Prof. M. Joachim Bonell has authored a 2nd edition of his text, "An International Restatement of Contract Law" (Transnational: Irvington, NY 1997). The following excerpt from this new and enlarged commentary on The UNIDROIT Principles of International Commercial Law is reproduced with the permission of the author.
1. International legislation vs "restatement"
Without a doubt, the 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG) represents a landmark in the process of international unification of law. Unanimously adopted in 1980 by a diplomatic Conference held in Vienna with the participation of representatives from 62 States and 8 international organizations, it has in the meantime been ratified by 48 countries from the five continents, including almost all the major trading nations. The importance of CISG is further demonstrated by the fact that the number of decisions rendered by both State courts and arbitral tribunals in its application is rapidly increasing.
The adoption of CISG in 1980 was the culmination of some fifty years' work which started back in 1929, when UNIDROIT, acting upon a proposal by German comparativist Ernst Rabel, decided to undertake the necessary preparatory studies with a view to elaborating a uniform law for international sales contracts and to entrust this task to a special group of experts.
The fact that from the beginning it was taken for granted that the envisaged uniform rules were to be prepared in the form of a binding instrument should not come as a surprise. In those days legal positivism and the identification of law with State-made law were the dominant credo. As a consequence any attempt at unifying the law likewise could only take the form of uniform legislation agreed upon by States at an international level and which they subsequently had to introduce into their domestic legal systems.
Preliminary drafts of a uniform law for the international sale of goods were prepared in 1935 and 1939. After work was suspended during the war two further revised versions followed in 1956 and 1963, and in the meantime an additional draft uniform law dealing with the formation of international sales contracts was prepared. In 1964 a diplomatic Conference convened by the Government of the Netherlands at The Hague resulted in the adoption of two Conventions bearing on a Uniform Law on the International Sale of Goods (ULIS) and a Uniform Law on the Formation of Contracts for the International Sale of Goods (ULF) respectively. However, despite several decades of intensive efforts invested in their preparation, it appeared from the outset that the two Conventions would meet with little success: only nine States ratified them, seven of which belonged to Western Europe.
Notwithstanding this, when in 1968 the newly-established United Nations Commission on International Trade Law (UNCITRAL) decided to make a fresh start, the basic choice remained the preparation of a binding instrument. There was now even a further reason to insist on the legislative option. The unification process was no longer confined to a relatively small number of States with a rather homogeneous economic and social structure, but for the first time also involved the socialist countries of Eastern Europe and the newly independent nations in the so-called Third World. A common feature of most of these countries was a strictly centralised and planned economy. If they wanted to participate in international commerce, they had to provide special rules for their foreign trade relationships by granting their economic organizations basically the same freedom of contract enjoyed by their competitors from countries with market economies. Such a special legal regime could only be established through legislation, whether enacted unilaterally or -- as in the case of international sales contracts -- agreed at the international level.
Yet the option in favour of uniform legislation inevitably restricted the drafters' room for manoeuvre. Due to the differences in legal tradition and at times, even more significantly, in the social and economic structures prevalent in the States participating in the negotiations, some issues had to be excluded at the outset from the scope of the envisaged instrument, while with respect to a number of other items the conflicting views could only be overcome by compromise solutions leaving matters more or less undecided.
As a result, CISG presents significant gaps and several rather vague and ambiguous provisions.
Thus, some categories of sale -- among which are also transactions of considerable importance in international trade practice, such as sales of shares and other securities, of negotiable instruments and money, of ships and aircraft -- are expressly excluded from its scope. But also in regard to ordinary sales contracts a number of important issues have not been taken into consideration. CISG itself expressly mentions the validity of the contract, the effect of the contract on the property in the goods  and the liability of the seller for death or personal injury caused by the goods to the buyer or any other person. In addition, one may recall, for instance, the conclusion of the contract through an agent, the problems arising from the use by one or both of the parties of standard terms, or the impact which the different kinds of State control over the import and/or export of certain goods or the exchange of currency may have on the contract of sale as such or on the performance of any of its obligations.
Of the provisions laying down not too convincing compromise solutions between conflicting views some openly refer the definite answer to the applicable domestic law, while others use the technique of a main rule immediately followed by an equally broad exception thereby leaving the question open as to which of the two alternatives will ultimately prevail in each single case;  others still hide the lack of any real consensus by an extremely vague and ambiguous language.
It was both the merits and the shortcomings of CISG which prompted UNIDROIT to embark upon a project as ambitious as the Principles. In other words, if it had not been for the world-wide adoption of an international uniform sales law like CISG, any attempt at formulating rules for international commercial contracts in general would have been unthinkable. At the same time, it was precisely because the negotiations leading up to CISG had so amply demonstrated that this Convention was the maximum that could be achieved at the legislative level, which caused UNIDROIT to abandon the idea of a binding instrument and instead to take another road for its own project. In other words, the objective was no longer to unify domestic law by means of special legislation, but merely to "restate" existing international contract law. As a result, the decisive criterion in the preparation of the UNIDROIT Principles was not just which rule was adopted by the majority of countries ("common core-approach"), but rather which of the rules under consideration had the most persuasive value and/or appeared to be particularly well-suited for cross-border transactions ("better rule-approach").
2. Contents compared
In view of its intrinsic merits and world-wide acceptance, CISG was of course an obligatory point of reference in the preparation of the UNIDROIT Principles.
To the extent that the two instruments address the same issues, the rules laid down in the UNIDROIT Principles are normally taken either literally or at least in substance from the corresponding provisions of CISG; cases where the former depart from the latter are exceptional.
Perhaps the most significant example of such departures is that the UNIDROIT Principles impose upon the parties a duty to act in good faith throughout the life of the contract, including the negotiation process, while CISG, in contrast, expressly refers to good faith only in the context and for the purpose of the interpretation of the Convention as such.
