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Published by Manz, Vienna: 1986. Reproduced with their permission.

excerpt from

Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods

Univ. Prof. Dr. Peter Schlechtriem [*]

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III. The Sphere of Application

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E. Contracts for the Sale of Made-to-Order Goods and for the Sale of Services

Contracts "for the supply of goods to be manufactured or produced" fall within the sphere of application of the Convention (Article 3(1)). As with ULIS Article 6, contracts in which the party who orders the goods also supplies a substantial part of the materials are excluded from the scope of the Convention. Insignificant amounts of materials supplied by the manufacturer are not sufficient to bring the contract under the Convention. As under ULIS, the distinction between contracts for the supply of goods to be manufactured or produced, which are subject to the Convention, and contracts for labor or services, which are governed by domestic law, depends on whether the materials supplied by the party ordering the goods are "substantial" or not. Under ULIS, the party asserting the exception has the burden of proof. He must prove that the party who placed the order supplied, or was supposed to supply, a substantial amount of the materials. This presumably would be the case under the Convention as well.[77]

Article 3(2) further excludes contracts which may require the delivery of goods, but which are primarily contracts for labor or services, such as construction contracts.[78] This section attempts to regulate a question that proved to be difficult in ULIS, namely whether a contract for both the delivery and the installation of goods is covered by the Uniform Law for International Sales. This provision is likely to prove difficult to interpret and to apply. Therefore, the parties should attempt to reach a clear agreement in their contract. The term "preponderant part" should in most cases be understandable and practicable if considered in terms of relative values.[78a] The sale price of the goods to be delivered must be [page 31] compared with the fee for labor and services, as if two separate contracts have been made. A United Kingdom proposal [79] to use the term "major part in value" was withdrawn for lack of support, but the United States's countervailing example of a painter who is commissioned to cover a ceiling with gold paint will hardly have any practical impact. "Preponderant" in this sense should be considerably more than 50% of the price. It is more difficult, in such cases, to decide whether there are, in fact, two separate contracts, and, for example, whether the delivery is subject to the Uniform Law for International Sales while the installation contract is governed by domestic law. Domestic law should decide whether these two contracts can and must be distinguished.[80] It must be remembered, though, that the intent of the parties [81] to treat the delivery contract separately must be respected, even if domestic law generally regards such combinations as a single contract. Furthermore, Article 6 also permits the parties to modify Article 3(2) in such a way that, though the obligation to install is the "preponderant part," the whole contract is subject to the Uniform Law for International Sales.

During the deliberations on Article 3, a United Kingdom proposal [82] addressed the problem of whether the transfer of know-how should be covered and regulated by the Convention. The United Kingdom's proposal aimed at excluding contracts for goods to be manufactured or produced if the party ordering the goods provides the information or expertise necessary for such manufacture or production. This proposal failed because the characterization of such sales contracts was perceived as uncertain, because it is probably without parallel in domestic laws, and because quite a number of contracts would thereby be removed from the sphere of the Convention.[83][page 32]


FOOTNOTES

* The author of this book participated at the Conference as a member of the delegation from the Federal Republic of Germany. The views expressed here are personal to the author and do not necessarily represent the position of the F.R.G. or its delegation.

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77. Cf. Riese, 29 RabelsZ 18 (1965) (on ULIS).

78. Cf. Secretariat's Commentary at 41 2.

78a. Honnold, Commentary 59; see also Kahn 955 (presumption that CISG is applicable to contracts with a clearly preponderant "service" component as well as to "turn-key" contracts).

79. See A/Conf. 97/C.1/L.26 (= O.R. 84).

80. cf. Secretariat's Commentary at 41-42 3; contra Honnold, Commentary 60 (arguing that the Convention should apply to the entire agreement).

81. Respect for party autonomy belongs to the basic principles of the Convention. See Article 6.

82. A/Conf. 97/C.1/L.26. (= O.R. 84).

83. See A/Conf. 97/C.1/SR.2 at 9-10 (= O.R. 243) (for the positions taken). The Conference thus also avoided the politically sensitive question of rules and guidelines relating to the transfer of technology.

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Pace Law School Institute of International Commercial Law - Last updated June 5, 2000
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