Go to Database Directory || Go to Information on other available case data
Search the entire CISG Database (case data + other data)

2,000 cases 7,500 case annotations

Article 7. Interpretation of Convention

TEXT OF ARTICLE 7

(1) In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade.

(2) Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.


OUTLINE OF ISSUES

Reproduced with permission of UNCITRAL

7A Principles of interpretation

7A1 International character (art. 7(1))

7A11 Autonomous interpretation v. reliance on domestic law

7A2 Uniformity in application of Convention

7A3 Observance of good faith

7A31 As principle for interpreting Convention

7A32 Relevance of international usages (art. 9)

7A33 Applications of good faith standards

7B Materials for interpretation

7B1 International case law and scholarly studies

7B2 Legislative history

7B3 Domestic law

7B31 Relevance of consensus applicable to international transactions

7C Gap-filling

7C1 Excluded areas (see arts. 2, 3, 4, and 5)

7C2 Problems governed by Convention but not expressly settled

7C21 Analogous application to areas not expressly regulated

7C22 Recourse to general principles on which Convention is based

7C221 Behavior of a reasonable person (see arts. 8(2), 16(2)(b), 25, 35(2)(b), 44, 79)

7C222 Foreseeability (see arts. 25, 35(2)(b), 42(1)(a), 74)

7C223 Communication and co-operation (see arts. 34, 37, 48(1))

7C224 Other principles

7C23 Gap-filling by domestic law

7C231 Recourse to domestic law selected by Private International Law

7C232 Consensus on rules for international transactions

7D Other issues concerning interpretation


DESCRIPTORS

Interpretation of Convention ; Uniformity ; Internationality ; General principles ; Reasonableness ; Good faith ; Cooperation ; Private international law, gaps in Convention ; Gap filling


CASE ANNOTATIONS: UNCITRAL DIGEST CASES PLUS ADDED CASES

UNCITRAL has identified relevant cases in Digests containing case annotations for each article of the CISG. UNCITRAL cites 90 cases in its Digest of Art. 7 case law:

Argentina      1           Germany       31           Russian Federation        2
Australia 1 Hungary   1 Spain   1
Austria 7 ICC   5 Stockholm Chamber   1
Belgium 4 Italy   5 Switzerland 10
Bulgaria 1 Mexico   2 United States   6
France 4 Netherlands   8 TOTAL 90

Presented below is a composite list of Art. 7 cases reporting UNCITRAL Digest cases and other Art. 7 cases. All cases are listed in chronological sequence, commencing with the most recent. Asterisks identify the UNCITRAL Digest cases, commencing with the 26 November 2002 citation reported below. Cases are coded to the UNCITRAL Thesaurus.

English texts and full-text English translations of cases are provided as indicated. In most instances researchers can also access from this list UNCITRAL abstracts and link to Unilex abstracts and full-text original-language case texts sourced from Internet websites and other data, including commentaries by scholars, to the extent available.

There are scholars who believe that there are circumstances in which the UNIDROIT Principles of International Commercial Contracts may be used to interpret or supplement this Article of the CISG. See match-up of this Article with counterpart provisions of the Principles and commentary on this subject. To the extent this reasoning fits, cases on the counterpart provisions of the UNIDROIT Principles may be relevant. To the extent available, such cases may be found on the Unilex website.
 

Netherlands 29 July 2009 Rechtbank [District Court] Arnhem (___ v. Omnibus Trading B.V.)

Germany 24 July 2009 Oberlandesgericht [Appellate Court] Celle

United States 15 April 2009 U.S. District Court [New Jersey] (San Lucia S.r.l. v. Import & Storage Services, LLC)

United States 3 April 2009 U.S. District Court [Washington State] (Barbara Berry S.A. de C.V. v. Ken M. Spooner Farms, Inc.) 7B1

United States 26 March 2009 U.S. District Court [Ohio] (Miami Valley Paper, LLC v. Lebbing Engineering & Consulting GmbH) 7B1

Netherlands 25 February 2009 Rechtsbank [District Court] Rotterdam (Fresh-Life International B.V. v. Cobana Fruchtring GmbH & Co., KG)

Italy 16 February 2009 Tribunale di Forli [District Court] (Cisterns and accessories case) 7B1 [translation available]

Serbia 28 January 2009 Foreign Trade Court of Arbitration, Serbian Chamber of Commerce (Medicaments case) 7B [English text]

Netherlands 21 January 2009 Rechtsbank [District Court] Rotterdam (Sleeping Europe B.V. v. Calesco Foil A.B.)

Netherlands 16 January 2009 Rechtsbank [District Court] Breda (Watermelon case) [translation available]
 

Italy 11 December 2008 Tribunale di Forli [District Court] (Mitias v. Solidea S.r.l.) 7B1 [translation available]

Switzerland 26 November 2008 Handelsgericht [Commercial Court] Aargau (Fruit and vegetables case) 7A33 [translation available]

Germany 18 November 2008 Oberlandesgericht [Appellate Court] Brandenburg (Beer case) 7A3 [translation available]

Netherlands 5 November 2008 Rechtsbank [District Court] Arnhem (Baufix Holz- und Bauetechnik GmbH v. Eurovite Nederland)

Australia 24 October 2008 Federal Court [South Australia District] (Hannaford v Australian Farmlink Pty Ltd) 7A1 ; 7B1

Switzerland 12 September 2008 Amtsgericht [District Court] Sursee (Second-hand tractor case)

United States 20 August 2008 U.S. District Court [New York] (Hilaturas Miel, S.L. v. Republic of Iraq)

Serbia 15 July 2008 Foreign Trade Court of Arbitration, Serbian Chamber of Commerce (Milk packaging equipment case) 7B [translation available]

Slovak Republic 19 June 2008 Supreme Court (Health care products case) [translation available]

Germany 12 June 2008 Landgericht [District Court] Landshut (Metalic slabs case) 7A3 ; 7C23 [translation available]

Slovak Republic 30 April 2008 Supreme Court (Health care products case) [translation available]

United States 28 April 2008 U.S. District Court [Kansas] (Guang Dong Light Headgear Factory Co., Ltd. v. ACI International, Inc.) 7C22

United States 16 April 2008 U.S. District Court [New York] (Macromex Srl. v. Globex International, Inc.)

Germany 31 March 2008 Oberlandesgericht [Appellate Court] Stuttgart (Automobile case) 7B1 [translation available]

Australia 14 March 2008 Supreme Court of South Australia (Vetreria Etruscia S.r.l. v Kingston Estate Wines Pty Ltd)

Netherlands 27 February 2008 Rechtbank [District Court] Breda (Interland Chemie BV v. Tessenderlo Chemie NV)

Netherlands 27 February 2008 Rechtbank [District Court] Zutphen (Frutas Caminito Sociedad Cooperativa Valenciana v. Groente-En Fruithandel Heemskerk BV) [abstract available]

Serbia 23 January 2008 Foreign Trade Court of Arbitration, Serbian Chamber of Commerce (Chrystal white sugar case) 7B31 [translation available]

Spain 17 January 2008 Supreme Court (Used automobiles case) [translation available]
 

Spain 27 December 2007 Audiencia Provincial [Appellate Court] Navarra (Case involving machine to repair bricks) 7A33 [translation available]

Spain 19 December 2007 Audiencia Provincial [Appellate Court] Pontevedra (Frozen seafood case) [translation available]

Italy 21 November 2007 Tribunale di Rovereto [District Court] (Takap B.V. v. Europlay S.r.l.)

Serbia 13 November 2007 Foreign Trade Court of Arbitration, Serbian Chamber of Commerce (Mineral water and wooden pallets case) 7B [translation available]

Slovak Republic 29 October 2007 District Court Bardejov (Glass chaton case) [translation available]

American Arbitration Association 23 October 2007 [Interim Award] (Macromex Srl. v. Globex International Inc.) 7B1 ; 7C23

Australia 12 October 2007 District Court of South Australia (Kingston Estate Wines Pty Ltd v Vetreria Etruscia S.r.l.)

Ukraine 6 September 2007 Donetz Appellate Commercial Court (Crucible press case) [translation available]

Germany 2 July 2007 Oberlandesgericht [Appellate Court] Köln (Cutter head case)

Switzerland 19 June 2007 Handelsgericht [Commercial Court] Aargau (Railway rails case) [translation available]

Hungary 6 June 2007 Congrád County Court (Clothing case) [translation available]

Argentina 31 May 2007 National Commercial Court of Appeals, Division "A" (Sr. Carlos Manuel del Corazón de Jesús Bravo Barros v. Salvador Martínez Gares) 7C [translation available]

Poland 11 May 2007 Supreme Court (Shoe leather case) 7C21 [translation available]

Austria 3 May 2007 Handelsgericht [Commercial Court] Vienna (Poppy seed case) [translation available]

Switzerland 27 April 2007 Tribunal cantonal [Appellate Court] Valais (Oven case) [translation available]

Slovak Republic 9 March 2007 Regional Court Bratislava (Blouses case) [translation available]

Spain 20 February 2007 Audiencia Provincial [Appellate Court] Madrid (Sunprojuice DK, Als v. San Sebastian, S.c.A.) 7A33 [translation available]

France 13 February 2007 Cour de cassation [Supreme Court] (Computer motherboard case) 7C23 [translation available]

Russia 30 January 2007 Arbitration Award 147/2005 (Metal products case)

Netherlands 17 January 2007 Rechtbank [District Court] Arnhem (Hibro Compensatoren B.V. v. Trelleborg Industri Aktiebolag) 7C2 [translation available]

Netherlands 2 January 2007 Gerechtshof [Appellate Court] 's-Hertogenbosch (G.W.A. Bernards v. Carstenfelder Baumschulen Pflanzenhandel GmbH)
 

Russia 29 December 2006 Arbitration Award 54/2006 (Equipment case) [translation available]

Russia 19 December 2006 Arbitration Award 46/2006

Slovak Republic 15 December 2006 District Court Galanta [translation available]

Switzerland 12 December 2006 Obergericht [Appellate Court] Thurgau (Building materials case) [translation available]

Russia 23 November 2006 Arbitration Award 11/2006

Russia 15 November 2006 Arbitration Award 30/2006

Russia 15 November 2006 Arbitration Award 98/2006

Switzerland 27 October 2006 Tribunal cantonal [Appellate Court] Valais (Bicycle and motorcycle parts case) [translation available]

Russia 13 October 2006 Arbitration Award 119/2005

Russia 29 September 2006 Arbitration Award 127/2005

United States 23 August 2006 Federal District Court [New York] (TeeVee Tunes v. Gerhard Schubert GmbH)

Russia 24 July 2006 Arbitration Award 123/2005

Netherlands 18 July 2006 Gerechtshof [Appellate Court] Arnhem (Potting soil case) [translation available]

Slovak Republic 27 June 2006 District Court Nitra (Children's equipment case) [translation available]

Switzerland 23 May 2006 Tribunal cantonal [Higher Cantonal Court] Valais (Suits case) [translation available]

Switzerland 12 May 2006 Cour de justice [Appellate Court] Genève (Office furniture case) [translation available]

Denmark 3 May 2006 Højesteret [Supreme Court] 7C22

Russia 13 April 2006 Arbitration Award 105/2005 7C2 [translation available]

Egypt 11 April 2006 Court of Cassation [Supreme Court] (Marble case) 7A3

Russia 7 March 2006 Arbitration Award 37/2005 [translation in process]

Netherlands 1 March 2006 Rechtbank [District Court] Arnhem (Skoda Kovarny v. B. van Dijk Jr. Staalhandelmaatschappij B.V.) [translation available]

Russia 1 March 2006 Arbitration Award 101/2005 [translation in process]

Russia 14 February 2006 Arbitration Award 7/2005

Russia 13 February 2006 Arbitration Award 102/2005 7C23 [translation available]

Germany 8 February 2006 Oberlandesgericht [Appellate Court] Karlsruhe (Hungarian wheat case) 7B1 [translation available]

Russia 26 January 2006 Arbitration Award 53/2005

Russia 13 January 2006 Arbitration Award 137/2004 7C23 [translation available]

Italy 10 January 2006 Tribunale [District Court] Padova (Merry-go-rounds case) 7B1 [translation available]
 

Germany 21 December 2005 Oberlandesgericht [Appellate Court] Köln (Trade usage case) 7A33 [translation available]

Russia 14 December 2005 Arbitration Award 150/2004 [translation available]

Slovenia 14 December 2005 Higher Court [Appellate Court] Lujubljana (Door and door jamb case) [translation available]

Italy 9 December 2005 Tribunale [District Court] di Modena (XX Cucine S.p.A. v. Rosda Nigeria Limited)

China 7 December 2005 CIETAC Arbitration Award [CISG/2005/05] (Heaters case) 7A3 ; 7C22 [translation available]

Poland 10 November 2005 Supreme Court (Furniture case)

Austria 8 November 2005 Oberster Gerichtshof [Supreme Court] [translation available]

Canada 28 October 2005 Superior Court of Justice, Ontario (Chateau des Charmes Ltd v. Sabaté USA Inc. et al.)

