdictions, although of course the representation cannot account for the ongoing dynamics inherent in iteration and network effects.[205]


(3, 1, +20)
(2, 1, +20)
(2, 2, -20)
(0, 0, -20)

Game theory illustrates the effects of the changes wrought by the external shock in Scenario Two. As before, from a societal perspective the best solution is for both the lawyer and the firm to invest (+26 units). Moreover, it is now clear to both the lawyer and firm that they should invest. For the firm, investment is the best decision, irrespective of the lawyer's decision, since it will enhance perceived gains in either case.[206] For the lawyer, regardless of the direction the firm takes, investment yields better results than non-investment, due to the new reward structure in Scenario Two.[207] The new singular Nash equilibrium in the game in Scenario Two is for both lawyer and firm to invest, since the non-investment strategy is strictly dominated by the investment strategy for both players under the revised payoff structure.

As reformulated after the external shock, there is a new solution to the choice of law game. If all act rationally, the decisions will converge upon a solution collectively optimal for the decision makers themselves, and for society.

5. Internalization of Learning Costs & Transparency

Even limited dealings with superior bargaining strength in pro-CISG counterparties might profoundly alter the decision making environment in a number of ways. One change might be to the information asymmetry between lawyer and client. In most principal-agency problems incentives built into the agency contract are suggested as appropriate solutions to the monitoring problem.[208] By contrast, as suggested above, in the present analysis, broader background incentives beyond the specific lawyer-client relationship are more likely catalysts for realignment of interests, and far more effective than any ethical or contractual incentive.

In Scenario Two, the lawyer who has to date been 'satisficing' is suddenly faced with a stark choice. The lawyer could still insist on the opt-out anyway, and allow the client to bear, in addition to costs of a potentially suboptimal choice of law, a worse bargain, which the party in the superior position will exact in terms of price,[209] other contractual terms, or even loss of the deal. Alternatively, the lawyer could bite the bullet and invest in the time and effort of becoming familiar with the CISG, thereby internalizing learning costs and eliminating the moral hazard risk of suboptimal choice of law for the client.

Thus pro-CISG bargaining strength is extremely powerful, because it has the power to make more transparent to the client the real cost of sticking to the lawyer's preferred 'path.' The client faced with disadvantageous terms suddenly has reason to question why it is so important not to use the CISG. Pressure from a client asking for an explanation, if not embarrassment at his/her own inability to give a professionally competent answer, might prompt the lawyer to reconsider investment in learning costs.

However, as discussed in relation to game theory analysis, it is the iteration of this pressure which is the most important characteristic of bargaining power in the hands of a pro-CISG jurisdiction with superior economic power. When the isolated embarrassment of a single less advantageous deal has passed, and our satisficing lawyer is faced, time and again with similar situations, the prior sense of inadequacy is more likely to be actively addressed.

One can only 'fudge' it for so long. It is repeated interactions with stronger pro-CISG parties that best reveals to clients the true expense of unfamiliarity. This erodes the ability of lawyers to shirk learning costs and in turn reduces market failure to account for lack of expertise within the pricing of legal fees.

Transparency accentuates the possibility that an individual lawyer who fails to invest in learning costs will simply become uncompetitive in a global legal market.[210] By contrast, expertise in international transactions allows firms to compete with international mega¬firms.[211] Such competitive pressure also answers the argument that lawyers would simply raise the price of legal fees if CISG familiarity were only to benefit clients, without reciprocal advantage accruing to the lawyer. Internalization of learning costs becomes increasingly attractive if firms begin to notice the trend and adjust their risk-reward structures accordingly. Through this new perspective, the previously 'insurmountable' learning costs may seem to magically shrink, relatively speaking, from the perspective of both firms and lawyers.

Pressure from clients as a by-product of transparency may reinforce the process of reaching 'critical mass' within high exclusion jurisdictions, and prompt a cascade effect across jurisdictions. If that happens, then jurisdiction by jurisdiction, we may see the formerly automatically excluding 'rats' opting out of the sinking ship of automatism in choice of law.

Of course, even in this new environment, busy lawyers will no doubt still 'satisfice,' but at a new aspiration level. As aspiration levels become more difficult to attain, they are generally adjusted.[212] The evolution of a new heuristic to suit the altered environment will involve consideration of the CISG on a case by case basis -perhaps reduced to some key elements, unless there is no choice due to bargaining position. This necessarily involves greater familiarity. If the number of jurisdictions in which lawyers are less prone to opting out slowly climbs, we can expect lawyers in remaining jurisdictions to feel increasing pressure to revise their heuristic toolbox to fit the new environment.[213] Repeated encounters with the CISG will be the key to alerting individuals and the profession to the need to raise their aspirations to seriously consider the CISG.[214]

6. Institutionalization of Choice of Law

As mentioned earlier, in commodity markets, individual preferences of each side will matter little. An individual lawyer's substantive concerns, familiarity, learning costs and even the client's bargaining power rarely impact upon the choice of law, and it would be "arrogant" as Prof. Bridge puts it, to argue otherwise.[215] In commodity markets, choices of law by trade associations dominate, and these universally exclude the CISG in favour of English law through standard form contractual terms.

In these market sectors the institutionalization of choice of law is more relevant than any individual non-choice. Undeniably, substantive issues are not the sole factor behind institutional choice. Interestingly, there are parallels between influences on institutional and individual choices of law.

Within commodities markets an important feature is the string transaction. Commodities contracts take the form of documentary spot and forward sales.[216] The tendency for huge volumes of trade and volatile price fluctuations creates powerful incentives for trade in price risk.[217] Numerous intermediate parties with no interest in the physical goods speculate on price risk on these markets, seeking margin profits by predicting price movement. Exposure to price risk can be limited to the financial difference between two contracts.[218] The repetition of this process of on-selling obligations in relation to particular goods creates a 'string,'[219] with physical buyer and seller at either end of a chain of contracts strung together by an appropriation notice issued by the physical seller and transmitted down the string. It is not uncommon for there to be 100 such intervening contracts in a string.[220]

Effectively, string transactions and the smooth operation of commodities markets depend on the commodification of the underlying contract through standardization of terms, including standardization of the goods, ports of destination, choice of forum and choice of law.[221] Contracts traded by intermediate parties are identical other than in price and (where broken up into standard amounts) quantity.[222] The standardized choice of any law, carries economic value per se by facilitating string transactions,[223] and ultimately the vital function of trade in price risk.

Clearly there is a network effect at play in choice of law for commodities markets; the more contracts conform to a singular model, the greater flexibility there is for all in the market to bargain for exactly the level of risk each is willing to bear. Intermediate transactions are really contracts for financial difference.[224] Contracts that are not alike cannot be netted ('closed out') against each other. Therefore there is a degree of impracticality in suggesting any current choice of law should be altered,[225] since 'swapping platforms' midstream (to borrow software terminology), would necessarily create a major disruption to the market, regardless of the substantive merit of the new choice of law.

In this sense, although mimicking path dependence, the institutionalized choice of any law over a long period has considerable practical and economic merit. The fact that it is not truly irrational means it is not path dependence in the sense normally meant by behavioural economists. Arguably, optimality can be legitimately maximized by means of stability rather than substantive merit in any market where string transactions occur, since standardization of transactions is paramount to the ability of parties to evaluate and trade contracts. This is essentially another example of a network effect as discussed above,[226] whereby the commonality of the choice enhances or perhaps in this case, eclipses any intrinsic value of the chosen law itself due to the connectivity of transactions in the market.[227] Choices of law made decades, even a century earlier, might therefore still hold value despite subsidence in substantive suitability relative to other choices. The peculiarity of the string characteristic creates switching costs and network effects that effectively render impervious the institutionalized choices of law in commodity markets.[228]

Despite the efficiency of stability, other forces may also explain the stability of institutional choice. These are related more to the political economy. Litigation industries have sprung from the UK seats of trade associations creating a substantial financial interest in the maintenance of the choice of law status quo. An ingrained choice of English law has gone hand-in-hand with a choice of forum based in London. Thus dominant trade associations, which have traditionally been English in origin,[229] have effectively allocated dispute work for lawyers, and consequently universally directed the associated financial rewards to London. Indeed, some contend this is the reason for the failure of the UK thus far to accede to the CISG.[230] The relationship between derivative futures and physical markets is a further form of institutional interconnectivity. In summary, the embeddedness of institutional interdependence combined with the scale of switching costs explains the strength of this market's resistance to institutional change.[231]

If vested financial self-interest has at least partly guided the trade association choice of law, then there are parallels between the institutional maintenance of the status quo and the lawyer who shies from the CISG to avoid learning costs at the expense of the interests of his client. In both cases, a potentially suboptimal decision is made which later becomes a path dependent behavioural pattern, institutionalized within the firm or trade association, jurisdiction or market sector respectively. However, unlike the lawyer who relies on information asymmetry and a similarly satisficing counterparty, trade associations can provide their members with a rational economic justification for retention of the existing status quo; the change-over costs in terms of market disruption that would ensue from altering choices of law.

For commodities, historic institutionalization of the choice of law and the pervasive interconnectivity of string transactions means English law as the dominant choice has and may continue to persist irrespective of whether it is substantively superior or sub-optimal relative to the CISG.[232] From an institutional perspective, this behaviour is at least a semi-rational (second order) centralized mode of path dependence.[233] Although change might be possible if carefully managed by a suitable transition clause,[234] under circumstances of high switching costs and institutional embeddedness, even bounded change is unlikely within trade association choices of law,[235] absent some external shock.[236] Of course, when viewed from an individual lawyer's perspective, institutionalization makes the choice to opt out in such market sectors not only rational, but inevitable.[237]


The CISG was never intended to "claim a monopoly over international sales law."[238] Yet its underutilization in some jurisdictions is due to factors independent of the real benefits it holds for many transactions and clients. The market failure identified here is not the failure to adopt the CISG universally, but the failure of some lawyers to properly consider it as a potential choice of law in circumstances where it indeed could be a viable and rational choice. In commodity markets, where institutionalized choices of law are pervasive, exclusion of the CISG is a foregone conclusion for the individual lawyer or party. However, in other markets, automatic exclusion of the CISG is often a form of path dependence reinforced by jurisdictional peer groups which maintain the status quo. Their continued ability to ignore the CISG is dependent on environments of CISG unfamiliarity and high learning costs, which are conducive to the satisficing behaviour of blind exclusion of the CISG.

My contention is that, in the long-term, path dependent automatic opt-outs are unsustainable in non-institutionalized markets. Even low level exposure to pro-CISG counterparties carries the potential for network effects that can slowly increase the value placed on CISG skills, alert clients to efficiency costs borne by them due to automatic opt-outs, and awaken firms to changed conditions in the market for legal services. Frequent or repeated exposure may act as an external shock, leading to a critical mass within firms and across the entire profession. In the new environment, it could become worthwhile or indeed imperative for competitive survival to invest in CISG knowledge, and eschew blind opt-outs. New heuristics will be required, and satisficing will need to take place at a more sophisticated aspiration level, resulting in more efficient choices of law for clients.

Pro-CISG bargaining power has the capacity to change investment in learning costs from an optional risky strategy to a basic training requirement necessary for professional survival.[239] It has the potential to shift the scales in jurisdictions like the US, Canada and Australia, by changing the decision making environment from one in which automatic opt-out satisficing is feasible to one in which it is not.

The decision making environment that in some jurisdictions has fostered market distortions, path dependence or the satisficing heuristic of automatic opt-outs, is slowly coming to an end. Pro-CISG China may be just the catalyst needed to correct this market failure. China's relatively strong economic position and similar trends in ASEAN nations could ultimately serve to slowly force CISG exposure on more reluctant jurisdictions such as the US, Canada and Australia, where environments of unfamiliarity and high learning costs so far still harbour automatic opt-outs. In reshaping irrational behaviour, 'stronger bargaining strength' in the hands of pro-CISG parties might perform a more powerful role at the drafting end than forced familiarization through CISG dispute work. This is particularly significant in jurisdictions with little CISG dispute work, or where firm or professional structures preclude such dispute work exposure from filtering through to front-end drafting lawyers.[240]

In my view, pro-CISG China, with its massive economic power, will inevitably change the choice of law landscape, whether viewed from the perspective of global or limited rationality.[241] There may already be signs that the decision making environment is changing. Although exclusions still dominate, there are trends in some European nations that opt-outs are becoming less common,[242] although, for reasons of survey design, this might not always be obvious from the data.[243] In the US, opt out behaviour might be slowly beginning to change.[244] Additionally, there are other jurisdictions in which lawyers do not favour opting out, but have so far had little choice because of the superior bargaining power of counterparties from predominantly opt-out nations.[245] It will take little for social cascades and network effects to unfold in those jurisdictions.

The story is of course very different for institutionalized markets. The CISG is not unsuited to the task, but it will take a seismic jolt to move trade associations to re-consider a choice of law which underpins the enormous trade in price risk, itself entirely dependent on stability and standardization. The network effects from the established choice are vast. However, it is not impossible to envisage pressure from European-led English law reforms,[246] nor is it impossible to contemplate how change could be implemented.[247]

One would hope that as we emerge from the global financial crisis, the advantages inherent of a frequently utilized uniform international sales law will have become obvious to lawyers and institutions everywhere, to the point where conscious rather than subconscious decisions are made. Whether tempted or forced to partake of the CISG, just like Chinese lawyers before them, lawyers and firms in high exclusion jurisdictions may find themselves pleasantly surprised by its flavour.


* An earlier and less extensive version of this article appears in (2009) 13 Vindobona Journal of International Commercial Law & Arbitration 159 (Kaleidoscope Part II). The author thanks Justus Meyer, Martin Koehler & Guo, Yujun for sharing their work, and the following for their sage advice: Lee Gordon-Brown on statistical analysis, J. Shahar Dillbary, Pushkar Maitra & Pasquale Sgro on economic analysis, Jeff Waincymer for his valuable critique and Matt Slater for his maths expertise. Any errors are mine.

