Go to Database Directory || Go to Bibliography

Reproduced with the permission of Oceana Publications

Article 10 [Place of business]

For the purpose of this Convention [1]:

(a) if a party has more than one place of business [2], the place of business is that which has the closest relationship to the contract and its performance [4], having regard to the circumstances known to or contemplated by the parties [3] at any time before or at the conclusion of the contract;
(b) if a party does not have a place of business, reference is made to his habitual residence [5].

[WORDS AND PHRASES, CONCEPTS

[COMMENTARY]

[1] [the decisive place of business]

It is important to determine the decisive place of business in order to find out whether the sales contract in question comes under the sphere of application of the Convention at all (c. Article 1). But a number of other articles also refer directly or indirectly to the place of business (e.g. Art. 12; Art. 18, paragraph 2; Art. 20, paragraph 1; Art. 24; Art. 31, subpara. (c); Art. 42, paragraph 1, subpara. (b); Art. 57, paragraph 1, subpara. (a); Art. 69, paragraph 2).

[2] [the term place of business]

The term "place of business" is not defined in the CISG. For an establishment to be regarded as a place of business it is not necessary for that establishment to be a legal person. It can, for instance, be also a business of an individual. However, the mere incorporation in a specific State would already create a place of business. Insofar as no legal person was created, certain facts have to be given: the establishment must have existed for a certain time, it must have an address and probably also an office, and it must have a certain competence. Temporary travel groups, therefore, do not form a place of business. As to production facilities, the former will, however, [page 71] generally apply insofar as they enter into contracts which refer to the provision of the facility. Such production facilities can, however, not be regarded as place of business if employees working there conclude contracts for the mother company, e.g. agree modifications of a contract for whose performance the facility was built.

[3] [circumstances known to or contemplated by the parties]

The circumstances which are contemplated by the parties must at least be known so that the latter criterion would have been sufficient. The relevant circumstances must be known to both parties at the latest at the conclusion of the contract. If they are not, they will have no influence on the determination of the decisive place of business. "Ought to have known" is not sufficient in this case.

[4] [criteria which have to be taking into account; closest relationship]

In regard to the criteria which have to be taken into account and weighed against each other, the details given by the parties themselves on the contract partnership should gain decisive importance. Normally, they are incorporated in the contracts. Further clues could be deduced from the permanent working place of the employee authorized to conduct contractual negotiations, the terms of payment, a distinction possibly made in the contract between contract partnership and performance of the contract, or from the correspondence in general or on specific issues etc. Less meaningful in this regard is the place of manufacture or destination of the goods. We tend to interpret "the closest relationship" more in the legal than in the factual sense because we consider the commercial management of the transaction as being the decisive factor.

[5] [habitual residence]

The alternative envisaged here can only apply in the case of natural persons who rarely are parties to international sales contracts in the meaning of the CISG (in particular the exception in Article 2, subpara. (a)). The habitual residence of a natural person is where that person actually stays most of the time (at the time of the preparation and conclusion of the contract), if it can be concluded from the circumstances of that stay (e.g. renting of an apartment) that the stay is intended for a certain duration. This last criterion can, however, not be taken into consideration when there is another permanent residence (if considered in a larger time frame). [page 72]

Go to Table of Abbreviations || Go to Explanation of Abbreviated Bibliographic References
Go to entire contents of Enderlein & Maskow text