Russia 27 October 2005 Arbitration Award 132/2004 [translation available]

Russia 18 October 2005 Arbitration Award 21/2005 (Varnish and paint machine case) 7C23 [translation available]

France 13 October 2005 Cour d'appel [Appellate Court] (Versailles) (Caterpillar toys case) [translation available]

Netherlands 11 October 2005 Gerechtshof [Appellate Court] 's-Hertogenbosch

Slovak Republic 11 October 2005 Regional Court Bratislava (Fur case) [translation available]

China October 2005 CIETAC Arbitration Award [CISG 2005/24] (Filling and sealing machine case) 7C223 [translation available]

Germany 3 August 2005 Landgericht [District Court] Neubrandenburg (Pitted sour cherries case) 7A3 [translation available]

Russia 18 July 2005 Arbitration Award 134/2004 [translation available]

Russia 2 June 2005 Arbitration Award 131/2004 7A3 [translation available]

Russia 27 May 2005 Arbitration Award 95/2004 [translation available]

Austria 24 May 2005 Oberster Gerichtshof [Supreme Court]

Austria 23 May 2005 Oberster Gerichtshof [Supreme Court] [translation available]

United States 23 May 2005 Federal Appellate Court [7th Circuit] (Chicago Prime Packers v. Northam)

Russia 27 April 2005 Arbitration Award 5/2004 7C23 [translation available]

Switzerland 5 April 2005 Bundesgericht [Supreme Court] [translation available]

United States 19 March 2005 Federal District Court [New York] (Genpharm Inc. v. Pliva-Lachena A.S.) 7A11

Mexico 10 March 2005 Primer Tribunal Colegiado en Materia Civil del Primer Circuito [Appellate Court] (Kolmar Petrochemicals v. Idesa Petroquímica) 7A3 [translation available]

Germany 2 March 2005 Bundesgerichtshof [Federal Supreme Court] 7A11 [translation available]

China 24 February 2005 CIETAC Arbitration Award [CISG 2005/08] (Second pork case) 7A3 [translation available]

Netherlands 10 February 2005 Netherland Arbitration Institute (interim award) 7A3 ; 7C22 [English text]

Netherlands 28 January 2005 Hoge Raad [Supreme Court] 7C22

Russia 24 January 2005 Arbitration Award 68/2004 [translation available]

Italy 11 January 2005 Tribunale [District Court] Padova (Rabbit case) 7B1 [translation available]

Greece 2005 Decision 165/2005 of the Single-Member Court of First Instance of Larissa 7A2 ; 7A3 ; 7B1

Ukraine 2005 Arbitration Award Case no. 48 [translation available]
 

Russia 12 November 2004 Arbitration Award 174/2003

Russia 2 November 2004 Arbitration Award 188/2003 [translation available]

Germany 6 October 2004 Oberlandesgericht [Appellate Court] Frankfurt

Italy 20 September 2004 Corte Suprema di Cassazione [Supreme Court] [translation available]

Germany 15 September 2004 Oberlandesgericht [Appellate Court] Köln [detailed abstract available]

Germany 15 September 2004 Oberlandesgericht [Appellate Court] München 7A33 [translation available]

Russia 3 September 2004 Arbitration Award 128/2002 [translation available]

China September 2004 CIETAC Arbitration Award [CISG 2004/07] (Steel products case) 7B1 [English text]

Switzerland 7 July 2004 Bundesgericht [Supreme Court] (Cable drums case) 7C22 ; 7C23 [translation available]

France 30 June 2004 Cour de Cassation [Supreme Court] 7A3 [translation available]

Russia 28 June 2004 Arbitration Award 167/2003 [translation available]

Germany 28 May 2004 Oberlandesgericht [Appellate Court] Düsseldorf [translation available]

Russia 28 May 2004 Arbitration Award 175/2003 7C2 [translation available]

United States 21 May 2004 U.S. District Court [Illinois] (Chicago Prime Packers v. Norham)

Russia 19 May 2004 Arbitration Award 100/2002 [translation available]

Switzerland 29 April 2004 Handelsgericht [Commercial Court] St. Gallen [translation available]

Germany 21 April 2004 Oberlandesgericht [Appellate Court] Düsseldorf [15 U 88/03] 7A33 [translation available]

Russia 20 April 2004 Arbitration Award 115/2003 [translation available]

Italy 31 March 2004 Tribunale [District Court] Padova [translation available]

Austria 29 March 2004 Oberster Gerichtshof [Supreme Court] 7C22 [detailed abstract available]

Netherlands 17 March 2004 Rechtbank [District Court] Arnhem 7C23 [translation available]

Russia 12 March 2004 Arbitration Award 55/2003 [translation available]

Italy 25 February 2004 Tribunale [District Court] Padova 7A33 ; 7B1 ; 7C [translation available]

Russia 19 February 2004 Arbitration Award 65/2003 [translation available]

Switzerland 11 February 2004 Appelationshof [Appellate Court] Bern (Cable case) 7C [translation available]

Russia 2 February 2004 Arbitration Award 56/2003 [translation available]

Switzerland 27 January 2004 Kantonsgericht [District Court] Schaffhausen [translation available]

Germany 8 January 2004 Landgericht [District Court] Trier 7B1 [translation available]

ICC 2004 International Court of Arbitration Case 12460 (CISG / Unidroit Principles case) 7B32
 

Switzerland 13 November 2003 Bundesgericht [Supreme Court] [translation available]

Switzerland 24 October 2003 Handelsgericht [Commercial Court] Zürich 7A3 ; 7C22 [translation available]

Russia 22 October 2003 Arbitration Award No. 134/2001 7A3 [translation available]

France 24 September 2003 Cour de Cassation [Supreme Court] [translation available]

Spain 22 September 2003 Audiencia Provincial [Appellate Court] Navarra 7A33

Switzerland 19 August 2003 Tribunal Cantonal [Appellate Court] Valais [translation available]

Russia 15 August 2003 Arbitration Award No. 57/2001 [translation available]

Germany 25 July 2003 Oberlandesgericht [Appellate Court] Düsseldorf 7A3 [translation available]

Germany 15 July 2003 Landgericht [District Court] Mönchengladbach 7C23 [translation available]

Argentina 2 July 2003 Commercial Court of Original Jurisdiction, Buenos Aires (Arbatax S.A. Reorganization Proceeding) [translation available]

Russia 16 June 2003 Arbitration Award No. 135/2002 [translation available]

Germany 11 June 2003 Landgericht [District Court] Hamburg [translation available]

Spain 7 June 2003 Audiencia Provincial [Appellate Court] Valencia 7B [translation available]

Switzerland 30 April 2003 Tribunal Cantonal [Appellate Court] Valais (Furniture case) [translation available]

Netherlands 23 April 2003 Gerechtshof [Appellate Court] 's-Gravenhage 7A33 [translation available]

Russia 17 February 2003 Arbitration Award No. 168/2001 [translation available]

United States 29 January 2003 U.S. District Court [Illinois] (Ajax Tool Works v. Can-Eng Manufacturing) 7C

Netherlands 22 January 2003 Rechtbank [District Court] Zwolle

ICC 2003 International Court of Arbitration, Case 11849 (Fashion products case) 7A3 ; 7C [English text]

ICC 2003 International Court of Arbitration Case 12097 (CISG / Unidroit Principles case)
 

China 27 December 2002 CIETAC Arbitration Award [CISG 2002/29] (Medicine manufacturing equipment case) 7C23 [translation available]

Austria 18 December 2002 Oberster Gerichtshof [Supreme Court] 7C22 [translation available]

* Italy 26 November 2002 Tribunale [District Court] Rimini 7B1 ; 7C22 [translation available]

United States 19 November 2002 U.S. Circuit Court of Appeals [7th Cir.] (Zapata v. Hearthside) 7C22 ; 7C231

Russia 11 November 2002 Arbitration Award No. 52/2002 [translation available]

China 8 November 2002 CIETAC Arbitration Award [CISG/2002/05] (Canned asparagus case) 7A3 ; 7C223 [translation available]

Italy 18 October 2002 Court Supremo di Cassazione [Supreme Court] (Janssen Cosmeceutical Care GmbH v. Munda Alberto)

Netherlands 16 October 2002 Gerechtshof [Appellate Court] 's-Hertogenbosch 7A ; 7C

Netherlands 15 October 2002 Netherlands Arbitration Institute Case No. 2319 7A ; 7B ; 7C [English text]

Argentina 21 July 2002 Cámara Nacional de Apelaciones en lo Comercial [Appellate Court] [translation available]

* United States 21 June 2002 U.S, Circuit Court of Appeals [4th Cir.] (Schmitz-Werke v. Rockland) 7A ; 7C1

Russia 7 June 2002 Arbitration Award No. 116/2001 [translation available]

* Belgium 15 May 2002 Hof van Beroep [Appellate Court] Gent 7A3 [translation available]

Switzerland 12 May 2002 Obergericht [Appellate Court] Luzern

United States 10 May 2002 U.S. District Court [Southern Dist. NY] (Geneva Pharmaceuticals Tech. Corp. v. Barr Labs. Inc.) 7A ; 7B ; 7C

* United States 28 March 2002 U.S. District Court [Illinois] (Usinor Industeel v. Leeco Steel Products) 7B1 ; 7C231

United States 26 March 2002 U.S District Court [Southern Dist. NY] (St. Paul Insurance v. Neuromed) 7A1

Russia 22 March 2002 Arbitration Award No. 225/2000 [translation available]

France 19 March 2002 Cour de Cassation [Supreme Court] 7A3 [translation available]

* Belgium 6 March 2002 Rechtbank van Koophandel [District Court Hasselt [A.R. 2671/01] 7B1

Russia 28 February 2002 Arbitration Award No. 2/2001 [translation available]

Switzerland 25 February 2002 Kantonsgericht [District Court] Schaffhausen 7C22 [translation available]

Russia 11 February 2002 Arbitration Court [Appellate Court] for Moscow Region (Case No. KG-A40/274-02) 7C22 ; 7C23 [translation available]

Denmark 31 January 2002 Sø og Handelsretten [Maritime Commercial Court] 7B [translation available]

* Germany 9 January 2002 Bundesgerichtshof [Federal Supreme Court] [translation available]

ICC 2002 International Court of Arbitration Case 11638 (CISG / Unidroit Principles case) 7B32
 

Italy 13 December 2001 Tribunale [District Court] Busto Arsizio 7A3

Germany 12 November 2001 Oberlandesgericht [Appellate Court] Hamm (Memory module case) 7A ; 7A3 [translation available]

Russia 8 November 2001 Arbitration Court [Appellate Court] for Moscow Region (Case No. KG-A40/6314-01) [translation available]

* France 6 November 2001 Cour d'appel [Appellate Court] Paris 7C

* Germany 31 October 2001 Bundesgerichtshof [Federal Supreme Court] 7A11 ; 7A3 ; 7C223 [translation available]

* Austria 22 October 2001 Oberster Gerichtshof [Supreme Court] [1 Ob 49/01i] 7A ; 7A33 [translation available]

New Zealand 3 October 2001 Court of Appeal (Bobux Marketing Ltd v. Raynor Marketing Ltd) 7A3

Italy 28 September 2001 Milan Arbitration proceeding (Steel wire case) 7A3 [English text]

United States 28 August 2001 U.S. District Court [Illinois] (Zapata v. Hearthside) 7A1

Russia 30 July 2001 Arbitration Award No. 198/2000 [translation available]

Russia 17 July 2001 Arbitration Award No. 419/1995 [translation available]

Netherlands 12 July 2001 Arrondissementsrechtbank [District Court] Rotterdam [translation available]

Belgium 27 June 2001 Hof van Beroep [Appellate Court] Antwerpen 7A3 [translation available]

Russia 25 June 2001 Arbitration Court [Appellate Court] for Moscow Region (Case No. KG-A40/3057-01 7C22 ; 7C23 [translation available]

France 12 June 2001 Cour d’appel [Appellate Court] Colmar [translation available]

Bulgaria 12 March 2001 Bulgaria Chamber of Commerce Arbitration award, Case 33/98 7C231 [translation available]

China 19 February 2001 Jiangsu Higher People's Court [Appellate Court] (Tai Hei v. Shun Tian) [translation available]

Denmark 15 February 2001 Højesteret [Supreme Court] [translation available]

* Belgium 29 January 2001 Rechtbank van Koophandel [District Court Ieper 7C2

Russia 25 January 2001 Arbitration Award No. 88/2000 [translation available]

Russia 10 January 2001 Arbitration Award No. 101/2000 7C223 [translation available]
 

Germany 14 December 2000 Amtsgericht [Lower Court] Hamburg-Altona

Australia 17 November 2000 Supreme Court of Queensland (Downs Investments v. Pertwaja Steel) 7B1

China 6 November 2000 CIETAC Arbitration Award [CISG/2000/12] (Marble building materials case) 7A3 [translation available]

Australia 3 November 2000 Federal Court (South Sydney District Rugby League v. News Ltd) 7A3

Finland 26 October 2000 Helsingin hoviokeus [Helsinki Court of Appeals] 7C223 [translation available]

* Germany 12 October 2000 Landgericht [District Court] Stendal 7C2 [translation available]

* Austria 7 September 2000 Oberster Gerichtshof [Supreme Court] 7C22 [translation available]

Russia 24 August 2000 Arbitation Court [Appellate Court] for the Moscow Region [translation available]

* Italy 12 July 2000 Tribunale [District Court] Vigevano 7B ; 7C21 [translation available]

Switzerland 11 July 2000 Bundesgericht [Federal Supreme Court] [translation available]

Russia 21 June 2000 Arbitration Court [Appellate Court] for Moscow Region (Case No. KG-A40/2396-00) 7C [translation available]

Russia 13 June 2000 Arbitration Award No. 280/1999 [translation available]

Russia 6 June 2000 Arbitration Award 406/1998 7C [translation available]

Switzerland 26 May 2000 Tribunal cantonal [Appellate Court] Vaud (Asphalt case)

Colombia 10 May 2000 Corte Constitucional [Constitutional Court] 7A ; 7A3 ; 7C22 [translation available]

* Argentina 24 April 2000 Cámara Nacional de Apelaciones en lo Comercial [Appellate Court] 7C231

* Austria 13 April 2000 Oberster Gerichtshof [Supreme Court] 7B1 [translation available]

* Germany 13 April 2000 Amtsgericht [Lower Court] Duisburg 7C231 [translation available]

Spain 27 March 2000 Audiencia Provincial [Appellate Court] Navarra

* Austria 9 March 2000 Oberster Gerichtshof [Supreme Court] 7C22 [translation available]

China 11 February 2000 CIETAC Arbitration Award 7A3 [translation available]

Germany 26 January 2000 Oberlandesgericht [Appellate Court] Hamburg [translation available]

Russia 24 January 2000 Arbitration Award No. 54/1999 7C22 ; 7C23 [translation available]

China 7 January 2000 CIETAC Arbitration Award [CISG/2000/06] (Cysteine case) 7C ; 7C232 [translation available]

ICC 2000 International Court of Arbitration, Case 9781 7A [English text]
 

* Italy 29 December 1999 Tribunale [District Court] Pavia 7B1 ; 7C231 [translation available]

* Germany 26 November 1999 Oberlandesgericht [Appellate Court] Hamburg 7C2 [translation available]

Germany 28 October 1999 Oberlandesgericht [Appellate Court] Braunschweig 7C2 [translation available]

