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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. Sphere of Application

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F. Contract Validity and the Transfer of Title (Article 4)

Article 4, like ULIS Article 8, limits the Convention's sphere of application to the rules on formation of contract and the rights and obligations of the seller and the buyer arising from it (Article 4 sentence 1). This leaves to domestic law - the examples are expressly stated - both the effect of the contract on the transfer of title to the goods sold (Article 4(b) [83a]) and the validity of the contract and any of its provisions (Article 4(a)), so long as the Convention's rules on the formation of the contract do not expressly apply. Therefore, domestic law still regulates such matters as the capacity to contract and the consequences of mistake, gross unfairness, unconscionability and fraud.[page 32]

Contracts are also considered invalid if the underlying sale is immoral or illegal and therefore void according to domestic law.[83b] Economic regulations such as export or import controls or consumer-protection laws which prohibit certain formulations may void contracts falling under the Convention. Thus, the buyer's right to revoke an instalment contract under German law can probably be "saved" where the Convention covers an instalment sale, provided German law otherwise applies. The applicability of domestic law does not depend upon whether the invalidity occurs by operation of law, such as by judicial decision or government intervention, or by an act of a party, such as a declaration of avoidance. The courts can also adjust the content of a contract where domestic law voids only part of the contract and the court is permitted to fill the gap. This deference to domestic provisions regarding validity is only binding, however, as long as the Convention does not include express provisions to the contrary. "Expressly provided in Article 4" should not be taken to mean only those of the Convention's provisions that expressly indicate a deviation from domestic law or the validity of an obligation despite the domestic prohibition. For example, despite the similar formulation in ULIS Article 8, the general view was that if the subject of the sale was non-existent at the time the contract was formed, the breach-of-contract provisions of the Uniform Law for International Sales would apply, and not domestic provisions which would nullify the contract, such as BGB § 306.[84] In my view, therefore, domestic laws which accord legal recourse in situations where a party errs about the goods to be delivered [84a] or the solvency of the other party would not apply under the Convention because these problems are specifically and conclusively regulated by the Convention's provisions on conformity of goods and anticipatory breach.[85]

Finally, domestic law still controls the validity of usages. The controversy over the binding effect of usages [86] loses much of its practical importance by virtue of Article 4(a) which permits states to prohibit the recognition of international usages which conflict with domestic law. As in ULIS, a state and its courts can also refuse to recognize a usage on the grounds that the usage is contrary to its public policy.[87] It also follows from Article 4 sentence 1, that duties and liabilities which arise outside of the contract are not covered by the Convention.

Article 5 expressly states this principle for products liability questions concerning personal injuries from defective goods.[88] But one may also assume, from [page 33] the limitation by Article 4 sentence 1, that claims for damages caused intentionally or by fraud - regardless of whether they sound in contract or tort - are to be judged strictly according to domestic law, even though there is no provision corresponding to ULIS Article 89.[page 34]

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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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83a. A reservation of title does not, however, exclude the application of the Convention to the sales contract. See Winship, Scope at 1-24.

83b. If, however, domestic provisions use "indefinite concepts" such as "unconscionable" or "treuwidrig", the contractual clause should be measured by CISG and not by domestic law. For example, a clause limiting recoverable damages to foreseeable losses is in accordance with the principle underlying Articles 74-76 and therefore valid, even if the standards under domestic law are stricter. See also Ziegel, Remedial Provisions at 9-38; Gonzales at 82.

84. See von Caemmerer, Probleme at 121 et seq. 127; Dölle (Stoll) ULIS Article 74 §§ 51-52 (with references to comparable domestic rules on validability). As to the 1978 Draft Convention, see Secretariat's Commentary at 179 § 4 (seller's liability for goods already destroyed at the conclusion of the contract).

84a. Accord Honnold, Commentary § 240.

85. See infra at VI.B.5, Vi.e.1.

86. See infra at IV.C.

87. See Dölle (Herber) Article 8 § 8 (with additional references).

88. Discussed infra at III.G.

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