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Reproduced with permission of 12 International Trade & Business Law Review (2009) 82-126

The Limits to the Conformity of Goods in the United Nations
Convention on Contracts for the International Sale of Goods (CISG)

Kristian Maley

ABSTRACT

In contracts governed by the United Nations Convention on Contracts for the International Sale of Goods, the duties of the seller are principally governed by the notion of 'conformity'. This duty is expansive, imposing an absolute liability for defects that exist when risk passes to the seller, regardless of the fault. This article examines what facts in a case are considered part of the 'goods' for the purposes of the conformance duty. In particular, it considers whether it is appropriate in the context of the Convention to define this term according to a dichotomy between the physical and non-physical things that could form the object of a contract of sale. It is inappropriate to adopt such a general rule.

The notion of 'brand equity' is accepted in the commercial world as an attribute of goods. Concepts of brand are typically dealt with using intellectual property concepts such as trademarks, and other legal notions such as 'goodwill'. However, treatment of this concept in these contexts is not exhaustive. This article concludes that there is, in principle, no barrier to the brand or reputation of the goods being a characteristic for the purposes of conformance. Whether such an element is indeed a characteristic will depend on the intent of the parties, the relevant trade, and whether the element is within the seller's 'sphere of control'.

INTRODUCTION

Simple international commodity sale contracts often concern goods of a utilitarian nature, with a clearly defined purpose. A buyer may be content to receive a consignment of oil regardless of the country of origin, the identity of the producer or refiner, or the method used to produce it. In more complex cases, however, a buyer may expect that the goods also possess certain attributes that are not physically embodied in goods. A different buyer may wish to ship the oil into a port where trade embargoes against certain countries are in place. In the case of manufactured goods purchased for resale, the utility of the goods to a buyer [page 82] may be influenced by a broad range of factors. The buyer may choose particular goods based on their brand or reputation. The environmental and social practices involved in their manufacture may also be significant. Moreover, consumer tastes and preferences for the type of good may rise and fall.

In order to make sense of the web of facts in which these complex transactions occur, it is necessary to address some fundamental (and somewhat metaphysical) questions about the nature of the 'goods'. This article will examine the extent of the seller's duties with respect to the goods under a contract of sale governed by the 1980 United Nations Convention on Contract for the International Sale of Goods (CISG). In particular, it will attempt to plot the boundaries of this seemingly expansive duty and identify the point at which the goods end and the factual circumstances begin.

In contracts governed by the CISG, the principal duties of the seller are to deliver 'the right goods, to the right place, at the right time and at the agreed price.'[1] This article is concerned with the first of these duties, the 'heart of the seller's contract obligation'.[2] This duty is defined primarily in Article 35 CISG according to the principle of 'conformity'. Article 35(1) provides that 'the seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract' .

The notion of conformity supports the general principle of party autonomy expressed in Article 6,[3] because conformity is essentially a description of the extent to which the goods concord with the parties' actual intent and presumed intent. The presumed intent of the parties is given force through Article 35(2): 'Except where the parties have agreed otherwise, the goods do not conform with the contract' unless they meet the three specified criteria. The parties' intent remains paramount, as they are expressly free to displace the rules. Moreover, the criteria are phrased as presumed requirements of the contract and are tools for comparing the goods with what the parties intended.

The interpretative criteria under Articles 35(2)(a) and (b) are whether the goods are fit for certain purposes. The standard under Article 35(2)(a) is fitness for the goods' ordinary purpose, specifically, fitness for 'the purposes for which goods of the same description would ordinarily be used'. A generally applicable example of an ordinary purpose is resale.[4] The criterion under Article 35(2)(b) is fitness for [page 83] the goods' particular purpose, specifically, any particular purpose expressly or impliedly made known to the seller'.[5] The concept of fitness for purpose looks to the interplay between the goods themselves and their surroundings, such as public law regulations, technical standards, cultural traditions and religious convictions.[6]

In order to promote good faith in international trade, commercial efficiency and party autonomy, courts and tribunals must address the issue of the limits of conformance with an open mind. This article will argue that the limits of conformance should not be guided by the distinction between physical and non-physical characteristics of the goods. Having rejected this dichotomy, other conceptual tools for marking this boundary will be explored. In the final analysis, the limits of the conformance doctrine are dynamic and amorphous, and must be decided on the facts of each case, with regard to the intent of the parties and the general economic division of duties found in the Convention.

The notion of 'goods'

The notion of conformance serves to quantify Article 30, which requires that '[t]he seller must deliver the goods ... as required by the contract and this Convention'. Therefore, to identify the ambit of conformance, it is relevant to identify the 'goods' that are the object of the Convention. The term 'goods' is not defined in the CISG. However, its meaning can be understood by reference to the Convention's Sphere of Application provisions.[7] In particular, Article 1(1) provides that the 'Convention applies to contracts of sale of goods', whereas Articles 2 and 3 restrict the ambit of the Convention, and by implication, the ambit of 'goods'.

Goods as tangible property

Article 2 excludes several types of intangible property: 'stocks, shares, investment securities, negotiable instruments or money'[8] and 'electricity'.[9] By extension, other intangible things such as intellectual property [10] and 'know how' [11] are not 'goods' for the purposes of the Convention. The Oberlandesgericht Köln has held that a contract to produce a market analysis report was not a sale of goods contract.[12] The Court reasoned that the object of that contract was to transfer the [page 84] right to use the ideas recorded in the report, as distinct from a sales of goods contract, the object of which is the transfer of property in 'corporeal movable goods'.[13] This demonstrates a general principle underlying the CISG that 'goods' are tangibles.[14] Indeed, the ambit of many sales of goods regimes is delineated according to tangibility.[15]

This conclusion does not, however, mean that the concept of 'goods' relates only to the property in a tangible, physical thing.[16] Indeed, intangible property rights are not excluded from the CISG per se.[17] Rather, intangibles and intellectual activity are considered to be 'incorporated' as subsidiary aspects of the physical goods.[18] In effect, the intangible property rights become a non-physical characteristic of the goods. The treatment of subsidiary intangible aspects of goods is demonstrated by Article 42(1) CISG: the seller is obliged to provide goods 'which are free from any right or claim of a third party based on industrial property or other intellectual property'. Furthermore, Article 41 requires that '[t]he seller must deliver goods which are free from any right or claim of a third party.

The question of whether software is a 'good' within the meaning of the Convention is particularly illustrative. There is a general consensus that software shipped on physical media (such as a disk) is a good because it is tangible.[19] This is because the intellectual property licensed to the user is incorporated into the physical good. In contrast, it appears that software is not a good if it is not delivered via a non-physical medium, such as over the internet.[20] [page 85]

Furthermore, Lookofsky argues that as 'a computer program is a real and very functional thing', the CISG is 'well suited' to contracts for the sale of software, and the Convention should be applied by analogy.[21] The differentiation of software according to its medium underscores that the distinction between the physical and non-physical can be counterproductive. Lookofsky's position seems inevitable, given the growing acceptance of 'virtual property': representations of physical objects in online virtual words, which are considered real, or personal property rather than intellectual property,[22] The conclusion that may be drawn from the above is that the notion of 'goods' does not include things that are entirely intangible property but does include things comprising dominant physical aspects and subsidiary non-physical characteristics.

Contracts consisting partially of services

The Convention applies to mixed contracts, under which the seller provides goods and services. These are treated as unitary contracts rather than separate sales and services contracts,[23] and the Convention will apply to both parts '[w]hen there are significant relationships between the two aspects'.[24]

The issue of whether software is a good is once again illustrative. Software is not a good if it is 'custom software', as distinct from 'standard software'.[25] Custom software is software developed specifically for a particular user, or modified to fit that user's needs.[26] The treatment of custom software as a service [27] is consistent with Article 3(2) CISG. This provision further restricts the meaning of 'goods', excluding contracts 'in which the preponderant part of the obligations of the party who furnishes the goods consists in the supply of labour or other services'. [page 86]

The meaning of 'preponderant part' is quantitative rather than qualitative [28] and is something more than half.[29] In one ICC arbitral case,[30] a contract for the sale and assembly of materials for the construction of a hotel was held to be a contract of sale covered by the Convention. The tribunal's decision turned on the relative price of the goods and portion of the contracts as against the service portion, as the latter was of a 'completely secondary order of magnitude'.[31]

Of particular relevance here, the parties may contractually address marketing and other non-physical factors affecting their transaction, for example, through marketing, distribution or franchise contracts, or through intellectual property licensing arrangements. Applying Article 3(2), the applicability of the CISG is determined according to 'what rights and duties besides the purchase of goods the [seller] has undertaken'.[32] A principle has emerged from several German cases that framework, or distribution agreements, are to be treated as separate from sales contracts associated with them.[33] In one case,[34] the Bundesgerichtshof said that as the distinction 'can be fluid', any intention expressed by the parties should be given effect to avoid doubts. On the facts, the parties did not intend for the arrangements to constitute a single transaction. The Obergericht des Kantons Luzern has adopted a similar approach,[35] looking to whether the parties contemplated the concept of distribution 'prevailing' over the 'typical legal elements of sales'.[36] In contrast, in Medical Marketing International v Internazionale Medico Scientifica,[37] the parties accepted as uncontroversial the distribution agreement as a sales contract to which the CISG applied.

In sum, the effect of Article 3(2) is that both the physical and non-physical subjects of a sales contract will amount to a 'good' if the preponderant part of the [page 87] seller's obligation relates to the physical aspects. Thus, the concept of the 'goods' in the CISG includes the physical characteristics of the goods and as subsidiary, the non-physical aspects that are connected to the goods.

The dichotomy between intrinsic and extrinsic characteristics

The distinction between tangible and intangible things is a significant determinant of whether something is a 'good' for the purposes of the CISG. This reflects a broader dichotomy found in law and business practice. The polar opposites constituting this dichotomy are described in various terms, for example, intrinsic/extrinsic; embodied/unembodied; tangible/intangible; corporeal/incorporeal; objective/subjective;[38] real/intellectual and physical/non-physical. For the sake of consistency, the final pair will generally be used in this article. Each of these dichotomies has intellectual parallels. The nucleus of an international sale is the provision of a good with certain defined physical characteristics. Surrounding this nucleus, the parties may have contemplated that the sale would involve certain states of affairs that are in some respect connected to the goods but are not physically part of the goods. In some cases, these states of affairs may be so inextricably linked to the goods as to be 'non-physical characteristics' of the goods.

'Brand' and related concepts as characteristics of the goods

A key example of non-physical characteristics that the parties may view as part of the goods emerges from the field of marketing. In that field, '[t]he idea of tangible and intangible attributes [of goods] is well established'.[39] Tangible characteristics are those that 'are physically present or can be seen, experienced, or measured in some way'.[40] Intangible characteristics, such as reputation, quality image, and country of origin,[41] are 'understood using cognitive processes and also often contain an emotional dimension'.[42] Importantly, 'both tangible and intangible variables serve as means towards perceptions of economic value'.[43] Hence, these non-physical attributes are conceived of as part of the goods. [page 88]

This is exemplified by the brand of the goods, which is conceived as a non-physical attribute of the goods. A 'brand' is a commercial concept that describes 'the impression of a product in the minds of potential users or consumers'.[44] In the context of international trade, the rapid globilisation of mass media has had the effect that many goods sold under international sales contracts will ultimately be resold in national markets on the strength of their brand and reputation. Consumers in places across the world 'wear, drive and drink the same brands'.[45] Importantly, it is used in the sense that it is an attribute of the goods, rather than something external to them.[46] The term's meaning is related to the legal concept of a 'mark', however, distinguishable in that it does not prejudge the legal effect.[47] Related to this is the notion of 'brand equity'. The brand equity in a good is measured by the difference between the inherent value of the good and the perceived value (or market value) of the good.[48]

Brand management evolved in consumer goods marketing; however, it is increasingly important in the marketing of industrial goods, that is, goods used in services or manufacturing and are not marketed to the general consuming public.[49] Bendixen et al.[50] estimate that in a typical contract for the sale of industrial goods, the product brand accounts for 16 per cent of the purchase decision. The brand of the goods also has a very real effect on their market value: positive brand associations allow an average price premium of 7.4 per cent, whereas negative associations incur a 6.5 percent discount.[51] For this reason, a manufacturer that produces goods under a brand may invest in 'signalling activities' to produce brand equity, such as advertising, promotion, and public relations activities.[52]

Merchants may specifically address international branding issues in their contractual arrangements; however, inevitably the parties will neglect to do so in some cases. In particular, this may occur in relation to industrial goods, where the parties may have less expertise in brand marketing and may operate in more specialised markets. Therefore, it is relevant examine the default position under the CISG. [page 89]

Legal protection of branding

Intellectual property rights of the producer

The law recognises that reputation and customer awareness are worthy of protection by allowing the enforcement of intellectual property rights. Although it is not a legal concept, brand equity has been referred to as being '[a]t the core of a trademark's value and a manifestation of the legal concept of trademark good will.'[53] For example, the Paris Convention for the Protection of Industrial Property [54] requires signatory states to prohibit the use of trademarks that constitute 'a reproduction, an imitation, or a translation' of a registered mark.[55] Relevantly in the context of international trade, signatory states are also required to seize goods that unlawfully bear a trademark,[56] or which falsely indicate the identity of the producer.[57]

The seller's express duties in respect of intellectual property

The branding and reputation of the goods are connected to intellectual property in the goods. The seller's duties in respect of conformance and intellectual property rights are interrelated rather than mutually exclusive. Certain characteristics of the goods may indeed be relevant to both duties. As will be demonstrated, the CISG's provisions relating to intellectual property are apt to deal only with the existence of certain non-physical characteristics of the goods. The content of those characteristics must be dealt with under the principle of conformity.