1. Admittedly the grouch is not identified as Knox in the text, but I have presumed his identity for ease of reference and because of his incontrovertibly Knox-esque physical qualities. See Dr Seuss, Green Eggs and Ham (New York, Random House, 1960).

2. JP McEvoy, "Canada", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 33, 33-34 (stating it "barely registers on the consciousness of Canadians").

3. JS Ziegel, "Commentary on Party Autonomy and Statutory Regulation: Sale of Goods" (1993) 8 Journal of Law & Commerce 109, 124; J Lookofsky, "Online with Al K", in UG Schroeter & CB Andersen (eds), Sharing International Commercial Law across National boundaries: Festchrift for Albert H. Kritzer on the Occasion of his Eightieth Birthday (London, Wildy, Simmonds & Hill Publishing, 2008), 287, 291(neither side has a "home ground advantage"); L Spagnolo, "The Last Outpost: Automatic CISG Opt Outs, Misapplications and the Costs of Ignoring the Vienna Sales Convention for Australian Lawyers" (2009) 10 Melbourne Journal of International Law 141, 149, 151 & 163; F Diedrich, "Maintaining Uniformity in International Uniform Law via Autonomous Interpretation: Software Contracts and the CISG" (1996) 8 Pace International Law Review 303, 305.

4. See, eg C Widmer & P Hachem, "Switzerland", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 281, 286 (from a survey of 153 Swiss lawyers in 2008, finding that 26% thought the CISG made choice of law negotiations easier).

5. Empirical studies involving small sample sizes must be treated with caution. While smaller results may be unreliable, larger results may enable relatively reliable inferences regarding population, since [symbols not reproduced] where an alternate hypothesis would be accepted if the test statistic (right side value) is more extreme than a critical value (z): see E Mansfield, Statistics for Business and Economics (New York, WW Norton, 5th edn, 1994), 284.

6. Studies of US lawyers have yielded three rates: 55%, 61% and 71%. In 2006-2007, on the basis of a sample size of 47 for the question involved, Fitzgerald found 55% of US lawyers surveyed "typically" opt out of the CISG: PL Fitzgerald, "The International Contracting Practices Survey Project" (2008) 27 Journal of Law & Commerce 1, 64 (Question 11). Fitzgerald's study allows an inference with 80% confidence of 46-64% of US lawyers "typically" opting out. In 2004-2005 on the basis of a sample size of 48 US lawyers, Koehler found 71% surveyed "generally/predominantly" opted out: MF Koehler, "Survey regarding the Relevance of the United Nations Convention for the International Sale of Goods (CISG) in Legal Practice and the Exclusion of its Application" (October 2006), 1, <http://cisgw3.law.pace.edu/cisg/biblio/koehler.html> accessed on 7 May 2010. Koehler's study allows an inference with 80% confidence of 62-79% of US lawyers generally opting out. In 2007 on the basis of a sample size of 46 (mostly litigation) US lawyers, Philippopoulos found an 'overwhelming majority' preferred to opt out, although no proportion is stated: GV Philippopoulos, "Awareness of the CISG Among American Attorneys" (2008) 40 UCC Law Journal 357, 361 & 363. Working backwards from the alternative responses, it appears that 61% of respondents preferred to opt out. This allows an inference with 80% confidence of 52-70% of US lawyers preferring to opt out. The Gordon study is sometimes cited as having found that half the 124 respondents opted out, however, the sample size is in fact unclear. The "survey was sent to a random 100" members of the Florida Bar International Law Section, plus a further 24 members of the Section's Executive Committee, thus the sample size must be 124 or less. Further, rather than half of all respondents indicating that they opted out, Gordon states half of those 32% who indicated reasonable or good knowledge of the CISG had opted out or opted in: MW Gordon, "Some Thoughts on the Receptiveness of Contract Rules in the CISG and UNIDROIT Principles as Reflected in One State's (Florida) Experience of (1) Law School Faculty, (2) Members of the Bar with an International Practice, and (3) Judges" (1998) 46 (Suppl.) American Journal of Comparative Law 361, 368.

7. A 2004 survey of 479 German lawyers by Justus Meyer found opt outs were "normal" practice for 45%: J Meyer, "The CISG in Attorneys' Every Day Work" (2009) 6, Question 4, Tables 4A-4C (draft paper on file with author)('Attorneys' Work'). The results have previously been published in German: J Meyer, "UN-Kaufrecht in der deutschen Anwaltspraxis" (2005) 69 Rabels Zeitschrift für ausländisches und internationales Privatrecht 457. Note some respondents gave multiple answers: email correspondence with J Meyer (on file with author). In 2004¬2005, on the basis of a sample of 33 German lawyers, Koehler found 73% "generally/predominantly" opted out: Koehler, supra n 6, (link to Chart 'Frequency of Exclusion of the Convention') & MF Koehler & Y Guo, "Combined Charts (Survey Germany USA China) - Frequency of Exclusion" (2008)(spreadsheet on file with author). At an 80% confidence level Koehler's study yields an inference of 63-83% of German lawyers generally opting out, while Meyer's result gives an inference of 41-49% with 90% confidence, as it involved a larger sample. Thus the Meyer study is primarily relied upon here.

8. Two studies have been conducted, with results of 41% and 62% respectively. A 2007 study of 393 Swiss lawyers by Justus Meyer found 41% "normally" contracted out: Meyer, Attorneys' Work, supra n 7, 6, Question 4, Tables 4A-4C. The results have previously been published in German: J Meyer, "UN-Kaufrecht in der schweizerischen Anwaltspraxis" (2008) 104 Schweizerische Juristen-Zeitung/Revue suisse de jurisprudence 421. Note some gave multiple answers: email correspondence with Justus Meyer (on file with the author). Widmer & Hachem report in 2008 on the basis of a survey of 153 Swiss lawyers that 62% "regularly" opt out. They also found Swiss lawyers 5 times more likely to accept a counterparty's proposal to opt out rather than opt in: supra n 4, 285 & 286. Although responses were received from 170 lawyers, 17 were not involved in international sales: ibid, 282. With 90% confidence, the Widmer-Hachem result indicates an interval of 55-69% of the population, while the Meyer result yields an interval of just 37-45% with the same confidence given the larger sample, therefore the Meyer study is primarily relied upon here.

9. A 2007 study of 296 Austrian lawyers by Meyer found 55% "normally" contracted out: Meyer, Attorneys' Work, supra n 7, 6, Question 4, Tables 4A-4C. The results have previously been published in German: J Meyer, "UN-Kaufrecht in der österreichischen Anwaltspraxis" (2008) 63 Österreichische Juristen-Zeitung 792. Again, some gave multiple responses: email correspondence with J Meyer (on file with author). Meyer's result predicts 50-60% of Austrian lawyers normally opt out with 90% confidence.

10. In 2007, on the basis of a small sample of 27 Chinese lawyers, Koehler & Guo found that 37% "generally/predominantly" opt out: MF Koehler & Y Guo, "The Acceptance of the Unified Sales Law (CISG) in Different Legal Systems - An International Comparison of three Surveys on the Exclusion of the CISG's Application Conducted in the United States, Germany and China" (2008) 20 Pace International Law Review 45. The Koehler-Guo survey only allows an inference of 27-47% with 70% confidence. Normality of the sample can be presumed because both [symbols not reproduced] and [symbols not reproduced] : 9.99 & 17.01 respectively: see Mansfield, supra n 5, 202. Anecdotal observations perhaps point to the actual figure being even lower than 37%: see, eg Han who reports Chinese lawyers "seldom" opt out: S Han, "China", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 71, 71; Lookofsky, supra n 3, 291(stating "Chinese merchants are ready and most willing to do business on the [basis of the CISG]"); F Yang, "CISG in China and Beyond" 40 UCC Law Journal 373, 376 (2008)(noting that "[w]hile the US trend has been for contracting parties frequently to opt out of the CISG…the trend in China goes the other way").

11. Over and above the low level of practitioners who generally opt out in China, this sets China apart as a pro-CISG jurisdiction. Koehler & Guo, supra n 10, found 52% of Chinese lawyers surveyed seldom or never opt out: § II. With 80% confidence this indicates at least 39% and up to 64% of Chinese lawyers seldom or never opt out. Comparatively, Koehler found 21% of US practitioners and 18% of German practitioners surveyed never or seldom opt out: Koehler, supra n 6, (link to Chart 'Frequency of Exclusion of the Convention'). The later results allow us to infer with 80% confidence that no more than 29% of the population of US lawyers and no more than 25% of German lawyers seldom or never opt out because a normal sample can be assumed in each case as both [symbols not reproduced] and [symbols not reproduced] for Germany (5.94, 27.06) for the US (10.08, 37.92): see Mansfield, supra n 5, 202.

12. According to anecdotal evidence in Australia: Spagnolo, Last Outpost, supra n 3, 142, fn 2 (and authorities cited therein), 159-160, & fn 90; Canada: McEvoy, supra n 2; and empirical data in the case of the US: see supra, n 6.

13. In the US, 44% of lawyers surveyed were found to be "not at all familiar" with the CISG: Fitzgerald, supra n 6, 32 (Question 3)(surveying on this question 134 lawyers in 2006-7). Fitzgerald's result allows an inference that between 39-50% of US lawyers are not at all familiar with 80% confidence. See Gordon, supra n 6, 371 (reporting that in 1997, US lawyers in Florida had a "poor level of knowledge"); Philippopoulos, supra n 6, 364 (Question 9) (suggesting US lawyers rate their professions' awareness level at 3.12 out of 10).

14. Meyer found that across Switzerland, Austria and Germany, almost half of the lawyers surveyed spent up to 10% of their workload dealing with CISG disputes: Meyer, Attorneys' Work, supra n 7, 4, Question 2, Tables 2A¬2C. Due to Meyer's large survey size, we can infer with 90% confidence the result is accurate to within ± 2.4%. German lawyers were the most prevalent at the higher frequency end of CISG dispute work, with 18% spending more than a quarter of their workload on CISG disputes (Austria 13%, Switzerland 10%), and 9% of German lawyers spending half or more of their workload this way (3% in Austria & Switzerland): ibid, 4, Question 2, Tables 2A-2C. At 90% confidence these figures are indicative of the result for German, Austrian and Swiss lawyers within ± 2.9, 3.2 & 2.5% respectively. Citing the figures of Meyer and Koehler, Magnus points to high levels of familiarity amongst German lawyers (citing familiarity figures of almost 100%): U Magnus, "Germany", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 143, 145. However, he cautions there is a "wide range within which the degree of knowledge [amongst German lawyers] varies": ibid, 145.

15. See Meyer, Attorneys' Work, supra n 7.

16. Widmer & Hachem report that in 2008 that only 2% of Swiss lawyers were not aware of the CISG: supra n 4, 284 & 287. With 92% confidence we can infer that 0-4% of Swiss lawyers are not aware of the CISG. See also the results of Meyer's study regarding proportion of workload Swiss lawyers devote to CISG dispute work, supra n 8.

17. McEvoy, supra n 2.

18. See supra, n 12.

19. P Butler, "New Zealand", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 251, 251, 252 & 258.

20. Thus application of the CISG could occur either through Art. 1(1)(a) where both are apparently from Contracting States, or through Art. 1(1)(b) if the choice of law is that of a Contracting State, provided conflict rules of the forum uphold that choice and no issue arises due to an Art. 95 reservation.

21. Han reports that to become a lawyer in China it is necessary to "understand or even gain mastery" of the CISG: Han, supra n 10, 71-72; J Lookofsky, "Denmark", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 113, 119 (stating Danish lawyers are "well acquainted with the CISG").

22. Magnus, supra n 14, 145. For example, although 98% of Swiss lawyers were aware of the CISG, 93% of Swiss lawyers had a "basic" or better knowledge of the CISG, 37% had a "good" knowledge, and one stated CISG work formed the predominant part of his practice: Widmer & Hachem, supra n 4, 284 & 287. At 90% confidence these figures reflect the underlying population within ± 3.4, 6.4 & & 1.9% respectively.

23. F Ferrari, "General Report", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 413, 474-75.

24. See, eg M Reimann, "The CISG in the United States: Why It Has Been Neglected and Why Europeans Should Care" (2007) 71 Rabels Zeitschrift für ausländisches und internationales Privatrecht 115, 126 (agreeing US unfamiliarity is significant in opt outs); M Kilian, "CISG and the Problem with Common Law Jurisdictions" (2001) 10 Journal of Transnational Law & Policy 217, 230 & 238; JS Ziegel, "The Scope of the Convention: Reaching Out to Article One and Beyond" (2005-6) 25 Journal of Law & Commerce 59, 67-71; S Kruisinga, (Non-)Conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a Uniform Concept? (Antwerp, Insentia, 2004), 9 (stating that a reason for opting out "could be that lawyers [are] more familiar with their own national law"); LR Nottage, "Who's Afraid of the Vienna Sales Convention (CISG)? A New Zealander's View from Australia and Japan" (2005) 36 Victoria University of Wellington Law Review 815, fn 8; J Murray Jr, "Symposium-Ten Years of the United Nations Sales Convention: The Neglect of CISG: A Workable Solution" (1998) 17 Journal of Law & Commerce 365, 365, 371-72; VS Cook, "CISG: From the Perspective of the Practitioner" (1997-8) 17 Journal of Law & Commerce 343, 349; Gordon, supra n 6, 368 (arguing in 1997 on a non-empirical basis US opt outs were being caused by unfamiliarity); WS Dodge, "Teaching the CISG in Contracts" (2000) 50 Journal of Legal Education 72, 74-78.

