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CISG number

Art. 10

59. The text of article 6, as adopted by the Working Group on the International Sale of Goods, is as follows:

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Subparagraph (a)

(i) Deletion of subparagraph (a)

60. The Committee considered a proposal that article 6(a) be deleted and that the introductory words of article 1(1) be amended so that the Convention would apply to contracts entered into by parties whose main places of business are in different States. In support of this proposal it was pointed out that it would be simpler to determine the main place of business rather than ascertaining which place of business had "the closest relationship to the contract and its performance." In opposition to the proposal, it was pointed out that use of the main place of business departed from the concept of relationship with the contract, with the result that the Convention may be attracted to transactions wholly formed and performed in one State, e.g. if the contracting parties have their main places of business in different States. Similarly, the Convention may not apply to international transactions because the contracting parties have their main places of business in one State. It was also noted that the present text was likely to correspond to the intention of the parties. Further, it was observed that article 6(a) corresponds to article 2(c) of the Convention on the Limitation Period" After considerable discussion and deliberation, the Committee did not retain the proposal to delete article 6(a).

(ii) Insertion of new definition of "place of business"

61. It was proposed that a new definition of "place of business" be formulated which did not relate "place of business" to the contract and its performance. In support of this proposal, it was stated that a clear definition would enable the relevant "place of business" to be determined at the moment of the conclusion of the contract. Such determination was difficult with the present definition which required that account be taken on the performance of the contract. A further problem was that as each party may have numerous obligations it may be difficult in practice to apply the test of "closest relationship with the contract and its performance." However, in opposition to the proposal, it was stated that article 6(a) is a good indication of the intention of the parties and also gives a clear method of determining which places of business are relevant for the purposes of the Convention. It was also observed that although performance naturally occurs after the conclusion of the contract the last part of article 6(a) specifically limits consideration of performance "to the circumstances known to or contemplated by the parties at the time of the conclusion of the contract." After extensive deliberations the" Committee decided to reject the proposal to reformulate the definition of "place of business."

(iii) Relationship of place of business to performance

62. The Committee considered a proposal to delete the reference to the performance of the contract which, in the proposed text, is relevant in determining which of more than one place of business should be selected for the purposes of the Convention. The view was expressed that the concept of performance did not necessarily relate to a single act but could cover a series of actions, such as handing the goods over to a carrier and delivery to the buyer. There could thus arise an ambiguity if a branch of the seller's business, participating in the performance of the contract, were situated in the buyer's State since it might be doubtful if the Convention would be applicable. It was further argued that it was at the time of the conclusion of the contract that it was necessary to know whether it was the national law or the Convention which applied, and that this question should not be resolved in the fight of subsequent circumstances.

63. In favour of retention of the reference to performance it was argued that the question at issue should be considered in the light of the last phrase of paragraph (a): "having regard to the circumstances known to or contemplated by the parties at the conclusion of the contract." It should be the transaction as a whole, "the contract and its performance", which should determine the relevant place of business.

64. The Committee, after deliberation, decided not to retain the proposal to delete the reference to performance. [page 29]

Subparagraph (b)

65. The Committee adopted the present text after noting a proposal that rather than making reference to the habitual residence of the parties it would be preferable to clearly define the meaning of "place of business."

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Decision

71. The Committee recommends that the Commission should adopt the following text of this article, now renumbered as article 5:

"Article 5

"For the purposes of this Convention:
"(a) If a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at the time of the conclusion of the contract;
"(b) If a party does not have a place of business, reference is to be made to his habitual residence." [page 30]

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