The seller has express obligations in relation to trademarks and other intellectual property rights under Article 42(1)(a) CISG:

'The seller must deliver goods which are free from any right or claim of a third party based on industrial property or other intellectual property, of which at the time of the conclusion of the contract the seller knew or could not have been unaware, provided that the right or claim is based on industrial or other intellectual property: under the law of the State where the goods will be resold or otherwise used, if it was contemplated by the parties at the time of the conclusion of the contract that the goods would be resold or otherwise used in that State [...].'

The ambit of 'industrial property or other intellectual property' broadly includes all rights that owe their existence to an activity of human mind in the fields [page 90] of industry, science, literature and art, in accordance with the definition of 'intellectual property'.[58] The seller's duty in respect of intellectual property does not appear to extend to names and personality rights. This is because the Convention distinguishes between intellectual property rights on one hand (Art. 42) and general legal defects on the other (Art. 41).[59]

The nature of Article 42 is prohibitory rather than mandatory: the seller's obligation is to goods that are free of third party rights, as distinct from an obligation to provide goods in which the buyer has rights. In this respect, it may be distinguished from duty to provide conforming goods in Article 35, which is mandatory in nature. However, the aim of Article 42 is to guarantee the buyer unconditional use of the goods.[60] Indeed, Schlechtriem notes that the duty under Article 42 is 'regarded as a special category of breach of contract, closer to a lack of conformity than to a defect in title.'[61] There are certain parallels between Articles 35 and 42. For example, under both provisions, the seller will have no obligation 'if at the time of conclusion of contract the buyer knew or could not have been unaware' of the third party claim [62] or lack of conformity [63] (as the case may be).

The corollary of the seller's negative duty described above is that the seller has some kind of 'quasi-rights' to intellectual property in the good. The content of these quasi-rights extends to whatever is necessary for the goods to be used in the manner contemplated by the contract [64] (including the ordinary and particular purpose of the goods). This resembles provisions of the WIPO Treaty referring to the 'legitimate interests' of third parties.[65] According to the WTO Dispute Settlement Body, the term 'legitimate interest' is understood according to both [page 91] 'legal positivist' and "nonnative' perspectives, the latter referring to 'interests that are justifiable in light of objectives that underlie the protection of exclusive rights'.[66]

Furthermore, Article 42 CISG has parallels with Article 35(2)(c), under which the seller is required to provide goods that 'possess the qualities of goods which the seller has held out to the buyer as a sample or model'. By inspecting samples or models of the goods, a buyer is considered to have made his or her own decision in relation to those characteristics that the sample is intended to represent. Therefore, the seller is generally not liable if those characteristics render the goods unsuitable.[67] Similarly, under Article 42, if it would be clear to a buyer on inspection that certain characteristics of the goods would attract third party intellectual property claims, the seller will not be liable in respect of those characteristics. For example, in one case of the Cour de Cassation, a buyer had inspected samples of shoes with counterfeit laces.[68] It was held that a professional merchant such as the buyer could not ignore the fact that the shoelaces were counterfeit and violated a third party's trademark; therefore, the seller was not liable under Article 42(2)(a).

In some respects, the seller's duty in relation to intellectual and industrial property is more limited than the conformance duty. Article 42(1) is expressed to apply only to third party claims 'of which at the time of the conclusion of the contract the seller knew or could not have been unaware'. For example, in one case, a buyer incurred a liability for third party claims to intellectual property in the goods. The Gerechtshofs Arnhem held that the buyer had failed to prove that the seller knew or could not be unaware of the third party rights.[69] However, this limitation is less significant than it may appear. The seller is obliged to research whether third parties have any intellectual property rights in the goods in the state where the goods are to be used.[70] Furthermore, the seller will have no defence if the intellectual property rights were publicly known.[71] [page 92]

Brand equity as a characteristic of the good

The trademark (or brand) is an 'agency for the actual creation and perpetuation of goodwill'.[72] The commercial concept of brand equity' is similar to the legal concept of goodwill. Goodwill is recognised as an asset of a legal entity in both common law [73] and civil law [74] jurisdictions. It is also a concept recognised under the CISG.[75] Like brand equity, goodwill is a measure of potential customer demand. It is 'hope founded upon probability';[76] an advantage that gives a reasonable expectancy of preference in the face of competition.[77] However, unlike brand equity, goodwill is an asset attached to a business; it has no independent existence and cannot attach to goods.[78]

It is clear that the seller is bound to ensure that the seller's (quasi-)rights in the intellectual property exist. Hence, a seller must ensure there that no third party can impede the buyer's use of branded goods. However, brand equity is not seen as merely being absent or present in goods; it is a characteristic of the goods that can be qualitatively and quantitatively assessed. This is reflected in the enforceability of intellectual property rights against acts that reduce the value of brands. For example, a trademark owner may claim that his or her brand is diluted by another person's mark, either by creating a negative association with the mark or by making it less distinctive. Moreover, regardless of whether a trademark is registered in respect of a brand, acts that lessen the value of the brand may constitute the tort of passing off or a breach of personality rights.

The parties may well have intended that the goods would have brand equity of a specific nature. For a variety of reasons, this intention may give rise to a dispute. For example, the seller may lessen the value of its brand, diluting its trademark through imprudent business decisions,[79] or social change may cause the brand to diminish in value. Such a dispute cannot be settled under Article 42. Rather, as [page 93] will be demonstrated, the rights and duties of each party are determined according to the conformance provisions in Article 35 CISG.

Can reputation be an asset forming part of the goods?

'Reputation' and 'commercial image' appear in several cases interpreting the CISG. However, these concepts are applied in assessing a party's entitlement to damages, rather than in identifying a breach. Typically, a buyer alleges that the seller has supplied goods that are physically non-conforming, and that in re-selling these goods, it has incurred damage to its reputation. The availability of damages for loss of reputation is uncontentious, as confirmed by the CISG Advisory Council.[80] In practice, however, proving such loss is often problematic.[81] A typical example is Maes Roger v. Kapa Reynolds,[82] in which the seller supplied plastic cling film which was 'too thin, too airy and tore under accepted usage ... uneven in its density'.[83] The buyer claimed that, as a consequence of its customers' negative experiences with the defective foil, it was unable to sell several other products, which amounted to a 'commercial and financial catastrophe'.[84] The Hof van Beroep Gent held that the buyer was in principle entitled to compensation for loss of reputation; however, in the circumstances, the buyer was not entitled to damages because it had failed to mitigate its losses as required by Article 77 CISG.[85]

One relevant issue is whether the CISG recognises the loss of reputation itself as compensable or only the financial losses flowing from the loss of reputation. In one arbitral case, the tribunal stated that damages could not be awarded in respect of the loss of reputation itself, as this would involve 'an abstract calculation on the basis of market prices'.[86] A similar conclusion was reached by the Landgericht Darmstadt,[87] which stated, 'damaged reputation is completely insignificant as long as it does not lead to a loss of turnover and consequently lost profits'. However, a different view was adopted by the Handelsgericht Zurich,[88] [page 94] which stated that 'goodwill damage' can certainly be compensated under the CISG' [89] This seems to be the better view as it accords with the commercial view of reputation as an asset in itself.[90] Indeed, the contrary authorities seem to be more concerned with difficulty in quantifying goodwill than any matter of principle.[91] If goodwill or reputation is indeed considered an 'asset', there seems to be no reason why this could not be part of the 'goods' delivered under the contract.

The nature of the conformance duty

Conformance as a unitary concept

Article 35 has been described as a 'unitary' concept, in that 'any claim resulting from the delivery of defective goods will have to be based on article 35'.[92] In most sales of goods regimes, certain distinctions are applied in assessing what goods are required by the contract. Unlike many national sales laws, the CISG combines the obligations in respect of quantity, quality, description and fitness for purpose.[93] Furthermore, as per Article 35, CISG is free from the binary distinctions found in many legal systems.[94] For example, the common law distinguishes between conditions and warranties. Similarly, many civil law systems distinguish hidden defects (defauts caches) and visible defects (vices apparents), and between lack of qualities (flaschlieferung; peius) and delivery of a different kind of good (aliud).

However, it is something of an oversimplification to state that a buyer will 'also only have one ground to sue the seller for any defects in the goods.'[95] The seller's duties to provide goods free of legal defects in Article 41, and to provide goods [page 95] free of third party intellectual property claims in Article 42, are independent of Article 35.[96]

Conformity as an implied warranty

Subject to specific exceptions, the seller's duty to provide conforming goods applies 'irrespective of his fault in breach of an obligation'.[97] For example, in one case before the Bundesgerichtshof,[98] the non-conformity was caused by defective raw materials provided by the seller's supplier. The Court said that the seller's liability is 'not based on the supplier's obligation to inspect goods before delivery'.[99] Rather, 'the seller's culpability is not important due to the statutory allocation of risk'.[100] In this respect, the Convention is similar to the common law doctrine of implied warranty and stands in contrast with fault based liability ('positive Vertragsverletzung') under the civil law.[101]

The civil law's fault-based liability is based on the Roman Law, under which a seller acting in good faith had no liability in damages for defective goods.[102] This caveat emptor rule was based on the parties' moral obligations [103] and was appropriate in the Roman marketplace, where the seller was able to physically inspect the goods.[104] However, in international sales there is typically a clear delineation between the' sphere of influence of the buyer and seller.[105] Economic efficiency demands that the risk of loss lies with the party that is best able to prevent that loss. The characteristics of the goods are generally within the seller's sphere of influence; hence the Convention applies a caveat venditor rule.[106] [page 96]

The application of this sphere of influence principle can be seen in the Bundesgerichtshof's decision in the well-known New Zealand Mussels case.[107] The mussels delivered by the seller contained cadmium content in excess of the recommended maximum level in the buyer's country but as acceptable in the seller's country. The Court held that the seller is not normally obliged to comply with public law requirements and administrative practices of the buyer's country or the country of use.[108] This is because a foreign seller

'[C]an simply not be required to know the not easily determinable public law provisions and/or administrative practices of the country to which he exports ... the buyer can be expected to have such expert knowledge ... he can be expected to inform the seller accordingly.'[109]

This also accurately describes the prevailing view among commentators.[110] This view looks to whether the factors lie in the buyer or seller's sphere of influence; that is, to the question of which party is best able to judge the characteristics.[111] This approach is reinforced by the exceptions to the general principle stated by the Court. First, the seller would be expected to comply with the standards if they exist in both the buyer's and seller's countries. For regulatory standards, this will be the case where legal requirements have been standardised, such as in the EU.[112] Second, if the buyer has pointed the standards out to the seller, compliance with the standards would form a part of the particular purpose of the goods. Finally the goods are required to comply with any standards that are known to the seller, or which in the circumstances should be known to the seller. In all these cases, the special requirements would be known or knowable to the seller and therefore in the seller's sphere of influence.

The external factors in the New Zealand Mussels case were the public law requirements of the buyer's country. However, the Court's reasoning applies more broadly to any non-physical factors. Indeed, the Court did not find it necessary [page 97] to determine whether the measures were indeed legally authorised,[113] despite noting that the matter was uncertain.[114] Schlechtriem notes, 'Public law regulations, ideological, and cultural or traditional conditions upon the use of goods are to be treated equally',[115] and there is no basis to distinguish different types of external factors that may affect the usability of the goods. Hence, the principles informing this judgement may be applied generally in delimiting the conformance requirements under the CISG and are of greater utility than the physical/non-physical distinction.

For example, if negative publicity affected the goods' conformance, this should be analysed according to whether the negative publicity was particular to the buyer's country or existed in both the buyer's and seller's countries. In the latter case, the seller is able to judge whether the negative publicity would render the goods non-conforming. In contrast, if the question was whether the negative publicity was a physical characteristic, the seller would not be liable even if the publicity was directly caused by the seller's poor public relations practices. Similarly, if the seller has actively targeted the market in the buyer's country, this market may be within the seller's sphere of influence, and the seller may bear the risk of adverse market events.[116]

The burden and transfer of risk

The passing of risk

The conformity of the goods with the contract is judged, as a general rule, at the time when risk passes to the buyer.[117] This is the effect of Article 36(1) CISG, which provides that '[t]he seller is liable in accordance with the contract and this Convention for any lack of conformity which exists at the time when the risk passes to the buyer'.

This link between conformance to the passing of risk underscores that the conformance duty applies regardless of the seller's fault.

Where the parties have not agreed when risk will pass,[118] the default rules in Articles 67 to 69 apply. The general principle underlying these provisions is that risk passes when the seller gives up physical possession of the goods, either [page 98] to the buyer or to the carrier.[119] Valioti [120] notes that the Convention rejects the theory of risk passing at the time the contract is concluded, which is found in the law of Switzerland,[121] Spain [122] and the Netherlands.[123] Again, the position adopted by the CISG is economically efficient, as risk generally lies with the party most able to insure against the loss.[124] This presents interesting issues when the lack of conformity is caused by a non-physical characteristic of the goods. Some characteristics may be described as dynamic rather than static. For example, the origin of the goods is static, because by definition it cannot change between the time the contract is concluded and the time of delivery. In contrast, reputation is dynamic, in that it is susceptible to change within that period. For dynamic characteristics, the passing of risk may appear rather arbitrary. For example, as a general principle the seller will be liable for an adverse press report occurring before the time of delivery, but not after.

There are, however, several provisions of the CISG that modify this allocation of risk. First, under the second limb of Article 36(1), the seller is liable for hidden defects, that is, a lack of conformity that existed at the time risk passed, but became apparent only after that time. This includes 'an existing cause for a lack of conformity [which] has an effect on the goods only at a later time'.[125] If the adverse press report concerned some hidden physical aspect of the goods, such as food contamination, the goods would be non-conforming due to this latent physical defect.