Russia 2 August 1999 Arbitration Award 516/1996 [translation available]

ICC August 1999 International Court of Arbitration, Case 9887 [English text]

* Russia 27 July 1999 Arbitration Award 302/1996 7A3 [translation available]

* Austria 29 June 1999 Oberster Gerichtshof [Supreme Court] 7C21 [translation available]

* Switzerland 11 June 1999 Handelsgericht [Commercial Court] Aargau 7A3 [translation available]

Russia 10 June 1999 Arbitration Award 55/1998 7A3 [translation available]

China 4 June 1999 CIETAC Arbitration Award [CISG/1999/28] (Industrial raw material case) 7A3 [translation available]

Germany 25 May 1999 Landgericht [District Court] Berlin [translation available]

* United States 17 May 1999 Federal District Court [Louisiana] (Medical Marketing v. Internazionale Medico Scientifica) 7A2

* Germany 24 March 1999 Bundesgerichtshof [Federal Supreme Court] 7A11 ; 7B1 [translation available]

Russia 22 March 1999 Arbitration Award 227/1996

* Germany 19 March 1999 Landgericht [District Court] Zwickau

China 13 January 1999 CIETAC Arbitration Award [CISG/1999/05] (Latex gloves case) 7C221 [translation available]

ICC 1999 International Court of Arbitration, Case 8547 7C [English text]
 

Russia 30 December 1998 Arbitration Award 62/1998 [translation available]

Germany 29 December 1998 Hamburg Arbitration Award 7B [translation available]

Russia 18 December 1998 Arbitration Award 288/1997 7A3 [translation available]

* Italy 11 December 1998 Corte di Appello [Appellate Court] Milano 7A3 [translation available]

* Belgium 2 December 1998 Rechtbank van Koophandel [District Court] Hasselt

* ICC December 1998 International Court of Arbitration, Case 8908 [English text]

* Mexico 30 November 1998 Compromex Arbitration proceeding 7A3 [translation available]

* Switzerland 30 November 1998 Handelsgericht [Commercial Court] Zürich 7A33 [translation available]

Germany 25 November 1998 Bundesgerichtshof [Federal Supreme Court] [translation available]

Russia 24 November 1998 Arbitration Award 96/1998 7A3 [translation available]

Austria 12 November 1998 Oberster Gerichtshof [Supreme Court]

Switzerland 5 November 1998 Bezirksgericht [District Court] Sissach 7A33 ; 7C22 [translation available]

* Switzerland 28 October 1998 Bundesgericht [Supreme Court] (Meat case) 7C22 [translation available]

Russia 22 October 1998 Arbitration Award 196/1997 [translation available]

Austria 15 October 1998 Oberster Gerichtshof [Supreme Court] 7B1 [translation available]

Germany 5 October 1998 [Appellate Court] Hamburg [translation available]

Russia 14 September 1998 Arbitration Award 131/1996 [translation available]

Switzerland 30 June 1998 Kantonsgericht Wallis / Tribunal cantonal Valais [Canton Appellate Court] (Granite stones case) [translation available]

Switzerland 29 June 1998 Tribunal Cantonal [Appellate Court] Valais

* United States 29 June 1998 Federal Appellate Court [11th Circuit] (MCC-Marble Ceramic Center v. Ceramica Nuova D'Agostino) 7A

Russia 9 June 1998 Arbitration Award 263/1997 7C23 [translation available]

* Stockholm Chamber of Commerce 5 June 1998 Arbitration Award (Beijing Light Automobile Co. v. Connell) [English text]

* United States 6 April 1998 Federal District Court [Southern Dist. NY] (Calzaturificio Claudia v. Olivieri Footwear) 7A11

Russia 25 March 1998 Arbitration Award 491/1997 [translation available]

* Germany 24 March 1998 Landgericht [District Court] Berlin (Knitwear case) 7C22 [translation available]

* Germany 11 March 1998 Oberlandesgericht [Appellate Court] München 7C23 [translation available]

Russia 2 March 1998 Arbitration Award 201/1997

* ICC March 1998 International Court of Arbitration, Case 9117 7C22 [English text]

Russia 18 February 1998 Arbitration Award 243/1996[translation available]

Russia 16 February 1998 Arbitration Award 33/1997

Austria 12 February 1998 Oberster Gerichtshof [Supreme Court] 7C [translation available]

* Bulgaria 12 February 1998 Arbitration Case 11/1996 7C22 [translation available]

Russia 26 January 1998 Arbitration Award No. 76/1997 7A3 [translation available]

* Switzerland 23 January 1998 Kantonsgericht [Canton Court] Freiburg 7C23 [translation available]

* Germany 21 January 1998 Oberlandesgericht [Appellate Court] München [translation available]

Russia 16 January 1998 Arbitration Award 309/1996 [translation available]

* Switzerland 15 January 1998 Tribunale d'appello [Appellate Court] Lugano 7C22 [translation available]

* France 14 January 1998 Cour d'appel [Appellate Court] Paris 7C2 ; 7C22 ; 7C23

Russia 10 January 1998 Arbitration Award 65/1997 [translation available]

Hungary 1998 Fovárosi Biróság [Metropolitan Court] Budapest
 

France 18 December 1997 Tribunal de commerce [District Court] Colmar [translation available]

China 15 December 1997 CIETAC Arbitration Award [CISG/1997/34] (Hot rolled coils case) 7C223 [translation available]

China 15 December 1997 CIETAC Arbitration Award [CISG/1997/34] (Hot rolled coils case) [translation available]

ICC December 1997 International Court of Arbitration, Case 8817 7C22 [translation available]

Russia 6 November 1997 Arbitration Award 451/1996 [translation available]

Germany 5 November 1997 Oberlandesgericht [Appellate Court] Hamm [translation available]

Switzerland 28 October 1997 Tribunal Cantonal [Appellate Court] Valais 7C22

* Germany 15 October 1997 Landgericht [District Court] Hagen 7C23 [translation available]

* Switzerland 26 September 1997 Handelsgericht [Commercial Court] Aargau (Cutlery case) [translation available]

Germany 18 September 1997 Landgericht [District Court] Hamburg

Germany 15 September 1997 Landgericht [District Court] Heilbronn 7C [translation available]

* Netherlands 17 July 1997 Arrondissementsrechtbank [District Court] Arnhem

Netherlands 7 July 1997 Arrondissementsrechtbank [District Court] Arnhem 7A3

Switzerland 3 July 1997 Bezirksgericht [District Court] St. Gallen [translation available]

* Germany 25 June 1997 Oberlandesgericht [Appellate Court] Karlsruhe 7A33 ; 7C22 [translation available]

* Netherlands 29 May 1997 Arrondissementsrechtbank [District Court] Zutphen 7C23

Russia 29 May 1997 Arbitration Award 439/1995 [translation available]

* Germany 6 May 1997 Landgericht [District Court] München

* Germany 24 April 1997 Oberlandesgericht [Appellate Court] Düsseldorf [translation available]

Netherlands 15 April 1997 Gerechtshof [Appellate Court] Arnhem

* Russia 28 March 1997 Arbitration Award 38/1996 7C23 [translation available]

* Netherlands 5 March 1997 Arrondissementsrechtbank [District Court] Zwolle 7A3

* Germany 28 February 1997 Oberlandesgericht [Appellate Court] Hamburg 7A33 [translation available]

* Switzerland 20 February 1997 Bezirksgericht [District Court] Saane [translation available]

Russia 27 January 1997 Arbitration Award 94/1996 7C22 [translation available]

* ICC 23 January 1997 International Court of Arbitration, Case 8611 7A3 ; 7C2 [translation available]

Germany 8 January 1997 Oberlandesgericht [Appellate Court] Köln 7A33 [translation available]

Switzerland 8 January 1997 Obergericht [Appellate Court] Luzern 7A2 [translation available]

ICC January 1997 International Court of Arbitration, Case 8786 7A33 [English text]

ICC 1997 International Court of Arbitration, Case 8855

Russia 1997 High Arbitration Court [Ruling No. 4, case 7]
 

Austria 25 October 1996 Oberlandesgericht [Appellate Court] Wien (Vienna) [3 R 167/96t-33]

* France 23 October 1996 Cour d'appel [Appellate Court] Grenoble 7C22 [translation available]

China 17 October 1996 CIETAC Arbitration Award [CISG/1996/47] (Tinplate case) 7A33 [translation available]

Russia 26 September 1996 Arbitration Award 433/1994 7C231 [translation available]

Russia 16 September 1996 Arbitration Award 74/1995 7C [translation available]

* Germany 11 July 1996 Oberlandesgericht [Appellate Court] Düsseldorf [translation available]

Switzerland 31 May 1996 Arbitration ZHK 273/1995 [Zürich Chamber of Commerce] [English text]

China 22 May 1996 CIETAC Arbitration Award [CISG/1996/25] (Broadcasting equipment case) 7C2 [translation available]

* Germany 21 May 1996 Oberlandesgericht [Appellate Court] Köln 7A33 [translation available]

Netherlands 15 May 1996 Arrondissementsrechtbank [District Court] Amsterdam

China 2 May 1996 CIETAC Arbitration Award [CISG/1996/21] ("FeMo" alloy case) 7A3 [translation available]

* Mexico 29 April 1996 Compromex Arbitration proceeding (Conservas La Costeña v. Lanin) 7C22 [translation available]

Russia 25 April 1996 Arbitration Award 72/1995 [translation available]

Bulgaria 24 April 1996 Bulgaria Chamber of Commerce Arbitration Award 56/1995 7C23 [translation available]

* Germany 17 April 1996 Landgericht [District Court] Duisburg 7C23 [translation available]

China 3 April 1996 CIETAC Arbitration Award [CISG/1996/17] (Plastic bags case) 7C22 [translation available]

* Germany 3 April 1996 Bundesgerichtshof [Federal Supreme Court] 7A11 [translation available]

* Germany 26 March 1996 Landgericht [District Court] Saarbrücken 7A3 [translation available]

* Germany 21 March 1996 Hamburg Arbitration Award 7A3 ; 7C23 [translation available]

Russia 12 March 1996 Arbitration Award 218/1995 [translation available]

* Austria 6 February 1996 Oberster Gerichtshof [Supreme Court] 7C22 [translation available]

* Italy 31 January 1996 Tribunale Civile [District Court] Cuneo 7B1 [translation available]

Germany 25 January 1996 Landgericht [District Court] München [translation available]
 

Russia 19 December 1995 Arbitration Award 133/1994 [translation available]

Russia 13 December 1995 Arbitration Award 364/1994 [translation available]

* United States 6 December 1995 Federal Appellate Court [2nd Circuit] (Delchi Carrier v. Rotorex) 7A ; 7C

Hungary 5 December 1995 Budapest Arbitration proceeding Vb 94131[translation available]

Russia 1 December 1995 Arbitration Award 369/1994 [translation available]

Russia 1 December 1995 Arbitration Award 22/1995 [translation available]

Russia 22 November 1995 Arbitration Award 99/1994 7C23 [translation available]

* Hungary 17 November 1995 Budapest Arbitration Award Vb 94124 7A32 ; 7A33

France 13 September 1995 Cour d'appel [Appellate Court] Grenoble 7C23 [translation available]

Netherlands 22 August 1995 Gerechtshof [Appellate Court] Arnhem 7A33 ; 7C231

* Germany 21 August 1995 Oberlandesgericht [Appellate Court] Stuttgart 7C23 [translation available]

* Germany 20 July 1995 Landgericht [District Court] Aachen 7C2 ; 7C3 [translation available]

Germany 7 July 1995 Landgericht [District Court] Koblenz

* Germany 9 June 1995 Oberlandesgericht [Appellate Court] Hamm 7C23 [translation available]

* Germany 24 May 1995 Oberlandesgericht [Appellate Court] Celle [translation available]

Germany 12 May 1995 Amtsgericht [Lower Court] Alsfeld 7C23 [translation available]

Netherlands 27 April 1995 Arrondissementsrechtbank [District Court] Zutphen

* Switzerland 26 April 1995 Handelsgericht [Commercial Court] Zürich 7C22 [translation available]

Germany 5 April 1995 Landgericht [District Court] Landshut 7C23 [translation available]

Germany 31 March 1995 Oberlandesgericht [Appellate Court] Frankfurt 7A3 ; 7C221 [translation available]

Germany 20 March 1995 Landgericht [District Court] München 7C [translation available]

Russia 16 March 1995 Arbitration Award 155/1994 [translation available]

Russia 3 March 1995 Arbitration Award 304/1993 [commentary available]

Russia 3 March 1995 Arbitration Award 309/1993

ICC March 1995 International Court of Arbitration, Case 7645 7A33 ; 7B1 [English text]

* France 22 February 1995 Cour d'appel [Appellate Court] Grenoble 7A33 [translation available]

Germany 8 February 1995 Oberlandesgericht [Appellate Court] München [7 U 1720/94] 7A33 [translation available]

Germany 8 February 1995 Oberlandesgericht [Appellate Court] Hamm 7C221

* Netherlands 25 January 1995 Arrondissementsrechtbank [District Court] Middelburg 7C23

* ICC 1995 International Court of Arbitration, Case 8128 7C22 [translation available]
 

Switzerland 20 December 1994 Tribunal Cantonal [Appellate Court] Valais [translation available]

Russia 14 December 1994 Arbitration Award 171/1994

Russia 14 December 1994 Arbitration Award 172/1994

China December 1994 Fujian Higher People's Court [Appellate Court] [translation available]

Russia 17 November 1994 Arbitration Award 493/1993

* Netherlands 5 October 1994 Arrondissementsrechtbank [District Court] Amsterdam 7C23

United States 9 September 1994 Federal District Court [Northern Dist. NY] (Delchi Carrier v. Rotorex) 7A ; 7C

* Germany 6 September 1994 Amtsgericht [Lower Court] Mayen

* Germany 6 July 1994 Landgericht [District Court] Frankfurt 7C22

* Austria 1 July 1994 Oberlandesgericht [Appellate Court] Innsbruck

Switzerland 29 June 1994 Tribunal Cantonal [Appellate Court] Valais

Russia 28 June 1994 Arbitration Award 76/1993

* Austria 15 June 1994 Vienna Arbitration Award SCH-4318 7A33 ; 7C2 [translation available]