25. Fitzgerald, supra n 6, 65 (Question 12)(arguing the figure in fact would be higher were one to re-categorize responses masked as different responses). Multiple answers were not allowed, and it is worth noting that only 45 lawyers responded to this question, so it should be treated with a degree of caution as it involves a slight result from a small sample size: supra n 5. With 80% confidence we can say the result indicates between 9-23% of US lawyers would give this answer, since the sample can be assumed to be normally distributed since both [symbols not reproduced] and [symbols not reproduced] : 7.2 & 37.8 respectively: see Mansfield, supra n 5, 202. Reasons for opt outs were not sought by Gordon: supra n 6.

26. Anecdotally, Hayakawa lists insufficient familiarity as one of the reasons for opt outs in Japan: S Hayakawa, "Japan", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 225, 225 & 227; McEvoy, supra n 19, 34, 37, 40, 46-49, & 60-66. Widmer & Hachem's Swiss survey did not specifically provide "unfamiliarity" as an option for respondents as to why they opted out. However, 42% responded that one reason for opt outs was "lack of certainty" (multiple responses were permitted), which the authors attribute in part to insufficient familiarity and consequent lack of confidence rather than lack of awareness: Widmer & Hachem, supra n 4, 285. With 80% confidence, this allows an inference that 37-47% of the population of Swiss lawyers would give the same response.

27. Some 54% of US lawyers surveyed admitted that at least one of their reasons for opting out was that the CISG was "not widely known": Koehler & Guo, supra n 10, §IV (allowing respondents to give multiple responses in a study of 48 US lawyers in 2004-2005). As many as 52% gave this response in Germany: id.. It is likely that in many cases the response was a reflection of the respondent's own unfamiliarity. With 80% confidence we can therefore state that the result should hold true for 45-63% of US and for 43-65% of German lawyers.

28. JS Ziegel, "The Future of the International Sales Convention from a Common Law Perspective" (2000) 6 New Zealand Business Law Quarterly 336, 346 (mentioning "economic" constraints "of time and resources [that] may limit the amount of research they are willing to do"); Ziegel, supra n 24, 345 (referring to costs of becoming familiar with the CISG as "economic" reasons for paucity of CISG cases in the US).

29. HM Flechtner, "Changing the Opt-Out Tradition in the United States", University of Pittsburgh Legal Studies Research Paper Series No. 2010-10, <http://ssrn.com/abstract=1571281> accessed on 7 May 2010. See supra, n 23.

30. Koehler surmised that "a large number of the respondents have not yet taken the trouble to compare the legal aspects of the [CISG and non-CISG domestic law] in detail": Koehler, supra n 6, 10. One respondent remarked "you can't teach an old dog new tricks," and another pointed out the "steep learning curve" that lawyers faced in order to "buy into the CISG": ibid, 3. A respondent to Fitzgerald's study commented that internal legal teams of multinational companies "do not have the time or occasion to try to determine whether the CISG […] might actually be favorable in a particular situation and choose instead to exclude […] because of the need for consistency in template agreements." Ironically, the same respondent then detailed how a "cookbook" of differences between US and local law was kept when foreign domestic law applied because the "internal legal group [was] responsible for highlighting the differences [between US and] non-US law": Fitzgerald, supra n 6, 106. In the Philippopoulos study there were comments that parties "would rather simply opt out of the CISG than to take the time to learn its provisions" and found it "very confusing to figure out how it differs from reliance on [the UCC]," or at least, did not want to "spend the time and money to figure it out so they automatically opt out": Philippopoulos, supra n 6, 365-66. See S Gopalan, "A Demandeur-Centric Approach to Regime Design in Transnational Commercial Law" (2008) 39 Georgetown Journal of International Law 327, 336 (arguing "learning externalities are a key contributor to the lack of impact" of the CISG); CP Gillette & RE Scott, "The Political Economy of International Sales Law" (2005) 25 International Review of Law & Economics 446, 478 (noting that "attorneys have incentives to avoid learning about novel law, and thus they incorporate [familiar law] into their contracts").

31. Similarly see, eg Widmer & Hachem, supra n 4, 288; Gordon, supra n 6, 368.

32. Despite the fact that the CISG is generally optional in German law schools, it is "part of the ordinary curriculum of most German law faculties," and "almost every standard commentary on the German Civil code" includes CISG commentary: Magnus, supra n 14, 145. In Denmark, the CISG is integrated into the University of Copenhagen curriculum: Lookofsky, supra n 21, 119 (arguing this has helped ensure Danish lawyers are "well acquainted with the CISG").

33. Han, supra n 10, 71-72 (the CISG is examinable as part of the National Judicial Examination).

34. M Torsello, "Italy", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 187, 208 (asserting Italian law schools provide students with limited exposure within contract law, but more frequently within comparative private law and international business transaction subjects); McEvoy, supra n 19, 33-34 (observing in Canada that it is covered only in optional subjects); Butler, supra n 19, 252 (stating that it is generally not taught as part of compulsory contract courses, and only minimal attention within private international or international commercial law subjects). This author can report that the CISG at undergraduate level generally receives passing reference within compulsory contract law, and limited attention within optional subjects in Australian law schools.

35. Fitzgerald's survey of US professors in 2006-7 revealed substantial improvement in CISG coverage in undergraduate courses and in US casebooks since Gordon's survey some 10 years earlier: Fitzgerald, supra n 6, fns 108-112 and accompanying text, Questions 32 & 33; Gordon, supra n 6, 364-67. Fitzgerald found 76% of professors surveyed taught CISG in basic contracts courses, but in 95% of cases it was only mentioned occasionally or in passing. He found 96% covered CISG in basic sales courses, in 46% of cases forming a substantial part of sales coursework: Fitzgerald, supra n 6, Questions 29, 30, 33 & 35. The 96% coverage in basic sales courses may be statistically unreliable, as it allows an inference of ±16% with a 68% confidence level. Others are more reliable: at 80% confidence levels: the 76% coverage within contracts course gives an interval of ±7.7%; the 95% passing coverage in contracts an interval of ±4.5%; and the 46% substantial part of sales course an interval of ±13%.

36. See Pace Website, <http://www.cisg.law.pace.edu/cisg/text/casecit.html#a06> accessed on 7 May 2010.

37. However, in doing so, one must always be cognizant of the limitations: from underreporting in some jurisdictions, to the difficulty of linking exposure through "back end" dispute work with "front end" drafting trends in others, given the tendency in some jurisdictions, to segregate the work of lawyers specializing in these areas: L Spagnolo, "A Glimpse through the Kaleidoscope: Choices of Law & the CISG (Kaleidoscope Part I)" (2009) 13 Vindobona Journal of International Commercial Law & Arbitration 137, 147 & 148 (Table 3: Rate of Lawyers Generally Opting Out by [cases per million capita] & by [cases per trillion trade dollar]).

38. Ibid, 148-49 (despite difficulties with data, concluding that Canadian, Australian and US dispute work exposure was the lowest on either measure by a considerable margin, and that "identity of those in the lowest three ranks vis-à-vis the higher ranks is less prone to change. In fact, more accurate case reporting is only likely to heighten the chasm.")

39. Meyer, Attorneys' Work, supra n 7, 4, Question 2, Tables 2A-2C (finding 70-78% of Swiss, German & Austrian lawyers had encountered CISG disputes at least once). Given the large sample set, the interval is less than ± 3% for this result with 95% confidence.

40. See F De Ly, "The Relevance of the Vienna Convention for International Sales Contracts-Should We Stop Contracting It Out?" (2003) 4 Business Law International 241, 244 (arguing one reason for absence of a "general pattern excluding the CISG" amongst Dutch lawyers might be the similarity between Dutch law and the CISG). De Ly reports that Dutch lawyers and even Dutch trade associations do not tend to exclude CISG: ibid, 244, & 245 n.18.

41. The CISG has had a direct impact on domestic law in China, Germany, Scandanavia, Japan, Québec, Czech Republic, Russia, & Estonia. It has also had some effect on reforms in the Netherlands, Germany, Japan, Greece and OHADA member states. It has indirectly affected domestic law via the EU Directive on certain aspects of the sale of consumer goods and associated guarantees, Directive 99/44/EC [1999] OJ L171/12 itself based on the CISG: Ferrari, supra n 23, 472-73. Thus it has had indirect effect on the domestic law of Denmark, France and Italy. See Spagnolo, Glimpse, supra n 37, fn 63. The CISG has also directly influenced the Draft Common Frame of Reference for the European Union, especially IV.A. on sales, but also II on contract formation & III on obligations & remedies: Principles, Definitions and Model Rules of European Private Law: Draft Common Frame of Reference (DCFR) Full Edition, (Munich, Sellier, C von Bar & E Clive (eds), 2009), see, eg IV.A.-2:306 Note 1, 1305.

42. See supra, n 12.

43. See Magnus, supra n 14, 147 (lamenting "reluctance towards/satisfaction with the CISG depends…a great deal on how much practitioners specialise in international sales, how much [exposure they have to] the CISG in their daily work").

44. Koehler found that for 26% of US lawyers, one reason for opting out was simply strength of bargaining position: Koehler, supra n 6, 10. We can say with 80% confidence the true figure for the population of US lawyers is within 18-34%, as the sample can be assumed to be normal since both [symbols not reproduced] and [symbols not reproduced] : 12.48 & 35.52 respectively: see Mansfield, supra n 5, 202.

45. Some 16% of Swiss lawyers gave as a reason for opting out that the "CISG was unacceptable to counterparties": Widmer & Hachem, supra n 4, 285. We can thus infer with 80% confidence this result will hold for 12-20% of the population of Swiss lawyers. See N Rozehnalová, "Czech Republic", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 107, 108 (noting those Czech lawyers familiar with the CISG come under pressure to exclude the CISG by foreign counterparties who "require the application of their own national law"); H Veytia, "Mexico", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 231, 235, 237, 239 & 248 (stating Mexican lawyers often deal with US counterparties who prefer to opt out, and in other cases, due to control of some Mexican law firms by US firms, Mexican lawyers have little choice but to use standard form contracts drafted in the US which exclude the CISG in favour of the UCC. Further, Veytia claims there is a cultural tendency in Mexico to prefer US or European to Mexican solutions, known in a wider societal context as 'Malinchismo'); D Možina, "Slovenia", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 265, 265 & 272, fn26 (similarly for Slovenian lawyers, arguing lawyers in this small and new jurisdiction tend to accept terms proposed by counterparties). Analogously to Veytia's comment, De Ly notes that within Dutch companies controlled by German corporations exclusion clauses seemed to be copied into general terms of contract, despite absence of a general tendency to opt out amongst Dutch lawyers: De Ly, supra n 40, 243-45 (discussing results of field work conducted by one of his students).

46. See Ferrari, supra n 23, 428 (arguing lawyers "ultimately cannot avoid becoming more knowledgeable about the CISG" because they will only be able to exclude "if their clients have more bargaining power than opposing counsel's clients").

47. The choice to opt in to the CISG can be direct or indirect. Indirect opt in can occur through choice of a Contracting State's law: Art. 1(1)(b). See Lookofsky, supra n 21, 120 (noting anecdotally Danish lawyers tend not to opt out since they lack bargaining strength to demand a choice of Danish domestic sales law); similarly, Hayakawa reports that "with the decline of the bargaining power of Japanese companies, it has been getting harder and harder to insert into the contracts a conflict of law clause which designates Japanese law as the applicable law": Hayakawa, supra n 26, 226. Weakness of bargaining position may be why Croation businesses choose the CISG: M Baretic & S Nikšic, "Croatia", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 93, 94-95.

48. Note the change from 71% in 2004 to 61% or 55% in 2006-7): Koehler, Philippopoulos & Fitzgerald: supra, n 6. Alternatively, differences could simply be due to survey design, sample composition (eg Philippopoulos targeted litigators), but are not attributable to difference in sample sizes (which were 48, 46 & 47 respectively): ibid.

49. Flechtner, supra n 29 (noting in the US pressure exerted by globalisation of legal services markets and observing a "change" in queries he received from practitioners regarding CISG from purely litigious to front end (drafting and choice of law) queries).

50. Anecdotally, while opting out is still prevalent in Italy, many specialist drafters are now choosing not to opt out: Torsello, supra n 34, 189, 190, 195-99 & 208 (suggesting that while CISG is not popular, there is a trend toward international drafting specialists with English law language skills and they are well-versed in the CISG). It seems a similar trend is appearing in Germany, where Magnus reports the impression that an increasing number of business associations no longer generally recommend opting out, and that opting out is no longer the norm for standard forms: Magnus, supra n 14, 146.

51. One US practitioner commented that "[p]articularly in Chinese transactions, the CISG will apply to the international contract": Fitzgerald, supra n 6, 106. In another study, a US lawyer stated that "he prefers the CISG when contracting with Chinese firms because CISG is more easily understandable than the Chinese law alternative": Philippopoulos, supra n 6, 364.

52. Ziegel, supra n 24, 72-73; Ziegel, supra n 28, 345-46; McEvoy, supra n 19, 60. Technically, the reservations are in fact declarations, but have similar effect.

53. Perpetuating the myth that CISG caselaw is "scant" or "sparse" (in fact there are over 2,000 on the Pace Website): Delchi Carrier SpA v Rotorex Corp., 71 F.3d 1024 (US), 6 December 1995, <http://cisgw3.law.pace.edu/cases/951206u1.html>. The comment has been repeated by numerous US courts since Delchi.

54. On the role of trade associations in standard contracts: JM Perillo, "Neutral Standardizing of Contracts" (2008) 28 Pace Law Review 179, 184 (highlighting role of ISDA for derivatives).