Second, under Article 36(2), the seller is liable for a lack of conformity occurring after the passage of risk, if the lack of conformity was caused by the seller's breach of obligations. This is reinforced by Article 66, which provides that loss or damage occurring after the risk has passed does not discharge the buyer's obligation to pay the price, unless this is due to the seller's act or omission. Article 36(2) has particular import if the seller has obligations that are in the buyer's sphere of influence.[126] This would be the case for the seller's obligations under a combined sale of goods [page 99] and marketing contract (provided the entire contract is subject to the CISG).[127] This clarifies that the sphere of influence applies subject to the agreement of the parties. Hence, the goods may be rendered non-conforming by an express or implied warranty as to the goods' sales performance in the buyer's market.

Third, in some cases risk will pass at the time of the conclusion of the contract. For example, Article 35(3) excludes the seller's conformance duty if 'at the time of the conclusion of the contract the buyer knew or could not have been unaware of such lack of conformity'. This is relevant in cases where the goods have a negative reputation in the buyer's market at the time the contract was concluded. The reputation of the goods is, by its very nature, in the public domain, so this would likely be a characteristic of which the seller 'knew or could not have been unaware'.

Economic risk

In opposition to the general principle that extrinsic attributes are relevant to the conformity of goods is the notion of economic risk. Economic risk relates to the rise and fall of commodity and financial markets, such as the market value of certain goods, or changes in foreign exchange rates. Entering into a contract establishes an equilibrium of risk and benefit between the parties;[128] in a sales contract the risk to a party is that the economic value (or cost) of their performance will increase relative to that of the other party. As a general rule, these economic risks are not part of the risk passing to the buyer,[129] A contract governed by the CISG must fix or make provision for determining the price.[130] A subsequent fall in the market price may disadvantage the buyer; however, ordinarily this would not bear on the goods' conformance with the contract, as 'no possible change of market conditions can release the buyer from this duty [to accept the goods]'[131] Similarly, the seller ordinarily bears the economic risk of a rise in the cost of procuring the goods beyond what was contractually agreed: IT 'has accepted the risk of acquiring the goods and the risk that cannot be acquired at a certain price'.[132]

The logical implication of this principle is that the economic value of the goods is not a 'characteristic' of the goods. This flows from the nature of economic value [page 100] as something of a paradox. Simmel observed that 'value is never a "quality" of the objects, but a judgement upon them which remains inherent in the [observer]'.[133] Value is considered a universally held view, in that through the market, it is ascribed to all potential buyers of the goods. However, value is also highly subjective.

Although this principle is clearly applicable to simple commodity contracts, the interaction between the principle of economic risk and the reputation as a characteristic of the goods is problematic. One example of these complexities can be seen in Lempertz v van der Geld.[134] The contract of sale was for the painting 'Portrait of a Woman', painted in 1888 and attributed to Henry van de Velde.[135] The painting was delivered, and the buyer on-sold the painting to a second buyer. It emerged that the painting was not in fact painted by van de Velde; based on this, the second buyer sued the first buyer. The Arrondissementsrechtbank Arnhem said that the effect of Article 36(1) was that 'the timing of delivery is decisive for the answer to the question whether the obligation of conformity had been met'.[136] Risk passed to the buyer at the date of delivery, and at this time, there was no indication that the painting could not be attributed to van de Velde. Hence, the seller was not liable.

The Court's decision is consistent with the principle of economic risk: the 'attribution' of the painting merely reflects market perceptions of the work, and the seller must bear any fall in market value. In contrast, based on the same principle, Erauw argues that this decision is incorrect: agreeing to sell a painting by van de Velde, the identity of the painter is 'part of the authenticity of the good', and hence, part of the bargain the parties have struck. Therefore, it is said that the risk that the goods are less than a required bargain is an economic risk, which stays with the seller, rather than passing to the buyer.[137]

Financial force majeure

Although a change in the economic value of the goods will not render them non-conforming, such a change may amount to 'financial force majeure' giving the buyer an exemption from remedies. According to Article 79(1) CISG,

'A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the [page 101] time of the conclusion of the contract or have avoided or overcome it or its consequences.'

Article 79 acts as an exception to a party's liability for damages; it does not affect the question of whether a seller has breached the conformance duty. However, by its nature, this provision restricts the seller's duty to provide conforming goods; indeed, it has been described as 'competing' with [138] or potentially serving to 'undermine'[139] Article 35. Article 79 is examined here because of its potential to render market-based factors de facto conformance characteristics. For example, Article 79 may be relevant where there been a drastic change in consumer demand or market prices for the goods. A buyer might argue that taking delivery and paying the price in these circumstances would be so unprofitable as to amount to an 'impediment'. If this argument was successful, the buyer would therefore be exempt from damages for failing to perform these obligations.

The application of Article 79(1) in such circumstances is unclear. A dramatic change in circumstances may constitute as an 'impediment': Article 79 encompasses economic impediments, but only those that are comparable to a non-economic (physical) impediment.[140] Some cases indicate that a change in market prices will never amount to an impediment. In one arbitral case it was stated that 'a change in market conditions cannot serve as an excuse for the Buyer to avoid payment for the goods'.[141] Similarly, the Oberlandesgericht Hamburg rejected an argument that a change in market prices amounted to an impediment, stating that a party bears the risk of adverse price fluctuations.[142] The Court in that case said that market factors would only be impediment if the goods were no longer available. In another case, the same court considered a seller's argument that a market shortage of the goods amounted to an 'impediment'. The Court found this insufficient, noting that '[t]he owed class of goods was undoubtedly not exhausted' The Court characterised the facts as an increase in the market price rather than a shortage and did not consider this an impediment.

In contrast, some other cases leave open the possibility that price fluctuations may, in some instances, amount to an impediment excusing performance. The analysis in these cases focuses on the whether the party 'could not reasonably be [page 102] expected to have taken the [change in market conditions] into account at the time of the conclusion of the contract'. In one ICC arbitral award,[143] a contract for the sale of steel contained a provision granting the buyer an option to purchase a further shipment at the agreed price. When the buyer exercised the option, the seller refused to deliver as the market price had increased. Although the tribunal held that the CISG was not applicable, it compared the applicable national law with the CISG and Uniform Law on International Sales,[144] and held that each had the effect that the seller was bound by the agreed price, as change in market price was not sudden, substantial or unforeseeable.

In Société Romay AG v. SARL Behr France [145] the buyer 'invoked the collapse of the automotive market', which reduced the buyer's resale price to 'less than half the price of the goods supplied by the seller. According to the Court, the buyer would succeed if it established that the change in the market caused a "necessity" which would allow it [the buyer] to terminate the contract'. On the facts, this was not the case. The requirement in Article 79 that the market change must be unforeseeable was also not satisfied, despite a 50 per cent fall in the resale price. The Court emphasised that 'price fluctuations, even sudden and significant, are not exceptional' in international markets and that it is up to the parties to build economic risk management into the contractual framework.

The weight of case law shows that it is as at least arguable that market factors may constitute an impediment within the meaning of Article 79. Indeed, commentators suggest that a 100 per cent change in market price could constitute an impediment.[146] Thus, a sudden drop in the market value of goods may allow a seller to refuse to take delivery without consequence, if two criteria are satisfied: first, the drop in value must be unforeseeable; second, the drop in value must have an effect on the buyer that it could not reasonably have avoided. In such a circumstance, the seller would become responsible for the market value of the goods.

Although the existing case law focuses on the question of foreseeability, a seller might also argue that the buyer ought to have taken steps to avoid the effects. In trades where production inputs are susceptible to price volatility, it is common to mitigate the risk of such exposure through future trading and other hedging instruments.[147] If a seller established that a buyer could reasonably have been expected to prevent the financial impediment from arising by hedging against the economic risk, the buyer would unable to rely on the exception in Article 79. [page 103]

The CISG's rules for the burden and passing of risk discussed in this section raise interesting issues with respect to non-physical characteristics of the goods. For such characteristics, an allocation of risk based on physical delivery of the goods seems rather arbitrary. Goods conforming at the time the contract is concluded may be rendered non-conforming by adverse market events before time of delivery, which may result in non-conformance. However, the distinction between market-based characteristics of the goods and the economic value of the goods is problematic. The boundary between these concepts must be determined according to the facts of each case, with reference to the intent of the parties and the sphere of influence principle. However, to maintain economic policy objectives such as arbitrage in goods markets, Courts and tribunals should not allow Article 79 to render purely price-based factors to become a de facto conformance requirement.

Quantity, quality and description

Article 35(1) CISG states that '[t]he seller must deliver goods which are of the ... quality and description required by the contract', The contractual description under this provision is 'the usual way through which the parties determine the content of their obligations',[148] As the seller's obligations in relation to the goods are defined according to the parties' agreement, the presence of defects is assessed subjectively.[149] The parties' autonomy is paramount; hence, the contractually stipulated 'quality' means, 'as well as the goods' physical condition, all factual and legal circumstances concerning the relationship of the goods to their surroundings'.[150] As Henschel observes, the parties may agree that the goods will have non-physical characteristics:

'The starting point is that there are no limits to the contractual requirements which the parties may agree with respect to the goods, for example, that the goods may not be made by child workers, that the goods should be produced in an environmentally-friendly way ... that the goods should satisfy the special safety and environmental requirements of the buyer's country, etc. Only the imaginations of the parties and mandatory public law rules can set limits to what can be validly agreed.'[151]

As such, the goods will be non-conforming under Article 35(1) even though the departure from the contractual description has no bearing on the usability or value [page 104] of the goods.[152] Where the contractual description identifies specific goods, such as a specific machine, delivery of a different machine would be non-conforming, even if physically identical.[153]

The origin of the goods do not form a part of the physical characteristics of the goods, yet may be relevant to the conformity part of the contractual description. A sales contract may specify that the goods be produced in a particular country or by a particular manufacturer; this will constitute a contractual description for the purpose of Article 35. For example, a shipment of cobalt sulphate produced in South Africa was held to be non-conforming under a sales contract with the description 'origin: England'.[154] Similarly, in a CIETAC arbitral decision, a contract specifying that 'the country of origin and manufacture was Switzerland' formed part of the contractual description.[155]

The parties may agree that the goods will bear a certain brand or mark. This also forms a part of the contractual description. The purpose of a trademark is to identify the origin of a product.[156] Therefore, a contractual requirement that the goods bear a trademark, brand or similar indica (regardless of whether they are recognised as intellectual property) should be considered a contractual description of the origin of the goods.

The contractual quality may include the age of the goods. For example, in one case, the Oberlandesgericht Köln considered a claim under a contract for a car with an odometer reading of 15,000 kilometres, which was first registered in Italy in 1992.[157] In fact the car had travelled 65,000 kilometres and had first been registered in 1990. The Court said that these facts alone gave rise to non-conformance, with the implication that the seller's fault or knowledge of the lack of conformance was not decisive.[158] A representation that a car was first registered on a particular date is considered a description of the car's quality.[159] In a similar case involving an incorrect statement of the date of the car's original registration, [page 105] the Landgericht Berlin reached a similar conclusion, stating that the age of the car forms part of the quality of the goods, and therefore falls within the ambit of Article 35(1).[160] Similarly, in one arbitral case, industrial goods manufactured between 1981 and 1983 were held not to conform to a contract describing the goods as being produced between 1987 and 1988.[161]

The Dutch decision of Lempertz v van der Geld,[162] referred to above, shows a willingness by the courts to interpret the contractual description as referring to extrinsic characteristics. The Court's decision seems to have turned on the interpretation of the contract's description of the painting as being 'attributed to' Henry van de Velde. This was interpreted as meaning 'the artist to whom the public attribute the painting', rather than 'the actual artist who created the work'. This implies that the characteristic of attribution is not an underlying, hidden characteristic of the good waiting to be revealed (Art. 36(1)) but rather something wholly extrinsic: a product of market knowledge.

Although this outcome seems remarkable it is decidedly unremarkable in light of two aspects of the Court's reasoning. First although not explicitly stated by the Court, the decision follows the CISG's principle that trade usages are to be upheld. Article 9(2) states that the parties are considered to have agreed to 'a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned'.

Furthermore under Article 8(3), disagreements over the interpretation of a party's statements are to be resolved with regard to any usages between the parties. The Court found that in the art trade, a seller is not generally considered to unconditionally warrant the authenticity of a nineteenth century work.[163] It follows that there exists a usage in the art trade that attribution is not an objective, unchanging characteristic of the goods, but a subjective quality based on public knowledge of the work.

The second aspect of the court's reasoning is the invocation of the principle of good faith.[164] Article 7(1) CISG requires that the Convention be interpreted with regard to the need to promote 'the observance of good faith in international trade'. The buyer alleged that the seller had unconditionally guaranteed the authenticity of the work. Thus, despite any contrary agreement entered into by the parties, the expert buyer could not in good faith rely on the non-expert seller's departure from the trade usage.[165] This case demonstrates that, in principle, there is no barrier [page 106] to treating entirely non-physical characteristics as relevant to the conformity of the goods. In particular, this case supports the proposition that the law must respect trade usages that defines properties of a good by reference to extrinsic characteristics.

One particularly pertinent issue associated with contractual description relates to social and ecological labelling for consumer products. In recent years, consumer purchasing decisions have been increasingly influenced by political considerations. These considerations typically relate to the processes used to produce the goods. For example, consumers will pay a premium for goods produced with methods that are environmentally sound,[166] are socially responsible,[167] or do not use biotechnology techniques.[168] The Appellationsgericht Basel-Stadt held that 'free of genetically modified organisms' amounts to a contractual description for the purposes of Article 35(1),[169] and non-conformance with such a description will amount to a fundamental breach of the contract.[170] In that case, the genetic modification was a physical characteristic of the goods, being detectable by chemical analysis.