Another instance is the provision according to which usages do not bind the parties whenever their application would be unreasonable. As stated in the Comment, the reason for this limitation, which does not appear in CISG, is that the application of a particular usage, though regularly observed by the generality of business people in a particular trade sector, may nevertheless be unreasonable in a given case, e.g., because of the special conditions in which one or both parties operate and/or the atypical nature of the transactions.
What still remains to be seen is whether the "reasonableness" test may also be used to deny effect to a usage merely because one of the parties would be unfairly surprised by its application.
Yet another example is the adoption of the "receipt" principle for every kind of notice, including the notice a party must give in order to preserve its rights in case of the other party's non-performance, while according to CISG in the latter cases a delay or error in the transmission or the failure of the notice to arrive does not deprive the notifying party of the right to rely on that notice, or the provisions allowing the valid conclusion of a contract even without the determination of the price, a possibility which seems to be excluded under CISG.
Likewise, while Art. 19(3) CISG states that any modifying term contained in the purported acceptance, relating to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or the settlement of disputes, is considered to be a material modification of the terms of the offer and therefore transforms the acceptance into a counter-offer, no such list is provided for in Art. 2.11 of the UNIDROIT Principles.
Again, Art. 3.2 of the UNIDROIT Principles, contrary to Art. 29(1) CISG, states in general terms that a contract is concluded, modified or terminated by the mere agreement of the parties without any further requirement; and Art. 6.1.5 of the UNIDROIT Principles stipulates, contrary to Art. 52 CISG, that the obligee may reject earlier performance unless it has no legitimate interest in so doing.
Finally, while under CISG a court, notwithstanding the fact that the right to require performance is expressly stated in Arts. 46 and 62, is not bound to enter a judgment for specific performance unless it would do so under its own domestic law, according to the UNIDROIT Principles specific performance is not a discretionary remedy, i.e. a court must order performance, unless one of the exceptions laid down in Art. 7.2.2 applies.
Since the UNIDROIT Principles were not intended to become a binding instrument aimed at unifying national laws relating to international contracts, they were much less conditioned by the differences existing between the various legal systems. As a result, it was possible for them to address a number of matters which are either completely excluded or not sufficiently regulated by CISG.
Thus, in the chapter on formation, new provisions were included on the manner in which a contract may be concluded, on writings in confirmation, on the case where the parties make the conclusion of their contract dependent upon reaching an agreement on specific matters or in a specific form, on contracts with terms deliberately left open, on negotiations in bad faith, on the duty of confidentiality, on merger clauses, on contracting on the basis of standard terms, on surprising provisions in standard terms, on the conflict between standard terms and individually negotiated terms  and on the battle of forms.
Further, a whole chapter on validity was added  which moreover is not restricted to the classical cases of invalidity, i.e. the three defects of consent such as mistake, fraud and threat, but also addresses the much more controversial issue of "gross disparity".
Equally new are, among others, the contra proferentem rule, the provision on linguistic discrepancies  and that on supplying an omitted term  in the chapter on interpretation, the provision on implied obligations  in the chapter on content; those on payment by cheque or other instruments, on payment by funds transfer, on currency of payment, on the determination of the currency of payment where it is not indicated in the contract, on the costs of performance, on the imputation of payments, on public permission requirements  and on hardship  in the chapter on performance; the provisions on the right to performance, on exemption clauses, on the case where the aggrieved party contributes to the harm, on interest rates  and on agreed payment for non-performance  in the chapter on non-performance.
Yet it was not only because the UNIDROIT Principles were less hampered by the differences between the various domestic laws that they were able to deal with additional matters not covered by CISG. Another reason for the addition of new provisions was that the scope of the UNIDROIT Principles is not limited to sales contracts but also encompasses other kinds of transactions, above all service contracts.
Examples of provisions so conceived as to take into account the special problems connected with these other types of contract are those on the duty of co-operation between the parties, on the distinction between a duty to achieve a specific result and the duty of best efforts and the criteria for determining the kind of duty involved in a given case, on the determination of the quality of performance, on the order of performance, on putting an end to a contract for an indefinite period, and on the right to require performance not only of monetary, but also of non-monetary obligations. Likewise, whereas CISG denies the buyer the right to terminate the contract if it is impossible for him to make restitution of the goods (with the sole exception of Art. 82(2)), the UNIDROIT Principles do not contain such a restriction but instead provide that upon termination of the contract both parties must make restitution and, if restitution in kind is not possible or appropriate, allowance should be made in money whenever reasonable.
3. Terms of co-existence
As to the relationship between the UNIDROIT Principles and the other uniform law instruments, it has been observed that
"[the Principles] do not compete or claim to displace the other harmonizing projects, but instead fit well with them as part of the multi-layered approach. The use of the restatement form avoids confrontation between the Principles and other parts of the multi-layer approach; it enables them to supplement each other."
This statement appears especially relevant to the relationship between the UNIDROIT Principles and CISG, in so far as both instruments seem to have their own raison d'être and not only do not compete with each other but may actually fulfil very important functions side by side.
Since CISG only deals with contracts for the sale of goods, and the scope of the UNIDROIT Principles is much wider, no overlap can occur where contracts other than sales contracts are concerned.
Yet even in respect of sales contracts, the two texts are not necessarily incompatible and indeed can even usefully support one another.
To begin with, notwithstanding the worldwide acceptance of CISG it might still occur that a sales contract is entered into between two parties not situated in Contracting States, thereby escaping the scope of application of CISG. In such cases there could be room for applying the UNIDROIT Principles as an alternative set of internationally uniform rules, either because of an express choice to this effect by the parties themselves or because a reference in the contract to "general principles of law" or the "lex mercatoria" or the like as the governing law is considered to be equivalent to a reference to the UNIDROIT Principles.
On the contrary, whenever the requirements for the application of CISG exist, CISG will normally take precedence over the UNIDROIT Principles in view of its binding character.
