[For more current case annotated texts by this author, see Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed. (2003) and Lookofsky, Understanding the CISG in the USA, 2d ed. (2004).]
A. Conformity of the Goods
161. A substantial portion of all sales litigation relates to claims by buyers that the goods are in some sense 'defective', i.e., in that they do not conform to that which has been agreed. As regards international sales subject to the CISG, Article 35 lays down the supplementary rules.
B. Distinction Between Contractual and Delictual Claims
162. Before proceeding to examine the important rules laid down in Article 35, it should again be emphasized that the Convention governs only contractual rights. Depending on the circumstances in the particular case, the forum court may find that certain domestic law rules providing remedies for the breach of non-contractual duties can supplement - and complicate - the international regime.
For example, even in a case where a seller cannot be said to have assumed (or breached) any contractual (promissory) commitment in the Article 35 sense, the applicable domestic law of tort (delict) might still provide the buyer with damages for losses suffered by reason of reliance on negligent misrepresentation, just as the buyer's claim for rescission arising by reason of a fraudulent misrepresentation regarding the quality of the goods could serve to supplement the CISG avoidance [page 88] rules. Similarly, courts might allow a 'product liability' claim grounded in domestic rules of tort (negligence) to 'compete' with a CISG claim for damages grounded in the seller's no-fault liability for damage to buyer's property when the seller has delivered non-conforming goods.
C. Conformity With Express Contractual Requirements (Description, Guarantee, etc.)
163. The Convention, to repeat, is concerned with contractual claims. According to Article 35(1):
Paragraph (1) of Article 35 is a specific - though perhaps somewhat redundant - 'restatement' of the familiar principle whereby the obligations of the parties to a CISG contract are, in the first instance, defined by their own agreement.
In one simple yet illustrative CISG case, a Turkish company had promised to deliver 1,000 tons of fresh cucumbers to a buyer doing business in Germany, but the seller allegedly delivered less than that amount. Since the CISG applied, the seller was obligated to deliver goods of the quantity required by the contract, and so delivery of less than 1,000 tons constituted a contractual breach.
Another illustration of the Article 35(1) principle involved a German seller's obligation to sell steel bars in lots to a Syrian buyer. The contract expressly permitted a weight variation of 5 per cent, but some of the bars delivered fell outside this range, so the seller was held to have breached its obligation to deliver steel bars which, as of the passing of risk, conformed to the quality and description required [page 89] by the contract.
Since Article 35(1) requires that the seller (always) deliver goods of the quality and description 'required by the contract', the seller must, inter alia, deliver goods which conform with an express (contractual) guarantee - e.g. if the seller 'guarantees' that the goods sold (a machine) will run for a 'minimum of 10,000 working hours'. Indeed, for purposes of Article 35(1), there may be little difference between such a performance 'guarantee' and the seller's mere 'description' of the performance-characteristics of the goods.
On the other hand, an agreement as to quality within the purview of Article 35(1) need not take the form of express words. If, prior to the conclusion of a contract for the sale of marble, the buyer provides the seller with a 'model' marble slab, thus indicating the buyer's expectations, and the seller does not indicate his unwillingness or inability to deliver goods of that kind, then the characteristics of the slab will impliedly become part and parcel of parties' contract under Article 35(1), i.e., their (implied) agreement with respect to the quality of the goods.
D. Supplementary Convention Obligations
1. Introduction: Implied Obligations, Express Disclaimers, etc.
164. Paragraph (2) of Article 35 sets forth a series of four implied obligations as to the quality of the goods which the Convention, as a starting point, imposes on every CISG seller. As under most modern domestic rule-sets, so too under the CISG: caveat emptor ('let the buyer beware') is no longer the supplementary rule, because today's international buyer is entitled to expect the goods to possess certain basic qualities, even if the contract does not expressly so state.[l] Indeed, it would seem that caveat venditor has become the supplementary CISG rule.
Before proceeding to discuss the significant impact of the individual implied obligations set forth in Article 35(2), however, it should be noted that these duties are not to be implied in cases where the parties have (validly) 'agreed otherwise'. [page 90] That is to say, an express ('caveat emptor') provision in the contract - e.g. whereby the seller 'undertakes no obligations whatsoever in respect of the goods fitness for ordinary and/or particular purposes' - will serve to displace (negate) the obligations otherwise implied by subparagraphs (a) and (b) of Article 35(2), provided that the express provision (disclaimer etc.) is valid under the applicable domestic rules of law.