Another case concerned barley declared 'organic'; in particular, the parties agreed that '[t]he goods will meet the requirements under Council Regulation EEC No. 2092/91 on organic production of agricultural products'. Suspicions arose that the barley was not organic within the meaning of the Regulation. The Court considered that the description of 'organic' was a contractual quality.[171] The buyer was unable to establish that, as a factual matter, the barley was organic. However, as the Court noted, 'Organic barley cannot be distinguished from other barley, at least not by usual methods'.[172] Rather, the Regulation's criteria for the designation of 'organic' related to the process, specifically, 'a system of certification of companies at production, trade and processing'[173] Although the Court considered that 'organic' was a contractual quality,[174] it was quality of a procedural nature: consumers pay higher prices for organic products 'not for a proven quality but for the observation of the inspection scheme at [page 107] production, transport and processing'.[175] Thus, 'organic' was held to describe a contractual quality that was not a physical characteristic of the goods, but rather the non-physical history of the goods.

Where certification requirements form a part of the contractual description, the seller's obligation is not merely to provide such certificates. The seller must also provide goods that in fact conform to the characteristics listed in the certificates. This can be seen from a CIETAC arbitration proceeding involving souvenir coins commemorating the reunification of China and Macau.[176] The tribunal held that although it was not stipulated in the contract, there was an implied duty that the seller 'should make the goods consistent with the descriptions and certificates'.[177]

Subjective and objective interpretation of statements

In determining the content of the seller's duty to provide goods conforming with the contract, identifying the content of the contract is critical, Article 8 CISG contains two rules for determining contractual intent: (1) the default rule in Article 8(1) looks to the parties' common subjective intention; (2) where this cannot be determined, intention is determined objectively in accordance with Article 8(2), As the aim of Article 8 is to resolve conflicts involving parties with differing views as to what was agreed, the objective rule in 'Article 8(2) applies in most cases.[178] A legal controversy normally involves a difference of subjective interpretation, making it necessary to use the objective test.[179] For example, conflict may arise if the parties have discussed the non-physical characteristics of the goods, yet have not made this an express term of the contract. Such a case would be governed by Article 8(2).

According to the subjective rule in Article 8(1), statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was', This involves interpretation by reference to the true intention of the party making the statement, as distinct from the stated intention,[180] [page 108]

The words 'could not have been unaware in Article 8(1) impose a duty on a party to whom a statement is made. If a party finds a statement made by another party ambiguous, that party to whom the statement is made will be under a duty to inquire as to the intent in making the statement.[181] A party that fails to inquire will be bound by the other party's intention. For example, the Cour d'appel Grenoble found that, on the basis of negotiations between the parties, a seller' could not have been unaware' of the marketing requirements of the seller's country.[182] Therefore, the seller was required to provide goods conforming with the French public law requirements.

The rule in Article 8(2) is that 'statements made by and other conduct of a party are to be interpreted according to the understanding of a reasonable person of the same kind as the other party would have had in the circumstances'. Honnold argues that Article 8(2) is based on the contra proferentem principle, which holds that ambiguous statements are to be interpreted against the party making the statement.[183] Indeed, as a general principle on which the CISG is based, it is to be considered when interpreting the convention.[184] Evidence of these general principles may be found in the UNIDROIT Principles,[185] of Article 4.6 titled 'Contra proferentem rule'. In contrast, Hyland sees an obligation to inquire under Article 8(2) similar to that under Article 8(2).[186] He argues that the 'reasonable person' under Article 8(2) is not a passive recipient of information but an active participant in the communication. Notably, under Article 8(2) the burden appears to be on the party making a statement to make its intention clear. This stands in [page 109] contrast to the position described under Article 8(1), where the party to whom a statement is made bears the burden of making an inquiry,

Determining the parties' intention

The quantity, quality and description of goods that the seller must provide are determined according to the contract. According to Article 8(3),

'In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usage and any subsequent conduct of the parties.'

The first part of the circumstances requiring consideration, 'the negotiations', amounts to a rejection of the parol evidence rule.[187] Further reinforcing this is Article 11 CISG, providing that a contract may be proved by any means, including witnesses. (Arguably, however, the parties may specifically invoke the parol evidence rule by incorporating a merger clause into their written contract.)[188] Hence, in determining the conformance requirements of a contract of sale, it is insufficient to consider only the terms of a written document drafted by the parties. Indeed, in MCC-Marble Ceramic Center v Ceramica Nuova D'Agostino,[189] the US Federal Appellate Court stated that 'the parol evidence rule is not viable in CISG cases in light of article 8 of the Convention', as a court cannot substitute 'familiar principles of domestic law when the Convention requires a different result'.[190]

When the parties' express agreement does not seem to define the contractual requirements of the goods, it is clear that such requirements should be read from the circumstances. However, the situation is more complex if the parties appear to [page 110] have expressly agreed on the requirements of the goods, but the buyer alleges that additional terms arise from other statements or conduct of a party. Evidence of such statements or conduct would certainly be admissible.[191] This underscores the importance of determining the extent to which non-physical characteristics may render the goods non-conforming. If the parties have recorded their contractual intention in a single written document, it will be relatively simple to determine the contractual quality and description. However if all the circumstances of the case are relevant in determining contractual intent any statement or conduct by a party in relation to the goods could, in principle, form a part of the contractual quality and description. For example, where the buyer intends to purchase the goods for resale in the domestic consumer market, the parties may have discussed consumer marketing in pre-contractual correspondence. A reference to goods having a certain reputation could in principle form a part of the contractual description. This does not, however, mean that every statement made by a party will form a part of the contract. In civil law jurisdictions, where there is no parol evidence rule, pre-contractual statements are presumed insignificant, and for the party relying on the statement to show that the statement was indeed intended to be binding.[192]

Article 8(3) also expressly requires that usages are to be taken into account in determining intent. This is in effect a reinforcement of what has already been stated: Article 8(1) looks to the parties' shared subjective understanding and thus shared interpretation of a term's meaning.[193] Moreover, the 'reasonable person of the same kind' under Article 8(2) is understood in the context of their trade or profession [194] and therefore the usages of that profession.[195]

If the parties have referred to a state of affairs that may be considered a non-physical characteristic of the goods, usage may be key in determining whether it is indeed a characteristic relevant to conformance. The usage need not have been expressly or impliedly agreed to;[196] however, if one exists it will take effect as a 'fictitious agreement' between the parties.[197] A typical example of this interpretative function of usages [198] is where the parties refer to a technical word that has an ordinary meaning and a distinct trade use. Similarly, if the parties have referred to products of a 'suitable brand, usages in the retail trade may well [page 111] have the effect that the requisite product has sufficient brand equity to be resold in the volumes ordered. If a trade usage exists, requiring goods to have certain non-physical characteristics, this will have even greater force, taking effect as an implied term of the contract. The application of these usages is well demonstrated in the art trade, as discussed above.[199]

In sum, it is common for a contract of sale to expressly require goods with specific non-physical characteristics, such as the origin and age of the goods. The potential for conflict arises because of the wide sources of contractual duty under the CISG. This will be particularly relevant in common law jurisdictions, where merchants may be inclined to view the written contract as conclusive.

Ordinary purpose

Article 35(2)(a) requires the seller to deliver goods that 'are fit for the purposes for which goods of the same description would ordinarily be used.' The ordinary purpose obligation is related to the warranty of merchantable quality found in the common law, and in the Sale of Goods Act 1893 (UK) and Uniform Commercial Code (USA),[200] although the seller's burden is somewhat higher under the CISG. It is not sufficient that the goods are capable of being resold.[201] The requisite standard has been variously considered one of average fitness,[202] average quality [203] or reasonable quality in the circumstances.[204] However, the better view is that none of these constitutes a general rule; rather, the requirements must be determined on a case-by-case basis with reference to the parties' intention.[205] Thus, the ordinary purpose provision is not in the nature of an objective legal guarantee but rather a rule by which the contractual intent of the parties is determined.[206] [page 112]

In cases where this provision is decisive, the parties may not have expressly specified the intended purpose of the goods, as this will often not seem necessary in a routine transaction.[207] The goods will not be fit for their ordinary purpose 'when they lack specific ordinary characteristic or when they have defects which impede their material use'.[208] As the goods' ordinary purpose includes resale, they will also be rendered unfit by defects that considerably lessen their trade value (regardless of fitness for their material use).[209] This considerably extends the ambit of the ordinary use obligation, measuring it with reference to market value.

Reputation and ordinary purpose

The potential for goods to be rendered unfit due to their negative reputation is well demonstrated by a case of the Oberlandesgericht Frankfurt.[210] That case involved a highly controversial global advertising campaign by the Benetton Company in the early 1990s. A German buyer of Benetton brand clothing claimed that the campaign caused a slump in sales amounting to significant financial losses. The buyer was unable to prove that the losses were due to the seller's advertising campaign rather than general economic conditions or conditions in the specific industry.[211] While highlighting the significance of reputation and related characteristics of the goods, this case also highlights the difficulties in quantifying such characteristics.

In the New Zealand Mussels case described above, the buyer alleged the goods were not fit for their purpose for a reason that was to some extent grounded in a physical characteristic of the goods, namely the cadmium content. However, two further cases suggest that reputation itself may render the goods non-conforming. In one Swiss arbitration case,[212] the parties concluded a contract of sale for a large quantity of pocket ashtrays, to be delivered in several consignments. The goods in the first consignment were defective, as metal components in the product were overly sharp and a safety hazard. Although the seller remedied the defects, the product had gained a reputation for being unsafe, and consequently sales of the product were poor. The buyer therefore discontinued sales, returned the unsold portion of the goods and claimed damages in respect of loss of earnings for the returned goods.[213] [page 113]

The arbitrator upheld the buyer's claim for damages in respect of lost earnings, as the loss 'was directly cause by [the product's] reputation as being hazardous'.[214] The seller appealed to the Bundesgericht, arguing that there was insufficient evidence of damage caused by reputation; however, this argument was rejected.[215] In reaching this conclusion, the arbitrator stated that the subsequent consignments conformed to the contract.[216] Thus, the negative reputation itself was not considered to render the goods non-conforming but was rather a consequence of the physical fault in the first shipment.

The tribunal adopted similar reasoning in a decision of the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry.[217] The goods were to be delivered in two shipments. The buyer demanded a price reduction in respect of the first shipment, as it did not conform to the technical standards stipulate in the contract. Although the second shipment did conform to the standards, the buyer sought damages for loss of profit, arguing that 'non-conforming quality in the first instalment [sic] had led to the loss of reputation of the production of the given manufacturer in the market'.

On the facts of the case, the seller did not prove that the defects in the first shipment were of such magnitude as to cause 'serious damage in the market on the reputation of the goods'.[218] The tribunal so stated that the buyer did not take measures to eliminate the negative impression of the seller's goods in the market, seemingly referring to the buyer's duty to mitigate loss under Article 77 CISG. Specifically, the buyer agreed 'with unsubstantiated allegations of his consumers', without testing supposedly faulty products.

This reasoning in these two cases is problematic, because following the principle articulated, the buyer's right to return the goods owing to negative reputation would arise only if the seller had previously delivered defective goods. This seems to be a somewhat artificial distinction, as the direct cause of the poor sales was the negative reputation of the product rather than the non-conformance of the first shipment. Another person attempting to sell the same products would encounter the same difficulties but would have no recourse unless it had also received a defective consignment. This is similar to the difficulties encountered in determining whether software is a good within the meaning of the CISG. As Lookofsky notes, it is artificial and divorced from commercial reality to distinguish between sales of software delivered on physical and non-physical media.[219] Similarly, given that [page 114] the brand equity in a good is considered a very real asset in the commercial world, it is not appropriate to adopt a position whereby reputation can only render goods non-conforming if the buyer has received a previous shipment with physical defects. It is preferable that negative reputation itself should be considered a fault rather than merely a consequence of a fault.

Suspected health hazards and ordinary purpose

Two cases dealing with contaminated meat product suggest that extrinsic attributes of the goods may render them non-conforming. In the Bundesgerichtshof's decision in the 'Frozen Pork' case,[220] a seller in Belgium contracted to sell pork to a buyer in Germany, delivered directly to the buyer's customer in Bosnia-Herzegovina. After risk in the goods had passed to the buyer, a suspicion emerged that meat produced in Belgium between certain dates was contaminated with dioxin. Subsequently, health authorities in Belgium, Germany and the EU enacted ordinances restricting the sale of Belgian meat slaughtered between those dates.

Even though the suspicion emerged after risk had passed to the seller, the Bundesgerichtshof considered that it was the meat's country of origin that made it non-conforming. The court said that '[t]he characteristics that led to the confiscation and the loss of tradability were already attached to the meat at the time the risk passed'.[221] The relevant 'characteristics' were that the meat 'originated from the dioxin contaminated inventory'.[222] The 'defect' that existed at the time risk passed was the 'character of the goods potentially harmful to health'.[223]

Thus, the conformance of the goods did not turn on the physical characteristics of the goods. Indeed, the Court said that 'whether and to what extent the meat delivered to [Buyer] was actually contaminated with dioxin is irrelevant because the suspicion alone ... has a bearing on the resaleability and tradability' (emphasis added). The Bundesgerichtshof rejected the Oberlandesgericht Frankfurt's [224] judgement that the suspicion raised a factual presumption of a physical defect in the goods, stating that this principle of domestic law had no application in the CISG.[225]

In the Frozen Pork case, the Bundesgerichtshof did not find it necessary to determine whether a suspicion of a health hazard will always render goods non-conforming. However, the Court did state that a suspicion will render the [page 115] goods non-conforming 'if the suspicion ... has led to public measures that preclude the goods' tradability'.[226] This statement is significant because a 'suspicion' is, on one level, divorced from the physical nature of the goods, Indeed, just as brand equity may be described as 'hope founded on probability',[227] a suspicion is a 'fear founded on probability'. In the author's view, there is no fundamental difference between a suspicion of a health risk and the brand equity in a good. Where the purpose of goods is resale, a failure of public authorities confidence' may render the goods unfit. Where the purpose of goods is resale to a particular group of consumers, a failure of those consumers' confidence may render the goods unfit. The next section of the chapter will examine the requirements of the goods when the purpose of the goods has been particularised in such a way.