It is true that according to Art. 6 CISG, parties may exclude the Convention wholly or in part. While there may be cases where parties choose to replace individual articles of CISG by the corresponding provisions of the UNIDROIT Principles which they consider to be more appropriate, an exclusion of CISG in its entirety in favour of the UNIDROIT Principles is, at least for the time being, rather unlikely. As a matter of fact, parties do quite often exclude CISG, but this is generally because they are afraid of the uncertainties surrounding the application of any novel instrument. In such cases, they will prefer the safety of domestic law rather than venture into the application of something as novel as the UNIDROIT Principles, whatever their intrinsic merits.
It remains to be seen, however, what will happen if the parties, either because they are not aware of the existence of CISG, or because they do not know that their contract falls within the scope of application of CISG, refer to the UNIDROIT Principles as the applicable law, without expressly excluding CISG. The view has been expressed that such reference is tantamount to a tacit exclusion of CISG as a whole, just as occurs, for example, if the parties choose the law of a non-Contracting State or refer to principles and rules typical of the non-unified domestic law of any State, whether or not a party to CISG. This argument, however, is difficult to accept. There is not the same degree of incompatibility between the UNIDROIT Principles and CISG as exists between CISG and the domestic law of whichever State: on the contrary, they are both instruments of international origin which, apart from their different scope, at most differ in specific provisions. It follows that reference to the UNIDROIT Principles as the law governing the contract cannot be construed as indicating the parties' intention to exclude CISG in its entirety; the sole consequence of such reference is that, within the limits of party autonomy according to Art. 6 CISG, the UNIDROIT Principles will prevail over any conflicting provision of CISG. CISG, however, will continue to govern the individual contract as the applicable law; hence all issues peculiar to sales contracts and as such neglected by the UNIDROIT Principles, such as for instance the seller's liability for defective goods, and the specific remedies granted to the buyer, will be governed by CISG, not by the otherwise applicable domestic law, as would be the case if CISG were to be completely excluded by the parties.
Yet even in cases where the international sales contract is governed by CISG, the UNIDROIT Principles may serve an important purpose.
According to paragraph 1 of Art. 7 CISG,
"[i]n the interpretation of this Convention regard is to be had to its international character and to the need to promote uniformity in its application [. . .]."
So far, the principles and criteria for the proper interpretation of CISG have had to be found each time by the judges and arbitrators themselves. The UNIDROIT Principles could considerably facilitate their task in this respect.
For example, the criteria laid down in Art. 7.3.1 ("Right to terminate the contract") for the determination of whether or not there has been a fundamental breach of contract, may be used for a better understanding of the rather cryptic manner in which this important concept is defined in CISG. Indeed, in addition to the general criterion laid down in Art. 25 CISG, i.e. the fact that the non-performance substantially deprives the aggrieved party of what it was entitled to expect under the contract, provided the other party could not reasonably have foreseen such result, paragraph 2 of Art. 7.3.1 indicates as further factors to be taken into account in each single case whether strict compliance with the non-fulfilled obligation is of essence under the contract, whether the non-performance is intentional or reckless, whether the aggrieved party has reason to believe that it cannot rely on the other party's future performance, and finally whether the defaulting party would suffer disproportionate loss as a result of the preparation or performance if the contract is terminated.
Equally, Art. 7.1.4 ( "Cure by non-performing party"), which as mentioned above expressly states that the right of the non-performing party to cure its own failure may be exercised notwithstanding the fact that the aggrieved party has given notice of termination of the contract, may be invoked in order to resolve the doubts which in this respect exist under the corresponding Art. 48 CISG.
Another example may be found in paragraph 1 of Art. 7.4.9 ("Interest for failure to pay money") which, by expressly stating that the right to interest is independent of whether or not the non-payment of the sum of money due is excused, provides an answer to a question which Art. 78 CISG leaves open.
Finally, reference may be made to paragraph 4 of Art. 7.1.7 ("Force majeure") which, by expressly mentioning among the remedies not affected by the occurrence of an impediment preventing a party from performance the right to terminate the contract, to withhold performance and to request interest on money due, but not the right to performance, makes it clearer than does the corresponding provision in CISG  that as to this latter remedy the solution has to be found in each single case, in accordance with the criteria laid down for its availability in general.
Yet besides clarifying unclear language, the UNIDROIT Principles may also be used to fill veritable gaps found in CISG.
According to paragraph 2 of Art. 7 CISG,
So far, it has been each judge's or arbitrator's task, on a case-by-case basis, not only to determine such general principles but also to derive from those general principles the solution for the specific question to be settled. This latter task could be facilitated by resorting to the UNIDROIT Principles.
The only condition which needs to be satisfied is to show that the relevant provisions of the UNIDROIT Principles are the expression of a general principle underlying CISG.
Thus, Arts. 6.1.7 ( "Payment by cheque or other instrument"), 6.1.8 ("Payment by funds transfer") and 6.1.9 ("Currency of payment") of the UNIDROIT Principles may provide an answer to the questions, not expressly settled in CISG, of whether, and if so under what conditions, the seller is entitled to pay by cheque or by other similar instruments, or by a funds transfer, and in which currency payment is to be made.
One of the general principles on which CISG is based is that of reasonableness. The duty of the parties to act in a reasonable manner clearly underlies the rule laid down in Art. 6. 1.7, according to which the obligor may pay in any form used in the ordinary course of business at the place for payment, but cheques or other similar instruments are accepted by the obligee on condition that they will be honoured. The same may be said of the rule contained in Art. 6.1.8 whereby, if the obligee has made known its bank account number(s), payment may be made by a funds transfer to such account(s); or of the rule stated in Art. 6.1.9, according to which, even if a monetary obligation is expressed in a currency other than that of the place for payment, payment may be made in that latter currency unless, apart from an agreement to the contrary between the parties, that currency is not freely convertible.
Other provisions of the UNIDROIT Principles which may be used in order to fill in gaps in CISG are paragraphs 1 and 2 of the already mentioned Art. 7.4.9 on interest and Art. 7.4.12 ("Currency in which to assess damages").