* Austria 15 June 1994 Vienna Arbitration Award SCH-4366 7C22 [translation available]

Netherlands 15 June 1994 Arrondissementsrechtbank [District Court] Amsterdam 7C231

* Germany 20 April 1994 Oberlandesgericht [Appellate Court] Frankfurt

Russia 6 April 1994 Arbitration Award 224/1993

* Germany 24 January 1994 Kammergericht [Appellate Court] Berlin 7C22 [translation available]

ICC 1994 International Court of Arbitration, Case 7331 7A3 ; 7C22 ; 7C232 [English text]

ICC 1994 International Court of Arbitration, Case 7565 7C231 [English text]

ICC 1994 International Court of Arbitration, Case 7660 7C23 [English text]
 

Netherlands 30 December 1993 Arrondissementsrechtbank [District Court] Arnhem 7C231

* Germany 17 September 1993 Oberlandesgericht [Appellate Court] Koblenz 7C23 [translation available]

* Switzerland 9 September 1993 Handelsgericht [Commercial Court] Zürich (Furniture case) 7C22 [translation available]

Israel 22 August 1993 Supreme Court (Examin v. Textile and Footware) 7A3 [translation available]

Germany 14 July 1993 Landgericht [District Court] Dortmund

* Germany 2 July 1993 Oberlandesgericht [Appellate Court] Düsseldorf 7C22 [translation available]

* Switzerland 7 May 1993 Richteramt [District Court] Laufen 7A11 [translation available]

* Netherlands 6 May 1993 Arrondissementsrechtbank [District Court] Roermond 7C23

China 30 March 1993 CIETAC Arbitration Award [CISG/1993/07] (Talcum block case) 7C2 [translation available]

* Netherlands 25 February 1993 Arrondissementsrechtbank [District Court] Arnhem 7C231

* ICC 1993 International Court of Arbitration, Case 6653 [translation available]
 

* Switzerland 27 April 1992 Pretore della giurisdizione [District Court] Locarno Campagna [translation available]

United States 14 April 1992 Federal District Court [Southern Dist. NY] (Filanto v. Chilewich) 7A33 ; 7C22 ; 7C223

* Australia 12 March 1992 Appellate Court New South Wales (Renard Construction v. Minister for Public Works) 7A3

* Netherlands 26 February 1992 Gerechtshof [Appellate Court] 's Hertogenbosch 7C22

ICC 1992 International Court of Arbitration, Case 7197 7C23

ICC 1992 International Court of Arbitration, Case 7585 7C22 [English text]
 

Netherlands 23 September 1991 Arrondissementsrechtbank [District Court] Breda

Netherlands 13 September 1991 Hoge Raad [Supreme Court]

* Germany 13 August 1991 Landgericht [District Court] Stuttgart (Women's clothes case) 7C22 [translation available]

Argentina 20 May 1991 Juzgado Nacional de Primera Instancia en lo Comercial [National Commercial Court of First Instance] 7C23 [translation available]

Germany 18 January 1991 Landgericht [District Court] Bielefeld
 

Germany 31 August 1989 Landgericht [District Court] Stuttgart [translation available]
 

Netherlands 5 January 1978 Gerechtshof [Appellate Court] Amsterdam [ULIS precedent] 7A33 ; 7C221 [translation available]


CASE DIGEST AND ANALYSIS
-   UNCITRAL's case law digest; and
-   An analysis of CISG jurisprudence

The UNCITRAL Digest of case law on the United
Nations Convention on the International Sale of Goods
[*]

A/CN.9/SER.C/DIGEST/CISG/7 [8 June 2004]
Reproduced with the permission of UNCITRAL

[Text of Article 7
Digest of Article 7 case law
-    Interpretation of the Convention
-    Observance of good faith in international trade
-    Gap-filling and general principles]
ARTICLE 7

      (1) In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade. 

      (2) Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law. 

DIGEST OF ARTICLE 7 CASE LAW

Interpretation of the Convention

1. As national rules on the law of sales are subject to sharp divergences in approach and concept, it is important to avoid an interpretation of the Convention that is influenced by the concepts used in the legal system of the country of the forum.[1] It is for this reason that article 7(1) provides that in the interpretation of the Convention "regard is to be had to its international character and to the need to promote uniformity in its application".

2. In effect, according to some courts the reference to the Convention's international character [2] is to be understood as preventing courts from resorting to an interpretation of the concepts used in the Convention that is based on national law;[3] rather, courts should interpret the Convention "autonomously."[4] Nevertheless, there are courts that have stated that case law interpreting analogous domestic law provisions may also inform a court where the language of the relevant provisions of the Convention tracks that of the domestic law, even though the domestic law "is not per se applicable".[5] According to case law, reference to the Convention's legislative history is admissible [6] as well as to international scholarly writing.[7]

3. As far as the further obligation to promote uniform application of the Convention is concerned, it has been interpreted in the sense that courts should also take into account decisions rendered by foreign courts.[8] In one case, one court quoted forty foreign court decisions as well as arbitral awards.[9] In other cases, two courts quoted two foreign court decisions,[10] while there are several cases in which one foreign court decision is referred to.[11]  More recently, one court referred to 37 foreign court decisions and arbitral awards.[12]

4. What value foreign court decisions should have was dealt with by two courts both of which stated that foreign court decisions merely have persuasive, non-binding value.[13]

Observance of good faith in international trade

5. Article 7(1) also requires that the Convention be interpreted in such a manner that the observance of good faith in international trade is promoted.[14] Although an express reference to the good faith principle is to be found solely in the provision relating to the Convention's interpretation, there are numerous applications of that principle throughout the Convention. Among the manifestations of that principle are the rules contained in the following provisions:

Gap-filling and General Principles

6. Paragraph (2) makes sure that gaps, i.e. matters the Convention governs but which it does not expressly solve, are filled, if possible, without resorting to domestic law, but rather in conformity to the Convention's general principles. Only where no such general principles can be identified should one resort to the applicable national law.[16] Matters the Convention does not govern at all are to be solved directly by having recourse to the applicable national law.[17] As for the issues considered to fall outside the Convention's scope, they have been listed under the comments to article 4.

7. According to several courts, one of the general principles upon which the Convention is based is that of the "prevalence of party autonomy".[18]

8. The principle of good faith has also been found to be one of the general principles upon which the Convention is based.[19] In one case, that general principle has led a court to even state that an explicit declaration of avoidance of the contract was not necessary once the seller had refused to perform its obligations and that to insist on such a declaration would be against the principle of good faith, even though the Convention expressly requires a declaration of avoidance of contract.20] In another case, a court justified the order to one party to pay damages on the basis that that party's conduct was "contrary to the principle of good faith in international trade laid down in article 7 CISG"; in doing so, the court also stated that the abuse of process violates the good faith principle.[21]

9. A more recent court decision referred to the general principle of good faith and stated that it leads to the parties having to both cooperate with each other and exchange the information relevant for the performance of their respective obligations.[22]

10. According to some decisions, estoppel is also one of the general principles upon which the Convention is based; more specifically, it is a manifestation of the principle of good faith.[23] According to one court, however, estoppel is a matter the Convention is not concerned with.[24]

11. Decisions opting for the existence of a general principle upon which the Convention is based in respect of the place of performance of monetary obligations are more numerous. Thus, in determining the place of payment of compensation due for non-conformity of the goods one court stated that "if the purchase price is payable at the place of business of the seller", under article 57 of the Convention, then "this indicates a general principle valid for other monetary claims as well".[25] In a comparable situation, another court, considering an action for restitution of an excess in the price received by the seller, stated that there was a general principle under which "payment is to be made at the creditor's domicile, a principle that is be extended to other international trade contracts under article 6.1.6 of the UNIDROIT Principles".[26] The Supreme Court of another State, which had previously adopted the reverse principle, decided that the gap of the Convention in respect of the legal consequences of avoidance, particularly with regard to the performance of restitution obligations, were to be filled by means of a general principle of the Convention, according to which "the place for performance of restitution obligations should be determined by transposing the primary obligations — through a mirror effect — into restitution obligations".[27] It should be noted, however, that there is also one decision which denies the existence of a general principle under the Convention on the basis of which to determine the place of performance for all monetary obligations.[28]

12. As far as the currency of payment is concerned, one court observed that it is a question governed by, albeit not expressly settled in, the Convention.[29] The court first referred to the view that according to a general principle underlying CISG, the seller's place of business governs all questions relating to payment, at least where the parties did not agree otherwise, and therefore also governs the question of currency. The court, however, also mentioned the view that the question cannot be solved by applying a general principle of the Convention but rather by the domestic law applicable. The Court did not choose between the alternatives since in the case at hand the result was the same (currency of the seller's place of business).

13. According to some decisions,[30] the issue of burden of proof is a matter governed by, albeit not explicitly settled in, the Convention. Therefore, the issue is to be settled in conformity with the general principles on which the Convention is based.[31] According to various decisions, it is article 79(1)[32] and, at least according to one court decision, article 2(a) that evidence general principles of the Convention in respect of this issue.  These general principles have been summarized as follows: the party which wants to derive beneficial legal consequences from a legal provision has to prove the existence of the factual prerequisites of the provision,[33] any party claiming an exception has to prove the factual prerequisites of that exception.[34] It must be noted, however, that according to some courts, the issue of burden of proof is one not governed by the Convention, which is why domestic law is supposed to be applied to that issue.[35]

14. According to some arbitral tribunals, the Convention is also based upon the principle of full compensation.[36] One court restricted this general principle to cases in which, as a result of a breach of contractual obligations, a contract is declared void.[37]

15. Several tribunals expressly stated that the principle of informality, laid down in article 11, also constitutes a general principle upon which the Convention is based;[38] from this principle it follows, among other things, that the parties are also free to modify or terminate their contract in any form be it either in writing or orally or in any other form. Even an implied termination of the contract has been held possible;[39] furthermore, it has been held that a written contract may be orally changed.[40]

16. The dispatch principle appears to be the general principle of the Convention concerning communications after the parties have concluded their contract. According to the principle a notice, request or other communication becomes effective as soon as the declaring party releases it from its own sphere by an appropriate means of communication. This rule applies to the notice of non-conformity or of third-party claims (arts. 39, 43), to requests of specific performance (art. 46), price reduction (art. 50), damages (art. 45 (1)(b)) or interest (art. 78), to the declaration of avoidance (arts. 49, 64, 72, 73), to the fixing of an additional period for performance (arts. 47, 63) and other notices as in articles 32(1), 67(2) or 88. As stated in case law, as a general principle for Part III of the Convention, the dispatch principle applies as well to any other communication the parties may have provided for in their contract unless they have agreed that the communication has to be received to be effective.[41]

17. The mitigation principle set forth in article 77, pursuant to which a party who relies on a breach of contract must take such measures as are reasonable in the circumstances to mitigate the loss, including loss of profit, resulting from the breach, in order to avoid entitling the party in breach to be able to claim a reduction in the damages in the amount by which the loss should have been mitigated, has also been considered a general principle upon which the Convention is based.[42]

18. Another general principle, recognized by case law, is that unless otherwise agreed, the parties are bound by 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.[43]

19. One court suggested that the issue of set-off was governed, albeit not expressly settled, in the Convention, and that the Convention contained a general principle within the meaning of article 7(2) that permitted reciprocal claims arising under the Convention (here, the buyer's claims for damages and the seller's claim for the balance of the sale proceeds) to be offset.[44] According to other courts, however, the issue of set-off is not governed at all by the Convention.[45]

20. An arbitral tribunal stated that the entitlement to interest on all sums in arrears also constitutes a general principle of the Convention.[46] According to some tribunals, the Convention is based upon the general principle pursuant to which the entitlement to interest does not require a formal notice to the debtor in default.[47] There are, however, decisions that state that a formal notice must be given to the debtor before one is entitled to interest on sums in arrears.[48]

21. Commentators have also suggested that the Convention is based upon the favor contractus principle, pursuant to which one should adopt those solutions that favor the contract's existence rather than its avoidance. This view appears to have been adopted by two courts; one court expressly referred to the principle of favor contractus,[49] whereas the other court stated that the avoidance of the contract merely constitutes an "ultima ratio" remedy.[50]

22. Several decisions have identified Article 40 as embodying a general principle of the Convention applicable to resolve unsettled issues under the Convention. According to an arbitration panel, "Article 40 is an expression of the principles of fair trading that underlie also many other provisions of the Convention, and it is by its very nature a codification of a general principle".[51] Thus, the decision asserted, even if Article 40 did not directly apply to a lack of conformity under a contractual warranty clause, the general principle underlying Article 40 would be indirectly applicable to the situation by way of Article 7(2). In another decision, a court derived from Article 40 a general principle of the Convention that even a very negligent buyer deserves more protection than a fraudulent seller, and then applied the principle to find that a seller could not escape liability under Article 35(3)[52] for misrepresenting the age and mileage of a car even if the buyer could not have been unaware of the lack of conformity.[53]

23. One arbitral tribunal,[54] when having to decide what rate of interest to apply to the sums in arrears, applied the average bank short-term lending rate to prime borrowers, being the solution adopted both by Art. 7.4.9 of the UNIDROIT Principles of International Commercial Contracts and by Art. 4.507 of the Principles of European Contract Law; the arbitral tribunal adopted that solution on the grounds that such rules had to be considered general principles on which the Convention is based. In other cases,[55] arbitral tribunals referred to the UNIDROIT Principles of International Commercial Contracts to find corroboration of the results reached by applying the rules of the Convention; one State court also referred to the UNIDROIT Principles of International Commercial Contracts to corroborate a solution adopted on the basis of the Convention.[56] Furthermore according to a State court, the UNIDROIT Principles can also help to determine the exact meaning of a general principles upon which the CISG is based.[57]


FOOTNOTES

* The present text was prepared using the full text of the decisions cited in the Case Law on UNCITRAL Texts (CLOUT) abstracts and other citations listed in the footnotes. The abstracts are intended to serve only as summaries of the underlying decisions and may not reflect all the points made in the digest. Readers are advised to consult the full texts of the listed court and arbitral decisions rather than relying solely on the CLOUT abstracts.