Particular purpose

Article 35(2)(b) CISG requires the seller to deliver goods that are

'[f]it for any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the con ct, except where the circumstances show that the buyer did not rely, or that it was unreasonable for him to rely, on the seller's skill and judgement.'

The quintessential application of this subsection is where a buyer provides details of the technical requirements of the product to be purchased, such as 'drills for drilling holes in plates of carbon steel'.[228] The seller would select goods from its inventory that are suitable for the stated application. However, the provision's application is broad in scope. As stated in the New Zealand Mussels case,[229] this obligation is one way in which the seller may be bound by conditions in the seller's state, such as government regulations, provided they are pointed out by the seller, However, it is not sufficient for the buyer to merely make the seller aware of the country in which the goods are to be used; rather, the particular requirements of use in that country must be made known for the seller to be bound.[230] The application of Article 35(2)(b) in such a case was confirmed by the Landgericht Ellwangen, where a seller was liable for non-conformity caused by non-compliance with a regulation that the seller had made known to it at the time the contract was concluded.[231] [page 116]

The decisions discussed above concerned the goods' compliance with the public law requirements for resale, which is an ordinary purpose falling under Article 35(2)(a).[232] In addition to public law requirements, other factors may equally prevent the use of a good, such as ideological, cultural and traditional factors. No distinction is drawn between these types of characteristics.[233] Just as the goods, fitness for resale is measured by compliance with regulatory requirements, fitness for resale within a particular market may be affected by consumer tastes and preferences. Suppose that, as well as being fit for resale, the goods must be fit for resale to a particular market segment, which is known to be particularly conscious of environmental or social issues. The goods would arguably be unfit for their particular purpose if a suspicion emerged among consumers that the goods had been produced using environmentally or socially unsustainable methods.

Expressly or impliedly made known to the seller

The potential for miscommunication is magnified in relation to the particular purpose duty, because unlike the other provisions in Article 35, obligations may be imposed without the actual knowledge of the seller. In order to enliven the seller's duty to provide goods fit for the particular purpose, the purpose must have been 'expressly impliedly made known to the seller'.[234] In determining the seller's particular purpose obligation, there are two distinct issues: first, the threshold issue of whether a purpose is made known, and second, the substantive content of the duty .

As to the first issue, the particular purpose need not be an express or implied term of the contract.[235] A proposal that the particular purpose must be a term of the contract was rejected at the 1980 Diplomatic Conference.[236] The effect of Article 8(3) is that the particular purpose may arise from the circumstances,[237] [page 117] including negotiations, the purpose of the contract and other standards by which fulfilment of the contract is judged.[238] Indeed, in the view of some commentators, Article 35(2)(b) is applicable only when the particular purpose is not an express term of the contract, as in other cases the purpose will be a contractual description under Article 35(1).[239] It is irrelevant that the seller had actual knowledge of the particular purpose.[240] The test is objective: the seller must have been put in a position to be able to recognise the purpose.[241] This is similar to the UCC, where the seller must have 'reason to know'.[242]

The second issue concerns the extent of the seller's duty. The more information that is available to the seller and the more specific the information, the greater the content of the seller's duty.[243] Indeed, in complex transactions, the seller's particular purpose duty may be nominal unless the specifics of the purpose are made known. This is underscored by a judgement of the Landgericht Regensburg.[244] The buyer claimed that fabrics supplied by the seller were of an unsuitable quality and size to be cut in economical manner. The Court held that as the buyer had not indicated the requirements for 'economical use', the seller could not have understood that this required any particular quality or size of fabric. Hence, the seller was not put in a position judge the required characteristics for the particular purpose, and the content of duty was essentially non-existent.

The same principle was applied with the opposite result in a decision of the Landgericht München,[245] where the purpose was made known in sufficient detail. The goods were motorised, rotating video screen mounts (referred to as 'globes'), which were intended to be used as permanent promotional displays in the seller's showrooms. The globes were manufactured in such as way that they were suitable for short advertising campaigns but not for use as a permanent fixture. Finding in favour of the buyer, the court said that it was made known in a 'crystal clear and recognisable' way that the intended promotion was ongoing and not merely a short advertising campaign.[246] The decisions demonstrate the need for [page 118] merchants to be mindful of the need to communicate properly when engaging in international trade.

Reliance on the seller's skin and judgement

The second limb of Article 35(2)(b) provision that the seller has no obligation in relation to particular purpose 'where the circumstances show that the buyer did not rely, or that it was unreasonable for him to rely, on the seller's skill and judgement'. The burden is on the seller to demonstrate that there has been no reliance by the buyer.[247]

The question of whether there is reliance must be evaluated on a case-by-case basis.[248] Nevertheless, general rules of application have emerged from both doctrinal and judicial authority. There will be reliance if the seller is a 'specialist or expert in the manufacture or procurement of goods for the particular purpose',[249] or if there is a 'technical gap' between the parties.[250]

The basic presumption is that the buyer will be presumed to rely on the seller,[251] except where such reliance is unjustified.[252] However, this presumption is not necessarily valid for non-physical aspects of the goods. This is because the presumption is based on the sphere of influence principle: The seller is generally responsible for manufacturing or procuring the goods and is therefore in a better position to determine the fitness of the goods.[253] Thus, the conformity is generally in the seller's economic sphere of influence However, this will not be the case [page 119] if the buyer is better able to judge the characteristic.[254] If the particular purpose relates to market-related factors, the question of whether reliance is reasonable will depend on whether the buyer or seller has more influence over that factor. Hence, where a product does not have existing brand recognition in the seller's country, it is unlikely that the buyer would reasonably rely on the seller to make judgements in respect of the product's brand.

In contrast, some kinds of goods, such as Fast Moving Consumer Goods (MCGs), are often promoted internationally through global brands. For example, the products of Coca-Cola, Kodak and Unilever are marketed under the same brands around the world.[255] In the case of such global brands, the brand recognition and reputation of the goods will typically be in the seller's sphere of influence.

The 'brand name defence'

In the view of some commentators, there will be no reliance if the buyer has 'insisted on a particular brand'[256] (except where this is because the seller has indicated that the brand is suitable [257] ). If this were true, it would seem that a buyer could not successfully assert that the goods were not fit for their particular purpose because of damage to the brand or reputation of the goods. However, it is the author's view that this is incorrect. This position seems to stem from Hyland's analysis of the seller's duties under the CISG in light of provisions in the UCC [258] However, a closer reading reveals that Hyland's comments have been misinterpreted:

'Actual reliance is difficult to prove directly, and no set of presumptions can make the necessarily fine distinctions. Under the UCC, for example ... [i]f the buyer ... or insists on a particular brand ... there may have been no reliance.'[259] [page 120]

This is merely an example of the difficulties in identifying whether there has been reliance and does not purport to set a rule of application for the CISG. Indeed, the effect of these comments is that reliance must in each case be shown on the facts and introducing general presumptions would be counterproductive.

Furthermore, even if the position under US law were applicable to the CISG, the existence of a brand name is not conclusive to whether the buyer has relied, but is merely one factor to be taken into account. The present 'brand name defence, has its antecedent in the Uniform Sales Act 15(4) 'In the case of a contract to sell or a sale of a specified article under its patent or other trade name, there is no implied warranty as to its fitness for a particular purpose'.

This provision was not interpreted literally 'since a mere purchase under a trade name does not prove that the purchaser is not relying at all on the skill and judgment of the seller'.[260] The current enactment of this principle is even more limited. The operative part of the current particular purpose provision (UCC 1302.28) does not mention the brand defence. Official Note 5 to this provision states that 'the existence of a patent or other trade name and the designation of the article by that name, or indeed in any other definite manner, is only one of the facts to be considered on the question of whether the buyer actually relied on the seller'.[261]

The comment goes on to say, 'If the buyer himself is insisting on a particular brand he is not relying on the seller's skill and judgment and so no warranty results'. This is difficult to reconcile with the stated rejection of conclusive rules in determining whether there is reliance. Indeed, this comment is contrary to case law under the stricter provision it replaced. In McNeil & Higgins v. Czarnikow-Rienda [262] the Court noted that the buyer requesting a particular brand does so 'because he expects the delivery to have at quality', and that the seller 'is in a position to know whether the delivery conforms with those expectations'. Furthermore, adopting the conclusive rule would exclude the seller's duty in cases which, in every other respect, are prototypical of this provision. In one example,[263] a buyer requests drill bits of a particular size for drilling holes in hardened steel, and the seller provides drill bits that are suitable for ordinary but not hardened steel, and are therefore unfit for their particular purpose, As the seller knows the characteristics of the goods better than the buyer, it is probable that there is reliance.[264] It would be an absurd outcome if the seller escaped liability merely because the buyer had requested a particular brand of drill bit. Hence, although a choice of brand or trademark may indicate that the seller has relied on its on skill and judgement, this is merely one factor to consider. Where the buyer alleges the [page 121] brand itself renders the goods non-conforming, it seems unlikely that the 'brand name defence' will succeed.

Conclusion

It is common for the quality or description of the goods to incorporate some elements that are not part of the physical goods, and such requirements should not be seen as novel. The prime consideration in determining the seller's obligation under the CISG is the intention of the parties. Article 35 is structured to create rules of interpretation rather than of binding force. Therefore, where the parties have made it an express term of the contract may indeed require goods that have brand equity or reputation of a certain description.

The text of the CISG emphasises the need to uphold the intention of the parties, including with reference to any trade usages. The notion of 'brand equity' is accepted in the commercial world and will often form a part of these trade usages. Tribunals and Courts should be mindful of the parties' understanding of 'brand equity' as part of the goods, as the parties may often consider this a contractual requirement of the good. Although concepts of branding are typically dealt with using intellectual property concepts such as trademarks and other legal notions such as 'goodwill', this treatment is not exhaustive. Such notions are apt to deal with the existence of the brand; however, the content of the brand fails to be dealt with under the principle of conformance.

As this duty is expansive, imposing an absolute liability for defects that exist when risk passes to the seller, it is critical for the parties to clearly articulate the aspects of the goods that they intend to form part of the conformance duty. This is especially important for goods such as consumer goods, where marketing and brand issues are highly relevant to the usability of the goods. Where the parties have failed to clearly articulate their intention, the requirement of the goods will be determined according to the rules in Article 8, and more generally, the sphere of influence principle that permeates the CISG.


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FOOTNOTES

1. René Franz Henschel, The Conformity of Goods in International Sales (2005), 23, emphasis in original.

2. Larry DiMatteo et al., 'The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence' (2004) 24 Northwest Journal of International Law and Business 299, 392.

3. Art. 6 states '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'.

4. 15 October 2002, Netherlands Arbitration Institute, no.2319 ('Rijn Blend' case); United Nations, Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March 1980, 32.

5. Art. 35(2)(b) CISG.

6. Peter Schlechtriem, 'Uniform Sales Law in the Decisions of the Bundesgerichtshof' in 50 Years of the Bundesgerichshof A Celebration Anthology from the Academic Community (2001), para 4.1.

7. See Chapter 1 CISG.

8. Art. 2(d).

9. Art. 2(f).

10. Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 29; John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 21; Joseph Lookofsky, Understanding the CISG in Scandinavia (1996), 58.

11. Franco Ferrari, 'Recent Developments: CISG' (199) 15 Journal of Law and Commerce 1, 66.

12. 25 August 1994, Oberlandesgericht Köln, 19 U 28293 ('Market Study' case), in CLOUT no. 122, available at <http://cisgw3.law.pace.edu/cases/940826g1.html>

13. Franco Ferrari, 'Recent Developments: CISG' (1997) 15 Journal of Law and Commerce 1, 65 FN 431.

14. 20 December 1993, Hungarian Chamber of Commerce and Industry Court of Arbitration, AZ Vb 92205 ('Shares of stock' case), in CLOUT no. 161: Franco Ferrari, 'Recent Developments: CISG' (1997) 15 Journal of Law and Commerce 1, 64; John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 51; Teija Poikela, 'Conformity of Goods in the 1980 United Nations Convention of Contract for the International Sale of Goods' (2003) 2003 #1 Nordic Journal of Commercial Law, 12.

15. United States -- goods must be 'movable' (UCC -105(1)); United Kingdom -- goods must be tangible (St Albans City and District Council v International Computers Ltd 1994, Court of Appeal of England and Wales, in [1996] 4 All ER 481, 493).

16. Joseph Lookofsky, 'In Dubio Pro Conventione? Some Thoughts about Opt-Outs, Computer Programs and Preemption under the 1980 Vienna Sales Convention (CISG)' (2003) 13 Duke Journal of Comparative & International Law 263.

17. Trevor Cox, 'Chaos versus uniformity: the divergent views of software in the International Community' (2000) Vindobona Journal of International Commercial Arbitration 3-29, para 1.

18. Franco Ferrari, 'Recent Developments: CISG' (199) 15 Journal of Law and Commerce 1, 66.

19. Frank Diedrich, 'Maintaining Uniformity in International Uniform Law Via Autonomous Interpretation: Software Contracts and the CISG (1996) 8 Pace International Law Review 303-338, 336; Arthur Fakes, 'The Application of the United Nations Convention on Contracts for the International Sale of Goods to Computer, Software and Database Transactions' (1990) 3 Software Law Journal 559, 582.