2. Fitness for Ordinary Purposes
165. Subparagraphs (a) and (b) of Article 35(2) contain the implied obligations which are of greatest practical importance:
As regards the first test of non-conformity - set forth in subparagraph (a) - it may be noted that goods often are ordered by denotation of their general description, i.e., without any indication to the seller as to the buyer's particular purpose (intended special use). In such cases, subparagraph (1)(a) will be especially relevant, since (absent agreement to the contrary), the seller always (automatically) undertakes an implied obligation that the goods sold will - at the minimum - be fit for the purposes for which goods of the same description would ordinarily be used. For this reason, the highest French court has held that ceramic 'ovenware' which was not resistant to high oven temperatures was not fit for ordinary (baking) purposes.
Within the context of international trade, resale must be considered an 'ordinary' use, so a CISG buyer who purchases for resale is entitled to expect goods which are resaleable in the ordinary course of business. What is resaleable will then depend upon the reasonable expectations of the ultimate purchasers. If, for example, a furniture merchant purchases sofas for resale to consumers, the goods are not fit for ordinary purposes if the cushions slide forward when the consumers sit down.
When it comes to (perishable) food products, consumption by (ordinary) consumers must of course be considered an ordinary purpose (use). Ordinary does not mean 'perfect', however, and the German Supreme Court (BGH) has held that New [page 91] Zealand mussels sold by a Swiss seller to a German buyer were fit for 'ordinary' purposes, notwithstanding the fact that the mussels delivered contained cadmium at a level higher than that recommended by the German Federal Department of Health; indeed, the quality requirements imposed by public law in the buyer's country are not even relevant in the context of Article 35(2) unless the seller had good 'reason to know' of their existence. In another German case, for example, the delivery of goods (paprika) not complying with the minimum standards of German public law constituted a breach of the seller's implied obligations under Article 35(1).
The kind of goods which are sometimes described as 'durable' goods (washing machines, industrial machinery, automobiles, etc.) are not fit for their 'ordinary' purposes unless they remain durable (usable) for an 'ordinary' period of time. A (new) refrigerator with a life-span of only a few weeks or months of use would clearly not be fit for the ordinary purposes to which refrigerators are usually put (long-term use). The precise period is, of course, a difficult determination which will vary depending on the nature of the particular goods, and the CISG could not be expected to provide guidance on this point.
3. Fitness for Particular Purposes
166. Prior to the conclusion of the contract, the seller may have been made aware of the particular purpose to which the goods will be put. If so, the seller assumes an implied obligation under Article 35(2)(b) that the goods are fit for such purpose, in that the buyer may reasonably rely on the seller's skill and judgment in this respect.
In one relevant example, a French seller and a Portuguese buyer had concluded a contract for the sale and dismantlement of a second-hand aircraft hangar. The French court held that the seller had breached the contract by delivering certain elements which were not fit for the particular purpose which the buyer had made known to the seller (reassembling of the hangar the same way as it was originally assembled). In this case, once the buyer's particular purpose was made known to the seller, the buyer was entitled to expect goods fit for that purpose.
In other cases, however, where the buyer either does not make his particular purpose known, or does not rely on the seller's skill and judgment, or if it is unreasonable for the buyer to so rely, no "obligation as to fitness for the buyer's particular purpose will be implied.
167. In many cases, the implied obligations set forth in subparagraphs (l)(a) and (l)(b) will overlap: a given buyer's particular purpose may well correspond to the purpose such goods are generally put. If so, any failure to comply with the 'reasonable reliance' test in subparagraph (l)(b) will be inconsequential as regards the establishment of a contractual breach in relation to subparagraph (l)(a).
4. Conditions and Warranties Under Domestic Law Distinguished
168. The implied Convention obligations set forth in subparagraphs (l)(a) and (l)(b) clearly resemble the obligation to supply what Common lawyers call (a) 'merchantable' goods and (b) goods 'fit for the purpose.' But, in contrast with the corresponding English and American rules, the CISG subsumes the delivery of unfit-for-purpose goods under the heading of goods which do 'not conform' with the contract. And since the CISG seller cannot be said to have breached a 'condition' or 'warranty' (in the Common law sense), no remedial consequences can be deduced solely on the basis of the quality implications of Article 35.
