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Published in J. Herbots editor / R. Blanpain general editor, International Encyclopaedia of Laws - Contracts, Suppl. 29 (December 2000) 1-192. Reproduced with permission of the publisher Kluwer Law International, The Hague.

[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).]

excerpt from

The 1980 United Nations Convention on Contracts
for the International Sale of Goods

Joseph Lookofsky

Article 6
Freedom of Contract: Convention as Supplementary Regime

A.  Contracting Out
B.  Contracting In

70. Article 6 of the CISG reaffirms the well-known principle of contractual freedom and the status of the Convention as a supplementary regime. Article 6 provides as follows:

'The parties may exclude the application of this Convention or, subject to article 12, derogate from or vary the effect of any of its provisions'. [page 46]

A. Contracting Out

71. The Convention was designed to eliminate or at least reduce the application of domestic sales law in international contexts, but like the domestic rule-sets which it displaces, the CISG is designed primarily to serve as a supplementary regime which fills contractual 'gaps'.[1] For this reason, Article 6 expressly gives parties to an international sales contract the right to 'contract out' of the CISG - in whole or in part - and thus prevent the automatic application of the Convention pursuant to Article 1(1).

So if, for example, a seller in France and a buyer in Russia agree that their sales contract shall be governed by the 'Swedish Sale of Goods Act of 1990' (Koplagen), then that Swedish (domestic) law will displace the CISG, i.e., even though both French and Russian courts otherwise (absent the clause) would have applied the Convention between the parties concerned, simply because they reside in different Contracting States.[2]

For those who would seek to contract out of the CISG, however, careful contract drafting is advised: a clause which simply states that, e.g. 'French law' applies will not be interpreted as displacing the CISG, because the CISG has become an integral part of French law.[3]

1. See generally supra Ch. 1.
2. Re. Article 1(1)(a) see supra No. 53. Logic might seem to dictate that the contract formation rules in CISG Part II should always be applied to determine whether a buyer and seller who reside in different Contracting States have actually concluded (formed) an agreement to contract out (see Bailey, J., 'Facing the Truth ...', 32 Cornell Int'l LJ. 273 (1999) at 303), especially since the CISG applies by virtue of Article 1(1)(a) without resort to choice-of-law/PIL rules: see supra No. 53 with note 2; this would seem to exclude CISG-circumvention by the application of PIL rules like the 1986 Rome Convention on the Law Applicable in Contractual Matters, Article 8, which would apply the law designated by the parties to determine whether a contract has been formed, but some commentators maintain nonetheless that the parties may agree that the question of CISG contract conclusion/formation is to be determined by domestic law: see, e.g., Schlechtriem, P., Commentary on the UN Convention on the International Sale of Goods (Oxford 1998) at 56. In any case, it is at least clear that displacement of the CISG regime presupposes that an express choice-of-law clause is upheld as valid pursuant to the applicable domestic validity rule: see supra No. 53.
3. Nearly all reported CISG decisions support this view. See, e.g., the decision of LG Düsseldorf (Germany), 11 October 1995 (No. 2 O 506/94, reported in UNILEX) applying the CISG on the basis of Art. l(l)(a), even though the seller's standard terms expressly provided for the application of 'German law'. Referring to Art. 6, the Court noted that the choice of the law of a Contracting State as the governing law of the contract could not in itself amount to an implied exclusion of CISG, because the CISG is part of the law of that State. See also OLG Koblenz (Germany), 17 September 1993 (No. 2 U 1230/91), RIW 1993, 934-938 [reported at <http://www.cisg.law.pace.edu/cisg/text/casecit.html>], where the parties' choice of 'French law', coupled with the 1(1)(b) rule, led to application of the CISG. Similarly, in a case involving a sale between a Dutch seller and an American buyer, the ICC Court of Arbitration interpreted a reference to 'the laws of Switzerland' as comprising a reference to the CISG: see ICC award No. 7565/1994, reported in UNILEX.
In situations like the foregoing, where the starting point is that the CISG applies by virtue of Article 1(1)(a)-(b), it is submitted that the issue of how statements like 'German law', 'French law' and 'the laws of Switzerland' should be interpreted should be resolved in accordance with CISG Article 8 (discussed infra No. 81 et seq.) - a provision which certainly tends to support the results reached in CISG practice.
The mere fact that the party who drafted a standard form intended, e.g.'German law' to mean German domestic law should not lead to the application of domestic, unless that is also [page 47] how the other party - or a reasonable person in the shoes of the other party - would interpret the clause. And if the rule in CISG Article 8(2) is supplemented by the (internationally accepted) contra proferentem method of interpretation (UNIDROIT Principles Art. 4.6), the effect of an unclear clause should not be to displace the CISG when that is the rule-set that would apply by default. Compare (re. the interpretation of such clauses under the ULIS) Schlechtriem, P., 'Uniform Sales Law - The Experience with Uniform Sales Laws in the Federal Republic of Germany,' Juridisk Tidsskrift vid Stockholms Universitet (1992) p. 7 [available at <http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem.html>]. Compare also re. contra proferentem and the interpetation of 'agreed documents' (drafted by representatives of both buyer and seller) Junge, W. in Schlechtriem, P., Commentary (1998) pp. 72-73.

72. As regards contracting out, where the parties do not elect to displace the CISG regime in its entirety, they will often contract out to a more limited extent, e.g. where the contract expressly incorporates the INCOTERMS.[l]

Another common example of partial contracting out is provided in situations where certain terms are set forth in a standard form agreement containing, e.g. a repair-or-replace clause, a disclaimer or limitation of liability,[2] an arbitration clause, etc. In such situations the parties' rights and obligations will be governed by a combination of (a) the express contractual provisions, (b) the applicable domestic rules of validity (which may serve to limit the effect of the express provisions)[3] and (c) the supplementary Convention rules.

1. See infra No. 152.
2. Regarding such liability arising from the operation of Articles 35, 45 and 74, see infra No. 161, 210 and 288 et seq. 3. Indeed, in the example just described, domestic mandatory rules (regarding the validity of the purported disclaimer) may limit the effectiveness of an express disclaimer: see supra No. 63.

B. Contracting In

73. In those situations where the CISG would not automatically apply,[1] there is, of course, no need for the parties to 'contract out' of the Convention regime; rather, the starting point would ordinarily be the application of the domestic sales and sales contract formation rules as determined by the choice of law rules of private international law. Then again, as a compromise between 'provincial' solutions, the parties to an international sale can elect to 'contract in' to the Convention - not only in cases where the parties do not reside in Contracting States, but also, e.g. with respect to the sale of a 'ship'.[2]

Note also in this connection that a court might well interpret a general reference to 'New York law' as evidencing an intent to 'contract in' to the Convention, i.e., in case where the Convention would not otherwise (in the absence of such a clause) apply.[3]

1. E.g. because the Article 1 'international' requirements were not met or, e.g. because the contract concerned was for the sale of a 'ship' under Article 2(e).
2. See supra No. 60 with accompanying note.
3. Accord Winship, op. cit. at 1-32; regarding the American Article 95 declaration see supra No. 55. Foreign courts have reached similar results applying the rule in CISG Art. 1(1)(b): see supra No. 71 and, e.g. the decision of OLG Düsseldorf (Germany), 8 January 1993 (No. 17 U 82/92), RIW 1993, 325 [reported at <http://www.cisg.law.pace.edu/cisg/text/casecit.html>], where the parties' express choice of 'German law' made the CISG applicable by virtue of Art. 1(1)(b), nothwitbstanding the fact that the Turkish seller did not reside in a CISG State.
[page 48]


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