20. Arthur Fakes, 'The Application of the United Nations Convention on Contracts for the International Sale of Goods to Computer, Software and Database transactions' (1990) 3 Software Law Journal 559, 582.

21. Joseph Lookofsky, 'In Dubio Pro Conventione. Some Thoughts about Opt-Outs, Computer Programs and Preemption Under the 1980 Vienna Sales Convention (CISG)' (2003) 13 Duke Journal of Comparative & International Law 263,277-8.

22. On virtual property see generally Joshua Fairfield, Virtual Property' (2005) 85 Boston University Law Review 1047.

23. Peter Schlechtriem. 'Requirements of Application and Sphere of Applicability of the CISG' (2005) 35 Victoria University of Wel1ington Law Review 81-794,787.

24. John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 58.

25. Landgericht München, 1995 #79@para 1; 25 August 1994, Oberlandesgericht Köln, 19 U 282/93 ('Market study' case), in CLOUT no. 122 available at <http://cisgw3.law.pace.edu/cases/940826g1.html>, para 2; Frank Diedrich, 'Maintaining Uniformity in International Uniform Law Via Autonomous Interpretation: Software Contra and the CISG' (1996) 8 Pace International Law Review 303-338, 327.

26. L M Hutcheson, 'The Exclusion of Embedded So are and Merely Incidental Information from the Scope of Article 28' (1998) 13 Berkeley Technology Law Journal 997, 977.

27. 25 August 1994, Oberlandesgericht Köln, 19 U 28 /93 ('Market study' case), in CLOUT no.122, available at<http://cisgw3.law.pace.edu/cases/940826g1.html>, para 2; J Mowbray, 'The Application of the United Nations Convention on Contracts for the International Sale of Goods to E-Commerce Transactions: The Implications for Asia' (2003) 7 Vindobona Journal of International Commercial Law and Arbitration 121,128-129.

28. Vivian a. Curran, 'The Interpretive Challenge to Uniformity' (1995) 15 Journal of Law and Commerce 175-159, 181, fu 14; John O. Honnold. Uniform Law for International Sales under the 1980 United Nations Convention (1999), 92; Warren Khoo, 'Article 4' in C. Massimo Bianca and Michael Bonell (eds), Commentary on the International Sales Law (1987), 42.

29. Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 36.

30. 1992, Court of Arbitration of the International Chamber of Commerce, 7153 of 1992 ('Hotel materials' case), in 14 Journal of Law and Commerce 217; CLOUT no.26, available at <http://cisgw3.law.pace.edu/cisg/wais/db/cases2/927153i1.html>

31. Albert H. Kritzer, 'Editorial Remarks [ICC Arbitration Case No.7153 of 1992] ' <http://cisgw3.law.pace.edu/cisg/wais/db/cases2/927153i1.html> accessed on 10 Apri1 2008.

32. 23 July 1997, Bundesgerichtshof, VIII ZR 134/96 (Benetton II' case), available at <http://cisgw3.law.pace.edu/cases/970723g2.html>

33. Peter Schlechtriem. 'Uniform Sales Law in the Decisions of the Bundesgerichtshof' in 50 Years of the Bundesgerichshof: A Celebration Anthology from the Academic Community (2001), para 2(b).

34. 23 July 1997, Bundesgerichtshof, VIII ZR 134/96 ('Benetton II' case), available at <http://cisgw3.law.pace.edu/cases/970723g2.html>.

35. 8 January 1997, Obergericht des Kantons Luzern. I 95 123/357 available at <http://cisgw3.law.pace.edu/cases/970108s1.html>

36. Ibid, para 3.

37. Medical Marketing v. Internationale Medico Scientifica, 1999, Eastern District of Louisiana District Court, 99-0380 Section 'K' (1) in CLOUT no. 418, available at <http://cisgw3.law.pace.edu/cases//990517u1.html>.

38. The meaning of objective and subjective in this context are distinct from their meaning in interpreting statements made by a party.

39. Susan McDowel1 Mudambi, Peter Doyle and Veronica Wong, 'An exploration of branding in industrial markets' (1997) 26(5) Industrial Marketing Management 433-446, 438.

40. Ibid.

41. Ibid, 450.

42. Ibid, 438.

43. Hansen, Håvard, Samuelsen, Bendik M and Silseth Pål R., 'Customer perceived value in B-to-B service relationships: Investigating the importance of corporate reputation' (2008) 37 Industrial Marketing Management 206-217, 207.

44. Oxford English Dictionary (2nd edn, 1989), s.n. 'brand'.

45. James Mitchiner, 'Intellectual Property in Image -- A Mere Inconvenience' (2003) 2003(2) Intellectual Property Quarterly 163-208, 182.

46. Oxford English Dictionary (2nd edn, 1989), s.n. 'brand'.

47. Black's law dictionary (8th edn, 2004), 'brand'.

48. Thomas Roberts, 'Commercial Impossibility and Frustration of Purpose: A Critical Analysis' (2003) 16 Canadian Journal of Law & Jurisprudence 129,134.

49. Mike Bendixen, Kalala A. Bukasa and Russell Abratt, 'Brand equity in the business-to-business market' (2004) 33(5) Industrial Marketing Management 371-380, 377.

50. Ibid.

51. Ibid; see also Steve Hartman, 'Brand Equity Impatient -- The Meaning of Dilution' (1997) 87 The Trademark Reporter 418-435, 420.

52. Oded Shenkar and Ephraim Yuchtman-Yaar, 'Reputation, image, prestige, and goodwill: an interdisciplinary approach to organizational standing' (1997) 50(11) Human Relations 1361, 1366.

53. Steve Hartman, 'Brand Equity Impairment -- The Meaning of Dilution' (1997) 87 The Trademark Reporter 418-354, 418.

54. Paris Convention for the Protection of Industrial Property, 20 March 1883.

55. Article 6 bis.

56. Article 9(1).

57. Article 10(1).

58. World Intellectual Property Organization Copyright Treaty, 20 December 1996, Art. 2(viii).

59. Christian Rauda and Guillaume Etier, 'Warranty for Intellectual Property Rights in the International Sale of Goods' (2000) 4(1) Vindobona Journal of International Commercial Law and Arbitration 30--6l, 34; Julius von Staudinger and Ulrich Magnus, Kommentar zum Bürgerlichen Gesetzbuch mil Einführungsgesetz und Nebengesetzen -- Wiener UN-Kaufrecht (CISG) (13th ed. 1995), Art. 42 para 12.

60. Christian Rauda and Guillaume Etier, 'Warranty for Intellectual Property Rights in the International Sale of Goods' (2000) 4(1) Vindobona Journal of International Commercial Law and Arbitration 30--61, 34.

61. See also Fitz Enderlein and Dietrich Maskow, International Sales Law (l992), 168; Peter Schlechtriem, Uniform Sales Law: The UN Convention Contracts for the International Sale of Goods (1986), 74.

62. Art 42(2)(a) CISG: 'The obligation of the seller under the preceding paragraph does not extend to cases where: ... at the time of the conclusion of the contract the buyer knew or could not have been unaware of the right or claim'.

63. Art 35(3) CISG: 'The seller is not liable under subparagraphs (a) to (d) of the preceding paragraph 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 conformity .

64. Peter Schlechtriem, Uniform Sales Law: The UN Convention on Contracts for the International Sale of Goods (1986), 74; Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 168.

65. See World Intellectual Property Organization Copyright Treaty, 20 December 1996, Arts. 13, 17, 26(2), 30, 3l(g), 34(3).

66. United States -- Section 110(5) Of the US Copyright Act, 2000, WTO Dispute Settlement Body, WT/DSl60, available at <http://www.wto.org/english/tratop_e/dispu_e/distab_e.htm>, 27-9.

67. 1999, Court of Arbitration of the International Chamber of Commerce, 9773 of 1999 ('Buckwheat' case), available at <http://cisgw3.law.pace.edu/cases/999773i1.html>, para 55; C. Massimo Bianca and Michael Bonell, Commentary on the International Sales Law: the 1980 Vienna Sales Convention (1987), 276.

68. 19 March 2002, Cour de Cassation, T 00--14.414, Arrêt no. 526 F-P ('Footwear' case), in CLOUT no.479; UNILEX no.758, available at <http://www.cisg.law.pace.edu/cases/020319f1.html>

69. Maglificio Esse v. Wehkamp B.V., 1996, Gerechtshofs Arnhem, 95/246, in Nederlands Internationaal Privaatrecht (1996) no.398; UNILEX no.335.

70. Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 168; Christian Rauda and Guillaume Etier, 'Warranty for Intellectual Property Rights in the International Sale of Goods' (2000) 4(1) Vindobona Journal of International Commercial Law and Arbitration 30-61, 46-47.

71. Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 168; Christian Rauda and Guillaume Etier, 'Warranty for Intellectual Property Rights in the International Sale of Goods' (2000) 4(1) Vindobona Journal of International Commercial Law and Arbitration 30-61,47; Peter Schlechtriem, Uniform Sales Law: The UN Convention on Contracts for the International Sale of Goods (1986), 74.

72. James Mitchiner, 'Intellectual Property in Image -A Mere Inconvenience' (2003) 2003(2) Intellectual Property Quarterly 163-208, 182-183.

73. Federal Commissioner of Taxation v Murry, 16 June 1998, High Court of Australia, [1998] HCA 42, in (1998) 193 CLR 605; Fine v Laband, 18 July 1983, Court of Appeals of Washington, No. 9468-8-1 in 667 P.2d 101; Inland Revenue Commissioners v Muller & Co's Margarine, Ltd, 20 May 1901. House of Lords, in [1900-1903] All ER 13.

74. See generally Paul Roubier, 'Droits intellectuels ou droits de clientèle' (1935) 34 Revue Trimestrielle de Droit Civil 251; Djakhongir Saidov. 'Damages: The Need for Uniformity' (2005) 25 Journal of Law and Commerce 393, 392.

75. CISG Advisory Council, Opinion No. 6: Calculation of Damages under GISG Article 74 (2006), para 7.2; Principles of European Contract Law (PE L) Art 9:501(2)(A); UNIDROIT Principles of International Commercial Contracts Art 7.4.2.

76. Hart v Smith, 27 June 1902, Supreme Court of India, in 64 NE 661.

77. High Court of Australia. 1998 #154; House of Lords. 1901 #155; In re Brown, 25 November 1926, Court of Appeals of New York, in 242 N.Y. 1.

78. Red Wing Malting Go v Willcuts, 5 November 1926, 8th Circuit Court of Appeals; Geraghty v Minter, 20 September 1979. High Court of Australia, in 142 CLR 177 .

79. Steve Hartman, 'Brand Equity Impairment -- The Meaning of Dilution' (1997) 87 The Trademark Reporter 418-345, 422.

80. CISG Advisory Council, Opinion No. 6: Calculation of Damages under CISG Article 74 (2006). para 7.

81. For cases where the buyer failed to prove the loss, see 10 February 1999, Handelsgericht Zurich. HG 970238.1 ('Art books' case), in CLOUT no. 31, available at <http://cisgw3.law.pace.edu/cases/990210s1.html>; 9 May 2000, Landericht Darmstadt, 10 O 72/00 ('Video recorders' case), in CLOUT no.343, available at <http://cisgw3.law.pace.edu/cases/000509g1.html>

82. NV Maes Roger v NV Kapa Reynolds. 2004, Hof v Beroep Gent, 2003/AR/2026, available at <http://cisgw3.law.pace.edu/cases/0405l0b1.html>

83. Ibid, para 1.2.1.

84. Ibid, para 1.2.4.

85. Ibid, para 2.7.

86. 21 March 1996, Schiedsgericht der Handelskammer Hamburg, available at <http://cisgw3.law.pace.edu/cases/960321g1.html>, para 9.

87. 9 May 2000, Landericht Darmstadt, 10 O 72/00 ('Video recorders' case), in CLOUT no. 343, available at <http://cisgw3.law.pace.edu/cases/000509g1.html>.

88. 10 February 1999, Handelsgericht Zurich, HG 9702 8.1 ('Art books' case), in CLOUT no. 331, available at <http://cisgw3.law.pace.edu/cases/990210s1.html>

89. Ibid, para 3.1(c).

90. Djakhongir Saidov, 'Damages: The Need for Uniformity' (2005) 25 Journal of Law and Commerce 393, 398-9.

91. CISG Advisory Council, Opinion No. 6: Calculation of Damages under CISG Article 74 (2006), para 7.3.

92. Rent Franz Henschel, The Conformity of Goods in International Sales (2005), 149; Sonja Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept? (2004), 26.

93. Fritz Enderlein, 'Rights and Obligations of the Sell under the UN Convention on Contacts for the International Sale of Goods' in Petar Sarcevic and Paul Volken (eds), International sale of goods: Dubrovnik lectures (1986) 133-201, 155.

94. C. Massimo Bianca and Michael Bonell, Commentary on the international sales law: the 1980 Vienna Sales Convention (1987), 270; Fritz Enderlein 'Rights and Obligations of the Seller under the UN Convention on Contracts for the International Sale of Goods' in Petar Sarcevic and Paul Volken (eds), International sale of goods: Dubrovnik lectures (1986) 133-201, 141; Rent Franz Henschel, The Conformity of Goods in International Sales (2005), 149; Sonja Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept? (2004), 26.

