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Reproduced with the permission of Oceana Publications

excerpt from

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 by
Prof. Dr. jur. Dr. sc. oec. Fritz Enderlein
Prof. Dr. jur. Dr. sc. oec. Dietrich Maskow

Oceana Publications, 1992

Article 2 [Exclusions from Convention]

[TEXT OF THE UNIFORM LAW]

This Convention does not apply to sales [1]:

(a) of goods bought for personal, family or household use [2], unless the seller, at any time before or at the conclusion of the contract, neither knew or ought to have known that the goods were bought for any such use [3];
(b) by auction [4];
(c) on execution or otherwise by authority of laws [5];
(d) of stocks, shares, investment securities, negotiable instruments or money [6];
(e) of ships, vessels, hovercraft or aircraft [7];
(f) of electricity [8].

[WORDS AND PHRASES, CONCEPTS

1. types of exclusions
2. goods bought for personal, family or household use
3. need to be able to recognize consumer sale from circumstances of transaction
4. sale by auction
5. sale on execution or otherwise by authority of law
6. sale of stocks, shares, investment securities, negotiable instruments or money
7. sale of ships, vessels, hovercraft or aircraft
8. sale of electricity ]

[COMMENTARY]

[1] [types of restrictions]

There are three types of restrictions in this article:

-   those based on the purpose for which the goods were purchased, (subpara. (a)),

-   those based on the type of sales contract, (subparas. (b) and (c)),

-   those based on the kinds of goods sold, (subparas. (d), (e) and (f)). [page 33]

[2] [goods bought for personal, family or household use]

This generally refers to a non-commercial purpose (similar view held by Huber, 421 fol). Those contracts are mostly excluded from the Convention's scope of application which in many countries are regarded as civil law contracts (in contrast to trade law contracts). That criterion, however, is not applied with regard to the character of the parties to a contract, which would have to be defined, but rather, to the purpose of the goods.

In many countries special laws have been enacted which are directed against clauses in general business conditions by which the legal rights, in particular of the buyer, are limited. Such legislation is above all aimed at consumer contracts which, irrespective of any national differences, meet the very definition of the contracts excluded here.

Insofar the relationship between the CISG and the mandatory domestic consumer protection rules does not have to be determined.

The legislation aimed against an abuse of general business conditions is not necessarily limited to consumer contracts and can, where it reaches beyond them, achieve importance also for international economic contracts. Since the CISG does not regulate those problems and also from its underlying principles the prohibition of abuses of general business conditions can hardly be deduced, it cannot be excluded that the relevant norms of the applicable law chosen on the basis of the decisive rules of private international law can be invoked in addition whenever a gap under Article 7, paragraph 2, is found. Contradictions that may exist between the CISG and the mandatory domestic law should, in our view, be settled in favour of the Convention (see Schlechtriem, 14; also as the Convention is the more recent and more specific law). This includes that the parties can make relevant arrangements, and the Contracting States must leave them that much freedom within the scope of application of the CISG (Herber/Doralt, 36). We believe that this is justifiable also because the structure in regard to parties to international economic contracts is generally more balanced than in the case of national ones. Should domestic protection rules, however, affect the validity of contracts or clauses they will generally supersede the CISG under Article 4, subpara. (a). There is a trend in publications to attach growing importance to this provision.

[3] [need to be able to recognize consumer sale from circumstances of transaction]

      [3.1] The purpose of the goods will in general be recognizable from the circumstances of the transaction, e.g. retail sale, sale through mail order firms, etc. If the goods, contrary to the purpose at the time of the purchase, are used for commercial purposes, the Convention will not apply because late changes in purpose are irrelevant (Honnold, 86). [page 33]

If, however, the circumstances of the transaction are such that an intended industrial use of the goods suggests itself (e.g. a wood-working machine for industrial purposes is ordered directly from the foreign manufacturer) the CISG is applied also in the exceptional case that the goods are destined for personal purposes (e.g. for use in one's own personal workshop), unless the seller knew or ought to have known this, e.g. because of an indication by the buyer (Loewe/Lausanne, 17). The Convention applies, however, to a contract which seems to be a consumer contract but is not (ibid).

