Cite as Jayme, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 27-33. Reproduced with permission of Dott. A Giuffrè Editore, S.p.A.
1. History of the provision
2. Meaning and purpose of the provision
3. Problems concerning the provision
(1) This Convention applies to contracts of sale of goods between 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.
(3) Neither the nationality of the parties nor the civil or commercial character of the parties of the contract is to be taken into consideration in determining the application of this Convention.
1. History of the provision.
1.1. - Any convention on international contracts, in order to distinguish international from merely national cases, has to determine the criterion of internationality (but see DE NOVA, Wann ist ein Vertrag «international»?, in Festschrift für Murrad Ferid zum 70. Geburtstag, München (Beck), 1978, 307-323). Article 1 serves this purpose by laying down general rules «for determining whether this Convention is applicable to a contract of sale of goods as well as to its formation» (Secretariat's Commentary, Official Records, I, 14-15; see HONNOLD, Uniform Law, 78; MASKOW, UN-Konvention, 548-549). [page 27]
1.2. - Article 1 contains, technically speaking, a unilateral conflict norm which determines the sphere of application of the Convention (VON CAEMMERER, Internationale Vereinheitlichung, 261; but see also BENTO SOARES-MOURA RAMOS, Do Contrato de compra e venda internacional, 90-91, note 18) and reduces «the necessity of resorting to rules of private international law» (Secretariat's Commentary, Official Records, I, 15). Thus, the exclusion of general conflict-of-law rules relating to international contracts can be derived from Article 1 without resort to an express provision such as Article 2 of ULIS.
1.3. - Article 1 is based on Article 1.2 of ULIS and Article 1 of ULFC as well as on Articles 2 and 3 of the 1974 Limitation Convention. The new provision is, however, simpler than the more complicated provisions of ULIS and ULFC. Article 1(1) of ULIS made a distinction between personal criteria for the application of the convention and other criteria which were connected with the transaction itself. (See LANDFERMANN, Neues Recht, 386; HUBER, UNCITRAL-Entwurf, 420; RÉCZEI, the area of operation, 517 et seq.). The Vienna Convention determines the sphere of its application by referring mainly to personal criteria such as parties whose places of business are in different States. It is no longer required that the goods will be carried from the territory of one State to another or that the acts constituting the offer and the acceptance have been effected in the territories of different States. On the other hand, the places of business must, except in cases under Article 1(1)(b), be within Contracting States, whereas Article 1 of ULIS contained a broader provision leaving it to the States to insert the word «Contracting» before the word «States» by way of reservation (see Article III of ULIS). The Vienna Convention is, in addition, also applicable, «when the rules of private international law lead to the application of the law of a Contracting State» (Article 1(1)(b)).
1.4. - Article 1 is in complete accordance with the UNCITRAL Draft Convention (Official Records, I, 15) and was not changed during the proceedings of the Vienna Conference, which added only the words «in determining the application of the Convention» to Article 1(3) in order «to avoid the possible implication that these factors would be irrelevant for all purposes [page 28] «(HONNOLD, Uniform Law, 84, note 6). There had been a proposal by the delegation of the Federal Republic of Germany to delete paragraph 1(b). This proposal was rejected by twenty-five votes to seven, with ten abstentions (A/Conf./97/C.1/SR.1/236-238). On the other hand, the Conference introduced Article 95 which read as follows:
Article 1(2) is a new provision which has no equivalent in ULIS, while Article 1(3) corresponds to Articles 1(3) and 7 of ULIS.
1.5. - The giving up of criteria referring to the transaction itself simplifies the determination of the scope of the Convention. Usually, when parties have their places of business in different States, the goods are carried from the territory of one State to the territory of another, and it makes no sense to retain such an additional limitation (see HUBER, UNCITRAL-Entwurf, 420-421). The Vienna Convention, therefore, has improved the practical application of ULIS (see HERRMANN, UN-Übereinkommen, 111). The new provision of Article 1(1)(b) might, however, raise difficult questions of interpretation.
2. Meaning and purpose of the provision.
2.1. - The basic criterion of Article 1 for the application of the Convention is «that the places of business of the parties are in different States» (Secretariat's Commentary, Official Records, I, 15). If a party has more than one place of business, the place of business is that of the closest relationship to the contract and its performance (see commentary on Article 10, infra, § 2.2.). This question was not solved by ULIS. The German Supreme Court has, anticipating the Vienna Convention, applied ULIS to a sale made between an American corporation and a German firm. The American vendor had entered into the contract through his place of business in the Netherlands (Supreme Court of the Federal Republic of Germany, 2 June 1982, Praxis des Internationalen [page 29] Privat- und Verfahrensrechts 3 (1983), 228, HERRMANN, Anwendbarkeit, 212-215). In cases where a party has no place of business, reference is to be made to his habitual residence (see Article 10(b)).
2.2. - Article 1 speaks of different States. A Contracting State may have several legal systems. Such State may declare that this Convention is to extend to all its territorial units or only to one or more of them (Article 93(1)). For the purpose of this Convention, a place of business is considered not to be in a Contracting State unless it is in a territorial unit to which the Convention extends (see Article 93(3)).
The Convention does not apply to cases where the parties have their places of business in different legal units of the same Contracting State. The Convention, therefore, does not cover, for instance, contracts between, parties in England and Scotland (with regard to this aspect of ULIS, see GRAVESON-COHN-GRAVESON, The Uniform Laws on International Sales Act 1967, London (Butterworths), 1968, 48).