95. See Sonja Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept? (2004), 26.

96. Secretariat Commentary, A/CONF./97/5, Commentary to1978 Draft Convention, Art. 33, para 3.

97. Sonja Kruisinga, (Non-)conformity in the 1980 Convention on Contracts for the International Sale of Goods: a uniform concept? (2004), 123; Peter Schlechtriem, 'Uniform Sales Law in the Decisions of the Bundesgerichtshof' in 50 Years of the Bundesgerichshof: A Celebration Anthology from the Academic Community (2001), para 2.

98. 24 March 1999, Bundesgerichtshof, VIII ZR 12 /98, available at <http://cisgw3.law.pace.edu/cases/990324g1.html>

99. Ibid, para 2(b).

100. Ibid.

101. Peter Schlechtriem, 'Uniform Sales Law in the Decisions of the Bundesgerichtshof in 50 Years of the Bundesgerichshof: A Celebration Anthology from the Academic Community (2001), para 2.

102. Arnau Muriá Tuñón, The Actio Quanti Minoris and Sales of Goods Between Mexico and the U.S.: An Analysis of the Remedy of Reduction of the Price in the UN Sales Convention, CISG Article 50 and its Civil Law Antecedents (1998) Pace Law School Institute of Commercial Law <http://www.cisg.law.pace.edu/cisg/biblio/muria.html> at 9 Apri1 2008, para 2.1.

103. Ibid, para 4.3.5.

104. René Franz Henschel, The Conformity of Goods in International Sales (2005), 66; René Franz Henschel, 'Conformity of Goods in International Sales Governed by the CISG: Article 35: Caveat Venditor, Caveat Emptor and Contract Law as Background Law and as a Competing Set of Rules' (20041 (2004 #1) Nordic Journal of Commercial Law, 2.

105. René Franz Henschel, The Conformity of Goods in International Sales (2005), 65.

106. Ibid, 67.

107. 8 March 1995, Bundesgerichtshof, VIII ZR 159/ ('New Zealand Mussels' case), available at <http://cisgw3.law.pace.edu/cases/950308g3.html>

108. Ibid, para II(1)(b)(bb), II(1)(b)(bb)(bbb).

109. Ibid, para II(1)(b)(bb)(bbb).

110. See, for example, C. Massimo Bianca and Michael Bonell, Commentary on the international sales law: the 1980 Vienna Sales Convention (1987), 274; Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 144; René F Henschel, The Conformity of Goods in International Sales (2005), 201.

111. Joseph Lookofsky, 'The 1980 United Nations Convention on Contracts for the International Sale of Goods' in J Herbots (ed), International Encyclopaedia of Laws --Contracts (2000), 69.

112. 2 March 2005, Bundesgerichtshof, VIII ZR 67/04 ('Frozen pork' case), available at <http://cisgw3.law.pace.edu/cases/050302g1.html>; René Franz Henschel, The Conformity of Goods in International Sales (2005), 200.

113. 8 March 1995, Bundesgerichtshof, VIII ZR 159/ ('New Zealand Mussels' case), available at <http://cisgw3.law.pace.edu/cases/950308g3.html>, para II(1)(b)(bb)(ddd).

114. Ibid, para II(l)(b)(bb)(bbb).

115. Peter Schlechtriem, 'Uniform Sales Law in the Decisions of the Bundesgerichtshof' in 50 Years of the Bundesgerichshof: A Celebration Anthology from the Academic Community (2001), para I.

116. Joseph Lookofsky, 'The 1980 United Nations Convention on Contracts for the International Sale of Goods' in J Herbots (ed), International Encyclopedia of Laws --Contracts (2000), 69.

117. John Erauw, 'CISG Articles 66-70: The Risk of Loss and Passing It' (2005) 25 Journal of Law and Commerce 203-217, 216.

118. Article 6 allows parties to 'derogate from or vary the effect' of any provision of the convention. This is typically accomplished by adopting an INCOTERM in the contract of sale.

119. Zoi Valioti. 'Passing of Risk in international sale contracts: A comparative examination of the rules on risk under the United Nations Convention Contracts for the International Sale of Goods (Vienna 1980) and INCOTERMS 2000' (20) (2004 #2) Nordic Journal of Commercial Law, 9-10.

120. Zoi Valioti, 'Passing of Risk in international sale contracts: A comparative examination of the rules on risk under the United Nations Convention Contracts for the International Sale of Goods (Vienna 1980) and INCOTERMS 2000' (20) (2004 #2) Nordic Journal of Commercial Law, FN 63.

121. Switzerland, Zivilgesetzbuch (Civil Code), Art. 18.

122. Spain, Código Civil (Civil Code), Art. 1452.

123. Netherlands, Burgerlijk Wetboek (Civil Code), 1496.

124. Peter Schlechtriem, Commentary on the UN Convention on the International Sale of Goods (2nd edn. 1998), 506.

125. 23 January 2006, Oberlandesgericht Linz, 6 R 160 05z ('Auto' case), available at <http://cisgw3.law.pace.edu/cases/060123a3.html>, para 3.3.

126. Sy1vain Bolléee. 'The Theory of Risks in the 1980 Vienna Sale of Goods Convention' (1999) 1999-2000 Pace Review of the Convention on Contracts for the International Sale of Goods 245-290, 282.

127. Sonja Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept? (2004), 35.

128. Thomas Roberts, 'Commercial Impossibility and Frustration of purpose: A Critical Analysis' (2003) 16 Canadian Journal of Law & Jurisprudence 129, 132.

129. John Erauw, 'CISG Articles 66-70: The Risk of Loss and Passing It' (2005) 25 Journal of Law and Commerce 203-217, 206.

130. A contract arises when an offer is accepted (CISG Art. 23). This offer is only effective if it 'fixes or makes provision for determining the quantity price' (CISG Art. 14(1)).

131. 11 June 1997, Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, 255/1994, available at <http://cisgw3.law.pace.edu/cases/970611r1.html>, 3.3.

132. 21 March 1997, Oberlandesgericht Hamburg, 1 U 167195 ('Iron molybdenum' case), available at <http://www.cisg.law.pace.edu/cases/970228g1.html>, para 2(d).

133. Georg Simmel, The Philosophy of Money (3rd 2004), 63.

134. Kunsthaus Mathias Lempertz OHG v. Wilhelmina van der Geld, 17 July 1997, Arrondissementsrechtbank Arnhem, 97/805, in Nederlands Internationaal Privaatrecht, 1998, nr 107.

135. Ibid, para 10.

136. Ibid.

137. John Erauw, 'CISG Articles 66-70: The Risk of Loss and Passing It' (2005) 25 Journal of Law and Commerce 203-217, 206.

138. René Franz Henschel, 'Conformity of Goods in International Sales Governed by the CISG: Article 35: Caveat Venditor, Caveat Emptor and Contract was Background Law and as a Competing Set of Rules' (2004) (2004 #1) Nordic Journal of Commercial Law, 5-6,

139. John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 477.

140. John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (2nd edn, 1990), 543.

141. See also 1996, Bulgarian Chamber of Commerce and Industry, 11/1996 ('Steel ropes' case), available at <http://www.cisg.law.pace.edu/cases/980212bu.html>; 11 June 1997, Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, 255/1994, available at <http://cisgw3.law.pace.edu/cases/970611r1.html>.

142. 21 March 1997, Oberlandesgericht Hamburg, 1 U 167/95 ('Iron molybdenum' case), available at <http://www.cisg.law.pace.edu/cases/970228g1.html>.

143. 26 August 1989, Court of Arbitration of the International Chamber of Commerce, No. 6281 ('Steel bars' case), available at <http://www.cisg.law.pace.edu/cases/896281i1.html>.

144. The antecedent of the CISG.

145. Société Romay AG v. SARL Behr France 2001, our d'Appel Colmar, in CLOUT no.480, available at <http://cisgw3.law.pace.edu/cases/010612f1.html>.

146. Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 325.

147. G David Haushalter, 'Financing Policy, Basis Risk and Corporate Hedging: Evidence from Oil and Gas Producers' (2000) 55(1) The Journal of Finance 107-152.

148. C. Massimo Bianca and Michael Bonell, Commentary on the International sales law: the 1980 Vienna Sales Convention (1987), 2.3.

149. René Franz Henschel, The Conformity of Goods in International Sales (2005), 162.

150. Peter Huber and Ingeborg Schwenzer, 'Obligations of the seller' in Peter Schlechtriem (ed), Commentary on the UN Convention on the International Sale of Goods (CISG) (2nd edn, 1998), Art. 35 para 9.

151. René Franz Henschel, The Conformity of Goods in International Sales (2005), 162.

152. 1996, Oberlandesgericht Köln, 22 U 4/96 ('Used car' case), available at <http://cisgw3.law.pace.edu/cases/960521g1.html>, para 1.

153. Peter Huber and Alastair Mullis, The CISG: A Textbook for Students and Practitioners (2007), 132.

154. Steinbock-Bjonustan EHF v NV Duma, 4 June 2004 Rechtbank van Koophandel, AR 21 36/2003, available at <http://cisgw3.law.pace.edu/cases/040604b1.html>; 3 April 1996, Bundesgerichtshof, VIII ZR 51/95 ('Cobalt Sulphate' case), available at <http://cisgw3.law.pace.edu/cases/960403g1.html>.

155. 5 September 1994, CIET AC, CISG/1994/10, available at <http://cisgw3.law.pace.edu/cases/940905c2.html>.

156. Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer, 2 April 1998, European Court of Justice, C-39/97, available at <http://oami.europa.eu/EN/axk/aspects/pdf/JJ970039.pdf>, [28] ; Joshua Krane, 'Flues and Suits: The Case Against Veuve Cliquot Ponsardin and its Claim to Brand Extension' (2006) 64 University of Toronto Law Review 129, 133.

157. 1996, Oberlandesgericht Köln, 22 U 4/96 ('Used car' case), available at <http://cisgw3.law.pace.edu/cases/960521g1.html>.

158. Ibid, para 1.

159. 13 September 2006, Landgericht Berlin, 94 O 50/ ('Aston Martin' case), available at <http://cisgw3.law.pace.edu/cases/060913g1.html>.

160. 1996, Oberlandesgericht Köln, 22 U 4/96 ('Used car' case), available at <http://cisgw3.law.pace.edu/cases/960521g1.html>.

161. 5 September 1994, CIETAC, CISG/1994/10, available at <http://cisgw3.law.pace.edu/cases/940905c2.html>.

162. Kunsthaus Mathias Lempertz OHG v. Wilhelmina van der Geld. 17 July 1997, Arrondissementsrechtbank Arnhem, 97/805, in Nederlands Internationaal Privaatrecht, 1998, ur 107.

163. Ibid, para 10.

164. Ibid, para 11.

165. Ibid, para 11.

166. Maria L Loureiro, Jill J. McCluskey and Ron C. Mittelhammer. 'Will Consumers Pay a Premium for Eco-labeled Apples?' (2002) 36(2) Journal of consumer Affairs 203-219.

167. Alyson Warhurst, 'Future roles of business in society: the expanding boundaries of corporate responsibility and a compelling case for partnership' (2005) 37(2-3) Futures 151-168.

168. Wanki Moon and Siva K. Balasubramanian. 'Willingness to Pay for Non-biotech Foods in the U.S. and U.K' (2003) 37(2) Journal of Consumer Affairs 317-339.

169. 22 August 2003, Appellationsgericht Basel-Stadt, 3/2002/SAS/so ('Soyprotein products' case), in 5 Internationales Handelsrecht (3/2005) 117, available at <http://cisgw3.law.pace.edu/case/030822s1.html>, para 2.

170. Ibid, para 3.

171. 13 November 2002, Oberlandesgericht München, U 346/02 ('Organic barley' case), in [2003] NJW-RR 12, 849, Unilex no. 992, available at <http://cisgw3.law.pace.edu/cases/021113g1.html>, para 1.

172. Ibid.

173. Ibid.

174. Ibid.

175. Ibid.

176. 2000. CIETAC, CISG/2000/17 ('Souvenir coins' case), available at <http://cisgw3.law.pace.edu/cases/000000c1.html>.

177. Ibid, para 2.

178. Richard Hyland, 'Conformity of Goods to the Contract Under the United Nations Sales Convention and the Uniform Commercial' in Peter Schlechtriem (ed), Einheitliches Kaufrecht und nationals Obligationenrecht (1987) 94-95.

179. 1999, Court of Arbitration of the International Chamber of Commerce, 9187/1999, in ICC Bulletin 11(2),95; 16 July 2001, Oberlandesgericht Köln, 16 U 22/01, available at <http://cisgw3.law.pace.edu/cases/010716g1.html>; E Allan Farnsworth, 'Article 8' in C. Massimo Bianca and Michael Bonell (eds), Commentary on the International Sales Law (1987) 95-102, 99; Joseph Lookofsky, Understanding the CISG in the USA (2004), 40-41; Henry Mather, 'Firm Offers under the UCC and the CISG' (2000) 105 Dickinson Law Review 31-56, 47.

180. Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 62; Richard Hyland, 'Conformity of Goods to the Contract Under the United Nations Sales Convention and the Uniform Commercial Code' in Peter Schlechtriem (ed), Einheitliches Kaufrecht und nationals Obligationenrecht (1987), 97; John E Murray, 'Essay on the Formation of Contracts and Related Matters under the United Nations Convention on Contracts for the International Sale of Goods' (1988) 8 Journal of Law and Commerce 11, 46-47; Chad Leng Sun. 'Interpreting an International Sale Contract' in Celebrating Success: 25 Years United Nations Convention on Contracts for the International Sale of Goods (200), 76.

181. René Franz Henschel, The Conformity of Goods in International Sales (2005), 98; Richard Hyland, 'Conformity of Goods to the Contract Under the United Nations Sales Convention and the Uniform Commercial Code' in Peter Schlechtriem (ed), Einheitliches Kaufrecht und nationals Obligationenrecht (1987), 335.