[Citations to cisgw3 case presentations have been substituted [in brackets] for the case citations provided in the UNCITRAL Digest. This substitution has been made to facilitate online access to CLOUT abstracts, original texts of court and arbitral decisions, and full text English translations of these texts (available in most but not all cases). For citations UNCITRAL had used, go to <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.]

1. See United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March - 11 April 1980, Official Records, Documents of the Conference and Summary Records of the Plenary Meetings and of the Meetings of the Main Committee, 1981, p. 17.

2. For references in case law to the need to take the Convention's international character into account in the interpretation of the Convention, see CLOUT case No. 418 [UNITED STATES Medical Marketing v. Internazionale Medico Scientifica Federal District Court [Louisiana] 17 May 1999 available online at <http://cisgw3.law.pace.edu/cases/990517u1.html>], (see full text of the decision); CLOUT case No. 138 [UNITED STATES Delchi Carrier v. Rotorex Federal Appellate Court [2nd Circuit] 6 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951206u1.html>] (see full text of the decision); CLOUT case No. 84 [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 20 April 1994, available online at <http://cisgw3.law.pace.edu/cases/940420g1.html>] (see full text of the decision); CLOUT case No. 201 [SWITZERLAND Laufen [District Court] Canton Berne 7 May 1993, available online at <http://cisgw3.law.pace.edu/cases/930507s1.html>] (see full text of the decision).

3. See CLOUT case No. 222 [UNITED STATES MCC-Marble Ceramic Center v. Ceramica Nuova D'Agostino [Federal Court of Appeals] [11th Circuit] 29 June 1998, available online at <http://cisgw3.law.pace.edu/cases/980629u1.html>] (see full text of the decision); CLOUT case No. 413 [UNITED STATES Calzaturificio Claudia v. Olivieri Footwear [Federal District Court] Southern District of New York 6 April 1998, available online at <http://cisgw3.law.pace.edu/cases/980406u1.html>] (see full text of the decision); CLOUT case No. 230 [GERMANY Oberlandesgericht [Appellate Court] Karlsruhe 25 June 1997, available online at <http://cisgw3.law.pace.edu/cases/970625g1.html>] (see full text of the decision); CLOUT case No. 171 [GERMANY Bundesgerichtshof [Supreme Court] 3 April 1996, available online at <http://cisgw3.law.pace.edu/cases/960403g1.html>] (see full text of the decision); CLOUT case No. 201 [SWITZERLAND Richteramt [District Court] Laufen Canton Berne 7 May 1993, available online at <http://cisgw3.law.pace.edu/cases/930507s1.html>] (see full text of the decision).

4. CLOUT case No. 333 [SWITZERLAND Handelsgericht [Commercial Court] Aargau 11 June 1999, available online at <http://cisgw3.law.pace.edu/cases/990611s1.html>]; CLOUT case No. 271 [GERMANY Bundesgerichtshof [Federal Supreme Court] 24 March 1999, available online at <http://cisgw3.law.pace.edu/cases/990324g1.html>] (see full text of the decision); CLOUT case No. 217 [SWITZERLAND Handelsgreicht [Commercial Court] Aargau 26 September 1997, available online at <http://cisgw3.law.pace.edu/cases/970926s1.html>] (see full text of the decision).

5. CLOUT case No. 138 [UNITED STATES Delchi Carrier v. Rotorex Federal Appellate Court [2nd Circuit] 6 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951206u1.html>] (see full text of the decision); for a more recent case stating the same, see  [UNITED STATES Schmitz-Werke v. Rockland Federal Appellate Court [4th Circuit] 21 June 2002, available online at <http://cisgw3.law.pace.edu/cases/020621u1.html>]

6. [GERMANY Landgericht [District Court] Aachen 20 July 1995, available online at <http://cisgw3.law.pace.edu/cases/950720g1.html>] (referring to the legislative history of article 78); CLOUT case No. 84 [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 20 April 1994, available online at <http://cisgw3.law.pace.edu/cases/940420g1.html>].

7. [AUSTRIA Oberster Gerichtshof [Supreme Court] 13 April 2000, available online at <http://cisgw3.law.pace.edu/cases/000413a3.html>].

8. [SPAIN Audiencia Provincial [Appellate Court] Valencia 7 June 2003, available online at <http://cisgw3.law.pace.edu/cases/030607s4.html>].

9. See CLOUT case No. 378 [ITALY Tribunale [District Court] Vigevano 12 July 2000, available online at <http://cisgw3.law.pace.edu/cases/000712i3.html>].

10. [BELGIUM Rechtbank [District Court] Hasselt 2 December 1998, available online at <http://cisgw3.law.pace.edu/cases/981202b1.html>]; [ITALY Tribunale [District Court] Cuneo 31 January 1996, available online at <http://cisgw3.law.pace.edu/cases/960131i3.html>].

11. [UNITED STATES Usinor Industeel v. Leeco Steel Products Federal District Court [Illinois] 28 March 2002, available online at <http://cisgw3.law.pace.edu/cases/020328u1.html>]; [BELGIUM Rechtbank [District Court ] Hasselt 6 March 2002, available online at <http://cisgw3.law.pace.edu/cases/020306b1.html>]; [AUSTRIA Oberster Gerichtshof [Supreme Court] 13 April 2000, available online at <http://cisgw3.law.pace.edu/cases/000413a3.html>]; CLOUT case No. 380 [ITALY Tribunale [District Court] Pavia 29 December 1999, available online at <http://cisgw3.law.pace.edu/cases/991229i3.html>] (see full text of the decision); CLOUT case No. 205 [FRANCE Cour d'appel [Appellate Court] Grenoble 23 October 1996, available online at <http://cisgw3.law.pace.edu/cases/961023f1.html>] (see full text of the decision).

12. [ITALY Tribunale [District Court] Rimini 26 November 2002, available online at <http://cisgw3.law.pace.edu/cases/021126i3.html.html>].

13. CLOUT case No. 378 [ITALY Tribunale [District Court] Vigevano 12 July 2000, available online at <http://cisgw3.law.pace.edu/cases/000712i3.html>]; CLOUT case No. 380 [ITALY Tribunale [District Court] Pavia 29 December 1999, available online at <http://cisgw3.law.pace.edu/cases/991229i3.html>].  [ITALY Tribunale [District Court] Rimini 26 November 2002, available online at <http://cisgw3.law.pace.edu/cases/021126i3.html.html>]

14. See United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March - 11 April 1980, Official Records, Documents of the Conference and Summary Records of the Plenary Meetings and of the Meetings of the Main Committee, 1981, p. 18.

15. United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March - 11 April 1980, Official Records, Documents of the Conference and Summary Records of the Plenary Meetings and of the Meetings of the Main Committee, 1981, p. 18.

16. [ICC Court of Arbitration case No. 8611/HV/JK of 23 January 1997, available online at <http://cisgw3.law.pace.edu/cases/978611i1.html.html>].

17. [FRANCE Cour d'appel [Appellate Court] Paris 6 November 2001, available online at <http://cisgw3.law.pace.edu/cases/011106f1.html>], expressly referring to article 7 of the Convention when stating that issues not governed by the Convention have to be solved by means of the applicable law; for a similar statement, [ARGENTINA Mayer Alejandro v. Onda Hofferle [Appellate Court] Cámara 24 April 2000, available online at <http://cisgw3.law.pace.edu/cases/000424a1.html>] (stating the same); CLOUT case No. 333 [SWITZERLAND Handelsgericht [Commercial Court] Aargau 11 June 1999, available online at <http://cisgw3.law.pace.edu/cases/990611s1.html>]; [NETHERLANDS Arrondissementsrechtbank [District Court] Zutphen 29 May 1997, available online at <http://cisgw3.law.pace.edu/cases/970529n1.html>] (stating the same); [RUSSIA Arbitration Award case No. 38/1996, available online at <http://cisgw3.law.pace.edu/cases/970328r1.html>] [GERMANY Amtsgericht [ Lower Court] Mayen 6 September [1994], available online at <http://cisgw3.law.pace.edu/cases/940906g1.html>] (stating the same); CLOUT case No. 97 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 9 September 1993, available online at <http://cisgw3.law.pace.edu/cases/930909s1.html>] (stating the same) (see full text of the decision).

18. [BELGIUM Hof van Beroep [Appellate Court] Gent [15] May 2002, available online at <http://cisgw3.law.pace.edu/cases/020515b1.html>]; [BELGIUM Rechtbank van Koophandel [District Court] Ieper 29 January 2001, available online at <http://cisgw3.law.pace.edu/cases/010129b1.html>]; [GERMANY Landgericht [District Court] Stendal 12 October 2000, available online at <http://cisgw3.law.pace.edu/cases/001012g1.html>]; [ITALY Tribunale [District Court] Rimini 26 November 2002, available online at <http://cisgw3.law.pace.edu/cases/021126i3.html.html>]

19. [BELGIUM Hof van Beroep [Appellate Court] Gent [15] May 2002, available online at <http://cisgw3.law.pace.edu/cases/020515b1.html>]; [GERMANY Bundesgerichtshof [Supreme Court] 9 January 2002, available online at <http://cisgw3.law.pace.edu/cases/020109g1.html>]; [GERMANY Bundesgerichtshof [Supreme Court] 31 October 2001, available online at <http://cisgw3.law.pace.edu/cases/011031g1.html>]; CLOUT case No. 297 [GERMANY Oberlandesgericht [Appellate Court] München 21 January 1998, available online at <http://cisgw3.law.pace.edu/cases/980121g1.html>] (see full text of the decision); CLOUT case No. 251 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 30 November 1998, available online at <http://cisgw3.law.pace.edu/cases/981130s1.html>] (see full text of the decision); [ITALY Corte di Appello [Appellate Court] Milano 11 December 1998, available online at <http://cisgw3.law.pace.edu/cases/981211i3.html>]; [MEXICO Compromex Arbitration Award 30 November 1998, available online at <http://cisgw3.law.pace.edu/cases/981130m1.html>]; CLOUT case No. 277 [GERMANY Oberlandesgericht [Appellate Court] Hamburg 28 February 1997, available online at <http://cisgw3.law.pace.edu/cases/970228g1.html>]; [NETHERLANDS Rechtbank [District Court] Arnhem 17 July 1997, available online at <http://cisgw3.law.pace.edu/cases/970717n1.html>]; [GERMANY Landgericht [District Court] München 6 May 1997, available online at <http://cisgw3.law.pace.edu/cases/970506g1.html>] (stating the same); CLOUT case No. 337 [GERMANY Landgericht [District Court] Saarbrücken 26 March 1996, available online at <http://cisgw3.law.pace.edu/cases/960326g1.html>]; CLOUT case No. 166 [GERMANY Schiedsgericht [Arbitral Tribunal] Hamburg 21 June 1996, available online at <http://cisgw3.law.pace.edu/cases/960621g1.html>] (see full text of the decision); CLOUT case No. 136 [GERMANY Oberlandesgericht [Appellate Court] Celle 24 May 1995, available online at <http://cisgw3.law.pace.edu/cases/950524g1.html>] (see full text of the decision); [ICC Court of Arbitration, case No. 8128/1995 of 17 November 1995, available online at <http://cisgw3.law.pace.edu/cases/958128i1.html>]; [HUNGARY Court of Arbitration Award No. Vb 94124 of 17 November 1995, available online at <http://cisgw3.law.pace.edu/cases/951117h1.html>]; CLOUT case No. 154 [FRANCE Cour d'appel [Appellate Court] Grenoble 22 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950222f1.html>].

20. See CLOUT case No. 277 [GERMANY Oberlandesgericht [Appellate Court] Hamburg 28 February 1997, available online at <http://cisgw3.law.pace.edu/cases/970228g1.html>].

21. CLOUT case No. 154 [FRANCE Cour d'appel [Appellate Court] Grenoble 22 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950222f1.html>].

22. [GERMANY Bundesgerichtshof [Supreme Court] 31 October 2001, available online at <http://cisgw3.law.pace.edu/cases/011031g1.html>].

23. [RUSSIA Arbitration Award case No. 302/1996 of 27 July 1999, available online at <http://cisgw3.law.pace.edu/cases/990727r1.html>]; CLOUT case No. 230 [GERMANY Oberlandesgericht [Appellate Court] Karlsruhe 25 June 1997, available online at <http://cisgw3.law.pace.edu/cases/970625g1.html>] (see full text of the decision); CLOUT case No. 94 [AUSTRIA Vienna Arbitration Award, case No. SCH-4318 of 15 June 1994; available at <http://cisgw3.law.pace.edu/cases/940615a4.html>]; CLOUT case No. 93 [AUSTRIA Vienna Arbitration Award, case No. SCH-4366 of 15 June 1994; available at <http://cisgw3.law.pace.edu/cases/940615a3.html>] (see full text of the decision); [NETHERLANDS Gerechtshof [Appellate Court] 's-Hertogenbosch 26 February 1992, available online at <http://cisgw3.law.pace.edu/cases/920226n1.html>].

24. [NETHERLANDS Arrondissementsrechtbank [District Court] Amsterdam 5 October 1994, available online at <http://cisgw3.law.pace.edu/cases/941005n1.html>].

25. CLOUT case No. 49 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 2 July 1993, available online at <http://cisgw3.law.pace.edu/cases/930702g1.html>].

26. [FRANCE Cour d'appel [Appellate Court] Grenoble, 23 October 1996, available online at <http://cisgw3.law.pace.edu/cases/961023f1.html>].

27. [AUSTRIA Oberster Gerichtshof [Supreme Court] 29 June 1999, available online at <http://cisgw3.law.pace.edu/cases/990629a3.html>].

28. CLOUT case No. 312 [FRANCE Cour d'appel [Court] Paris 14 January 1998, available online at <http://cisgw3.law.pace.edu/cases/980114f1.html>].

29. [GERMANY Landgericht [District Court] Berlin 24 March 1998, available online at <http://cisgw3.law.pace.edu/cases/980324g1.html>].

30. See CLOUT case No. 378 [ITALY Tribunale [District Court] Vigevano 12 July 2000, available online at <http://cisgw3.law.pace.edu/cases/000712i3.html>]; CLOUT case No. 380 [ITALY Tribunale [District Court] Pavia 29 December 1999, available online at <http://cisgw3.law.pace.edu/cases/991229i3.html>]; CLOUT case No. 196 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 26 April 1995, available online at <http://cisgw3.law.pace.edu/cases/950426s1.html>] (see full text of the decision); CLOUT case No. 97 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 9 September 1993, available online at <http://cisgw3.law.pace.edu/cases/930909s1.html>].