5. Sample or Model; Packaging
169. Article 35, subparagraph (l)(c) imposes a further obligation upon the seller regarding conformity to the 'qualities of goods which the seller has held out to the buyer as a sample or model'. By virtue of this - somewhat redundant - CISG provision, if a seller of computer software provides his buyer with a sample of same, the seller is (impliedly) obligated to deliver goods which conform to the sample.[l]
Subparagraph (l)(d) of Article 35 requires that the goods be 'contained or packaged in the manner usual for such goods or, where there is no such manner, in a manner adequate to preserve and protect the goods.' For example, as regards the first of these criteria, a CISG seller who is - or should be - aware of the buyer's intention to purchase goods (foodstuffs) which can be resold in France, in conformity with French law, must deliver goods which are wrapped in the manner required by French law.
As previously noted, neither of these Article 35(2) duties is to be implied in cases where the parties to the CISG contract have (validly) 'agreed otherwise'.
E. Seller's Knowledge of Defect Irrelevant
170. The seller's implied obligations are not generally dependent upon the seller's 'state of mind.' In other words, the seller is obligated to deliver goods which meet the requirements set forth in Article 35(2)(a)-(d) whether or not the seller 'knew or could have been aware' of a given non-conformity at the time of contracting.
Indeed, the seller's state of mind is also essentially irrelevant when it comes to the Convention's supplementary remedial rules: the CISG seller is liable in damages on a no fault basis, inter alia, for breach of the implied obligation to deliver conforming goods.
F. Caveat Emptor and Pre-Contractual Inspection of Goods
171. As already indicated, the CISG seller is automatically (by default) deemed to accept the Convention catalogue of implied obligations with respect to fitness for purpose, etc., set forth in Article 35(2) - at least in the absence of an express contractual provision to the contrary (a warranty-limitation, disclaimer of liability, or the like).
Then again, Article 35(3) of the Convention represents a limited remnant of the classical caveat emptor rule. According to this provision, the seller is not liable under subparagraphs (2)(a)-(d) for any lack of conformity of the goods if at the time of the conclusion of the contract the buyer knew or could not have been unaware of such lack of conformity.
So, although the CISG does not impose any pre-contractual duty to inspect, a buyer who in fact undertakes such an inspection and thus becomes aware, e.g. that the goods offered for sale are not fit for a particular intended purpose is assumed to purchase such goods as he finds them; the same is true of a buyer who' could not have been unaware' of such lack of conformity. In such clear-cut situations, where the buyer actually 'sees' the defective condition of the goods offered for sale, it seems fair to maintain a caveat emptor-type rule ('what you see is what you get'), i.e., the otherwise implied obligations in subparagraphs (2)(a)-(2)(d) notwithstanding.
G. Disclaimer and Limitation of Liability
172. A subject of great practical significance is the seller's ability to disclaim or limit the extent of liability for breach. [page 95]
As already emphasized, the implied obligations set forth in Article 35(2) apply by default, i.e., 'except where the parties have agreed otherwise'. This provision is in accord with the general Article 6 freedom-of-contract rule, in that the parties may 'derogate from or vary the effect of any [Convention] provisions.' On the one hand, such a derogation may take the form of a 'guarantee' from the seller (e.g. as to quality) which may serve to improve the remedial position buyer which the buyer would ordinarily enjoy pursuant to the CISG gap-filling regime.[l]
Of equal, if not greater practical importance are clauses whereby the seller seeks to reduce the commitments which ordinarily follow from the Convention scheme. For example, an express contract term in the seller's standard form whereby seller 'accepts no responsibility whatsoever that the goods are fit for any particular purpose, whether or not such purpose has been made known to him ...' will ordinarily serve to displace the obligation set forth in Article 35(2)(b). But this will only hold true if the clause in question is held incorporated into the overall contract, if it is interpreted in accordance with the draftsman's intent, and if domestic rules of validity do not get in the way. These conditions are the subject of the discussion which follows.