182. Caito Roger v. Société française de factoring, 1 September 1995, Cour d'Appel Grenoble, 93/4126, available at <http://www.cisg.law.pace.edu/cases/950913f1.html>.

183. John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 118.

184. Art. 7(2) CISG.

185. A. Hartkamp, 'The UNIDROIT Principles for International Commercial Contracts and the United Nations Convention on Contracts for the International Sale of Approval' in Katharina Boele-Woelki (ed), Essays on Comparative Law, Private International Law and International Commercial Arbitration in honour of Dimitra Kokkina-Intridou (1994) 85-98; Ulrich Magnus, The General Principles of the CISG' (1997) 3 International Trade and Business Law Report 33-56, para 6(b).

186. Richard Hyland, 'Conformity of Goods to the Contract Under the United Nations Sales Convention and the Uniform Commercial Code in Peter Schlechtriem (ed), Einheitliches Kaufrecht und nationals Obligationenrecht (1987, 332; see also Henry Mather, 'Finn Offers under the UCC and the CISG' (2000) 105 Dickinson Law Review 31-56.

187. CISG Advisory Council, Opinion No. 3: Parol Evidence Rule, Plain Meaning Rule, Contractual Merger Clause and the CISG (2004), para 1; John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 140; Monica Kilian, 'CISG and the Problem with Common Law Jurisdictions' (2001) 10(2) Journal of Transnational Law and Policy 217-243, 231; John E Murray, 'An Essay on die Formation of Contracts and Related Matters under the United Nations Convention on Contracts for the International Sale of Goods' (1988) 8 Journal of Law and Commerce 11, para V,

188. E Allan Farnsworth, 'Article 8' in C. Massimo Bianca and Michael Bonell (eds), Commentary on the International Sales Law (1987) 95-102, 101; John E Murray, 'An Essay on die Formation of Contracts and Related Matters under die United Nations Convention on Contracts for the International Sale of Goods' (1988) 8 Journal of Law and Commerce 11, para V.

189. MCC-Marble Ceramic Center v. Ceramica Nuova D'Agostino, 1998, 11th Circuit Federal Appellate Court, 97-4250 in CLOUT no. 222, available at <http://cisgw3.law.pace.edu/cisg/wais/db/cases2/980629u1.html>.

190. Ibid, Para 2; see also 12 December 2006, Obergericht des Kantons Thurgau, ZBR.2006.26 ('Building materials' case), available at <http://cisgw3.law.pace.edu/cases/061212s1.html>.

191. Joseph Lookofsky, Understanding the CISG in Scandinavia (1996). 54.

192. Ibid.

193. E Allan Farnsworth, 'Article 8' in C. Massimo Bianca and Michael Bonell (eds), Commentary on the International Sales Law (1987) 95-102, 97.

194. 20 November 1992, Oberlandesgericht Karlsrube, 15 29/92, available at <http://cisgw3.law.pace.edu/cisg/wais/db/cases2/921120g1.html>; United Nations, Official Records of the United Nations Conference on Contracts for the International Sale of Goods, A/CONF./97/19, 263, para 30.

195. Richard Hyland, 'Conformity of Goods to the Contract Under the United Nations Sales Convention and the Uniform Commercial Code' in Peter Schlechtriem (ed), Einheitliches Kaufrecht und nationals Obligationenrecht (1987) 99.

196. Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), Art. 9, para 8.

197. Ibid (Art. 9, para 4).

198. Ch Pamboukis, 'The Concept and Function of Usages in the United Nations Convention on the International Sale of Goods' (2006) 25 Journal of and Commerce 107-131, 107.

199. Kunsthaus Mathias Lempertz OHG v. Wilhelmina van der Geld, 17 July 1997, Arrondissementsrechtbank Arnhem, 97/805, in Nederlands Internationaal Privaatrecht, 1998, nr 107.

200. John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 256.

201. 15 September 1994, Landgericht Berlin, 52 S 24/94 ('Shoes' case), available at <http://www.cisg.law.pace.edu/cases/940915g1.html>.

202. Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 144.

203. 15 September 1994, Landgericht Berlin. 52 S 24/94 ('Shoes' case), available at <http://www.cisg.law.pace.edu/cases/940915g1.html>; Predrag Cvetkovic, 'Remarks on the manner in which the PECL may be used to interpret or supplement Article 14 CISG' (2002) <http://cisgw3.law.pace.edu/cisg/text/anno-art-14.html>

204. 15 October 2002, Netherlands Arbitration Institute, no. 2319 ('Rijn Blend' case), para 117; Herbert Bernstein and Joseph Lookofsky, Understanding the CISG in Europe (1997), 59-60; Sonja Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept? (2004), 31.

205. John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 149; Peter Huber and Ingeborg Schwenzer, 'Obligations of the Seller in Peter Schlechtriem (ed), Commentary on the UN Convention on the International Sale of Goods (CISG) (2nd edn. 1998), 280.

206. René Franz Henschel, The Conformity of Goods in International Sales (2005), 199.

207. Ibid (190).

208. Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 144, emphasis in original.

209. C. Massimo Bianca and Michael Bonell, Commentary on the international sales law: the 1980 Vienna Sales Convention (1987), 144.

210. 15 March 1996, Oberlandesgericht Frankfurt, 25 U 00/95 ('Benetton I' case), available at <http://cisgw3.law.pace.edu/cases/960315g1.html>.

211. Ibid, para 88.

212. 2005, Swiss Chamber of Commerce for Industry and Craft; referred to in 10 October 2005, Bundesgericht, 4P.146/2005/biz ('Pocket ashtray' case), in Unilex no. 1094, available at <http://www.unilex.info>.

213. 10 October 2005, Bundesgericht, 4P.146/2005/biz ('Pocket ashtray' case), in Unilex no. 1094, available at <http://www.unilex.info>, para A(d).

214. Ibid, para C, own translation.

215. Ibid, para 11.

216. Ibid, para C.

217. 24 January 2000, Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, 54/1999, in Internationales Handelsrecht [3/2006] 114; CLOUT no. 474, available at <http://www.cisg.law.pace.edu/cases/000124r1.html>.

218. M G Rozenberg, 'Case No. 054/1999: Synopsis and commentary' (2000) 14 Ezh-Yurist, para 4.1.

219. Joseph Lookofsky, 'In Dubio Pro Conventione? Some Thoughts About Opt-Outs, Computer Programs and Preemption Under the 1980 Vienna Sales Convention (CISG)' (2003) 13 Duke Journal of Comparative & International Law 263, 77-278.

220. 2 March 2005. Bundesgerichtshof, VIII ZR 67/04 ('Frozen pork' case), available at <http://cisgw3.law.pace.edu/cases/050302g1.html>.

221. Ibid, para 11(3)(d).

222. Ibid.

223. Ibid.

224. 29 January 2004, Oberlandesgericht Frankfurt, 7 40/02, available at <http://cisgw3.law.pace.edu/cases/040129g1.html>.

225. 2 March 2005, Bundesgerichtshof, VIII ZR 67/04 ('Frozen pork' case), available at <http://cisgw3.law.pace.edu/cases/050302g1.html>, Para 11(1).

226. Ibid, Para 11(3)(d).

227. See part 3 above.

228. John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 257-258.

229. 8 March 1995, Bundesgerichtshof, VIII ZR 159/94 ('New Zealand Mussels' case), available at <http://cisgw3.law.pace.edu/cases/950308g3.html>.

230. Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 144.

231. 1995, Landgericht Ellwangen, 1 KfH O 32/95 ('Spanish paprika' case), available at <http://cisgw3.law.pace.edu/cisg/wais/db/cases2/950821g2.html>.

232. 15 October 2002, Netherlands Arbitration Institute, no. 2319 ('Rijn Blend' case); United Nations, Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March 1980, 32.

233. Peter Schlechtriem, 'Uniform Sales Law in the Decisions of the Bundesgerichtshof in 50 Years of the Bundesgerichshof: A Celebration Anthology from the Academic Community (2001), IV .1.

234. Art 35(2)(b).

235. 19 April 2007, Oberster Gerichtshof, 6 Ob 56/07 ('Scaffold hooks' case), available at <http://cisgw3.law.pace.edu/cases/070419a3.html>, para .3; Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 145; Peter Huber and Alastair Mullis, The CISG: A New Textbook for Students and Practitioners (2007), 139; Peter Huber and Ingeborg Schwenzer, 'Obligations of the seller' in Peter Schlechtriem (ed), Comment on the UN Convention on the International Sale of Goods (CISG) (2nd ed, 1998), art 35, p 17; Sonja Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the international Sale of Goods: a uniform concept? (2004), 32.

236. United Nations, Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March 1980, A/CONF.97/C.l/L.73.

237. Peter Huber and Ingeborg Schwenzer, 'Obligation of the seller' in Peter Schlechtriem (ed). Commentary on the UN Convention on the International Sale of Goods (CISG) (2nd edn, 2005), 422.

238. Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 140-141.

239. C. Massimo Bianca and Michael Bonell, Commentary on the International sales law: the 1980 Vienna Sales Convention (1987), 273; however see contra John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 257.

240. Friedrich Niggemann, 'Die Bedeutung des Inkrafttretens des UN-Kaufrechts'. 'in Hans Hoyer and Willibald Posch (eds), Das Einheitliche Wiener Kaufrecht (84; Julius von Staudinger and Ulrich Magnus, Kommentar zum Bürgerlichen Gesetzbuch mit Einfüihrungsgesetz und Nebengesetzen -- Wiener UN-Kaufrecht (CISG) (13th ed, 1995), Art. 35, para 28.

241. Schlechtriem, 1998 #47@281; René Franz Henschel, The Conformity of Goods in International Sales (2005), 230.

242. UCC 2-315.

243. Peter Huber and Alastair Mullis, The CISG: A New Textbook for Students and Practitioners (2007), 138.

244. 24 September 1998, Landgericht Regensburg, 6 O 107/98 ('Cloth' Case), available at <http://www.cisg.law.pace.edu/cases/980924g1.html>.

245. 27 February 2002, Landgericht München, 5 HK 3936/00 ('Globes' case), available at <http://www.cisg.law.pace.edu/cases/0202271.html>.

246. Ibid.

247. John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 257; Albert H. Kritzer, 'The Convention on Contracts for the International Sale of Goods: Scope, Interpretation and Resources' (1995), Cornell Review of the Convention on Contracts for the International Sale of Goods 147-187, 283.

248. C. Massimo Bianca and Michael Bonell, Commentary on the International sales law: the 1980 Vienna Sales Convention (1987), 275; Peter Huber and Ingeborg Schwenzer, 'Obligations of the seller' in Peter Schlechtriem (ed), Commentary on he UN Convention on the International Sale of Goods (CISG) (2nd ed, 2005), 421.

249. Peter Huber and Ingeborg Schwenzer, "Obligations of the seller' in Peter Schlechtriem (ed), Commentary on the UN Convention on the International Sale of Goods (CISG) (2nd edn, 2005), 205: see also Sonja Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept? (2004), 32

250. 2006, Landgericht Coburg, 22 O 38/06 ('Plants' case), available at <http://cisgw3.law.pace.edu/cases/061212g1.html>, para 2(g).

251. Karl Neumayer and Catherine Ming, Convention de Vienne Sur Les Contrats De Vente Internationales De Merchandises: Commentaire (1 93), 280; Julius von Staudinger and Ulrich Magnus. Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen -- Wiener UN-Kaufrecht (CISG) (13th ed, 1995), Art 5 para 31.

252. 2006, Landgericht Coburg, 22038/06 ('Plants' case), available at <http://cisgw3.law.pace.edu/cases/061212g1.html>, para 2(g); John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 258.

253. EP S.A. v FP Oy, 30 June 1998, Helsinki Court of Appeal, S 96/1215 ('Skin care products' case); René Franz Henschel 'Conformity of Goods in International Sales Governed by the CISG: Article 35: Caveat Venditor, Caveat Emptor and Contract Law as Background Law and as a Competing Set of Rules' (2004) (2004 #1) Nordic Journal of Commercial Law, 3-4; Julius von Staudinger and Ulrich Magnus, Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen -- Wiener UN-Kaufrecht (CISG) (13th edn, 1995), Art 35, para 32.

254. John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 258

255. Marilyn A Stone and J B McCall, International Strategic Marketing: A[n] European Perspective (2004),170.

256. Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 109; Peter Huber and Ingeborg Schwenzer, 'Obligations of the seller' in Peter Schlechtriem (ed), Commentary on the UN Convention on the International Sale of Goods (CISG) (2nd ed, 1998), An. 35 para 23; Julius von Staudinger and Ulrich Magnus, Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen -- Wiener UN-Kaufrecht (CISG) (13th 00, 1995), Art. 35 para 33.

257. Fitz Enderlein and Dietrich Maskow, International Sales Law (1992), 109; Peter Huber and Ingeborg Schwenzer, 'Obligations of the seller' in Peter Schlechtriem (ed), Commentary on the UN Convention on the International Sale of Good (CISG) (2nd edn, 1998), Art. 35 para 23.

258. Richard Hyland, 'Conformity of Goods to the Contract Under the United Nations Sales Convention and the Uniform Commercial Code' in Peter Schlechtriem (ed), Einheitliches Kaufrecht und nationals Obligationenrecht (1987), 321.

259. Ibid in (321-322, emphasis added).

260. Pabellon v Grace Line. Inc, 26 July 1951, 2nd Circuit Court of Appeals, No. 264, Docket 22000, in 191 F.2d 169, para 6.

261. Emphasis added.

262. McNeil & Higgins Co. v. Czarnikow-Rienda Co., June 1921, Southern District of New York District Court, in 274 F. 397, 399.

263. Honnold provides this scenario as an example of particular purpose duty: John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1999), 257-258.

264. Ibid (258).


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