2.3. - The «place of business» is not defined in the Convention (see CARBONE, L'ambito di applicazione, 519-520). Any construction of the Convention has to bear in mind the purpose of Article 1, to define the internationality of a contract as well as the changes made by the Vienna Convention with regard to ULIS. Thus the mere place of contracting does not constitute a place of business (see HONNOLD, Uniform Law, 80-81); neither does the locality where the negotiations have taken place. Reference is made to a permanent and stable business organization and not to the place where only preparations for the conclusion of the single contract have been made. On the other hand, it is not only the head place of business which matters but also subsidiary places of business such as a branch, agency or other establishment of a party (see also Article 5 no. 5 of the 1968 European Convention on Jurisdiction and the Enforcement of Foreign Judgments in Civil and Commercial Matters). It has been suggested that the mere presence of the place of business of an agent who has authority to conclude contracts, is not sufficient for purposes of the Vienna Convention (see CARBONE, L'ambito di applicazione, 519). This view is supported by the fact that the [page 30] 1983 Geneva Convention on Agency in the International Sale of Goods, which applies when the principal and the third party have places of business in different States, should, as a general rule, be applicable. to cases falling under the Vienna Convention (see Explanatory Report on the Convention on Agency in the International Sale of Goods, in Uniform Law Review, 1984, I, 91 et seq.; BONELL, The 1983 Convention on Agency, 727 et seq.). On the other hand, the Vienna Convention determines internationality by a more substantial and real connection. It is not the head establishment but the place from which the transaction is to be performed (see Article 10) which matters. The Explanatory Report on the 1983 Geneva Convention on Agency in the International Sale of Goods does not regard as an international sale falling under the Vienna Convention a situation «where a commission agent concludes a contract for the sale of goods in a State where both he and the third party have their places of business» (Uniform Law Review, 1984, I, 91). In cases where the agency or the branch is connected closely with the conclusion and the performance of the sale, it is its place of business which is relevant for the purpose of Article 1(1) of the Vienna Convention. There should, however, be a real connection of the party with that place. Merely fictitious registration is not sufficient (see also MERTENS-REHBINDER, Internationales Kaufrecht, 95).
2.4. - A restriction is made by Article 1(2). This provision addresses the undisclosed foreign principal situation (HONNOLD, Uniform Law, 78) and other situations where one party does not know of the international character of the transaction (LOWE, Wiener Welt-Kaufrecht, 133; see also Article 2(2) of the 1983 Convention on Agency). If a party is not aware of the internationality of the situation, this party is protected by Article 1(2), restricting the application of the Convention to cases in which both parties know of the foreign element of their transaction.
2.5. - The Convention applies also when one party or both parties have their places of business in a State which is not a Contracting State if the rules of private international law lead to the application of the law of a Contracting State (Article 1(1)(b)). [page 31]
Usually a contract is governed by the law chosen by the parties (see Article 3(1) of the 1980 Rome Convention on the Law Applicable to Contractual Obligations). If the parties choose the law of a Contracting State, the Convention applies automatically to the contact despite the fact that one party of both parties do not have their places of business within a Contacting State.
2.6 – Many international conventions, particularly those dealing with family matters and succession, concern mainly citizens of the Contracting States. In commercial matters nationality is of less importance. Article 1(3) makes it clear that nationality is not taken into consideration (Secretariat’s Commentary, Official Records, I, 15). The Convention applies also to nationals of non-Contracting States who have their places of business within a Contracting State. In addition, for purposes of determining the scope of the Convention, it does not matter whether a party is a merchant or not in a particular legal system which applies special rules to commercial contracts different from the general rules on sales. The Convention avoids conflicts which arise between dualistic systems (such as France. The Federal Republic of Germany, etc.) and monistic legal systems which do not distinguish between the civil and commercial character of the parties (e.g., Italy; for conflicts law see HAGENGUTH, Die Anknüpfung der Kaufmannseigenschaft im internationalen Privatrecht, Munich (Thesis), 1981).
3. Problems concerning the provision.
3.1. – While Article 1 of this Convention avoids some of the uncertainties caused by Article 1 of ULIS, it may lead to problems of interpretation when the parties do not have their places of business within Contracting States. In such cases, the applicability of the Convention depends on the rules of private international law of the respective forum. Difficulties may arise where parties have not made an express choice of the applicable law to the contract. The rules for finding the proper law by an objective test differ widely even if, within the European Community, there is a good chance that the law of the person who effects the characteristic performance, will be agreed on within the [page 32] near future (see Article 4 of the 1980 Rome Convention). The problems which have arisen with regard to the implied exclusion of ULIS should not be relevant for Article 1(1)(b). For this provision it is sufficient that the rules of private international law lead to the law of a Contracting State regardless of whether the parties have contemplated the applicability of the Convention.
3.2. - Uniform law may not be applicable only by means of private international law. It has been suggested that uniform law supplies a subsidiary solution for cases in which the applicable foreign law cannot be ascertained (see KREUZER, Einheitsrecht als Ersatzrecht. Zur Frage der Nichtermittelbarkeit fremden Rechts, in Neue Juristische Wochenschrift, 36 (1983), 1943-1948). The term «private international law» should be construed in a broad way. If a legal system contains procedural rules calling for the application of uniform law in cases where the applicable foreign law is not ascertainable, such rules fall within the scope of Article 1(1)(b). [page 33]