CISG expressly settles neither the question of the time from which the right to interest accrues or of the rate of interest to be applied, nor that of the currency in which to assess damages. Yet as the principle of full compensation can be considered to be a general principle underlying CISG, these gaps may well be filled by the above-mentioned articles of the UNIDROIT Principles which are inspired by the same principle. Indeed, Art. 7.4.9, by stating that the aggrieved party is entitled to interest from the time payment is due (paragraph 1) and that the applicable interest rate shall be the average bank short-term lending rate to prime borrowers prevailing for the currency of payment at the due place of payment or, where no such rate exists at that place, the same rate in the State of the currency of payment, or in the absence of such a rate at either place the appropriate rate fixed by the law of the State of the currency of payment (paragraph 2), clearly intends to make sure that the interest to be paid covers to the greatest possible extent the loss actually suffered by the aggrieved party as a consequence of the non-payment of the sum of money due. The same is true of Art. 7.4.12, according to which damages are to be assessed either in the currency in which the monetary obligation was expressed or in the currency in which the harm was suffered, whichever is more appropriate.
Likewise, CISG does not expressly settle the question of where the seller has to refund the price if and to the extent that it was not due. The gap may be filled in by Art. 6.1.6(1)(a) of the UNIDROIT Principles on the assumption that the rule which it lays down, according to which a monetary obligation is to be performed at the obligee's place of business, expresses a general principle underlying CISG as well, as shown by Art. 57(1).
Finally, reference is made to Arts. 2.15 ( "Negotiations in bad faith") and 2.16 ( "Duty of confidentiality") of the UNIDROIT Principles, which by making a party who negotiates or breaks off negotiations in bad faith liable for the losses caused to the other party, and by imposing upon the parties a duty of confidentiality with respect to confidential information given in the course of negotiations irrespective of whether or not a contract is subsequently concluded, may be used in order to settle important questions of precontractual liability not covered in CISG. Indeed, as will be discussed in more detail below, both provisions are expressions of the general duty to act in good faith as laid down in Art. 1.7 and which, at least in the opinion of some commentators, is also a general principle underlying CISG.
It has even been suggested that, since CISG is silent on hardship, the relevant provisions contained in the UNIDROIT Principles could be used to supplement CISG on this point. Indeed, if one accepts that Arts. 6.2.2-6.2.4 are the expression of the basic idea of favor contractus,  the link to CISG would be established, since this idea is without a doubt one of the general principles of CISG as well. What is less certain, however, is whether the silence of the Convention on this point constitutes a true gap to be filled in according to Art. 7(2) CISG or whether in Art. 79 the Convention sets out to regulate the grounds for exemption of liability in an exhaustive manner so that, to the extent that hardship cannot be considered to constitute an "impediment" as defined in Art. 79(1), it must be denied any relevance under the Convention.
In view of the more comprehensive nature of the UNIDROIT Principles, parties may well wish to apply them in addition to CISG in respect of matters not covered therein. To this effect, they may include a clause in the contract which might read as follows:
"This contract shall be governed by CISG, and with respect to matters not governed by this Convention, by the UNIDROIT Principles of International Commercial Contracts."
Or, to quote a similar clause contained in the draft Model International Sales Contract prepared by the International Chamber of Commerce,
The difference between the role attributed to the UNIDROIT Principles under such clauses and the role which, as was shown in more detail above, they may play under Art. 7(2) CISG is clear, at least in theory. Under Art. 7(2) CISG, the UNIDROIT Principles merely serve to fill in any lacunae to be found in CISG, i.e. to provide a solution for "[q]uestions concerning matters governed by [CISG] which are not expressly settled in it [. . .]" and with respect to which recourse to domestic law is permitted only as a last resort. By contrast, by virtue of parties' reference to the UNIDROIT Principles of the kind described above, the latter are intended to apply to matters actually outside the scope of CISG and which otherwise would fall directly within the sphere of the applicable domestic law.
Given the special nature of the UNIDROIT Principles, the impact of such a reference is likely to vary according to whether a State court or an arbitral tribunal is seized of the case.
State courts will tend to consider the parties' reference to the UNIDROIT Principles as a mere agreement to incorporate them into the contract and to determine the law governing that contract on the basis of their own conflict-of-law rules. As a result, they will apply the UNIDROIT Principles only to the extent that the latter do not affect the provisions of the proper law from which the parties may not derogate. This may be the case, for instance, with the rules on contracting on the basis of standard terms  or on public permission requirements. On the other hand, the rules relating to validity  or to the court's intervention in cases of hardship  will only be applied to the extent that they do not run counter to the corresponding provisions of the applicable domestic law.
The situation is different if the parties agree to submit their disputes arising from the contract to arbitration. Arbitrators are not necessarily bound to base their decision on a particular domestic law. Hence they may well apply the UNIDROIT Principles not merely as terms incorporated in the contract, but as "rules of law" governing the contract together with CISG irrespective of whether or not they are consistent with the particular domestic law otherwise applicable. The only mandatory rules arbitrators may take into account, also in view of their task of rendering to the largest possible extent an effective decision capable of enforcement, are those which claim to be applicable irrespective of the law otherwise governing the contract ("loi d'application nécessaire"). Yet the application, along with the UNIDROIT Principles, of the mandatory rules in question will as a rule not give rise to any true conflict, given their different subject-matter.
1. The latest version of the UNILEX data base (available both on diskette and as a loose-leaf service) contains 217 court decisions from 15 countries and some 32 arbitral awards: cf. M.J. Bonell et al (eds.), UNILEX -- International Case Law & Bibliography on the UN Convention on Contracts for the International Sale of Goods, Transnational Publications Inc., Irvington, NY, (ed. July 1997).