55. MG Bridge, "Uniformity and Diversity in the Law of International Sale" (2003) 15 Pace International Law Review 55,69 ('Uniformity & Diversity')(stating "every commodities sale form and oil company's standard terms that I have seen expressly excludes the operation of the CISG"); L Singh & B Leisinger, "A Law for International Sale of Goods: A Reply to Michael Bridge" (2008) 20 Pace International Law Review 161; AC Mullis, "Termination for Breach of Contract in C.I.F. Contracts Under the Vienna Convention and English Law; is There a Substantial Difference?", in E Lomnicka & R Morse (eds), Contemporary Issues in Commercial Law (Essays in honour of Prof. A.G. Guest)(London, Sweet & Maxwell, 1997), 137, passim; P Schlechtriem, "Interpretation, Gap Filling and Further Development of the UN Sales Convention" (2004) 16 Pace International Law Review 279, § I.1; F De Ly, "Opting Out: Some Observations on the Occasion of the CISG's 25th Anniversary," in F Ferrari (ed.), Quo Vadis CISG? Celebrating the 25th Anniversary of the United Nations Convention on Contracts for the International Sale of Goods (Munich, Sellier, 2005), 25, 28 & 40.

56. See, eg Grain and Feed Trade Association ('GAFTA'): GAFTA No. 100, Contract for Shipment of Feedstuffs in Bulk Tale Quale CIF Terms, 1 January 2003, cl. 28; GAFTA No. 124, Sampling Rules, 1 January 2003, cl. 27; Federation of Oil Seeds and Fats Associations ('FOSFA'); JS Smid, "Arbitration Issues in the International Vegetable Oil Trade" (2002) 2(2) Oil Palm Industry Economic Journal 18 (noting choice of English law in FOSFA 80 Form); FOSFA, www.fosfa.org accessed on 7 May 2010; Bridge, Uniformity and Diversity, supra n 55, 60.

57. Bridge, Uniformity & Diversity, supra n 55, 69 (arguing this perception of certainty is fair and accurate); Mullis, "Twenty-Five Years On - The United Kingdom, Damages and the Vienna Sales Convention" (2007) 71 Rabels Zeitschrift für ausländisches und internationales Privatrecht 35, 38 ('Twenty-Five Years On'); Mullis, supra n 55, text accompanying fn 155 (somewhat ambivalently); MG Bridge, "A Law for International Sales" (2007) 37 Hong Kong Law Journal 17, 30-31 ('Hong Kong LJ')(querying these issues and arguing the right to cure would interfere with the 'clean documents' rule in commodity trade). On damages, see D Saidov, "The Present State of Damages Under the CISG: A Critical Assessment" (2009) 13 Vindobona Journal of International Commercial Law & Arbitration 197, 206-207.

58. GH Treitel, in AG Guest (ed), Benjamin's Sale of Goods, [18-004]966 & [18-232] fn 61 (London, Sweet & Maxwell, 6th edn, 2002); Bridge, Hong Kong LJ, supra n 57, 30; Mullis, supra n 55, text accompanying fn 156 (but arguing the claim is "over-exaggerated").

59. Bridge, Uniformity & Diversity, supra n 55, 65 & 69. However, not all commodity traders favour such harsh rights of rejection: Treitel, supra n 58, [18-231] 1142.

60. Sale of Goods Act 1979 (UK), s 35. Cases that have upheld this principle: Cehave NV v Bremer Handelsgesellschaft mbH (the Hansa Nord) [1976] QB 44 (UK)(Roskill LJ confirming obiter documentary conformity to be "sacrosanct"); SIAT Di Dal Ferro v Tradax Overseas [1980] 1 Lloyd's Rep 53 (UK); Hansson v Hamel & Horley Ltd [1922] 2 AC 36 (UK)(upholding "clean documents" rule on the basis documents should be "fit to pass current in commerce"); Soon Hua Seng Co. Ltd v Glencore Grain Ltd [1996] 1 Lloyd's Rep 398, 402 (UK)(contractual requirement of liner terms amounted to condition precedent enabling buyer to reject documents). See PS Atiyah, The Sale of Goods, (London, Pitman Publishing, 8th edn, 1990), 488; Bridge, Hong Kong LJ, supra n 57, 28; Schlechtriem, supra n 55, §5(c)(for an interesting comparison of the English perfect tender rule and the CISG).

61. Bunge NV v Tradax Export SA [1981] 2 All ER 513 (UK)(termination was justified on basis of late delivery by the seller despite delay in buyer notice transmission back up the string); MG Bridge, "Good Faith in Commercial Contracts," in R Brownsword, NJ Hird & G Howells (eds), Good Faith in Contract: Concept and Contexts (Aldershot, Ashgate/Dartmouth, 1999), 131 ('in Brownsword'); Bridge, Uniformity & Diversity, supra n 55, 65 (arguing good faith would not sit well with commodities trade); MG Bridge, "International Private Commodity Sales" (1991) 19 Canadian Business Law Journal 485, 488 ('Canadian Business LJ')(stating relational loyalty "cuts very little ice here").

62. Treitel, supra n 58, [18-231] 1141-42; Bridge, Canadian Business LJ, 488; Reardon Smith Line Ltd v Hansen Tangen [1976] 1 WLR 989, 998 (UK)(description in commodities vital). See, eg strategic behaviour by buyer on a falling market: Bowes v Shand (1877) 2 App. Cas. 455 (UK)(buyer could reject despite no loss caused by late shipment); Richco International Ltd v Bunge & Co. Ltd (the New Prosper) [1991] 2 Lloyd's Rep 93 (UK)(seller successfully seized upon a technical defect to take advantage of rising market) Recent amendments seem to overtly sanction such behaviour. Bridge notes that opportunistic reasons in commodity sales centre on time and documentary performance, the very matters "ring-fenced" from recent restrictions on rejection: Bridge, supra n 55, 69. See infra, n 78.

63. Bridge, Uniformity & Diversity, supra n 55, 65-66, fn 48 (noting such contracts are entered without legal assistance, and that involvement of law firms is primarily confined to litigation).

64. RA Macdonald, "Article 9 Norm Entrepreneurship" (2006) 42(2) Canadian Business Law Journal 240, 265.

65. Bridge, Hong Kong LJ, supra n 57, 22, 29 & 40 (observing English sales law for commodities focuses on application of express terms and has developed largely outside the Sale of Goods legislation, and noting richness of English caselaw accumulated on the issues of documentary sale); Mullis, supra n 55, text accompanying fn 158; Bridge, Uniformity & Diversity, supra n 55, 68 (claiming English sales law "functions as a system that was designed for commodity sales"); A Forte, "The United Nations Convention on Contracts for the International Sale of Goods: Reason or Unreason in the United Kingdom" (1997) 26 University of Baltimore Law Review 51, 58 (citing Law Society of England & Wales view on the "benefit of the certainty conferred by long-established [UK] case law"); Mullis, Twenty-Five Years On, supra n 57, 37.

66. Through construction under Arts 8(2), 8(3), 9(1) & 9(2) CISG; Schlechtriem, supra n 55, §2(c); CISG Advisory Council, Opinion No. 5, The Buyer's Right to Avoid the Contract in Case of Non-Conforming Goods or Documents, 7 May 2005, Badenweiler (Germany). Rapporteur: Professor Dr. Ingeborg Schwenzer, <http://www.cisgac.com/default.php?ipkCat=128&ifkCat=147&sid=147> accessed on 7 May 2010 ('CISG-AC Opinion No. 5'), [4.17]; Singh & Leisinger, supra n 55, 175.

67. Schlechtriem, supra n 55, §5(bb)(arguing variable stringency on the requirement of fundamental breach depending on usage pursuant to Art. 9(2)); CISG-AC Opinion No. 5, supra n 66, [4.17]; I Schwenzer, "The Danger of Domestic Pre-Conceived Views with Respect to the Uniform Interpretation of the CISG: The Question of Avoidance in the Case of Non-Conforming Goods and Documents" (2004-2005) Victoria University of Wellington Law Review 795, 806-807 (arguing delivery of clean and timely documents is always of the essence in commodity trade); Mullis, supra n 55, text accompanying fns 149-153 (stating it is at "least arguable that for documents disclosing a slight defect…or late delivery…the CISG might allow avoidance"); P Schlechtriem, "Subsequent Performance and Delivery Deadlines - Avoidance of CISG Sales Contracts due to Non-Conformity of Goods" (2006) 18 Pace International Law Review 83, 87 & 92-95 ('Subsequent Performance')(asserting an interpretation which "practically leads to a result corresponding to the perfect tender rule"); P Huber, "CISG - The Structure of Remedies" (2007) 71 Rabels Zeitschrift für ausländisches und internationales Privatrecht 13, 32 (arguing documentary obligations are "at least as strict as current English law" given good faith, trade usages, and express/implied terms including CIF Incoterms & UCP documentary credits); B Zeller, "Commodity Sales and the CISG," in UG Schroeter & CB Andersen (eds), Sharing International Commercial Law across National boundaries: Festchrift for Albert H. Kritzer on the Occasion of his Eightieth Birthday (London, Wildy, Simmonds & Hill Publishing, 2008), 627, 628 & 32. Cf, Bridge, Hong Kong LJ, supra n 58, 19 & 22. For an example of the court's willingness to view time as essential given the circumstances: see, eg Oberlandesgericht Hamburg, Germany, 28 February 1997, (Iron molybdenum case), <http://cisgw3.law.pace.edu/cases/970228g1.html> accessed on 7 May 2010 (holding time was forseeably of "special interest" to the buyer, as denoted by the Incoterm CIF, so delay amounted to fundamental breach).

68. See Art. 48(1); CISG-AC Opinion No. 5, supra n 66, [4.14]; Schwenzer, supra n 67, 806-807 (arguing ability to cure defective documents inapplicable to commodity sales); Huber, supra n 67, 32. See Amtsgericht München (FRG), 25 June 1995, <http://cisgw3.law.pace.edu/cases/950623g1.html> accessed on 7 May 2010, discussed by Singh & Leisinger, supra n 55, 177-78 & 186-87.

69. Given many contracts are not entered for the purposes of the physical goods, this is of prime concern to most parties in the market. A more detailed discussion of the significance of string transactions in commodity trade appears infra, section D6.

70. CISG-AC Opinion No. 5, supra n 66, [4.14]; Huber, supra n 67, 32; Schlechtriem, Subsequent Performance, supra n 67, 94-95 (on different basis); Zeller, supra n 67, 632.

71. For detailed analysis, see Saidov, supra n 57, 206-208 (arguing the abstract measure under Art. 76 has and would be employed) & 209-215 (dealing with description, market and price). See Bridge, Uniformity and Diversity, supra n 55, 68 (arguing the English position in determining damages as at due date for delivery is better suited to commodity trade as opposed to the CISG determination at date of avoidance); Zeller, supra n 67, 636 & 37 (arguing in addition to Art. 75 or 76, traders can still claim lost profits under Art. 74 to account for price fluctuations between avoidance and delivery date); Spagnolo, Last Outpost, supra n 3, 182, fn 255 & 256 (contending Art. 76 is a better measure than Art. 75 when parties are continuously "in the market").

72. Arts 30, 32 &34. See Secretariat Commentary, Commentary on the Draft Convention on Contracts for the International Sale of Goods, UN Doc. A/ CONF.97/5, 14 March 1979, Art. 2, [8], <http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-02.html> accessed on 7 May 2010 (stating in regard to exclusion of stocks, shares, investment securities, negotiable instruments in sub-Art. (d) that "[t]his subparagraph does not exclude documentary sales of goods from the scope of this Convention even though, in some legal systems, such sales may be characterized as sales of commercial paper"); CISG-AC Opinion No. 5, supra n 66, [4.12]; Schlechtriem, supra n 55, §I.1 (arguing views that the CISG was not suited to commodity trade would have come as a surprise to the CISG's architects).

73. Singh & Leisinger, supra n 55, 186-87 (commenting on interaction of Incoterms and CISG).

74. See, eg GAFTA 100, supra n 56, cl. 18 & 25 (dealing with the effect of governmental intervention preventing shipment).

75. In fact, as Bridge points out, requirements of fairness and co-operation are inherent in rules on transmission of appropriation notices: Bridge in Brownsword, supra n 61, 155-156.

76. Atiyah, supra n 60, 494 (stating that, if it can be done within the time for delivery, the seller can deliver substitute goods after rejection. See Bridge, Hong Kong LJ, supra n 57, 29-30 (discussing substitution of documents susceptible to this).

77. A number of observations support this view. First, acceptance is often deemed: Sale of Goods Act 1979 (UK), s 35(1)(when buyer intimates acceptance or the buyer acts toward goods delivered in a manner inconsistent with seller's ownership, or after lapse of a reasonable period without intimation of rejection); Kwei Tek Chao v British Traders & Shippers Ltd [1954] 2 QB 459, 475 (acceptance of goods and delay in rejecting documents constituted affirmation despite false date on bill of lading); Treitel, supra n 58, [12-044]; Atiyah, supra n 60, 496-97 (contrasting ease with which the right to reject can be lost for sale of goods with general law of contract, in particular, before awareness of the breach or the existence of the right to reject); CISG-AC Opinion No. 5, supra n 66, [2.2].

78. English law is being subjected indirectly to the influence of the CISG by EU law: see, eg EU Directive on certain aspects of the sale of consumer goods and associated guarantees, Directive 99/44/EC [1999], supra n 41, Art. 3 (price reductions); Bridge, Uniformity & Diversity, supra n 55, 71; Huber, supra n 67, 32 (also observing the influence of EU initiatives in decreasing English law's relative suitability vis-à-vis the CISG); Zeller, supra n 67, 638; Mullis, supra n 55, passim. Mullis considers the 1994 insertion of s 15A into the Sale of Goods Act 1979 (UK) restricting termination due to slight breaches of conditions implied by ss 13-15 to have added uncertainty to UK law. However, the restriction on the right to reject does not affect express terms, which are paramount in commodities trade. Further, as Bridge notes, s 15A does not apply to late or documentary performance: Bridge, Uniformity & Diversity, supra n 55, fn 58 & Bridge, Hong Kong LJ, supra n 57, 23 & Bridge in Brownsword, supra n 61, 164. See Atiyah, supra n 60, 487 (concluding forthcoming s. 15A would not apply to late shipping documents or failures to open letter of credits which would still be subject to unreasonable rejection); Halsbury's Laws of England (London, Butterworths, Lexis Nexis electronic version, 2010), (2) CIF Contracts, (ii) Legal Incidents, §340, fn 14. See CISG-AC Opinion No. 5, supra n 66, [2.2].