31. See CLOUT case No. 97 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 9 September 1993, available online at <http://cisgw3.law.pace.edu/cases/930909s1.html>].

32. CLOUT case No. 378 [ITALY Tribunale [District Court] Vigevano 12 July 2000, available online at <http://cisgw3.law.pace.edu/cases/000712i3.html>]; [GERMANY Bundesgerichtshof [Supreme Court] 9 January 2002, available online at <http://cisgw3.law.pace.edu/cases/020109g1.html>]; CLOUT case No. 380 [ITALY Tribunale [District Court] Pavia 29 December 1999, available online at <http://cisgw3.law.pace.edu/cases/991229i3.html>].

33. For references to this principle, see CLOUT case No. 378 [ITALY Tribunale [District Court] Vigevano 12 July 2000, available online at <http://cisgw3.law.pace.edu/cases/000712i3.html>]; [GERMANY Landgericht [District Court] Frankfurt 6 July 1994, available online at <http://cisgw3.law.pace.edu/cases/940706g1.html>]; CLOUT case No. 107 [AUSTRIA Oberlandesgericht [Appellate Court] Innsbruck 1 July 1994, available online at <http://cisgw3.law.pace.edu/cases/940701a3.html>] (see full text of the decision).

34. See CLOUT case No. 378 [ITALY Tribunale [District Court] Vigevano 12 July 2000, available online at <http://cisgw3.law.pace.edu/cases/000712i3.html>].

35. See CLOUT case No. 261 [SWITZERLAND Berzirksgericht [District Court] Sanne 20 February 1997, available online at <http://cisgw3.law.pace.edu/cases/970220s1.html>]; CLOUT case No. 103 [ICC Court of Arbitration, case No. 6653 of 26 March 1993, available online at <http://cisgw3.law.pace.edu/cases/956653i1.html>]; in one case, a state court referred to the problem of whether the Convention is based upon a particular general principle in respect of the issue of burden of proof or whether the issue is one not governed by the Convention, but left the issue open; see CLOUT case No. 253 [SWITZERLAND Tribunale d'appello [Appellate Court ] Lugano 15 January 1998, available online at <http://cisgw3.law.pace.edu/cases/980115s1.html>].

36. [AUSTRIA Oberster Gerichtshof [Supreme Court] 9 March 2000, available online at <http://cisgw3.law.pace.edu/cases/000309a3.html>]; CLOUT cases Nos. 93 [AUSTRIA Vienna Arbitration Award, case No. SCH-4366 of 15 June 1994; available at <http://cisgw3.law.pace.edu/cases/940615a3.html>] and 94 [AUSTRIA Vienna Arbitration Award, case No. SCH-4318 of 15 June 1994; available at <http://cisgw3.law.pace.edu/cases/940615a4.html>].

37. [AUSTRIA Oberster Gerichtshof [Supreme Court] 9 March 2000, available online at <http://cisgw3.law.pace.edu/cases/000309a3.html>].

38. [MEXICO Compromex Arbitration Award 29 April 1996 , available online at <http://cisgw3.law.pace.edu/cases/960429m1.html>].

39. [AUSTRIA Oberster Gerichtshof [Supreme Court] 29 June 1999, available online at <http://cisgw3.law.pace.edu/cases/990629a3.html>].

40. CLOUT case No. 176 [AUSTRIA Oberster Gerichtshof [Supreme Court] 6 February 1996, available online at <http://cisgw3.law.pace.edu/cases/960206a3.html>] (see full text of the decision).

41. [GERMANY Landgericht [District Court] Stuttgart 13 August 1991, available online at <http://cisgw3.law.pace.edu/cases/910813g1.html>] (according to the contract the notice of non-conformity had to be by registered letter. The court held that that meant that the notice had to be received by the other party. Moreover, the declaring party had also to prove that the notice had been received by the other party). See also CLOUT case No. 305 [AUSTRIA Oberster Gerichtshof [Supreme Court] 30 June 1998, available online at <http://cisgw3.law.pace.edu/cases/980630a3.html>].

42. [GERMANY Landgericht [District Court] Zwickau 19 March 1999, available online at <http://cisgw3.law.pace.edu/cases/990319g1.html>]; [ICC Court of Arbitration case No. 8817 of December 1997 , available online at <http://cisgw3.law.pace.edu/cases/978817i1.html>]; [ITALY Tribunale [District Court] Rimini 26 November 2002, available online at <http://cisgw3.law.pace.edu/cases/021126i3.html.html>].

43. [BELGIUM Rechtbank Koophandel [District Court] Ieper 29 January 2001, available online at <http://cisgw3.law.pace.edu/cases/010129b1.html>].

44. CLOUT case No. 348 [GERMANY Oberlandesgericht [Appellate Court] Hamburg 26 November 1999, available online at <http://cisgw3.law.pace.edu/cases/991126g1.html>].

45. [AUSTRIA Oberster Gerichtshof [Supreme Court] 22 October 2001, available online at <http://cisgw3.law.pace.edu/cases/011022a4.html>]; CLOUT case No. 378 [ITALY Tribunale [District Court] Vigevano 12 July 2000, available online at <http://cisgw3.law.pace.edu/cases/000712i3.html>] (see full text of the decision); [GERMANY Amtsgericht [Lower Court] Duisburg 13 April 2000, available online at <http://cisgw3.law.pace.edu/cases/000413g1.html>]; CLOUT case No. 232 [GERMANY Oberlandesgericht [Appellate Court] München 11 March 1998, available online at <http://cisgw3.law.pace.edu/cases/980311g1.html>]; CLOUT case No. 259 [SWITZERLAND Kantonsgericht [Canton Court] Freiburg 23 January 1998, available online at <http://cisgw3.law.pace.edu/cases/980123s1.html>]; [GERMANY Landgericht [District Court] Hagen 15 October 1997, available online at <http://cisgw3.law.pace.edu/cases/971015g1.html>]; [GERMANY Landgericht [District Court] München 6 May 1997, available online at <http://cisgw3.law.pace.edu/cases/970506g1.html>]; CLOUT case No. 275 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 24 April 1997, available online at <http://cisgw3.law.pace.edu/cases/970424g1.html>] (see full text of the decision); CLOUT case No. 169 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 11 July 1996, available online at <http://cisgw3.law.pace.edu/cases/960711g1.html>] (see full text of the decision); [GERMANY Landgericht [District Court] Duisburg 17 April 1996, available online at <http://cisgw3.law.pace.edu/cases/960417g1.html>]; CLOUT case No. 289 [GERMANY Oberlandesgericht [Appellate Court] Stuttgart 21 August 1995, available online at <http://cisgw3.law.pace.edu/cases/950821g1.html>]; [GERMANY Landgericht [District Court] München 20 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950320g1.html>]; [NETHERLANDS Rechtbank [District Court] Middelburg 25 January 1995, available online at <http://cisgw3.law.pace.edu/cases/950125n1.html>]; [GERMANY Amtsgericht [Lower Court] Mayen 6 September 1994, available online at <http://cisgw3.law.pace.edu/cases/940906g1.html>]; CLOUT case No. 281 [GERMANY Oberlandesgericht [Appellate Court] Koblenz 17 September 1993; available at <http://cisgw3.law.pace.edu/cases/930917g1.html>]; CLOUT case No. 125 [GERMANY Oberlandesgericht [Appellate Court] Hamm 9 June 1995; available at <http://cisgw3.law.pace.edu/cases/950609g1.html>]; [NETHERLANDS Rechtbank [District Court] Roermond 6 May 1993; available at http://cisgw3.law.pace.edu/cases/930506n1.html>]; CLOUT case No. 99 [NETHERLANDS Rechtbank [District Court ] Arnhem 25 February 1993, available online at <http://cisgw3.law.pace.edu/cases/930225n1.html>].

46. [ICC Court of Arbitration, case No. 8908 of September 1998 , available online at <http://cisgw3.law.pace.edu/cases/988908i1.html>].

47. CLOUT case No. 217 [SWITZERLAND Handelsgreicht [Commercial Court] Aargau 26 September 1997, available online at <http://cisgw3.law.pace.edu/cases/970926s1.html>] (see full text of the decision); CLOUT case No. 80 [GERMANY Kammergericht [Appellate Court] Berlin 24 January 1994, available online at <http://cisgw3.law.pace.edu/cases/940124g1.html>] (see full text of the decision); CLOUT case No. 56 [ SWITZERLAND Pretore della giurisdizione [District Court] Locarno Campagna 27 April 1992, available online at <http://cisgw3.law.pace.edu/cases/920427s1.html>] (see full text of the decision).

48. [BULGARIA Arbitration Award case No. 11/1996 of 12 February 1998, available online at <http://cisgw3.law.pace.edu/cases/980212bu.html>]; [GERMANY Landgericht [ District Court ] Zwickau 19 March 1999, available online at <http://cisgw3.law.pace.edu/cases/990319g1.html>].

49. CLOUT case No. 248 [SWITZERLAND Bundesgericht [Supreme Court] 28 October 1998, available online at <http://cisgw3.law.pace.edu/cases/981028s1.html>] (see full text of the decision).

50. [AUSTRIA Oberster Gerichtshof [Supreme Court] 7 September 2000, available online at <http://cisgw3.law.pace.edu/cases/000907a3.html>].

51. CLOUT case No. 237 [STOCKHOLM CHAMBER OF COMMERCE Arbitration Award of 5 June 1998, available online at <http://cisgw3.law.pace.edu/cases/980605s5.html>] (see full text of the decision).

52. Article 35(3) provides that a seller is not liable for a lack of conformity under Article 35(2) "if at the time of the conclusion of the contract the buyer knew or could not have been unaware of such lack of conformity".

53. CLOUT case No. 168 [GERMANY Oberlandesgericht [Appellate Court] Köln 21 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960521g1.html>].

54. [ICC Court of Arbitration, case No. 8128/1995 pf 17 November 1995, available online at <http://cisgw3.law.pace.edu/cases/958128i1.html>].

55. [ICC Court of Arbitration case No. 9117 of March 1998, available online at <http://cisgw3.law.pace.edu/cases/989117i1.html>]; [ICC Court of Arbitration case No. 8817 of December 1997 , available online at <http://cisgw3.law.pace.edu/cases/978817i1.html>].

56. CLOUT case No. 205 [FRANCE Cour d'appel [Appellate Court] Grenoble 23 October 1996, available online at <http://cisgw3.law.pace.edu/cases/961023f1.html>] (see full text of the decision).

57. [NETHERLANDS Rechtbank [District Court] Zwolle 5 March 1997, available online at <http://cisgw3.law.pace.edu/cases/970305n1.html>]


ANALYSIS OF CISG CASE LAW

Reprinted by special permission of Northwestern University School of Law. 34 Northwestern Journal of International Law and Business (Winter 2004) 299-440.[*]

excerpt from

The Interpretive Turn in International Sales Law:
An Analysis of Fifteen Years of CISG Jurisprudence

Larry A. DiMatteo, Lucien Dhooge, Stephanie Greene,
Virginia Maurer and Marisa Pagnattaro

[...]

[CISG as International Code
Principle of Uniformity
-   Strict Uniformity vs. Relative Uniformity
-   Uniformity through Original or Autonomous Interpretation
-   CISG as Soft Law: Uniformity through the Prism of Customary International Law
CISG Methodology and Jurisprudence
-   Interpretive Methodology
-   General Principles
-   General Default Rules and Specific Default Rule Creation
Developing an International Jurisprudence
Persistence of Homeward Trend]

A. CISG as International Code

It is important to understand that the CISG is written in the form of a convention-code [19] and not as a uniform or model law. The paramount characteristic of a convention is its international character. This characteristic implies that its overall purpose is the standardization of law at a level above that of national law.[20] This standardization provides the important benefit of the longstanding problem of conflict of laws among national states.

In the short term, however, international conventions often produce a problem referred to be Professors Enderlein and Maskow as the cleavage of statutes.[21] This is caused by the fact that although the CISG is not meant to be integrated into national legal systems, it is incorporated and applied by national courts. The presence of two sales laws within a single legal system inevitably produces norm conflict. The differences in the use of general contract and interpretation principles, along with substantive differences in the formal legal rules, cause a degree of conceptual dissonance. It is hoped that with any new trans-jurisdictional standardizing law, whether in the form of a uniform law, model law, or convention, the effect of such dissonance will diminish over time. In the end, it is hoped that a solid jurisprudential framework will develop in which the interpreter will "manage with the standardizing rules"[22] independently of the influence of divergent domestic law.

The international nature of the CISG is demonstrated by the fact that its jurisdiction is transaction-focused and not party-focused. The fact that a transaction crosses national borders is the linchpin of CISG jurisdiction -- not the nationality of the parties. For example, Article 10(a) provides that the place of business is that which has the closet relationship to the transaction. The nationality of the parties, the place of incorporation of a party, and the place of its headquarters are largely irrelevant. Article 10(a) states the rule that "the nationality of the parties is not to be taken into [page 308] consideration"[23] in determining the applicability of the CISG. Therefore, a contract between two nationals of the same country may be subject to the CISG if it involves a trans-border shipment and one of the parties has its CISG "place of business" in another country.[24]

Another example of the international nature of the CISG is its exclusion of types of sales transactions that are more likely to be exposed to the peculiarities of national laws. Article 2 excludes consumer sales, auction sales, sales of ships and aircraft, and forced or judicially mandated sales. The rationale behind excluding these types of sales is that they are subject to special national regulations. Examples of such specialty laws are consumer protection laws and special registration laws (ships and aircraft). [25]

B. Principle of Uniformity

A recent article is entitled: Is the United Nations Convention on the International Sale of Goods Achieving Uniformity?[26] The author correctly replies that the question itself is improper. The answer is yes and no depending on how the word uniformity is defined. If by uniformity one means substantive or absolute uniformity of application, then the answer is a commonsensical no. The better question is: Has the CISG become a functional code? Have functional default rules developed through the application of CISG's general principles? Has it resulted in at least a manageable level of uniform application to have decreased the legal impediments to international sales?[27] Finally, what is the likelihood of greater uniformity of application in the future?