In regard to whether the seller "knew" or "ought to have known", what matters again is the time of the conclusion of the contract (Secretariat's Commentary, O.R., 16; Khoo/BB, 37). It is not sufficient to gain this knowledge only when, for instance, the machine is being installed.

      [3.2] At the diplomatic conference (O.R., 238 fol) problems related to the burden of proof have played a role in this context. The view was also held that the Convention should not decide questions of burden of proof, but rather, this should be left to the courts as matters of procedural law (O.R., 295 fol; Khoo/BB, 39). It is no doubt correct that in formulating most of the provisions of the CISG the questions of burden of proof have not specifically been taken into account. Chances are that checking the Convention's text for them will not be successful. This should, however, not be made into a problem. The Convention should be invoked to the extent to which it solves such questions, and this is what it does in this place. Therefore, the usual methods of interpretation are to be used.

A typical constellation in this case could be, as Khoo (BB /40) rightly notes, that the buyer wishes to prevent application of the CISG in order to enjoy the domestic protection laws which are more favourable to him. The buyer will have to prove that he has bought the goods for personal use, and the seller will have to prove that he did not even have to have knowledge of it (Honnold, 87; Khoo, ibid).

[4] [sales by auction]

As a reason for this exception it was indicated that there are often specific rules for auctions under applicable domestic law (Secretariat's Commentary, O.R., 16). Already Réczei (Problems of Unification, 70) has justly objected that the rules for auctions are mostly created by the very institutions which hold such auctions; and the participants in the auction are obliged to accept those conditions. This specific form of party agreement could be complemented by the Convention as decisive law. [page 34]

Already at present, the rules for auctions could naturally determine the CISG as the subsidiary applicable law (opting in).

[5] [sale on execution or otherwise by authority of law]

Such sales are excluded because they are governed by special and mostly mandatory rules in numerous countries.

[6] [sale of stocks, shares, investment securities, negotiable instruments or money]

This exception can be explained by the existence of mandatory domestic rules of which only foreign exchange control regulations shall be mentioned here.

The negotiable instruments referred to here include bills of exchange, cheques and shares; but not, however, the documents relating to the goods (see also Secretariat's Commentary, O.R., 16; Honnold, 88), i.e. documents of title. The buyers of such papers are basically the buyers of the goods to which those refer. That such purchases should not be excluded follows, inter alia, from the fact that the documents mentioned in Articles 34 and 58, paras. 1 and 2, which relate to the goods and/or allow to have disposal of the goods are, in particular but not exclusively, documents relating to the goods.

[7] [sale of ships, vessels, hovercraft or aircraft]

      [7.1] The reasons given for this exception were, above all, registration requirements and the existence of specific rules for the sale of ships in some countries according to which ships are treated as immovable property (Secretariat's Commentary, O.R. 16). But the problems of title, which are the first to be affected in this context, are left out of the Convention (Article 4, subpara. (a)). Besides, the latter does not apply to aircraft. The argument mentioned by the FRG representative, that sales contracts for ships are of a very specific nature (O.R., 240 fol) could be invoked in regard to many other types of contracts which are not excluded from the Convention. Kahn (958) also justifies the exclusion referring, inter alia, to Article 3, paragraph 2, though he wants to have the Convention applied to contracts for the setting up of plants (not in agreement Huber, 419).

      [7.2] A distinction between the terms "ships" and "vessels" is not easy to make. For this reason, Honnold (89) wants to exclude any ship from the scope of application as is doubtlessly done in the case of seagoing (Schlechtriem, 16), hovercraft and aircraft. It should, therefore, be recommended to the parties in cases of doubt to expressly agree when to apply the Convention.

[8] [sale of electricity]

The reason given here that electricity in many legislations is not considered to be a good (compare O.R., 16) is theoretically not convincing because the Convention may create its own definition of a good. It should be admitted, however, that in light of the strong centralization of electricity, trade contracts can be elaborated in [page 35] great detail. But this would not exclude application of the Convention's general provisions.

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Pace Law School Institute of International Commercial Law - Last updated August 5, 2002
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