79. While the future of the DCFR is far from settled, were it to be adopted in its present form, it would apply to commodity sales and alter English law relating to commodities with regard to contractual formation, obligations and remedies. It also contains rules on property in movable goods and assignments, which are highly important in string transactions. It is interesting to note that it proposes a general duty of good faith, and combines commercial and consumer contractual law: DCFR Full Edition, supra n 41, II, III, IV.A. & VIII. In particular, see the comments at IV.A.-2:101 & 2:301, 1253 (discussing documentary sales). See Bridge, Uniformity & Diversity, supra n 55, 71-2 (acknowledging if supplanted by European contract law there would be no "legacy English law" to which commodity traders could turn).

80. Tradax Internacional SA v Goldschmidt SA [1977] 2 Lloyd's Rep 604, 612 (in FOB contract requiring certificate of quality of no more than 4% impurities, buyer held not to have the right to reject on grounds certificate of quality showed 4.1% impurity in absence of agreement this amounted to a condition). See discussion of this case by Mullis, supra n 55, text accompanying fn 137. See the New Prosper, supra n 62, 98-9.

81. This dilutes the strict dichotomy between conditions and warranties that previously prevailed: Hongkong Fir Shipping Co. v Kawasaki Kisen Kaisha [1962] 2 QB 26; the Hansa Nord, supra n 60; Tradax v Goldschmidt, supra n 80, 612. It was mentioned but ultimately not applied in SIAT Di Dal Ferro, supra n 60.

82. Atiyah, supra n 60, 497-98 (stating in relation to the right to reject the goods that it could be lost by waiver in the form of "clear and unequivocal representations (whether by express words, or by implication from conduct) that he will accept the goods, or that he will not reject them on grounds of late delivery or some other ground"); Kwei Tek Chao, supra n 77, 475; Vargas Pena Apezteguia y Cia Saic v Peter Cremer GmbH [1987] 1 Lloyd's Rep 394, 398 (UK)(estoppel/inconsistent behaviour upheld, could not reject when simultaneously state intent to resell); Panchaud Frères v Etablissements General Grain Co. [1970] 1 Lloyd's Rep 53 (UK)( right to terminate lost for inconsistent behaviour/waiver); Bremer Handelsgesellschaft mbH v C Mackprang Jr [1979] 1 Lloyd's Rep 221 (UK). Cf Sociéte Italo-Belge Pour le Commerce et l'Industrie SA v Palm & Vegetable Oils (Malaysia) Sdn Bhd (the Post Chaser) [1981] 2 Lloyd's Rep 695; [1982] 1 All ER 19 (UK); Proctor & Gamble Philippine Manufacturing Corp. v Peter Cremer GmbH (the Manila) [1988] 3 All ER 843, 853 (UK)(survey report tendered with documents insufficient to show knowledge by buyer of late shipping); V Berg Ltd & Son Ltd v Vanden Avenne-Izegem PVBA [1977] 1 Lloyd's Rep 499, 504 (UK); Jackson v Rotax Motor & Cycle Co. [1910] 2 KB 937 (UK); SIAT Di Dal Ferro, supra n 60.

83. This touches on the issues of status quo bias, group polarity & institutionalization discussed infra, sections D1, D3 & D6. See Singh & Leisinger, supra n 55, 189 (asserting this as the primary reason for the CISG's exclusion); Mullis, Twenty-Five Years On, supra n 57, 38. Noting that "attempts to deviate are met with great resistance" where neutral standard forms exist: Perillo, supra n 54, 187.

84. See infra, section D6.

85. KJ Arrow, "Existence of An Equilibrium for a Competitive Economy," in KJ Arrow (ed), Social Choice and Justice: Collected Papers of Kenneth Arrow, (Oxford, Blackwell, 1984), Vol. 2: General Equilibrium 58, 60; GJ Stigler, The Theory of Price (New York, Macmillan, 4th edn, 1987), 43-74 & 320-28; JE Stiglitz, Principles of Microeconomics (New York, WW Norton, 1st edn, 1993), 493-502; RB Korobkin & TS Ulen, "Law and Behavioural Science: Removing the Rationality Assumption from Law and Economics" (2000) 88 California Law Review 1051, n.104, 1055 & 1060-66.

86. Korobkin & Ulen, ibid, at 1082; CR Sunstein, "Cognition and Cost-Benefit Analysis" (2000) 29 Journal of Legal Studies 1059 ('Cost-Benefit'); Stiglitz, supra n 85, 28-29.

87. See HA Simon, "A Behavioral Model of Rational Choice", 69 Quarterly Journal of Economics 99, 101, 104 (1955)('(1955)'); HA Simon, "Rational Choice and the Structure of the Environment" (1956) 63(2) Psychological Review 129, 129 ('(1956)'); A Tversky & D Kahneman, "Prospect Theory: An Analysis of Decision under Risk" (1979) 47 Econometrica 263 ('Prospect Theory'); HA Simon, "Rational Decision Making in Business Organizations" 69(4) American Economic Review 493 (1979)('(1979)'); A Tversky & D Kahneman, "Judgment Under Uncertainty: Heuristics & Biases", in D Kahneman, P Slovic & A Tversky (eds), Judgment Under Uncertainty (Cambridge University Press, 1982), 1, 3 ('Judgment under Uncertainty'); A Tversky & D Kahneman, "Rational Choice and the Framing of Decisions", in RM Hogarth & MW Reder (eds), Rational Choice: The Contrast between Economics and Psychology (Chicago, University of Chicago Press, 1987), 67, 88 & 91 ('Framing'); G Gigenzer & DG Goldstein, "Reasoning the Fast and Frugal Way: Models of Bounded Rationality" (1996) 103 Psychological Review 650, 650; C Jolls, CR Sunstein & RH Thaler, "A Behavioral Approach to Law and Economics", in CR Sunstein (ed), Behavioral Law and Economics (Cambridge University Press, 2000), 13, 14; D Kahneman, "Maps of Bounded Rationality: Psychology for Behavioral Economics" (2003) 93 American Economic Review 1449, 1454-56 ('Maps of Bounded Rationality').

88. Korobkin & Ulen, supra n 85, 1074. Cf, Gigenzer & Goldstein, supra n 87, 650 (arguing the "rationality of the Enlightenment" has been replaced by the "heuristics and biases program"); RH Thaler, "The Psychology of Choice and the Assumptions of Economics", in RH Thaler (ed), Quasi Rational Economics (New York, Russell Sage Foundation, 1991), 137, 163.

89. Comparing 'new' (NIE) with 'old' institutional economics: HJ Hovenkamp, "Coase, Institutionalism, and the Origins of Law and Economics", University of Iowa Legal Studies Research Paper No 10-07 (2010), <http://ssrn.com/abstract=1538279> accessed on 7 May 2010.

90. This approach is espoused by M Kelman, "Behavioral Economics as Part of a Rhetorical Duet: A Response to Jolls, Sunstein, and Thaler" (1998) 50 Stanford Law Review 1577.

91. For a summary, see Spagnolo, Last Outpost, supra n 3, 149-59.

92. See Tversky & Kahneman, Prospect Theory, supra note 87, 263, 274 & 277; Tversky & Kahneman, Judgment under Uncertainty, supra note 87, & Framing, supra n 87; PA David, "Clio and the Economics of QWERTY" (1985) 75 American Economic Review 332, 332 (defining path dependence and arguing its relevance in standard keyboard design); WB Arthur, "Competing Technologies, Increasing Returns, and Lock-in by Historical Events" (1989) 99 The Economic Journal 116 ('Lock-in'); SJ Liebowitz & SE Margolis, "Path Dependence, Lock-in and History" (1995) 11 Journal of Law, Economics & Organization 205, 205-206 ('Path Dependence'). For a contrary account of the QWERTY story: SJ Liebowitz & SE Margolis, "The Fable of the Keys" (1990) 33 Journal of Law & Economics 3, 6-21 ('Fable of the Keys')(claiming a lack of evidence to support the claimed superiority of the alternative Dvorak keyboard design). Loss aversion can lead to path dependence: see Kahneman, Maps of Bounded Rationality, supra n 87, 1457; Korobkin & Ulen, supra n 85, 1104-11. On path dependence in relation to uniform law: J Linarelli, "The Economics of Uniform Laws and Uniform Lawmaking" (2002-2003) 48 Wayne Law Review 1387, 1394-95, 1398 & 1402. The term 'path dependence' in relation to opt outs of the CISG is also mentioned by Gopalan: supra n 30, 330.

93. However, weaker forms of path dependence, where inefficiency becomes knowable only ex post or change is not feasible after the initial choice is not irrational is compatible with rational choice theory: Liebowitz & Margolis, Path Dependence, supra n 92, 206.

94. This is consistent with 'status quo bias': R Korobkin, "Behavioural Economics, Contract Formation and Contract Law", in CR Sunstein (ed), Behavioral Law and Economics (Cambridge University Press, 2000), 116, 137; Thaler, supra n 88, 143 (stating "losses loom larger than gains"); CR Sunstein, "Introduction", in CR Sunstein (ed), Behavioral Law and Economics (Cambridge University Press, 2000), 1, 4; Korobkin & Ulen, supra n 85, 1069, 1095 & 1111-12; Kahneman, Maps of Bounded Rationality, supra n 87, 1457; Sunstein, Cost-Benefit, supra n 86, 1068 (describing the tendency to overvalue "loss from the status quo" combined with a tendency to ignore or undervalue gains); Liebowitz & Margolis, Path Dependence, supra n 92, 205; Tversky & Kahneman, Prospect Theory, supra n 87, 280. See M Hiscock, "The Role of International Conventions in International Business Transactions", presented at the 2008 International Trade Law Symposium, 11-12 April 2008, Canberra, 5 (on file with author)(CISG).

95. Thus the role of information and transaction costs is vital in ensuring efficient market outcomes: RH Coase, "The Problem of Social Cost" (1960) 3 Journal of Law and Economics 1. See J Farrell & G Saloner, "Standardization, Compatibility, and Innovation" (1985) 16 Rand Journal of Economics 70.

96. For a summary, see Spagnolo, Last Outpost, supra n 3, 149-59.

97. AE Butler, "The International Contract: Knowing When, Why, and How to 'Opt Out' of the United Nations Convention on Contracts for the International Sale of Goods" (2002) 76(5) Florida Bar Journal 24.

98. Cf RB Korobkin & C Guthrie, "Psychology, Economics and Settlement: A New Look at the Role of the Lawyer" (1997-98) 76 Texas Law Review 77, 81(arguing the presence of lawyers in litigation settlements improves efficiency).

99. In common law systems this would take the form of a suit in negligence, admittedly involving some difficult causation questions, and could also be framed as a breach of contract, possibly of an implied term. See Ferrari, supra n 23, 427; Spagnolo, Last Outpost, supra n 3, 163-64; RA Brand, "Uni-State Lawyers and Multinational Practice: Dealing with International, Transnational, and Foreign Law" (2001) 34 Vanderbilt Journal of Transnational Law 1135, 1162-66; RA Brand, "Professional Responsibility in a Transnational Transactions Practice" (1997-98) 17 JOURNAL OF LAW & COMMERCE 310, 341; S Saiegh, "The Business Lawyer's Perspective", in HM Flechtner, RA Brand & MS Walter (eds), Drafting Contracts under the CISG (Oxford University Press, 2008), 254; Dodge, supra n 24, 74. Cf CB Andersen, "United Kingdom", in F Ferrari (ed), The CISG and its Impact on National Legal Systems (Munich, Sellier, 2008), 303, 305.

100. For a summary of such advantages and disadvantages, see Spagnolo, Last Outpost, supra n 3, 149-59.

101. BW Arthur, "Positive Feedbacks in the Economy" (1990) 262 Scientific American 92, reprinted in WB Arthur (ed), Increasing Returns and Path Dependence in the Economy (Ann Arbor, University of Michigan Press, 1994), 13 ('Positive Feedbacks'); Arthur, Lock-in, supra n 92.

102. M Prado & M Trebilcock, "Path Dependence, Development, and the Dynamics of Institutional Reform" (2009) 59 University of Toronto Law Journal 341, 351 & 361.

103. 164 F.Supp.2d 1142 (2001)(US), <http://cisgw3.law.pace.edu/cases/010727u1.html> accessed on 7 May 2010.

104. (No 4) [2009] FCA 522, 20 May 2009 (Australia), <http://cisgw3.law.pace.edu/cases/090520a2.html> accessed on 7 May 2010.

105. CISG cases and CISG legislative history indicate express and implied exclusion are possible, but implicit exclusion requires "clear" indications of "real" intent. See, eg Oberlandesgericht Düsseldorf, Germany, 8 January 1993, (Tinned Cucumbers case), <http://cisgw3.law.pace.edu/cases/930108g1.html> accessed on 7 May 2010. For a summary of supporting cases and the minority contrary position, see UNCITRAL, UNCITRAL Digest of Case Law on the Convention on the International Sale of Goods, UN Doc. A/CN.9/SER.C/DIGEST/CISG/1 (8 June 2004), Art. 6; JO Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (Austin, Wolters Kluwer, HM Flechtner (ed.), 4th edn, 2009), [77] 106 (requiring "real" and not "theoretical" intent); F Enderlein & D Maskow, International Sales Law: United Nations Convention on Contracts for the International Sale of Goods: Convention on the Limitation Period in the International Sale of Goods: Commentary (New York, Oceana Publications, 1992), 48 (stating there must be "clear indications"); F Ferrari, "Specific Topics of the CISG in the Light of Judicial Application and Scholarly Writing" (1996) 15 Journal of Law & Commerce 1, 88, fn 614.