1. Strict Uniformity versus Relative Uniformity

The degree that the CISG has been successful at unifying international sales law has been debated. In order to gauge its perceived impact on unifying international sales law, a standard is needed in which to measure CISG jurisprudence. Numerous standards can be offered including the [page 309] standards of strict [28] or absolute uniformity,[29] relative uniformity, and the lessening of legal impediments to international trade.[30] "It is generally acknowledged that the existence of different national legal systems impedes the development of international economic relations with complicated problems arising from the conflict of laws."[31] We believe that the success of the CISG should be measured using a standard of relative uniformity or a standard of the lessening of legal impediments to trade. Thus, a relative or useful level of uniformity [32] should be the benchmark to measure the success of the CISG. This is what Professor Miller has referred to as "a more specific goal [of] uniformity." The fact that Article 7 prefaces its uniformity mandate with "regard has to be had"[33] implies that a standard below strict uniformity in application was envisioned. The uniformity mandate itself indicates that strict uniformity is not a realizable goal. Instead of using active words like establish or create, the CISG merely states the "need to promote uniformity in its application ... ."[34] The benchmark of relative or useful uniformity is superior to the previous system of private international law characterized by the full panoply of different domestic laws and systems.

The CISG was never intended to achieve the lofty goal of absolute uniformity. In the words of Johan Steyn, "[n]o convention can eliminate uncertainties in its application. But a convention such as the Vienna Sales Convention will tend to reduce differences and to eliminate uncertainty."[35] If it helps to relieve the impediment noted above of conflicts of national laws then it is to be considered a progressive, albeit a transitory, step to uniform private international law. [page 310]

2. Uniformity through Original or Autonomous Interpretation

The interpretive methodology of the CISG mandates that interpreters seek original or autonomous interpretations. It is hoped that such autonomous interpretations, divorced from the idiosyncrasies of domestic jurisprudence, will result in more truly supranational law. One of our co-authors previously wrote that "[t]he Convention is meant to be interpreted based upon its uniqueness and not its similarities to any one of the legal systems from which it was created."[36] As discussed earlier, the CISG is an example of a convention qua code. The importance of the fact that the CISG is a convention pertains to its international character. This international character calls for a non-domestic, autonomous interpretation of CISG rules.

The importance of convention qua code is that its international character is to be fused with the interpretive methodology common to all codes.[37] Professor Scott defines a code as "a preemptive, systematic, and comprehensive enactment of a whole field of law."[38] Thus, problems of interpretation such as gaps in the code are to be solved by means internal to the code. A court or arbitral panel is given the duty "to use the processes of analogy and extrapolation to find a solution consistent with the purposes and policy of the codifying law. In this way, the code itself provides the best evidence of what it means."[39]

The CISG invites the interpreter to construct autonomous interpretations through its use of nomenclature independent of any domestic legal system. The CISG uses terms such as contract "avoidance,"[40] and language such as "among other things,"[41] "extent of one party's liability to the other,"[42] and "handing the goods over."[43] CISG phraseology is relatively vague and abstract, which invites original interpretations. Simultaneously, the CISG's flexibility enables a wide scope for application [page 311] and reasonable but divergent "national" interpretations. This problem of divergent autonomous interpretations will be a focus of our CISG jurisprudential review.

3. CISG as Soft Law: Uniformity through the Prism of Customary International Law

One avenue to greater implementation and uniformity is the use of the CISG as soft law.[44] Two uses of the CISG as soft law include (1) the voluntary use of the CISG as a choice of law by private parties not automatically subject to CISG jurisdiction and (2) the use by courts and arbitral panels of the CISG as evidence of international customary law. One question posed by CISG jurisprudence is whether the CISG has been used where it is not mandatory law.[45] The major reporting services, CLOUT, Pace Law School, and Unilex, among others, report arbitral panel decisions.[46] These reports, although not comprehensive, indicate CISG usage as a source of soft law or customary international law. Because arbitral panels are often not required to apply a given national law, they are less susceptible to the legal centricity inherent in courts operating within a domestic legal system.[47] To this end, this article's analysis draws from both case law and arbitral decisions. [page 312]

II. CISG METHODOLOGY AND JURISPRUDENCE

Parts III through VI offer a selective but comprehensive review of CISG jurisprudence.[48] They allow an assessment of the diverging interpretations problem by national courts. Before assessing the uniformity of CISG jurisprudence relating to its substantive rules of contract, an understanding of the interpretive methodology provided by the CISG is necessary. Failure to understand and apply the CISG's interpretive methodology increases the likelihood of divergent interpretations through the improper use of domestic methodologies and legal constructs. This holds true for any code, domestic or international. Professor Hawkland, referring to the Uniform Commercial Code, asserts that "a court should look no further than the code itself for solution[s] to disputes governed by it -- its purposes and policies should dictate the result even where there is no express language."[49] CISG interpretive methodology provides a template for addressing substantive gaps or issues of law not directly (expressly) dealt with by the CISG. This template includes analogical reasoning by using CISG Articles not directly related to the issue at bar and the use of the general principles of the CISG in fabricating default rules.[50]

The notion of analogical reasoning is not expressly mentioned in the general provisions. However, such a methodology is implied in any comprehensive code. Furthermore, Article 7(2) states that "questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based." A broad interpretation of this methodology would require the use of express and implied general principles. General [page 313] principles cover all CISG provisions and can be utilized to uncover implied principles that underlie specific provisions. These principles -- express or implied -- are to be used for guidance in the interpretation of specific CISG provisions. This entails analogical reasoning in order to ensure that article-specific interpretations fit within the framework of the CISG as a whole.[51]

There is a debate as to which priority these rules have in the interpretive methodology of codes. Some argue that general principles are the first recourse to filling in a gap or ambiguity in a code provision.[52] Others argue that reasoning by analogy takes precedent especially when a solution provided in one code provision is analogous to an issue presented under another provision.[53] The best interpretive methodology would include both types of analysis.[54] The two levels of the interpretive discourse are likely to merge in most application. It is the recognition and application of general principles underlying specific CISG articles that make analogical reasoning a functional methodology. The third level of the CISG's interpretive methodology is recourse to private international law. Only after the failure to provide a CISG-generated solution from analogical reasoning or application of general principles should a court resort to private international law (domestic law).[55] The last resort status of domestic sales law is meant to deter the threat of homeward trend. This is especially crucial in the case of the CISG due to the fact that its provisions were the product of intense debate and compromise. The temptation exists that in cases of application, especially in areas of ambiguity or gaps, to seek [page 314] the familiarity of domestic default rules.[56]

A. Interpretive Methodology

As highlighted above, the CISG provides an interpretive methodology for interpreting and applying its substantive rules. The spirit of this methodology is that of excluding recourse to domestic legal methodologies. This is implicit in the view that the CISG directs decision-makers to develop autonomous interpretations [57] of CISG provisions. It is only in this way that the CISG can rise above the inherent differences between national contract laws and legal systems. Article 7(1) states that the CISG is to be interpreted in "good faith," "to promote uniformity," and with regard "to its international character."[58] The more difficult questions are not the fabrication of autonomous interpretations of the CISG but the development of different autonomous interpretations. This is especially due to the fact that the CISG is a product of studied ambiguity or compromise and that there are numerous substantive gaps in its rules. The courts and arbitral panels will invariably face issues that are within the scope of the CISG but where the CISG fails to provide an express rule.[59] Once again the above described methodology of analogical reasoning and general principles is consistent with the presumption that CISG provisions are to be interpreted broadly. A mandate of broad interpretation is consistent with the code-based interpretive methodology.[60]

B. General Principles

In order to diminish the frequency of divergent national interpretations, the CISG mandates the use of general principles, both express and implied, found within its Articles. The CISG displays two noticeable characteristics relevant to legal interpretation. First, it fails to [page 315] explicitly enunciate many of its general principles. Article 7(2) states that if "matters governed by [it] are not expressly settled in it [they] are to be settled in conformity with the general principles by which it is based."[61] The general principles can be characterized as either general or specific and either express or implied. The general, expressed principles are found in Article 7(1). It provides that "[i]n the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade."[62] The general principle of international character is directed at preventing the problem of homeward trend discussed earlier.[63]

An example of an implied general principle is "the principle of favoring the continuation of a contract."[64] The fact that goods can only be rejected for fundamental defects requires buyers to accept defective goods in most instances. The restrictive nature of fundamental breach is discussed in Part VI.B.1.[65] The importance of completing the transaction in long distance sales, as compared to the broad right of rejection under the perfect tender rule for domestic sales,[66] limits the right of avoidance under the CISG. This is somewhat offset by the incorporation of a uniquely non-common law remedy of price reduction. Thus, the buyer is forced to complete the transaction but is allowed to unilaterally reduce the price by the diminishment of value related to the defect. "The principle [of continuation of performance] can be extracted from Articles 34, 37, 48, 49, 51, 64, 71 and 72 of the CISG."[67]

The Helsinki Court of Appeals recognized the importance of continuation of contract within the principle of loyalty. "The so-called [page 316] principle of loyalty has been recognized in scholarly writings. According to the principle, the parties to a contract have to act in favor of the common goal; they have to reasonably consider the interests of the other party."[68] In essence, each party owes a duty of loyalty to the other party to preserve the viability of the transaction. From such a duty, the court recognized an implied general principle in an expanded notion of duty to continue a sales relationship beyond the discrete individual sales transactions. The case involved a buyer who purchased carpets for resale on an ad hoc basis. The seller abruptly ended its relationship with the buyer. The court held that on the basis of a two-year business transaction, the buyer's "operations cannot be based on a risk of an abrupt ending of a contract."[69] Therefore, the seller was restricted in its right to not sell to the buyer despite the fact that there was no agency or long-term supply contract in place. The court reasoned that the buyer had "obtained de facto exclusive selling rights."[70] Such implied rights, based upon good faith and trade usage, make the seller of multiple discrete transactions susceptible to damage claims under Article 74.[71] In essence, the court held that principles of reasonableness and trade usage require an extended notice of termination where damages to a buyer are foreseeable, regardless of the fact that the discrete contract failed to require such notice.[72]

Many of the CISG's rules are open-textured and allow application of contextual inputs such as trade usage and custom.[73] For example, it makes repeated use of the "reasonableness standard" in its gap-filling provisions. The authors counted thirty-eight instances where the reasonableness [page 317] standard is imposed by the rules of the CISG.[74] Open-ended rules derive their content from post-hoc application to real world cases.[75] Such rules allow for expansive interpretations to deal with novel cases and for use in analogical reasoning. The analogical reasoning can be used to fill in gaps within the scope of the CISG. As discussed above, one way this is done is through the deduction of general principles underlying the CISG in order to interpret CISG rules.[76]

Because many of the CISG rules are open-ended, despite the fact that it is in code format, it is important to interpret its provisions as part of a whole. In interpreting an open-ended rule, the interpreter should not only recognize the underlying rationales for that particular CISG provision, but should also interpret general principles and other relevant provisions.[77] [page 318] This methodology was applied in an Austrian court decision.[78] The court held that the payment of interest was within the scope of the CISG [79] even though it was not expressly explained. The court concluded that any issues regarding the payment of interest should be settled according to the general principles underlying the CISG. The court then recognized "full compensation" as an underlying general principle that required payment of interest.[80] The court further supported its decision by recognizing payment of interest as a trade usage permitted under Article 9(2).[81]

Article 7 requires that CISG interpretations should be accomplished with regard to "the observance of good faith in international trade."[82] The legislative history of Article 7 demonstrates that the inclusion of a duty of good faith was the subject of contentious debate.[83] The result was the muted compromise of including good faith principle in the interpretive methodology of the CISG. Despite the confinement of the express duty of good faith to CISG interpretation, courts and arbitral panels have implied a general duty of good faith to dealings between contracting parties. The Columbia Constitutional Court enunciated a broad good faith principle by referencing its own Magna Charta:

"Equally, the exercise of the commercial activity that the individuals develop with other citizens of different States must fit the principle of good faith, just as the Convention stipulates in paragraph number one in article 7. This principle should not only be observed in the contractual relationships or negotiations, but in the relationship between individuals and the State and in the procedural performances. Indeed, ... good faith, in conformity with article 83 of the Magna Charta is presumed ... ."[84] [page 319]

A Hungarian arbitration court ruled that "the observance of good faith in not only a criterion to be used in the interpretation of the CISG but also a standard to be observed by the parties in the performance of the contract."[85] The scholarly literature has generally favored the expanded use of Article 7's good faith principle to dealings between the parties.[86] One argument is that the use of the reasonableness standard throughout the CISG inherently requires the application of good faith to the conduct of the parties.[87] In support of this argument, the Secretariat Commentary references CISG provisions that are "manifestations of the requirement of the observance of good faith."[88] The reasonable person is seen as always acting in good faith. Moreover, the recognition of trade usage in the interpretive process has historically been premised upon the commercial norm of good faith and fair dealing.[89] In the area of acceptance, a Swiss court held that good faith is the key to determining whether a sender may assume the recipient of the confirmation letter accepted the terms of the letter.[90] A recent Belgian appellate court characterized Article 40 as the application of "the good faith principle," noting that if the seller knows of the non-conformity and fails to reveal it, he cannot fall back upon the buyer's failure to tell him what he knew already.[91]

C. General Default Rules and Specific Default Rule Creation

Many of the CISG articles provide very general, vague default rules tied to the concept of reasonableness. It is interesting to evaluate whether CISG jurisprudence has begun to fashion more specific, functional default [page 320] rules.[92] The alternative approach is a hasty devolution to the rules found in domestic legal systems. An interpreter will be tempted to argue that since the CISG fails to provide specific default rules for defined categories of cases, then recourse to more fully developed default rules in domestic law is appropriate. This would indeed be an inappropriate presumption. The general principles of uniformity and international character enumerated in Article 7 are intended to prevent premature recourse to domestic law.