2. There were those who, in view of the existence of a vast amount of contract clauses and practices developed by the interested business circles themselves in order to regulate their trade relationships in a satisfactory and, possibly, exhaustive manner, argued that any intervention by State legislators would run the risk of remaining a dead letter (cf. H. Grossmann-Doerth, Das Recht des Überseekaufs, Berlin-Leipzig 1930, I, p. 67 et seq.). Yet such objections were not shared by the promoters of the unification project. To quote the same Ernst Rabel (cf. Observations sur l'utilité d'une unification du droit de la vente du point de vue des besoins du commerce international, Institut international pour l'unification du droit privé 1935, Projet I, pp. 119-127 (p. 120), "such a project would not be without practical use. In the first instance, under the present system of commercial clauses, there are, and always will be, gaps.[. . .] But the merits of a uniform law would be even more manifest if it managed to regulate matters of mandatory law or matters which would at least partially fall outside the autonomy of the parties." (translation from French original)
3. Belgium, Federal Republic of Germany, Italy, Luxembourg, Netherlands, S. Marino and UK; the non-European States were Gambia and Israel.
4. Art. 2 CISG.
5. Art. 4 CISG.
6. Art. 5 CISG.
7. Cf., e.g., Arts 12 and 96 CISG with respect to the formal requirements of the contract; Art. 28 CISG concerning the possibility of obtaining a judgment for specific performance; Art. 55 CISG with respect to the possibility of a sales contract being validly concluded without an express or implied determination of the price).
8. Cf. e.g., Art. 16 CISG dealing with the revocability of the offer; Arts. 39(1), 43(1) and 44 CISG as to the notice requirement in case of delivery of non-conforming goods or goods which are not free from third parties' rights; Art. 68 CISG concerning the transfer of risk where the goods are sold in transit).
9. Cf., e.g., the reference to good faith in Art. 7(1) CISG; the definition of "fundamental breach of contract" in Art. 25 CISG; Art. 78 CISG concerning the right to interest on sums in arrears.
10. Cf. supra Ch. 2, p. 31 et seq.
11. According to J.M. Perillo, op. cit. (supra Ch. 1, n.7), p. 283) "[t]o the extent that the two documents cover the same ground, Principles is a better, more mature document."
12. Cf. UNIDROIT Principles, Art. 1.7. -- See infra Ch. 6, p. 136 et seq.
13. Art. 7(1) CISG. -- According to J.M. Perillo, op. cit. (supra Ch. 1, n.7), p. 287 "[o]ne of the improvements in Principles over CISG rules is Article 1.7." Also A.S. Hartkamp, Principles of Contract Law, in Hartkamp A.S. / Hesselink M.W. / Hondius E.H. / du Perron C.E. / Vranken J.M.B. (eds.), Towards a European Civil Code, Martinus Nijhoff Publishers, Dordrecht 1994, p. 37 et seq., (p. 44) states that "[t]he rule of Article 1.7 constitutes a marked improvement compared to Article 7 CISG [. . .]."
14. Cf. UNIDROIT Principles, Art. 1.8(2).
15. See Art. 9(2) CISG; see also Art. 4 CISG which expressly excludes from the scope of the Convention "the validity of […] any usage." -- According to A.S. Hartkamp, The UNIDROIT Principles for International Commercial Contracts and the United Nations Convention on Contracts for the International Sale of Goods, Asser Institute (ed.), Comparability and Evaluation. Essays on Comparative Law, Private International Law and International Commercial Arbitration, Nijhoff Publishers, 1994, p. 85 et seq. (p. 88) "[i]n order to protect parties from developing countries against usages unknown to them because they were developed in industrialised countries, Art. 9(2) CISG requires that the parties 'knew or ought to have known' the usage. The Principles seek to accommodate their interest more directly by protecting parties against the application of unreasonable usages. The latter approach is better since it is preferable to strike out clauses deemed unreasonable in the circumstances of the case rather than to exclude the application of the conditions as such on account of more or less subjective considerations relating to a party's knowledge of their content."
16. Comment 5 to Art. 1.8.
17. See in this sense, e.g., UCC, §1-205(6) ("Evidence of a relevant usage of trade offered by one party is not admissible unless and until he has given the other party such notice as the court finds sufficient to prevent unfair surprise to the latter") and Official Comment no. 10 ("Subsection (6) is intended to ensure that this Act's liberal recognition of the needs of commerce in regard to usage of trade shall not be made into an instrument of abuse.").
18. Cf. UNIDROIT Principles, Art. 1.9. -- The solution is explained by R. Hyland, op. cit. (supra Ch. 3, n. 20), p. 548, as follows: "From the point of view of risk allocation, all that is important is who can best prevent the loss. Since only the party who sends the notice can take the necessary precautions, it therefore makes sense to place the risk of loss on that party."
19. See Art. 27 CISG. -- For a critical analysis of this latter provision see, however, P. Schlechtriem in E. v. Caemmerer/P. Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht -- CISG, 2nd ed., München 1994 p. 227, who points out that in the light of the general principle of good faith as laid down in Art. 7(1) CISG, the "dispatch" principle cannot apply whenever the defective transmission is due to the sender's fault. The CISG approach is likewise criticised by A.S. Hartkamp, op. cit. (supra n. 15), p. 89, who in support of the solution adopted by the UNIDROIT Principles recalls that CISG itself contains a number of exceptions to the rule of Art. 27, such as Arts. 47(2), 48(4), 63(2), 65(1)(2), 79(4).
20. Cf. UNIDROIT Principles, Arts. 2.2 and 5.7.
21. See Arts. 14 and 55 CISG -- For an attempt to reconcile these two apparently conflicting provisions of CISG see, however, G. Eörsi, in M.J. Bonell - C.M. Bianca, op. cit. (supra Ch. 3, n. 68), p. 406 et seq. Critical vis-à-vis the solution contained in CISG and in favour of that adopted by the UNIDROIT Principles, D. Lecossois, La détermination du prix dans la Convention de Vienne, le U.C.C. et le droit français: critique de la première décision relative aux articles 14 et 55 de la Convention de Vienne, in 41 McGill Law Journal (1996), p. 513 et seq. (p. 540).
