Article 4


Albert H. Kritzer[*]

Article 4(a)

Important cross-references to article 4(a) turn on the phrase, "except as otherwise expressly provided in this Convention". The general rule recited in the Secretariat Commentary on article 4 of the 1978 Draft is: "Although there are no provisions in this Convention which expressly govern the validity of the contract or of any usage, some provisions may provide a rule which would contradict the rules on validity of contracts in a national legal system. In case of conflict the rule in this Convention would apply."

Six cross-references are identified below: article 11, article 29(1), article 8, article 78, article 55 and the UNIDROIT Principles. Others can likely identify additional cross-references.

Article 11. Clearly the article 4(a) validity proviso points to article 11. As stated in the cited Secretariat Commentary, article 11 "provides that a contract of sale of goods need not be concluded in or by writing and is not subject to any other requirements as to form. In some legal systems the requirement of a writing for certain contracts of sale of goods is considered to be a matter relating to the validity of the contract." Article 11 expressly provides otherwise. It overrides such domestic validity rules. See the editor's commentary on article 11 for data on related domestic validity rules that may nevertheless remain in effect.

The Secretariat Commentary continues, "It may be noted that pursuant to [article 12] and [article 96], a Contracting State whose legislation requires a contract of sale to be concluded in or evidenced by writing may make a declaration that, inter alia, [article 11] shall not apply where any party has his place of business in a Contracting State which has made such a declaration." The scheme of article 96 is, where there is a relevant declaration the applicable domestic validity rules override article 11.

Article 29(1) may also be cross-referenced to article 4(a). Article 29(1) states, "A contract may be modified or terminated by the mere agreement of the parties." This conflicts with the common law validity doctrine of consideration. The relevant Secretariat Commentary states that article 29(1) "is intended to eliminate an important difference between the civil law and the common law in respect of the modification of existing contracts. In the civil law an agreement between the parties to modify the contract is sufficient cause even if the modification relates to the obligations of only one of the parties. In the common law a modification of the obligations of only one of the parties is in principle not effective because `consideration' is lacking" (see footnote 1). The proper application of the general rule recited in the Secretariat Commentary on article 4 of the 1978 Draft is, the express language of article 29(1) overrides otherwise applicable domestic validity rules requiring consideration in such cases (see footnote 2).

Article 78. Another cross-reference to article 4(a) may be found in article 78 which expressly provides for interest. This conflicts with domestic validity rules in effect in certain Islamic states. If the general rule recited in the Secretariat Commentary is accurate, domestic validity rules that prohibit interest would be overridden by article 78 (see also the reference to interest in article 84(1)).

Article 8. Still another cross-reference may be to article 8 [Interpretation of the Contract]. An illustrative context is whether article 8 conflicts with the domestic validity rule on exclusion or modification of warranties recited in UCC section 2-316. Although there is some dissent, the consensus of most commentators who have considered this issue is that it does and that the Convention pre-empts UCC 2-316 (see footnote 3).

Article 55. A case in which the Convention expressly preserves a domestic validity rule may also be cross-referenced. This is article 55 ["Open-Price" Contracts]. An UNCITRAL Committee responsible for the development of article 55 elected to expressly refer to validity in this article by introducing it with the phrase "Where a contract has been validly concluded". The explanation is: "[T]here was considerable support in the Committee for a number of proposals which sought to have a clear statement in [this article] that the provision only operated if the agreement was otherwise valid pursuant to the applicable national law. . . ." (see footnote 4). "The Committee after deliberation, decided to introduce an express statement into [this article] to make it clear that the provision only applied to agreements which were considered valid by the applicable [domestic] law. . . ." (see footnote 5). In this case, the rule should be, where there is an applicable domestic validity rule on "open price" contracts that conflict with article 55, it overrides article 55.

Uncertainties. There are also areas of much uncertainty associated with article 4(a)'s validity proviso, mistake is an example. There is conflict among commentators as to whether and, if so, when the Convention pre-empts domestic validity rules on mistake (see footnote 6). Caveat: Notwithstanding generalizations contained in some of the discussions on this subject, this is not an area as to which one can generalize. In a letter to the editor of this commentary Honnold makes the point, to ask whether the Convention pre-empts domestic validity doctrines on mistake is itself a mistake. As issues can arise in many contexts, it is best to conduct the tailored analysis required by commencing with the question: Mistake as to what, and to match the applicable domestic validity rule with all provisions of the Convention that bear on the subject to determine whether any expressly conflict with the domestic validity rule.

An explanation for difficulties associated with mistake under the CISG appears to be that UNCITRAL was unable to fully resolve the issues prior to or at the Vienna Diplomatic Conference on the Convention. "At its Seventh Session the [UNCITRAL] Working Group requested the Secretary-General to analyze . . . the UNIDROIT draft Uniform Law on the Validity of Contracts for the International Sale of Goods . . . and to consider the desirability and feasibility of considering questions of . . . validity [including specific attention to . . . domestic doctrines on mistake]. VII Yearbook 89, para. 14. The Secretary-General's Report (paras. 16-27) recommended that the work not extend to questions of validity" (see footnote 7). The concluding paragraph of this report states: "In the absence of a general consensus, the consideration of [provisions in respect of a validity of contracts based on the UNIDROIT draft] would appear to be so complex that it would not be feasible for the Working Group to complete its work . . . `in the shortest possible time', as requested by the Commission. . . ." (see footnote 8). The issue re-surfaced on several occasions at the 1980 Vienna Diplomatic Conference with what appears to have been indispositive results (see footnote 9).