106. In addition to pre-contractual negotiations, the court referred to the nature of the contract, the fact that the seller was known to trade internationally, and the position and context of the apparent exclusion in order to conclude that the parties intended to exclude the CISG: Olivaylle, supra n 107, [20]-[23].

107. See supra, n 104.

108. Olivaylle, supra n 104, [203]-[209].

109. For example, the client might later engage another lawyer who appreciates the poor decision making of their predecessor, or the problem might be discovered during subsequent litigation stages. Discovery of and seeking compensation for inadequate legal advice involves monitoring costs. See generally Stiglitz, supra n 85, 551 & 567¬72. See Walt, supra n 112, 687; KJ Arrow, "Information and Economic Behavior", in KJ Arrow (ed), Social Choice and Justice: Collected Papers of Kenneth Arrow, (Oxford, Blackwell, 1984), Vol. 2: The Economics of Information 136, 150 (explaining the economic role of ethics in professional situations of information asymmetry).

110. Gillette & Scott, supra n 30, 478 (noting "attorneys have incentives to avoid learning about novel law" and therefore will opt out of even an "optimal" novel law): see Gopalan, supra n 30, 328-29 (arguing public conflicts arguments cannot explain failures of private law agreements like the CISG). However, when party choices are considered in light of lawyer-client agency, conflicts of interest are arguably highly important in explaining opt out practices. Terming such behaviour "opportunism:" OE Williamson, The Economic Institutions of Capitalism 47-49 (New York, Free Press,1985). See Stiglitz, supra n 85, 311 (on perverse incentives for quality where the latter is difficult to judge due to imperfect information, giving as an example medical services).

111. Stiglitz, supra n 85, 551 & 567-72; SG Winter, "Satisficing, Selection and the Innovating Remnant" (1971) 85 Quarterly Journal of Economics 237, 237; C Engel, "The Behaviour of Corporate Actors - A Survey of the Empirical Literature", (May 2008), Journal of Institutional Economics (forthcoming) Working Paper Series of Max Planck Institute for Research on Public Goods Bonn 2008/23, <http://ssrn.com/abstract=1135184> accessed 7 May 2010; M Kahan & M Klausner, "Path Dependence in Corporate Contracting: Increasing Returns, Herd Behavior and Cognitive Biases" (1996) 74 Washington University Law Quarterly 347, at 353-55.

112. Kahan & Klausner, ibid, 353-55; S Walt, "Novelty and the Risks of Uniform Sales Law" (1999) 39 Virginia Journal of International Law 671, 685-88 (considering whether opt out rates are influenced by lawyers seeking to maximise litigation fees in future, but ultimately dismissing the possibility). On principal-agency problems, see generally D Begg, S Fischer & R Dornbusch, Economics (London, McGraw-Hill, 5th edn, 1997), 53; J Amour, H Hansmann & RH Kraakman, "Agency Problems, Legal Strategies and Enforcement" (20 July 2009), Oxford Legal Studies Research Paper No 21/2009; Yale Law, Economics & Public Policy Research Paper No 388; Harvard Law and Economics Paper Series No 644, 3, <http://ssrn.com/abstract=1436555> accessed 7 May 2010; MC Jensen & WH Meckling, "Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure" (1976) 3 Journal of Financial Economics 305, 308-310.

113. Kahan & Klausner, supra n 111, 353 (arguing clients have imperfect information about quality of legal work).

114. In particular, multi-national companies may have cross-jurisdictional legal expertise in the form of in-house counsel. On complexity and its effect in increasing agency costs: Amour et al, supra n 112, 3; S Ross, "The Economic Theory of Agency: The Principal's Problem" (1973) 63 American Economic Review 134, 138 (noting not always feasible to monitor); Stiglitz, supra n 85, 311 (patient difficulty judging quality of medical services).

115. A moral hazard exists when a market distortion can be induced by information asymmetries, here due to the agency relationship. The present analysis treats burdens on the client resulting from lawyer shirking as market distortion or rent extracted by an agent.

116. As the CISG is part of the domestic law of the lawyer's own jurisdiction, it might not be justifiable to charge clients for learning costs. Additionally, it is questionable whether CISG learning costs should be fairly allocated to a single client. Even if the lawyer were able to recover learning costs, other consequences resulting from the decision to invest may rationally decrease the lawyer's enthusiasm, as detailed infra, section D3.

117. See discussion of imperfect information as market failure: JE Stiglitz, Economics of the Public Sector (New York, WW Norton, 3rd edn, 2000), 221; Stiglitz, supra n 85, 311.

118. See A Schwartz & LL Wilde, "Imperfect Information in Markets for Contract Terms: The Examples of Warranties and Security Interest" (1983) 69 Virginia Law Review 1387, 1388 (arguing information asymmetry may negatively affect the less informed party's perception of risk allocation, competing deals & legal relationship with the other party); SI Becher, "Asymmetric Information in Consumer Contracts: The Challenge That Is Yet to be Met" (2008) 45 American Business Law Journal 723, 734 (arguing asymmetric information causes a "serious market failure").

119. The cost of an inefficient choice of law amounts to an agency cost. See Jensen & Meckling, supra n 112, 5; EF Fama & MC Jensen, "Separation of Ownership and Control" (1983) 16 Journal of Law & Economics 301, 304 (stating agency costs include lost output).

120. See discussion in Spagnolo, Glimpse, supra n 37, 153-55.

121. Such risks are likely to be underestimated due to the human tendency to underestimate probabilities of failure where events are disjunctive - i.e. where one failure alone will cause all intended outcomes to be lost. In cognitive psychology, this is called "anchoring" bias: Tversky & Kahneman, Judgment Under Uncertainty, supra n 87, 16; Tversky & Kahneman, Prospect Theory, supra n 87, 271 & 275. See GT Jones, "Designing Heuristics: Hybrid Computational Models for Teaching the Negotiation of Complex Contracts" (2009), <http://ssrn.com/abstract=1370525> accessed 7 May 2010 (regarding loss of other optimal outcomes due to tendencies to confine contractual negotiations to a small range of possibilities).

122. Although this concern is irrelevant to the client's interests, it may play a part in decisions in high opt out-low familiarity jurisdictions. See infra, sections D3(a) & D4(a).

123. Kahan & Klausner, supra n 111, 355-58. Risk aversion and status quo biases are strong predictors of choices, due to the endowment effect, and may cause path dependency: RH Thaler, "Toward a Positive Theory of Consumer Choice" (1980) 1 Journal of Economic Behavior & Organization 39, 44-47; Kahneman, Maps of Bounded Rationality, supra n 87, 1459. Unfamiliarity levels can exacerbate the problem via accessibility bias in decision making: see generally ibid,1459 (noting interrelatedness of cognitive biases and externalities in standardization of suboptimal contract terms). See also supra, n 94.

124. Reviewing experiments supporting the endowment effect: J De Coninck, "Overcoming the Mere Heuristic Aspirations of (Functional) Comparative Legal Research? An Exploration into the Possibilities and Limits of Behavioral Economics" (2009) Global Jurist Vol. 9 No 4 Article 3 <http://www.bepress.com/gj/vol9/iss4/art3> accessed 7 May 2010, 9 fn 28-30 & at 13 fn 41. See C Jolls, "Behavioral Law and Economics", Public Law & Legal Theory Research Paper No 342, <http://ssrn.com/abstract=959177> accessed 7 May 2010; RB Korobkin, "The Endowment Effect and Legal Analysis" (2003) 97 Northwestern University Law Review 1227 ('Endowment Effect'); RB Korobkin, "The Status Quo Bias and Contract Default Rules" (1998) 83 Cornell Law Review 608, 664-65.

125. DG Goldstein & G Gigenzer, "The Recognition Heuristic, How Ignorance Makes Us Smart", in G Gigenzer, PM Todd & ABC Research Group (eds), Simple Heuristics that Make Us Smart (Oxford University Press,1999), 37, 40.

126. Discussing this 'fear of the unknown' in relation to the CISG: Murray, supra n 24, 365; Cook, supra n 24, 351; Forte, supra n 65, 57 (stating the CISG "has come to represent a source of 'traps' into which an unwary English lawyer will fall if utmost vigilance is not maintained. To the outside observer these attitudes seem paranoid.") See generally J Elster, Ulysses and the Sirens: Studies in Rationality and Irrationality (Cambridge University Press, 1979), 66.

127. Parents and those with long memories will recall Knox refusing the fictional dish of green eggs and ham simply on the basis that he "does not like them," whereupon Sam urges, "Try them! Try them! And you may. Try them and you may, I say": Seuss, supra n 1.

128. G Gigenzer & PM Todd, "Fast and Frugal Heuristics, The Adaptive Toolbox", in G Gigenzer, PM Todd & ABC Research Group (eds), Simple Heuristics that Make Us Smart (Oxford University Press,1999), 3, 5; Korobkin & Ulen, supra n 85, 1077.

129. Simon (1979), supra n 87, 502 (stating "rationality is bounded when it falls short of omniscience"); Simon (1955), supra n 87, 101& 112 (describing how all organisms suffer from limited capacities to obtain and process information); Simon (1956), supra n 87, 129 (describing "approximate rationality" as closer accounts of observable conduct than classical maximizing rationality); Korobkin & Ulen, supra n 85, 1075.

130. Korobkin & Ulen, supra n 85, 1069 & 1076; Gigenzer & Todd, supra n 128, 5 (describing human dependence on an "adaptive toolbox" of "frugal heuristics" to enable complex decision making in conditions of bounded rationality).

131. Gigenzer & Todd, supra n 128, 13 & 18 (utilizing the term "ecological rationality" to emphasize this aspect of bounded rationality, i.e. the match between heuristics and the decision making environment); Simon (1956), supra n 87, 129-130.

132. Simon argues that, rather than searching for all alternatives and completely ordering preferences per rational choice theory, "satisficing" behaviour only partially orders alternatives by setting an aspiration level of viable alternatives. This facilitates 'limited' rationality under constraints of knowledge and capacity, as opposed to global rationality which optimizes outcomes under conditions of perfect information and limitless capacity: Simon (1955), supra n 87, 104-113; Simon (1956), supra n 87, 129 & 136; Simon (1979), supra n 87, 501; Korobkin & Ulen, supra n 85, 1075; Gigenzer & Todd, supra n 128, 14-18.

133. Simon (1979), supra n 87, 501.

134. MA Eisenberg, "The Limits of Cognition and the Limits of Contract" (1995) 47 Stanford Law Review 211, 214 (citing March & Simon (1958)).

135. There is one line of thought that 'optimizing' behaviour still occurs within constraints in relation to the search for information: GJ Stigler, "The Economics of Information" (1961) 69 Journal of Political Economy 213. However, this would require greater computational skills than bounded rationality contemplates: Simon (1979), supra n 87, 503; Gigenzer & Todd, supra n 128, 10-11; Winter, supra n 111, 239-41.

136. Jones, supra n 121, 3.

137. Simon (1955), supra n 87, 113; Simon (1956), supra n 87, 137.

138. Simon (1956), supra n 87, 129, 136; Simon (1979), supra n 87, 501; Gigenzer & Todd, supra n 128, 14-18.

139. Simon (1979), supra n 87, 507 (discussing the "clear[] fit" between satisficing theories of problems solving and psychological selectivity utilizing heuristics). See Jones, supra n 121, 4 (using a computational model to evaluate various heuristics in complex contractual negotiations).

140. In the case of the CISG, in jurisdictions prone to 'automatic' opt outs, the aspirational level at which lawyers are satisficing is set at the benchmark of 'generally opt out,' and provided this is agreeable to the counterparty's lawyer, any other possibility need not be considered.

141. The existence of a suitable environment to the operation of a heuristic device in decision making under bounded rationality is highly important to the feasibility of the heuristic: Gigenzer & Todd, supra n 128, 14-18.

142. See Korobkin & Ulen, supra n 85, 1075.

143. Lawyers have a high capacity for rationalization in a manner which distorts or prevents recognition of ethical problems, and are susceptible to unconscious and automatic biases toward self-interest in legal decision making: K Hall, "Why Good Intentions are Often Not Enough: The Potential for Ethical Blindness in Legal Decision-Making" (2009), 2, 6-9, ANU College of Law Research Paper No. 09-32, <http://ssrn.com/abstract=1500137> accessed 7 May 2010; J Haidt, "The Emotional Dog and its Rational Tail: A Social Intuitionist Approach to Moral Judgment" (2001) 108 Psychological Review 814, 819-823 & 830 (asserting a dual process for moral decisions whereby normally decisions are made intuitively and only justified ex post facto by publicly acceptable rationalizations). See generally DA Moore & G Loewenstein, "Self-Interest, Automaticity, and the Psychology of Conflict of Interest" (2004) 17 Social Justice Research 189, 195, 196 & 199; M Hauser, F Cushman, L Young, RK Jin & J Mikhail, "A Dissociation Between Moral Judgment and Justifications" (2007) 22 Mind & Language 1, 17 (presenting evidence decision making is primarily intuitive). Note self-interest itself may be "bounded"; Jolls, supra n 124, 17-18.

144. Haidt, supra n 143. Influences of group dynamics are discussed infra, sections D3 & D4.

145. Hall, supra n 143; Moore & Loewenstein, supra n 143, 199.

146. However, see Korobkin & Ulen, supra n 85, 1076. As mentioned earlier, it is presumed the lawyer is unable to recover learning costs by charging the client for time spent researching the CISG: supra n 116.

147. Gigenzer & Todd, supra n 128, 32 (referring to external factors that may help to select heuristics). Contractual incentives are often touted as the solution to principal-agency monitoring costs, but the matter is not as easily resolved where the agent is hired to provide expert services without easily measured outcomes: see Arrow, supra n 109 (medical profession); Stiglitz, supra n 85, 311 (medical); Ross, supra n 114 (medical).