22. According to Comment 2 to Art. 2.11, "[w]hat amounts to a 'material' modification cannot be determined in the abstract but will depend on the circumstances of each case […]. An important factor to be taken into account in this respect is whether the additional or different terms are commonly used in the trade sector concerned and therefore do not come as a surprise to the offeror." It is clear that in this way, modifications in the purported acceptance, which according to CISG would be definitely material, could, according to the UNIDROIT Principles, in given case equally well be considered non material and therefore become part of the contract unless the offeror objects immediately.
23. By contrast, Art. 29(1) CISG expressly admits the validity of a mere agreement only with respect to modification and termination by agreement of the contract. -- The broader rule contained in Art. 3.2 of the UNIDROIT Principles is explained in Comments 1-3 by the fact that in commercial dealings consideration, "cause" or other similar prerequisites traditionally required by various domestic laws for the valid conclusion of the contract, are of minimal practical importance since in this context obligations are almost always undertaken by both parties.
24. On this point, A.S. Hartkamp, op. cit. (supra n. 15), p. 92, observes that "[t]he CISG rule does not contain the qualification relating to a legitimate interest in rejecting an early performance, but it seems to me that the same follows from Article 7, paragraph 1 (good faith)."
25. Cf. Art. 28 CISG.
26. At first sight this approach, which in substance corresponds to the position generally taken by the civil law systems (for a comparative survey, see G.H. Treitel, Remedies for Breach of Contract. A Comparative Account, Oxford 1988, p. 51 et seq.; P. Schlechtriem, Rechtsvereinheitlichung in Europa und Schuldrechtsreform in Deutschland, in Zeitschrift für Europäisches Privatrecht 1993, p. 217 et seq. (p. 222 et seq.)), may seem to be in contrast with the common law systems, where specific performance is traditionally considered to be the exceptional remedy to be granted only where the normal remedy of damages affords "inadequate" protection to the aggrieved party; on closer examination, however, this is not the case since there is a growing tendency, at least in the United States and Australia, to order specific performance without first asking whether damages are "adequate" and to refuse the former under certain conditions, including those indicated in Art. 7.2.2 of the UNIDROIT Principles. For further references on this point, see Farnsworth on Contracts, Boston-Toronto-London, 1990, III, p. 168 et seq.; G.H. Treitel, op. cit. p. 64 et seq.
The solution offered in the UNIDROIT Principles has found a convinced supporter in J.M. Perillo, op. cit. (supra Ch. 1, n. 7), who argues that (p. 304) "[a]s a practical matter, if a substitute performance is available from the market, the rational actor will not pursue specific performance regardless of whether the actor is operating in a civil law or common law country. Principles recognize this. In most respects it formulated a reasonable compromise between the common law and the civil law approaches to specific performance." For a similarly positive comment on Art. 7.2.2. of the UNIDROIT Principles, see R. Goode, op. cit. (supra Ch. 1, n. 11), p. 15, who points out that "the remedy of specific performance does have one great advantage over damages, in that it provides a means of discouraging profitable contract-breaking, conduct which is not adequately sanctioned by the English law of restitution, which allows recovery of benefits only upon a total failure of consideration [. . .] Though arguments have been advanced that to allow deliberate contract-breaking promotes economic efficiency, it seems wrong that the party in breach should be allowed to keep what he has not earned." See also A. Rosett, op. cit. (supra Ch. 3, n. 15), p. 449, who speaks of "[. . .] true harmonization that becomes possible by simply putting less emphasis on familiar historic doctrine and emphasizing the practical outcome of cases."
27. UNIDROIT Principles, Art. 2.1. - See infra Ch. 6, p. 118.
28. UNIDROIT Principles, Art. 2.12. - See infra Ch. 6, p. 119.
29. UNIDROIT Principles, Art. 2.13.
30. UNIDROIT Principles, Art. 2.14. - See infra Ch. 6, p. 122 and Ch. 7, p. 179.
31. UNIDROIT Principles, Art. 2.15. - See infra Ch. 6, p. 140.
32. UNIDROIT Principles, Art. 2.16. - See infra Ch. 6, p. 140.
33. UNIDROIT Principles, Art. 2.17.
34. UNIDROIT Principles, Art. 2.19. - See infra Ch. 6, p. 152.
35. UNIDROIT Principles, Art. 2.20. - See infra Ch. 6, p. 153.
36. UNIDROIT Principles, Art. 2.21. - See infra Ch. 6, p. 154.
37. UNIDROIT Principles, Art. 2.22. - See infra Ch. 6, p. 124.
38. Ch. 3 -- For a critical analysis of this chapter, see U. Drobnig, Substantive Validity, in 40 The American Journal of Comparative Law (1992), p. 635 et seq. (elsewhere the same author (Protection of the Weaker Party, in M.J. Bonell -- F. Bonelli (eds.), op. cit. (supra Ch. 3, n. 59), p. 215 et seq. (p. 224) argues that the inclusion in the UNIDROIT Principles of provisions dealing with questions of substantive validity of the contract "is a decisive step beyond the Vienna Sales Convention […]"); G. Alpa, La protezione della parte debole di origine internazionale (con particolare riguardo al diritto uniforme), in M.J. Bonell - F. Bonelli, op. cit. (supra Ch. 3, n. 59), p. 225 et seq.
39. UNIDROIT Principles, Arts. 3.8-3.9 - See infra Ch. 6, p. 149.
40. UNIDROIT Principles, Art. 10. - See infra Ch. 6, p. 128, 149, 162-167.
41. UNIDROIT Principles, Art. 4.6. - See infra Ch. 6, p. 155.
42. UNIDROIT Principles, Art. 4.7. - See infra Ch. 2, p. 36.
43. UNIDROIT Principles, Art. 4.8. - See infra Ch. 6, p. 145
44. UNIDROIT Principles, Art. 5.2. - See infra Ch. 6, p. 146
45. UNIDROIT Principles, Arts. 6.1.7-6.1.9. - See supra Ch. 2, pp. 36-37.
46. UNIDROIT Principles, Art. 6.1.10. - See supra Ch. 2, p. 36.
47. UNIDROIT Principles, Art. 6.1.11.
48. UNIDROIT Principles, Art. 6.12.
49. UNIDROIT Principles, Arts. 6.1.14-6.1.17. - See supra Ch. 2, pp. 38-39 and infra Ch. 5, pp. 98-99 and Ch. 7, pp. 180-181.
