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Source: Doc. B(1) Reproduced from UNCITRAL Yearbook VIII (1977), A/32/17, pages 25-64

EXCERPT FROM ANNEX I

Report of Committee of the Whole I relating to the
draft Convention on the International Sale of Goods

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CISG
number
Art. 1

Article 1

13. The text of article 1, as adopted by the Working Group on the International Sale of Goods, is as follows:

"(1) This Convention applies to contracts of sale of goods entered into by parties whose places of business are in different States:
"(a) When the States are Contracting States; or (b) When the rules of private international law lead to the application of the law of a Contracting State.
"(2) The fact that the parties have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract."

Paragraph (1)

Basic criterion

14. The Committee considered a proposal that would narrow the basic criterion for the application of the Convention by requiring that the parties to a contract of sale, besides having their places of business in different States, should also be of different nationalities. The purpose of this proposal was to ensure that, if buyer and seller were of the same nationality, their national law would apply, even if the place of business of the buyer was in a State other than the State in which the seller's place of business was situated.

15. The Committee did not retain this proposal on the grounds that the determination of nationality, particularly in relation to corporations, was a complex issue over which national laws differed. In addition, the nationality of the other party may not be evident to each party at the time of contracting. Accordingly, the adoption of the nationality requirement would greatly complicate the task of determining whether the Convention applied and could thus lead to uncertainty.

Places of business

16. Two proposals were made in regard to the concept of "places of business." Under one proposal, that concept should be replaced by the concept of "residence" since the test of "places of business: of the parties could have considerable disadvantages in practice. For example, if two enterprises having their residence in the same country had places of business in different countries the Convention would apply. After deliberation, the Committee decided not to retain the proposal on the grounds that the test of "residence" would not simplify the determination of whether the Convention applied and would, in some cases, not be appropriate. The Committee applied and would, in some cases, not be appropriate. The Committee also did not retain a second proposal under which the relevant places of business of the parties should be limited to their "main" places of business. The Committee's views in this respect are set forth under article 6(a).[a]

a. Article 6(a) provides that "if a party to a contract of sale of goods has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at the time of the conclusion of the contract;"

Subparagraph (1)(a)

17. The Committee considered, but did not retain, a proposal that it should be sufficient for the Convention to apply if one of the States in which the parties have their places of business was a Contracting State. The Committee noted that the present text reflected the approach of article 3 of the Convention on the Limitation Period in the International Sale of Goods, hereinafter referred to as the "Convention on the Limitation Period", and that the requirement that the States in which the parties have their places of business be Contracting States was preferable since it was based on the principle of reciprocity.

Subparagraph (1)(b)

18. Subparagraph (1)(b) provides that the Convention is applicable if the rules of private international law of the forum leads to the application of the law of a Contracting State and that, in such a case, it is immaterial whether the place of business of one or both parties is in a Contracting State.

19. The Committee considered two proposals which were addressed to this issue. Under the first proposal, subparagraph (b) should be deleted; under the second proposal, the Convention should be attracted only if the rules of private international law of a Contracting State led to its application.

20. Neither of these proposals commanded sufficient support in the Committee to be retained and the Committee recommends therefore to the Commission that the present wording of subparagraph (b) should be adopted.

Paragraph (2)

21. The Committee approved paragraph (2) without change.

Proposed paragraph (3)

22. The Committee, in its deliberations on article 6, referred to the Drafting Group the question whether article 6(c) should be relocated as article 1(1)(c).

Decision

23. The Committee accordingly recommends that the commission should adopt the following text:

"Article 1

"(1) This Convention applies to contracts of sale of goods entered into by parties whose places of business are in different States:
"(a) When the States are Contracting States; or
"(b) When the rules of private international law lead to the application of the law of a Contracting State. [page 26]
"(2) The fact that the parties have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract for from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract.
"(3) Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration."

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CISG
number
Art. 1(3)

"(c) Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration."

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Subparagraph (c)

66. The Committee considered three proposals:

(i) That the substance of article 6(c) be transferred to a new location as article 1(3);
(ii) That article 6(c) be deleted;
(iii) That article 6(c) be separated into two articles, the first dealing with nationality and the second with the character of the parties.

(i) Transfer of article 6(c)

67. In support of the proposal to transfer the substance of article 6(c) to a new location as article 1(1)(c), it was pointed out that this change would make it possible to take into consideration the civil or commercial character of the parties or of the contract for such purposes as determining the time for sending notices to the other party. The proposal was also supported on the ground that article 6(c) was better located in article 1 as it dealt with the sphere of application of the Convention whereas articles 6(a) and (b) were concerned with" the definition of "place of business." In opposition to the proposal, it was stated that it would be preferable to retain article 6(c) in its present location so that it would conform to article 2(e) of the Convention on the Limitation Period. It was also noted that since article 2(a) of the Sales Convention did not exclude all consumer sales from the sphere of application of the Convention, it would be desirable to preface article 6(c) by the words "except as provided in article 2(a)." A representative stated that while he would not object to such a change it was on the understanding that nationality of the parties was always irrelevant, even in consumer sales.

68. After considerable discussion, the Committee referred the question of the location of article 6(c) to the Drafting Committee which was also requested to consider whether article 6(c) should exclude article 2(a).

(ii) Deletion of subparagraph (c)

69. In support of the proposal to delete article 6(c), it was stated that as no other article dealt with nationality or with the civil or commercial character of the parties it was superfluous to have a separate provision stating that these matters were not to be taken into consideration. In opposition to this proposal, it was noted that many civil law systems apply different standards depending on the civil or commercial nature of the parties or of the contract. Accordingly, it was helpful to have a provision which clearly indicated that these considerations did not affect the application of the Convention. Similarly, it was helpful to provide that the nationality of the parties did not affect the operation of the Convention. The proposal was also opposed on the basis that it would create unnecessary conflict with the Convention on the Limitation Period. The Committee, after deliberation, did not retain the proposal for deletion.

(iii) Separation of article 6(c) into two articles

70. In support of this proposal, it was stated that the question of the civil or commercial character of the parties, or of the contract, was distinct from the question of nationality and so should be dealt with in a separate article as was the case in ULIS (article 1(3) and article 7). It was also suggested that the question of nationality should be dealt with in article 1 as it related to the scope of application of the Convention. The Committee referred this matter to the Drafting Committee. [page 30]

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Pace Law School Institute of International Commercial Law - Last updated July 13, 2007
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