148. I am not aware of any instances in which such matters have not been settled.

149. The term 'internalization' is strictly related to externalities, although it is borrowed here as a means of identifying a resolution to information-induced market distortions: see supra, n 115.

150. Similar processes occur as cascade effects, but deliberation appears to result in more extremist views: CR Sunstein, "Deliberative Trouble? Why Groups Go to Extremes" (2000-2001) 110 Yale Law Journal 71,75 & 85 ('Deliberative Trouble'); DM Kahan, "Gentle Nudges vs. Hard Shoves: Solving the Sticky Norms Problem" (2000) 67 University of Chicago Law Review 607, 614-15; DJ Isenberg, "Group Polarization: A Critical Review and Meta-Analysis" (1986) 50 Journal of Personality & Social Psychology 1141, 1141.

151. Kahan, supra n 150, 614; Isenberg, supra n 150, 1141; CR Sunstein, "Deliberating Groups Versus Prediction Markets (Or Hayek's Challenge to Habermas)" (2006) 3 Episteme 192, University of Chicago, Public Law Working Paper No 146, <http://ssrn.com/abstract_id=956189> accessed 7 May 2010 ('Hayek's Challenge'), 2 &4-5.

152. Sunstein, ibid, 2 & 4-5; Kahan, supra n 150, 614 (noting that the group view tends to move toward a more extreme end rather than the median view); Engel, supra n 111, 12 (similarly, groups move toward the more "radical" views of their members).

153. Isenberg, supra n 150, 1144-45; Sunstein, Deliberative Trouble, supra n 150, 78; Sunstein, Hayek's Challenge, supra n 151, 2-5.

154. Isenberg, supra n 150, 1141; Engel, supra n 111, 13; Sunstein, Deliberative Trouble, supra n 150, 75 & 85.

155. Referred to as the "common-knowledge effect": Sunstein, Hayek's Challenge, supra n 151, 10-13; Isenberg, supra n 150, 1150 (acknowledging the effect of normative processes in overt group interactions in motivating the skewing of arguments). Thus group views are based on incomplete information: D Gigone & R Hastie, "The Common Knowledge Effect: Information Sharing and Group Judgements" (1993) 65 Journal of Personality & Social Psychology 959, 959 & 961; Sunstein, Hayek's Challenge, supra n 151, 19; G Stasser, LA Taylor & C Hanna, "Information Sampling in Structured and Unstructured Discussions of Three-and Six-Person Groups" (1989) 57 Journal of Personality & Social Psychology 67.

156. Stasser, Taylor & Hanna, ibid, 75-76 (referring to "hidden profiles" whereby groups often fail to discover unshared information held by members); Gigone & Hastie, supra n 155, 960 & 966; Isenberg, supra n 150, 1150 (arguing normative processes in overt group discussions prompt self-censorship). By contrast, where disagreements are aired groups make more accurate decisions: ibid., 967 (citing Sniezek & Henry (1989)); Sunstein, Deliberative Trouble, supra n 150, 75.

157. Sunstein, Deliberative Trouble, supra n 150, 81-83; Sunstein, Cost-Benefit, supra n 86, 1066.

158. Kahan & Klausner, supra n 111, 356-58 (explaining standard terms enable lawyers to "share the blame" if the choice is proven ill-advised, whereas customization carries a far greater reputational risk for the individual who must shoulder any error alone).

159. Sunstein, Deliberative Trouble, supra n 150, 78; Sunstein, Hayek's Challenge, supra n 151, 2 & 4-5.

160. Sunstein, Hayek's Challenge, supra n 151, 2, 4-5 & 19.

161. Sunstein, Hayek's Challenge, supra n 151, 2 & 4-5.

162. Sunstein, Hayek's Challenge, supra n 151, 4-5. On experiments demonstrating framing biases even amongst experts see Thaler, supra n 88, 158 (citing a study on physicians by McNeil et al (1982)) & 137 (relating a study by Allais & Ellsberg on economists and statisticians).

163. Kahan & Klausner, supra n 111, 355 (noting lawyer "bias in favor of stnadard terms" due to the "dynamic…of 'herd' behaviour"). Similarly, Sunstein, Cost-Benefit, supra n 86, 1067 (observing that if an individual member knows the alarmist view held by the group is unwarranted, the member "may not voice […] doubts about whether the alarm is merited").

164. Perhaps primarily by participation in the annual Willem C. Vis International Commercial Law Arbitral Moot.

165. Sunstein, Deliberative Trouble, supra n 150, 91-92.

166. Kahan & Klausner, supra n 111, 348.

167. D Goetze, "Comparing Prisoner's Dilemma, Commons Dilemma, and Public Goods Provision Designs in Laboratory Experiments" (1994) 38 Journal of Conflict Resolution 56, 56 (defining 'collective action dilemmas' as situations where "incentives confronting individuals in a group may not be consistent with achievement of collective ends that would benefit everyone").

168. O Bar-Gill, "The Behavioural Economics of Consumer Contracts" (2008) 92 Minnesota Law Review 749, 759. Walt discusses collective action problems from perspective of the need to develop caselaw on CISG and costs and inability to capture benefits of such clarification on the part of individual parties involved: Walt, supra n 112, 692¬97. By contrast, this article discusses collective action problems in relation to drafting choice of law clauses.

169. See supra, n 115.

170. W Poundstone, Prisoner's Dilemma (Oxford University Press,1992), 6; DH Cole & PZ Grossman, "Institutions Matter! Why the Herder Problem is not a Prisoner's Dilemma", Theory & Decision, 30 October 2008, 7-8, <http://ssrn.com/abstract=1114541> accessed on 7 May 2010. Game theory was developed in 1944 by J von Neumann & O Morgenstern, Theory of Games and Economic Behavior (Princeton, Princeton University Press, 60th Anniversary edn, 2004). See Poundstone, passim (explaining the origins of game theory); Arrow, supra n 85, 69-70; Thaler, supra n 88, 137; Elster, supra n 126, 18-21.

171. Kahan & Klausner, supra n 111, 350-53 (discussing positive learning externalities from certainty generated by past use of boilerplate terms, and positive network externalities accruing from their future use).

172. See discussion supra, section D2.

173. Farrell & Saloner, supra n 95, 73 & 82; Bar-Gill, supra n 168, 759 & fn 46.

174. Players are assumed to be completely logical and self-interested in game theory: Poundstone, supra n 170, 6, 37 & 44. As mentioned earlier, it is presumed the lawyer cannot recover learning costs by charging clients for time spent researching the CISG: supra, n 116.

175. The irrationality of the crowd can affect reduce even the most informed market participant's ability to make rational choices: Bar-Gill, supra n 168, 789 (describing how irrational choices of ill-informed consumers of credit cards on relative prices of finance options faced by well-informed consumers). This again highlights the importance of taking into account the way the decision maker perceives the world: HA Simon, "A Comparison of Game Theory and Learning Theory" (1956) 21 Psychometrika 267, 271.

176. For discussion of the reputational issues facing lawyers in the choice between standard terms and customization of contract terms, see Kahan & Klausner, supra n 111, 356-58 (explaining how the safety of numbers within the "herd" allows lawyers choosing subotimal but standard terms to "share the blame" when the suboptimality of those terms is revealed).

177. Spagnolo, Last Outpost, supra n 3, 162-164; Arrow, supra n 109.

178. Kahan & Klausner, supra n 111, 361 (explaining how the status quo bias and endowment effect may contribute to path dependency in terms of standard contract terms); Korobkin, Endowment Effect, supra n 124, 1228-29 (noting status quo bias concept is wider than endowment effect). See Engel, supra n 111, 12.

179. This accords with cognitive tendency to discount distant payoffs: Moore & Loewenstein, supra n 143, 198. See P Dasgupta & E Maskin, "Uncertainty and Hyperbolic Discounting" (2005) 95 American Economic Review 1290 (ceteris paribus, humans generally discount future payoffs).

180. Engel, supra n 111, 1. See Kahan & Klausner, supra n 111, 358 (similarly in terms of risk aversion and sanctions). Note that taking such cognitive biases into account the model here is not strictly rational, but instead a hybrid (and hopefully more accurate depiction).

181. Arguably, in reality, the decisions are not made simultaneously, therefore game theory is incapable of capturing more dynamic scenarios: M Granovetter, "Threshold Models of Collective Behavior" (1978) 83 American Journal of Sociology 1420, 1441-42 (arguing that while game theory permits utility inferences, threshold models do not depend on homogeneity of preferences or simultaneous decision making).

182. The Prisoner's Dilemma involves two prisoners suspected of the same crime. To elicit evidence for a more serious conviction, a prisoner giving evidence against the other prisoner is rewarded, but only if the other prisoner remains silent. If both remain silent each receives a 3 year sentence; if one gives evidence and the other does not, the silent prisoner receives a 10 year sentence and the prisoner giving evidence goes free; whereas if they both give evidence, each receives a 6 year sentence: Cole & Grossman, supra n 170, 3; DG Baird, RH Gertner & RC Picker, Game Theory and the Law (Cambridge Massachusetts, Harvard University Press, 1994), 33; Poundstone, supra n 170, 116-18; Elster, supra n 126, 21.

183. G Hardin, "The Tragedy of the Commons" (1968) 162 Science 1243, 1244 (attributing it to a pamphlet by WF Lloyd, Two Lectures on the Checks to Population (1833)). In its game theory version, there are two herdsmen with access to an open meadow. If they graze equal numbers of cattle and both do not add extra cattle, total profits are 20 units, each farmer reaping 10 units. If one adds extra cattle but the other does not, total profits decrease to 10 units, but the self interested herdsman reaps 11 units profit while the other farmer suffers a 1 unit loss. If they both add extra cattle, total profit for all and for each is zero: See E Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action (Cambridge University Press, 1990), 3-4; Goetze, supra n 167, 78; Cole & Grossman, supra n 170, 5-6.

184. As opposed to zero-sum games where the loss of one player amounts to the gain of the other: Poundstone, supra n 170, 51 (defining zero-sum games).

185. This approach enables comparison with a second game in light of changes in circumstances and payoffs: see infra, Table 2.

186. As explained in section D2, there is a divergence of interests between the decision making players on the one hand, and the jurisdiction's profession and clients as a whole on the other. In this sense, the current analysis is different to other game theoretic analyses: see, for example, R Pradiptyo, "Does Punishment Matter? A Refinement of the Inspection Game" (2007) 3 Review of Law & Economics 197.

187. The table depicts an asymmetric hybrid game akin to a mirror image 'bully' game: the lawyer faces preferences from the standard 'stag' game whereby he prefers cooperation (investment by both) but fears defection (non¬investment by the firm); the firm faces preferences from the standard 'deadlock' game, whereby it prefers to defect (not invest) no matter what: see Poundstone, supra n 170, 221; Baird et al, supra n 182, 36-37. It is not a standard 'co-ordination' game since there is only one equilibrium: see RH McAdams, "Beyond the Prisoners' Dilemma: Coordination, Game Theory and the Law" (2009) 82 Southern California Law Review 209, 218.

188. For example, if he estimates the likelihood of firm investment at 30%, the average gain from investment is 0.9 units (3 x 0.3), whereas the gain from non-investment is on average 1.3 units ((2 x 0.3)+(1 x 0.7)). This reasoning employs a mixed strategy approach: See Baird et al, supra n 182, 37; Korobkin & Ulen, supra n 85, 1062-64 & 1084.

189. See Baird et al, supra n 182, 310 (stating a Nash Equilibrium exists when paired strategies "cannot be improved upon given the other strategy"); Cole & Grossman, supra n 170, 4; McAdams, supra n 187, 212; Poundstone, supra n 170, 98-99 (stating Nash equilibriums are such that each player in hindsight would have "no regrets […] given how the other player(s) played"). An equilibrium that does not coincide with one which produces the best possible outcome for at least one player and "at least as good for the others" is a Pareto-inferior outcome: Ostrom, supra n 183, 5.

190. Ostrom, supra n 183, 4; Cole & Grossman, supra n 170,2 &4.

191. JE Alcock & D Mansell, "Predisposition and Behavior in a Collective Dilemma" (1977) 21 Journal of Conflict Resolution 443, 444; Cole & Grossman, supra n 170, 2.

192. This is the case in theory and in practice in situations of communal resources throughout history: Ostrom, supra n 183, 58-102; Cole & Grossman, supra n 170, 9.

193. R Richards, "Reciprocity and Shared Knowledge Structures in a Prisoner's Dilemma Game" (2001) 45 Journal of Conflict Resolution 621, 621; Cole & Grossman, supra n 170, 8.

194. Kahan & Klausner, supra n 111, 352 n.15 (remarking that law firms do not tend to perform coordination).

195. Ultimatum games demonstrate that faced with a choice between an unfair deal and no deal at all, some will prefer the latter, despite the fact that they would be better off accepting the unfair deal: see generally RH Thaler, "The Ultimatum Game" (1988) 2 Journal of Economic Perspectives 195, 202-205; W Güth, R Schmittberger & B Schwarze, "An Experimental Analysis of Ultimatum Bargaining" (1982) 3 Journal of Economic Behavior & Organization 367 (first proposing the ultimatum game).

196. Farrell & Saloner, supra n 95, 70-72 & 79-80; Liebowitz & Margolis, Fable of the Keys, supra n 92, 3.

197. A network effect occurs when "one consumer's value for a good increases when another consumer has a compatible good," the classic example is the telephone: Farrell & Saloner, supra n 95, 70; ML Katz & C Shapiro, "Network Externalities, Competition, and Compatibility" (1985) 75 American Economic Review 424, 424; WB Arthur, Positive Feedbacks, supra n 101, 13; ML Katz & C Shapiro, "Systems Competition and Network Effects" (1994) 8(2) Journal of Economic Perspectives 93; SJ Leibowitz & SE Margolis, "Network Externality: An Uncommon Tragedy" (1994) 8 Journal of Economic Perspectives 133, 135; MA Lemley & D McGowan, "Legal Implications of Network Economic Effects" (1998) 86 California Law Review 479, 483. Arguing network effects of boilerplate terms: Kahan & Klausner, supra n 111, 348-49 (1996)(citing choice of New York law in bond indentures). See Walt, supra n 112, 688; Gopalan, supra n 92, 330 (mentioning network effects in relation to CISG opt outs).