50. Ch. 6, Section 2. - See infra Ch. 6, pp. 129-132 and Ch. 7, pp. 182-183. For a critical analysis of this chapter, see D. Maskow, Hardship and Force Majeure, in 40 The American Journal of Comparative Law (1992), p. 657 et seq.; M. Fontaine, Les dispositions relatives au hardship et à la force majeure, in M.J. Bonell - F. Bonelli, op. cit. (supra Ch. 3, n. 59), p. 183 et seq.; B. Bernardini, Hardship e force majeure, in M.J. Bonell - F. Bonelli, op. cit. (supra Ch. 3, n. 59), p. 193 et seq.; J.M. Perillo, Force Majeure and Hardship under the UNIDROIT Principles of International Commercial Contracts, in 5 Tulane Journal of International and Comparative Law (1997), p. 5 et seq.
51. UNIDROIT Principles, Arts. 7.2.1-7.2.5 - See supra p. 69 and infra Ch. 6, p. 148.
52. UNIDROIT Principles, Art. 7.1.6. - See infra Ch. 6, pp. 156-162.
53. UNIDROIT Principles, Art. 7.4.7.
54. UNIDROIT Principles, Art. 7.4.9. - See infra pp. 79-81. - For a critical analysis of this provision see K.P. Berger, Der Zinsanspruch im Internationalen Wirtschaftsrecht, RabelsZeitschrift 1997, p. 313 et seq. (pp. 336-341).
55. UNIDROIT Principles, Art. 7.4.13. - See infra Ch. 6, pp. 160-162.
56. For a critical analysis of these latter provisions, see D. Tallon, Damages, Exemption Clauses and Penalties, in 40 The American Journal of Comparative Law (1992), p. 675 et seq.
57. UNIDROIT Principles, Art. 5.3. - See infra Ch. 6, pp. 145-146.
58. UNIDROIT Principles, Arts. 5.4-5.5. - See infra Ch. 7, p. 176. - For further comments on these provisions, see M. Fontaine, op. cit. (supra Ch. 3, n. 4) p. 648 et seq.
59. UNIDROIT Principles, Art. 5.6.
60. UNIDROIT Principles, Art. 6.1.4. - See infra Ch. 7, p. 180.
61. UNIDROIT Principles, Art. 5.8. - See infra Ch. 6, p. 146.
62. UNIDROIT Principles, Art. 7.2.2. - See infra Ch. 6, p. 148.
63. Cf. UNIDROIT Principles, Art. 7.3.6(1).
64. A. Rosett, op. cit. (supra Ch. 3, n. 15), p. 449.
65. For the first arbitral awards referring to the UNIDROIT Principles in cases of this kind, see infra Ch. 8, pp. 248-254.
66. Yet see D. Lecossois, op. cit. (supra n. 21), p. 541, according to whom at least before arbitral tribunals the UNIDROIT Principles can be expected to replace, in a near future, the Convention.
67. K. Boele-Woelki, The Principles and Private International Law. The UNIDROIT Principles of International Commercial Contracts and the Principles of European Contract Law: How to Apply Them to International Contracts, in Uniform Law Review 1996, p. 652 et seq. (p. 670).
68. This article, while expressly stating that the seller's right to cure is "subject to Art. 49", which deals with the termination of the contract by the buyer, does not clarify the exact relationship between the seller's right to cure and the buyer's right to terminate. On the different views expressed in this respect both in the course of the preparation of the article in question and after its final approval, see, also for further references, J.O. Honnold, Uniform Law for International Sales 2nd ed., Deventer-Boston 1991, p. 375 et seq.
Recourse to the UNIDROIT Principles for a more appropriate interpretation of Art. 48 CISG is recommended also by A.S. Hartkamp, op. cit. (supra n. 15), p. 94, note 24.
69. For the same solution as laid down in Art. 7.4.9(1) of the UNIDROIT Principles see, e.g., B. Nicholas, in C.M. Bianca - M.J. Bonell, op. cit. (supra Ch. 3, n. 68), p. 570; H.H. Eberstein - K. Bacher, in E. von Caemmerer - P. Schlechtriem, op. cit. (supra n. 19), p. 670 et seq. (albeit with some reservations).
70. Cf. Art. 79(5) CISG, the generic language of which ("Nothing in this article prevents either party from exercising any right other than to claim damages under this Convention") may be misunderstood as if the remedy of specific performance were always available in situations covered by Art. 79: see on this point, also for further references, J.O. Honnold, op. cit. (supra Ch. 4, n.95), p. 551 et seq.
71. Only in the absence of such general principles does the same article permit as a last resort reference to the domestic law applicable by virtue of the rules of private international law.