UNIDROIT has paid further attention to this subject. For further attention to mistake and other validity issues in international sales contracts, an appropriate cross-reference is the UNIDROIT "Principles of International Contracts" (see footnote 10).

Article 4(b)

Article 8 of the 1964 Hague Sales Convention (ULIS) is a good cross-reference to CISG article 4(b). CISG article 4(b) carried forward without change a concept recited in ULIS article 8. The Tunc Commentary on this ULIS counterpart to article 4(b) can be regarded as equally applicable to the CISG. It states:

"[T]he Uniform Law is not concerned with the effects which the conclusion of a contract may have on the property in the thing sold. It is well known that different municipal systems may produce very different effects in the contract of sale in regard to the passing of property, whilst for others the contract only gives rise to obligations. Now it was clear from the beginning of the discussion relating to the Uniform Law that whilst it was vain to hope for a uniform rule on this question which was deeply involved both in historic traditions and in the regulation of credit and bankruptcy, on the other hand unification was not necessary if, taking a more direct and practical view, rules were merely provided for three types of questions linked, at least in certain legal systems, to the passing of property:

- the obligation of the seller to transfer the property in goods free from any right or claim not accepted by the buyer (Articles 18, 52 and 53) [Articles 30 and 41-44 are the CISG counterparts to these ULIS provisions],

- the passing of risk, regarded in a number of legal systems as the essential consequence of the passing of property (Articles 96 to 101) [Articles 66-70 are the CISG counterparts to these ULIS provisions],

- the obligation to preserve the goods and to bear the cost of preservation (Articles 91 to 95 [Articles 85-88 are the CISG counterparts to these ULIS provisions].

"It will be noted that there is no contradiction in declaring that the Law does not govern the effect of the contract on the property in the goods sold, then regulating the duty laid on the seller to transfer to the buyer the property in the goods, it being clearly understood that it is then exclusively a question of putting a duty on the seller, and that the rule governing the property remains outside the Uniform Law" (see footnote 11).


* Executive Secretary, Institute of International Commercial Law of the Pace University School of Law.

1. Secretariat Commentary on 1978 draft article 27 [counterpart to CISG article 29], Official Records p. 28.

2. Cf. Flechtner, "Article 29(1) of CISG is generally read as eliminating any consideration requirement for modifications to sales contracts governed by the Convention. . . . That does not mean, however, that all consideration arguments fall outside the `validity' exclusion. . . . [T]he fact that the Convention may dispense with the requirement of consideration for modifications does not mean that consideration in general is not a matter of validity. Nor does it necessarily imply that all consideration arguments are preempted merely because CISG does not include a general consideration requirement." Harry M. Flechtner, "More Recent U.S. Decisions on the UN Sales Convention . . ." 14 J.L. & Com. 166-167 (1995).

3. For citations to views on this subject, see Albert H. Kritzer, "Guide to Practical Applications of the United Nations Convention on Contracts for the International Sale of Goods", Suppl. 10 dated July 1994 (Kluwer Law International), Detailed Analysis, p. 44a.

4. UNCITRAL Yearbook VIII, A/CN.9/SER.A/1977, pp. 48-49, para. 328; John O. Honnold, Documentary History of the Uniform Law for International Sales (Kluwer Law International 1989) 341-342.

5. Id. at para. 329.

6. Two camps of commentators are Bydlinsky, Eörsi, Farnsworth, Hartnell, Huber, Samson, Tallon, Volken, von Caemmerer [Look to domestic law for the answer]; and Enderlein/Maskow, Heiz, Honnold, Nicholas, Schlechtriem [Look to the Convention for the answer. The answer is often found there. Look elsewhere only if the answer is not found there]. For citations to the above views, see Kritzer, supra note 3 at 44g through 44q.

7. Honnold, supra note 3 at 254.

8. UNCITRAL Yearbook VIII, supra note 4 at p. 93, para. 27; Honnold, supra note 4 at 257.

9. See, for example, Official Records, pp. 361-362 and 406.

10. UNIDROIT "Principles of International Contracts", International Institute for the Unification of Private Law (Rome 1994), pp. 64-89.

11. I Hague Conf. Records 363 (1964). "[T]he permissibility of a retention of title to the goods sold, as well as its requirements and form, are also governed by domestic law." Peter Schlechtriem, "Vienna Sales Convention 1980 (recent developments) -- Developed Countries' Perspectives", presentation at Conference for International Business Law (Singapore 1992), p. 25.

Pace Law School Institute of International Commercial Law - December 1996