2. Incorporation of Disclaimer
173. As already indicated, a given disclaimer or limitation of liability will not always achieve the (draftsman's) intended effect. For one thing, a given clause will only be effective if the clause can be described as incorporated into the contract, i.e., as a part of the overall contract of sale. One practically important subset of the incorporation problem relates to the fact that disclaimer clauses are likely to be hidden amidst the 'boilerplate' language in a seller's standard form, and courts will not always read surprising and/or unreasonably burdensome fine-print clauses as 'part of the deal.' Moreover, according to the 'battle of forms' rule in CISG Part II, a 'reply to an offer which purports to be an acceptance but contains [material] additions, limitations or other modifications [e.g., a limitation of liability] is a rejection' of the offer and constitutes a counter-offer;' and if the parties 'consummate' a CISG sale in this 'unmarried state', the Convention provides no clear solution to the remedial problem.[l]
3. Interpretation of Disclaimer
174. Even an incorporated clause will only achieve its intended effect if it is interpreted as 'covering' the situation concerned. In this connection, the Convention's 'reasonable-man' standard (in Article 8) will surely be applied along lines which accord with those previously established under domestic law. For this reason, disclaimers of liability will continue to be construed narrowly (contra preferentem) by national courts, i.e. 'against' the draftsman unless the draftsman can prove, e.g. that it was the intent of both parties that the seller should not be liable even if (grossly) negligent in the performance of his contractual duties, express or implied.
4. Validity of Disclaimer
175. Even where a given clause passes the incorporation and interpretation hurdles just described, the validity issue remains. As previously noted, the validity of the contract, hereunder the validity of a limitation or disclaimer of the implied obligations set forth in Article 35(2), is an issue which lies outside the CISG; and since the Convention is simply 'not concerned with' the validity of the contract or of any of its provisions, the validity of a disclaimer must be settled in accordance with the applicable domestic law.
5. Examples of the Application of Domestic Validity Rules
176. For example, under Swedish (and other Scandinavian) domestic law, a purported liability disclaimer will only be effective - even as between CISG merchants - if it passes a 'reasonableness' - test; when the 'reasonableness' of a disclaimer in a CISG contract is tested under American domestic law, the relevant question is whether the disclaimer is unconscionable (UCC §2-302). German courts have tested the validity of CISG liability disclaimers along similar lines. And whereas, e.g. the UK Unfair Contract Terms Act would not authorize similar overt censorship in an international case, an English or other national court might well reach the same kind of result by employing more covert judicial means, in that courts are able to 'interpret' their way 'around' an unfair - albeit incorporated and technically valid - disclaimer clause.
6. Validity v. Substance
177. In future, courts may have to struggle with the fact that the line between (domestic) validity and (CISG) substance is not always clear.
To take one clear example, under both German and Austrian law an unusual clause does not become 'part of the contract' if the other party did not have reason to expect it under the 'circumstances', especially as regards the 'appearance' of the contract. This provision functions as a validity rule and should (when otherwise applicable) supplement - and not be displaced by - the CISG substantive regime.
On the other hand, under §2-316(2) of the American Uniform Commercial Code, a warranty disclaimer is without effect unless it is conspicuous and mentions the word 'merchantability'. And while it might well be argued that this too is a validity rule (in some respects similar to the German and Austrian ones just noted), the 'merchantability' requirement is so closely tied to American substantive law (DCC §2-313) that it renders the rule highly inappropriate - and arguably also ineffective - in the CISG context.
7. Convention as Validity 'Yardstick'
178. The CISG is (generally) 'not concerned with' validity. Then again, the Convention serves not just as a gap-filler but also as a yardstick:  it 'aims at justice between the parties...' Its remedial system, considered to be a fair (substantive) solution in the average case, is also relevant as regards the proper application of validity rules which strive to maintain a reasonable balance between contractual obligations and remedial relief. [page 98]
Of course, the CISG does not represent the only fair regime, but a given alternative set forth in the parties' contract should, at the minimum, provide each party with the potential for minimum adequate remedial relief. And if the contract in question provides, not for minimum adequate remedies, but, e.g. for damages that are 'unconscionably low,' the reasonableness-tests of domestic law, acting in tandem with the CISG's general principle of good-faith, should serve to (re)activate the supplementary CISG remedial rule. [page 99]