72. This appears to have been overlooked by U. Drobnig, The Use of the UNIDROIT Principles by National and Supranational Courts, in Institute of International Business Law and Practice (ed.), UNIDROIT Principles, cit. (supra Ch. 1, n. 20), p. 223 et seq. (p. 228) when, in rejecting the possibility of using the UNIDROIT Principles in the context of Art. 7 CISG, he argues that "[a]rt. 7 para. 2 refers for matters governed by the Convention to the general principles on which the Convention is based [. . .] [if] there are no such principles, the provision refers to the law applicable by virtue of the rules of private international law [. . .]. Thus there does not seem to be any room for recourse to the UNIDROIT Principles." A favourable view of the possible use of the UNIDROIT Principles in interpreting and supplementing CISG, is taken by, e.g., S.N. Martinez Cazon, A Practitioner's View of the Applicability of the UNIDROIT Principles of International Commercial Contracts in Interpreting International Uniform Laws (paper presented at the 25th IBA Biennal Conference held in Melbourne, 9-14 October 1994), p 3; F. Enderlein, The UNIDROIT Principles as a Means for Interpreting International Uniform Laws (paper presented at the 25th IBA Biennal Conference held in Melbourne, 9-14 October 1994), p. 12; U. Magnus, Die allgemeinen Grundsätze im UN-Kaufrecht, RabelsZeitschrift 1995, p. 469 et seq. (pp. 492-493); A.M. Garro, The Gap-Filling Role of the UNIDROIT Principles in International Sales Law: Some Comments on the Interplay between the Principles and CISG, in 69 Tulane Law Review (1995), p. 1149 et seq. (p. 1152 et seq.) (this author goes so far as "to visualize the UNIDROIT Principles as a component part of the 'general principles' underlying the CISG"); P. Perales Viscasillas, UNIDROIT Principles of International Commercial Contracts: Sphere of Application and General Provisions, in 13 Arizona Journal of International and Comparative Law (1996), p. 383 et seq. (p. 404) (by contrast, this author warns against "easy" recourse to the UNIDROIT Principles, which should be applied only when it is impossible to find a solution under CISG either by analogy or by the general principles).
73. M.J. Bonell, in C.M. Bianca - M.J. Bonell, op. cit. (supra Ch. 3, n. 68), p. 80.
74. In this sense see also J.M. Perillo, op. cit. (supra Ch. 1, n. 7), p. 311; A. Garro, op. cit. (supra n. 72), pp. 1156-1157; K. Boele-Woelki, op. cit. (supra n. 67), p. 671; R. Goode, op. cit. (supra Ch. 1, n. 11), p. 237; K.P. Berger, op. cit. (supra n. 54), pp. 339-340 (though with some reservations).
Contra, F. Ferrari, La vendita internazionale. Applicabilità ed applicazioni della Convensione di Vienna del 1980, Padova 1997, p. 251 (in favour of determination of interest rate in accordance with the law which in the absence of the Convention would govern the contract, i.e. normally the law of the country where the seller has its place of business); P. Perales Viscasillas, La determinaciòn del tipo de interés en la compravendita internacional, in Quadernos Jurídicos 1996, p. 5 et seq. (pp. 7-9) maintains that both the question of the time from which the right to interest accrues and the question of the applicable rate can be resolved by the Convention itself; the former on the basis of Art. 84(1) which, albeit only with respect to the special case of repayment of the price unduly paid, states that interest accrues from the date on which payment becomes due; the latter on the basis of Art. 57(1) which by laying down the general principle according to which payment of a monetary obligation must be made in the "sphere of control" of the creditor, would seem to imply that the interest rate is likewise determined by the law of the creditor's country.
For the first three arbitral awards which have made express reference to Art. 7.4.9 of the UNIDROIT Principles for the determination of the applicable rate of interest, see infra, Ch. 8, pp. 246-247.
75. See in this sense, specifically, Cour d'Appel de Grenoble 1996, infra Ch. 8, pp. 247-248.
76. See infra Ch. 6, p. 140 et seq.
77. See, also for further references, M.J. Bonell, in C.M. Bianca - M.J. Bonell, op. cit. (supra Ch. 3, n. 68), p. 84 et seq. -- As to the possible implications of the principle of good faith referred to in Art. 7 CISG with respect to the formation of sales contracts governed by the Convention, see M.J. Bonell, Formation of Contracts and Precontractual Liability under the Vienna Convention on International Sales of Goods, in Institute of International Business Law and Practice (ed.), Formation of Contracts and Precontractual Liability, ICC Publication n. 440/9, Paris 1990, p. 157 et seq. (p. 166 et seq.).
78. Cf. A. Garro, op. cit. (supra n. 72), pp. 1182-1184; J. Perillo, op. cit. (supra Ch. 2, n. 44), p. 9.
79. See infra Ch. 6, p. 129 et seq.
80. Cf. M.J. Bonell, in C.M. Bianca - M. J. Bonell, op. cit. (supra Ch. 3, n. 68), p. 81; U. Magnus, Wiener UN-Kaufrecht, in J. Von Staudiners Kommentar zum Bürgerlichen Gesetzbuch, Berlin, 1994, p. 126.
81. In the sense that under the Convention even substantial supervening changes in economic circumstances do not amount to an exempting event see, among others, D. Tallon, in C.M. Bianca - M.J. Bonell, op. cit. (supra Ch. 3, n. 68), p. 591; H. Stoll, in E. von Caemmerer - P. Schlechtriem, op. cit. (supra n. 19), pp. 694-695; Tribunale di Monza, 14 January 1993, in UNILEX, D.1993-3; Landgericht Aachen, 14 May 1993, UNILEX, D.1993-16. Even those who maintain that the general definition of "impediment" in Art. 79(1) CISG is sufficiently broad also to cover extreme cases of hardship, insist that under the Convention hardship can only be invoked as an exemption from liability for non-performance, while it cannot lead to re-negotiation and possible adaptation of the contract, unless parties expressly provide for this: see, for example, J. O. Honnold, op. cit. (supra n. 68), p. 442 et seq.; M.J. Bonell, La prima decisione italiana in tema di Convenzione di Vienna sulla vendita internazionale, in Giurisprudenza Italiana, 1994, 1, c. 145 et. seq.; P. Schlechtriem, Internationales UN-Kaufrecht, Tübingen, 1996, p. 163.
82. Cf. Art. 1.2 of the Draft ICC Model International Sales Contract (Manufactured Goods Intended for Resale), B. General Conditions (May 1996).
83. For more on this point, see infra Ch. 7, p. 187 et seq.
84. Cf. Arts. 2.19-2.11.
85. Cf. Arts. 6.1.14-6.1.17.
86. Cf. Ch. 3.
87. Cf. Art. 6.2.3.
88. For further details see infra Ch. 7, p. 192 et seq.
89. For examples of possible conflicts, see infra Ch. 7, p. 221.
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