198. Kahan & Klausner, supra n 111, 349.

199. Granovetter, supra n 181, 1441-42 (explaining "thresholds" models of collective behaviour); Sunstein, Deliberative Trouble, supra n 150, 81, 82 & 84 (describing the point of critical mass, and "epidemic" nature of change).

200. Sunstein, Deliberative Trouble, supra n 150, 95-96.

201. Sunstein, Hayek's Challenge, supra n 151, 13-20.

202. Isenberg, supra n 150, 1141; Sunstein, Deliberative Trouble, supra n 150, 75 & 95.

203. Korobkin & Ulen, supra n 85, 1071 (arguing occasional suboptimal decisions do not cause a business to become insolvent; Engel, supra n 111, 5 (citing survival after extended poor corporate decision making).

204. The practice of 'automatic' exclusion can be viewed as an informal institution in the sense that learning costs and learning effects have previously encouraged path dependent embeddedness of opt out practices within firms in high exclusion jurisdictions. Critical junctures are points at which institutions are more amenable to change in otherwise path dependent courses: see Prado & Trebilcock, supra n 102, 355.

205. See Granovetter, supra n 181, 1441-42.

206. The firm receives either 3 or 2 units if it invests, depending on the lawyer's decision. If the firm decides not to invest, it receives just 1 or 0 units, depending on the lawyer's decision.

207. The lawyer receives 3 or 2 units by investing, depending on whether the firm also invests. Alternatively, the lawyer can receive just 2 or 0 units by not investing, depending on whether the firm invests. Thus investment is always better, or at least just as good as non-investment from the lawyer's perspective. The strategy is further enhanced if, as is likely in the new environment of Scenario Two, the lawyer perceives the likelihood of the firm investing is greater than 50%.

208. See supra, n 147.

209. Flechtner, supra n 29; Lookofsky, supra n 3, 291 (arguing few, if any, "well-positioned" Chinese traders would be willing to contract on the basis of a foreign trader's domestic law "without additional compensation").

210. Ultimately I therefore favour the view that in the longer term, some persistent errors are eliminated by means of evolutionary competitive forces favouring behaviour closer to (while perhaps not perfectly) rational. Cf, see generally Korobkin & Ulen, supra n 85, 1071; Tversky & Kahneman, Framing, supra n 87, 89-91. Taking the middle ground, Thaler, supra n 88, 158-159. Interestingly, Tversky & Kahneman list situations of transparency as more likely to give rise to rational behaviour: Framing, supra n 87, 88. The above argument poses competitive forces as likely to lead to transparency and ultimately improved (though not perfect) rationality. See Winter, supra n 111, 245; Liebowitz & Margolis, Fable of the Keys, supra n 92, 4.

211. Sosa notes that mid-sized German firms have "developed competence and experience in international transactions" which enables them to provide even "mega" UK and US-based law firms with "strong competition": FP Sosa, "Cross-Border Dispute Resolution from the Perspective of Mid-sized Law Firms: The Example of International Commercial Arbitration", in V Gessner (ed.), Contractual Certainty in International Trade: Empirical Studies and Theoretical Debates on Institutional Support for Global Economic Exchanges (Oxford, Hart Publishing, 2009),107, 109.

212. Simon (1955), supra n 87, 104-106 & 108-110.

213. While heuristics are useful, they often lead to "severe and systematic errors": Tversky & Kahneman, Judgment Under Uncertainty, supra n 87, 1; Kahneman, Maps of Bounded Rationality, supra n 87, 1449; Sunstein, Hayek's Challenge, supra n 151, 9 ("severe blunders"). See further, Kahan & Klausner, supra n 111, 352 (noting once optimal contractual terms may later become suboptimal and form a barrier to efficiency).

214. Repetition of encounters with the CISG can be expected to correct the "availability bias" whereby lawyers may be unable to recall instances in which CISG familiarity was important from personal experience. See Tversky & Kahneman, Judgment Under Uncertainty, supra n 87; Sunstein, Cost-Benefit, supra n 86, 1065-66; Thaler, supra n 88, 157 (arguing correction occurs infrequently due to lack of repetition and feedback).

215. Bridge argues it is "arrogant" to assert that lack of familiarity is to blame for exclusion of the CISG in commodities markets: Bridge, Uniformity & Diversity, supra n 55, 70. Cf Singh & Leisinger, supra n 55, 189; Schlechtriem, supra n 55.

216 Like most international sales other than ex-works contracts: International Chamber of Commerce (ICC), Incoterms 2000 (Paris, ICC, 1999), ICC Publication No. 560(E), [A8](See FCA, FAS, FOB, CFR, CIF, DAF, DES, DEQ, DDU, DDP; cf EXW). See also the qualification "if customary" in CPT & CIP). The seller's obligation thus includes an obligation to deliver documents of title to the buyer, or to assist the buyer in obtaining documents of title, such as in FOB terms: ibid.

217. RL Deutch & M Saccasan, Derivatives Demystified (Sydney, Prospect Publishing,1995), 41; Bridge, Canadian Business LJ, supra n 61, 486.

218. Those with primary exposure to the underlying physical market (primary producers of agricultural products or oil, or those financing their activities) can remove some or all of their price risk by entering the market and taking the opposite position to their physical exposure, or by using derivatives in futures markets such as options or swaps for notional delivery at the same time as their physical commitment in order to hedge against price risk: Bridge, Canadian Business LJ, supra n 61, 486; Deutch & Saccasan, supra n 217, 41 (defining commodity swaps as exchanges of cash flows based on a particular commodity for a defined period which involves no physical delivery). See hedge contracts listed by the International Petroleum Exchange of London, eg ICE options, futures & swaps for various commodities: <https://www.theice.com/homepage.jhtml> accessed on 7 May 2010.

219. Within a string, an intermediate party's exposure more than once creates a 'circle.' In the case of GAFTA, once a circle is identified, the parties involved in the circle must bilaterally settle the financial differences based on the excess of their contract price above the lowest price in the string: see, eg GAFTA 100, supra n 56, cl. 24; GAFTA 124, supra n 56, cl. 23. See Bridge in Brownsword, supra n 61, 153 & 154 (observing that GAFTA 100 effectively creates a "multipartite contract" for the purposes of identification of circles). Once a settlement has been agreed, the circle is removed ("circled out") from the physical string: Bridge, Canadian Business LJ, supra n 61, 491 & 493.

220. Bridge, Canadian Business LJ, supra n 61, 489-90 (noting each seller in the string is obliged to ensure the primary seller & all prior sellers issued the appropriation notice in time). For GAFTA 100, this is within 10 or 14 days of the bill of lading: supra n 56, cl. 10.

221. L Bernstein, "Private Commercial Law in the Cotton Industry: Creating Cooperation through Rules, Norms & Institutions" (2001) 99 Michigan Law Review 1724; Bridge, Uniformity & Diversity, supra n 55, 57-59 & 61 (explaining thoroughly the practice of concentrating bulk trade to large central ports such as Rotterdam).

222. Mullis, supra n 55, fn 15 (noting 'string trading' means linked contracts for identical goods on the same terms but for different prices); Bridge, Uniformity & Diversity, supra n 55, 62.

223. Bridge, Uniformity & Diversity, supra n 55, 60.

224. Bridge in Brownsword, supra n 61, 154-55 (noting a "subsequent frustrating event affecting physical performance will have no effect on the financial settlement" between intermediate parties in the string). Notably, circle settlement clauses ensure intervening contracts as are given effect as contracts for financial differences rather than physical obligations to prevent unconscionable results where parties appear more than once in the string: ibid,154; see R Pagnan & Fratelli v NGJ Schouten NV (the Filipinas I) [1973] 1 Lloyd's Rep 349, 356 (Kerr J, arriving at similar conclusion even without circle clause).

225. Mullis, supra n 55, text accompanying fn 158.

226. See supra, section D4, n 197 and accompanying text.

227. On the manner in which standard terms become a "medium of communication between transactors:" MP Van Alstine, "The Costs of Legal Change" (2001-2002) 49 UCLA Law Review 789, 842; CJ Goetz & RE Scott, "The Limits of Expanded Choice: An Analysis of the Interactions Between Express and Implied Contract Terms" (1985) 73 California Law Review 261, 287 (arguing this "labelling function" facilitates risk comparison).

228. Prado & Trebilcock, supra n 102, 350-1.

229. The membership of many English trade associations is now populated by multinational companies: Bridge, Uniformity & Diversity, supra n 55, fn 8 (stating "major English commodities traders were long ago absorbed by multinational traders"); Bridge in Brownsword, supra n 61, 150-51(detailing the five major companies that dominate world grain trade).

230. S Moss, "Why the United Kingdom Has Not Ratified the CISG" (2005) 25 Journal of Law & Commerce 483, 483 & 485 (noting ratification was opposed in 1997 by the Law Society of England & Wales and Commercial Bar Association. Moss reports a 2004 business community meeting where adoption of the CISG was opposed on the basis that "London would lose its edge in international arbitration and litigation." Strangely, at a second similar meeting it was argued that failure to adopt the CISG "may adversely affect the City of London as a forum for litigation and arbitration"); Forte, supra n 65, 57-58 & 63-64 (arguing substantive criticism of the CISG vis-à-vis UK law "only has force" in the context of the CISG as a threat to the self-perceived "world brand-name" of English adjudication under English law, and that this was what really underwrote the English legal profession objections to ratification of the CISG, but also reporting support for accession in 1989 by Department of Trade and Industry & City of London Law Society because the UK might lose dispute work if it failed to accede); Mullis, Twenty-Five Years On, supra n 57, 37. Arguing that ultimately lack of political will is to blame: Bridge, Uniformity & Diversity, supra n 55, 71; Moss, 483 & 485; Mullis, supra n 57, 38.

231. Prado & Trebilcock, supra n 102, 358 (noting these are important factors in failure of law reform).

232. On balance, at a substantive level, my own view is that the CISG is equally capable of dealing with commodity transactions. However, purported substantive merit is at most only one reason for retention of English law in commodity sales. Cf Zeller, supra n 67, 634 & 39 (arguing the choice is "rather contrived" since commodity traders are now multinationals, and that "history accounts for little more than nostalgia").

233. By this I refer to decisions determined by the historical path and cognizant of the inefficiency of the choice, but which are costly to change: Liebowitz & Margolis, Path Dependence, supra n 92, 207. This is not the type of behaviour typically discussed as being in conflict with neo-classical rational behaviour, which is better identified as "remedial" third order path dependence: ibid.

234. Trade associations could implement a new standard form choice of law with minimal disruption by means of a transitional standard clause which makes clear parties intend new head contracts to be subject to the new law if entered after a fixed date, and that all parties to on-sold contract intend to be subject to the same law as the head contract. This would allow continuation of existing strings without any mismatches, but also facilitate transition to the new choice of law for all new strings.

235. Normally bounded change might be expected "until something erodes or swamps the mechanisms of reproduction that generate continuity" in cases of institutional path dependence: Prado & Trebilcock, supra n 102, 358. Additionally, uncertainty over who will benefit from change will increase institutional resistance: R Fernandez & D Rodrik, "Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty" (1991) 81 American Economic Review 1146, 1146 & 1154. Further, any threat to leaders of existing organization from reform will help render an institution impervious to change: DC North, Understanding the Process of Economic Change (Princeton, Princeton University Press, 2005), 62; Prado & Trebilcock, supra n 102, 354. In this case, while change might not threaten those within trade associations, it may affect the interdependent English litigation industry.

236. Such as reform of English law foreshadowed at supra, section D5.

237. In this way, standard commodity contracts are "sticky" in that there is great resistance to (and suspicion about) any attempts to deviate from them: O Ben-Shahar & J Pottow, "On the Stickiness of Default Rules" (2006) 33 Florida State University Law Review 651, 680-87; Perillo, supra n 54, 187 & fn 31 (arguing this could mean standard boilerplate sticks more than it should); Kahan, supra n 150.

238. F De Ly, "Sources of International Sales Law: An Eclectic Model" (2005-6) 25 Journal of Law & Commerce1, 3.

239. The attaining of a 'tipping point' or 'critical mass' resolves what might earlier be characterized as a co¬ordination problem, by substituting a competitive imperative in place of communication between decision-making peers. In relation to co-ordination problems, see supra, n 199; Linarelli, supra n 92, 1413 (listing reasons for persistence of path dependence as "information costs, costs of cooperation or coordination"); Baird et al, supra n 182, 191.

240. See Spagnolo, Glimpse, supra n 37, 147.

241. That is, rational choice or satisficing heuristic.

242. Torsello and Magnus anecdotally report certain trends in Italy and Germany respectively. Torsello recently reported that while opting out is still prevalent in Italy, many specialist drafters are now choosing not to opt out: Torsello, supra n 34, 187, 189, 190, 195-99 & 208. Similarly, in Germany, Magnus recently reported that an increasing number of business associations no longer generally recommend opting out, and that opting out is no longer the norm for standard forms: Magnus, supra n 14, 146.

243. See Spagnolo, Glimpse, supra n 37, fn 66.

244. Flechtner, supra n 29 (noting pressure in the US exerted by globilized legal services market and observing a "change" in queries he received from practitioners regarding CISG from purely litigious to front end (drafting/choice of law) queries). Note the change in numbers of lawyers "generally opting out" in the US from 71% in 2004 to 61% or 55% in 2006-7): Koehler, Philippopoulos & Fitzgerald: supra n 6.

245. See supra, n 45 (in relation to Slovenia, Mexico, Czech Republic and the Netherlands).

246. See supra, n 41.

247. See supra, n 234.

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