An exercise akin to the development of specific default rules is the creation of factors that can be applied in the analysis of various types of cases under the scope of CISG provisions. These factors provide substance to the borderless reaches of reasonableness and enable the formulation of specific default rules. A Swiss Court enunciated a number of such factors by quantifying Article 38(1)'s mandate that a buyer must inspect delivered goods "within a short a period as is practicable in the circumstances."[93] The court listed a number of factors that can be used to categorize "in the circumstances." They include:

"In determining the time limit for the examination of the goods, one must consider the individual circumstances and the adequate possibilities of the parties. This includes, e.g., the place at which the goods are located and the way in which they are packaged. The nature of the goods themselves is particularly relevant. Goods which do not change their quality or go to waste can be expected to be examined for their quantity and type immediately.

"An immediate thorough examination of the quality cannot reasonably be expected if the buyer is busy with other dealings ... . Where a large quantity of goods is delivered, the buyer does not need to examine the entire load but must test samples. Where an examination may damage the substance of the goods, the buyer must check the weight, appearance, etc. In addition to that, she must also take samples even if the examined goods are destroyed in the process or cannot be used [page 321] afterwards. However, the number of samples taken in such cases can be reduced to a few per thousand. This rule also applies to goods in their original packaging which cannot be sold after being opened."[94]

The development of relevant factors is vital to the full functioning of CISG rules. A factors analysis provides the necessary flexibility needed to apply a generally worded default rule to a variety of fact patterns.

Another example can be found in the German Supreme Court's interpretation of the excuse doctrine of impediment.[95] Article 79 allows a party a legal excuse in the event of the unexpected existence of an "impediment beyond his control."[96] The CISG fails to define what it means by an "impediment" and "beyond his control." The court reasoned that the word impediment does not allow for a reallocation of contract risk. In this case, the seller argued for impediment due to the acts of a third party supplier that it had hired to fulfill its contract. The court rejected third-party non-performance as a ground for impediment. It defined "beyond control" more broadly than mere physical control. According to the court, it also included "economic risk control."[97] Since the third-party supplier was within the "seller's sphere of influence"[98] the economic risk remained with the seller. The seller could not argue impediment simply because it could not physically control the actions of a third party. [page 322]

[...]

A. Developing an International Jurisprudence

In cases where the CISG fails to provide a specific default rule, courts have been tempted to apply the default rule provided under their domestic laws. The better reasoned cases have taken the "international character" mandate of Article 7 seriously. They have explored foreign cases dealing with gaps in the CISG. In addition, in cases where CISG general principles or analogical reasoning have failed to provide a solution the better reasoned cases have avoided the hasty application of the local default rule in favor of an analysis of the default rules of various countries.[826] This approach is aligned with the mandate of "international character." An example of this is the Italian case of Sport d'Hiver Genevieve Cutlet v. Ets. Louys et Fils, in which the court reviewed both German and Swiss law to determine the reasonableness of a notice of non-conformity.[827] The court pointed out that the notice provision of CISG Article 39 is "intentionally elastic ... in terms of reasonableness, so that the degree of flexibility will be evaluated in accordance with the practicalities of each case."[828] It found that a notice sent 23 days after delivery for defects that were apparent was unreasonable under Swiss and German law and therefore under the CISG. [829]

A Swiss court in trying to determine a "reasonable time"[830] for sending a notice of non-conformity, recognized the divergent views of prompt notice in different legal systems. It noted that

"the calculation of the time limit to give a notice of defect varies. Whereas jurisdictions of the Germanic legal family demand an immediate notice ...in Anglo-American and Dutch law the notification ...of defect given several months after discovery of the defect is deemed to be within an appropriate time limit."[831]

The court then fabricated a one-month limit to giving notice as a compromise between the divergent views. It then reasoned that it was necessary to narrow this gap when interpreting Article 39 of the CISG.[832] "To avoid too wide a gap in interpretation, a convergence of those points of view seems inevitable. Therefore, an approximate medium time frame of at [page 430] least one month seems appropriate."[833] The court, in essence, fabricated a specific default rule of one month under Article 39's general default rule of giving prompt notice. However, this is not an inflexible, bright line rule. The court also lists a number of factors that impact the reasonableness of the one-month rule, including that the one-month rule is to be adjusted upward or downward depending upon the mix of the enunciated factors.[834] [page 431]

[...]

B. Persistence of Homeward Trend

Despite the existence of enlightened decision-making by courts and arbitral panels using CISG interpretive methodology, the persistence of homeward trend remains a problem. We have seen that some areas, such as the battle of forms, are particularly subject to homeward trend interpretations. [871] This is likely due to the vagueness and open-endedness of CISG language. An example is the U.S. Court of Appeals for the Fifth Circuit's decision that the parol evidence rule applied to cases of written contracts within the scope of CISG jurisprudence because of its nature as a rule of procedure and not of substantive law.[872] This is an example of judicial parochialism. The court failed to use CISG interpretive methodology. A reasoned analysis would have involved the court's [page 437] recognition of a general principle that, under the CISG, legal formalities are not to be used to preclude admission of relevant evidence. First, Article 11 states that a contract "need not be evidenced by a writing" and that "it may be proved by any means, including witnesses." [873] Article 8(3) states that "due consideration is to be given to all relevant circumstances of the case including negotiations."[874] Nonetheless, the court applied the Texas parol evidence rule to a case involving the CISG. It did so without a review of foreign case law and scholarly commentary.[875]

In comparison, the U.S. Court of Appeals for the Eleventh Circuit in MCC-Marble Center rejected the homeward trend temptation and correctly held that the admissibility of parol evidence was a rule of substantive law and within the scope of the CISG.[876] In addition, the court appropriately cited scholarly writings and foreign case law to buttress its holding. In doing so, it recognized an implied general principle that:

"the CISG was to provide parties to international contracts for the sale of goods with some degree of certainty as to the principles of law that would govern potential disputes. Courts applying the CISG cannot, therefore, upset the parties' reliance on the Convention by substituting familiar principles of domestic law."[877]

It also refers to the express general principles of freedom of contract by holding that the parties could adopt the parol evidence rule by inserting a merger clause into their contracts.[878]

More recently the U.S. Court of Appeals for the Fourth Circuit in Schmitz-Werke GmbH v. Rockland Industries, Inc. badly misapplied CISG's interpretive methodology.[879] It placed domestic jurisprudence on a non-hierarchical level with the express language of the CISG and its general principles. It nonchalantly states that "[c]ase law interpreting provisions of Article 2 of the Uniform Commercial Code that are similar to provisions in the CISG can also be helpful in interpreting the Convention."[880] The court correctly notes that recourse to domestic law is a matter of last resort. It then, however, argues that the CISG is silent as to the type of evidence [page 438] needed to prove a breach of an express warranty. The important question is not whether the CISG is silent as to the nature of the buyer's burden of proof but whether the issue is within the scope of the CISG. Given Article 35's warranty coverage, the issue of how a party proves non-conformity is within the scope of the CISG. Instead of devolving to UCC law, the court should have based its answer upon general principles and by reviewing foreign case law interpreting Article 35.

There are signs that U.S. courts are becoming more sophisticated in their applications of the CISG. [881] The references in MCC-Marble Center to international authorities and cases are aligned with Article 7's mandate that decisions should be based on due considerations of international character and the need for uniformity. This mindset was again on display in the U.S. Eastern District Court of Louisiana case of Med. Mktg. Int'l. v. Internazionale Medico Scientifica S.r.l.. [882] The issue in that case was the role of public regulations on the seller's warranty obligations under Article 35(2).[883] The drafters of the CISG did not consider the role of governmental standards and regulations on the merchantability of goods.[884]

In reviewing a foreign Arbitration Award, the American court recited the German case reviewed in the arbitral decision and treated it as a persuasive precedent.[885] The German Supreme Court held that the general rule was that a seller was not obligated to supply goods that conform to the laws of the buyer's country. The American court agreed with the arbitral decision that the case at bar came within an exception, namely, that the seller was obligated to provide goods that conform to foreign regulations "if due to 'special circumstances,' such as the existence of a seller's branch office in the buyer's state, the seller knew or should have known about the regulations at issue."[886] This case, along with the German and Austrian cases discussed in Part V, interpreting the warranty provisions of Article 35 provide an example of the proper application of CISG interpretive methodology to resist homeward trend decisions.[887] [page 439]


FOOTNOTES

* For a subsequent text on this subject by these authors, see Larry A. DiMatteo, Lucien Dhooge, Stephanie Greene, Virginia Maurer & Marisa Pagnattaro, "International Sales Law: A Critical Analysis of CISG Jurisprudence", Cambridge University Press (2005) 241 p.

[...]

19. See infra Part I.B.2 (discussing the importance of viewing the CISG as a code).

20. Professors Enderlein and Maskow state that "there is a difference with uniform laws insofar as this incorporation elucidates the international character of the perspective rule, underlines its special position in domestic law, and furthers an interpretation and application which is oriented to the standardization of law." Fritz Enderlein & Dietrich Maskow, International Sales Law 8 (1992) (emphasis in original) (hereinafter, Enderlein & Maskow) [available at <http://cisgw3.law.pace.edu/cisg/biblio/enderlein.html>].

21. Id. at 11.

22. Id.

23. Guide to CISG, supra note 6, at art. 1.

24. Should parties whose countries have ratified the CISG wish to opt-out of the convention, they should do so by explicit mention in the contract. See generally Paul M. McIntosh, Selected Legal Aspects of International Sales Transactions: The United Nations Convention on Contracts for the International Sale of Goods, Bus. Credit, Oct. 1, 2001, available at 2001 WL 12570546.

25. Id.

26. Philip Hackney, Is the United Nations Convention on the International Sale of Goods Achieving Uniformity?, 61 La. L. Rev. 473 (2001).

27. Professor Hackney rejects the argument that the CISG has increased the legal impediments to trade because it produces greater complexity. He responds that "this objection should fade with time, as a body of case law builds around the Convention." Id. at 476.

28. See generally Fred H. Miller, Realism not Idealism in Uniform Laws -- Observations from the Revision of the UCC, 39 So. Tex. L. Rev. 707, 721-26 (1998).

29. Professor Robert Scott discusses the difference between formal uniformity and substantive uniformity. He further discusses the different dimensions of substantive uniformity as being the interpretive function and the standardizing function. The interpretive function involves the uniform interpretation of contract terms. The standardizing function involves the "task of creating broadly suitable default rules." Robert E. Scott, The Uniformity Norm in Commercial Law, in The Jurisprudential Foundations Of Corporate And Commercial Law 149-50 (Jody S. Kraus & Steven D. Walt, eds. 2000) (hereinafter Scott, Uniformity Norm).

30. See also, Flechtner, supra note 6, at 206-09 (distinguishing varieties of non-uniformity).

31. Enderlein & Maskow, supra note 20, at 1.

32. Hackney, supra note 26, at 476.

33. CISG, supra note 4, at art. 7(1).

34. Id.

35. Johan Steyn, A Kind of Esperanto?, in The Frontiers Of Liability 14-15 (Peter Birks, ed. 1994) (emphasis added).

36. DiMatteo, Presumption of Enforceability, supra note 11, at 133.

37. The uniformity of code application requires that it provide a "built-in methodology." See John L. Gedid, U.C.C. Methodology: Taking a Realistic Look at the Code, 29 Wm. & Mary L. Rev. 341, 342 (1988).

38. Scott, Uniformity Norm, supra note 29, at 171.

39. Id.

40. See CISG, supra note 4, at art. 26 ("declaration of avoidance"), at arts. 49(1) & (2) ("declare the contract avoided"), at art. 51(2) ("contract avoided"), at art. 64 ("declare contract avoided), at arts. 72(1) & (2) ("contract avoided"), at art. 73(3) ("contract avoided"), at art. 76 ("time of avoidance"), at art. 81 ("avoidance of the contract"), at art. 83 ("contract avoided"), at art. 84(2) ("substantially in the condition").

41. Id. at art. 19(3).

42. Id.

43. Id. at art. 31(a). See also, id. at art. 57(1) ("the handing over"), at art. 58(1) ("handing over"), at art. 58(2) ("not be handed over"), at art. 60(b) ("taking over"), at art. 67(1) ("handed over"), at arts. 69(1) & (2) ("takes over the goods"), at art. 71(2) ("handing over").

44. For an example of soft law uses in a different context see, Larry A. DiMatteo, Contract Talk: Reviewing the Historical and Practical Significance of the Principles of European Contract Law, 43 Harv. Int'l L. J. 569 (2002) (discussing soft law nature of the Principles of European Contract Law) [available at <http://cisgw3.law.pace.edu/cisg/biblio/dimatteo2.html>]; see generally, Harold J. Berman, The Law of International Commercial Transactions (Lex Mercatoria), 2 Emory J. Int'l Disp. Resol. 235 (1988).

45. The CISG can be used as a compromise choice of law for parties from different national legal systems. This voluntary use of the CISG by international businesspersons is premised on the categorization of the CISG as a neutral set of legal rules. "To adopt the CISG certainty does not give an advantage to either party and is in the true sense a neutral system of law." Bruno Zeller, The Development of Uniform Laws -- A Historical Perspective, 14 Pace Int'l L. Rev, 163, 176-77 (2002) (emphasis added) [available at <http://cisgw3.law.pace.edu/cisg/biblio/zeller5.html>]. The CISG can be used to prevent the breakdown of contract negotiations over the issue of choice of law or to prevent the appearance of overreaching by the insertion of the national law of one of the parties. Contract negotiators can opt into the CISG when the contract is not within the jurisdiction of the CISG or elect not to opt out in case of its mandatory default application.

46. See generally Unilex website available at <http://www.uncitral.org/english/clout/> (last visited Feb. 11, 2004); Pace Law School website available at <http://cisgw3.law.pace.edu/cisgcases.html>.

47. This is especially true when arbitrators are authorized to decide ex aequo bonos or as amiables compositeurs.

48. The selectivity is due to a number of considerations including the increasing number of reported cases, especially in countries like Germany, the unavailability of English translations, and the clustering of cases among a number of issues. For example, an in-depth jurisprudence has developed in areas such as determining reasonable inspection and notice under Articles 38 and 39, the calculation of interest alluded to in Article 78, and measuring the nature of a breach as being fundamental or not. Some provisions of the CISG have yet to develop critical mass of cases. See generally, John O. Honnold, The Sales Convention: From Idea to Practice, 17 J.L. & Com. 181, 186-196 (1998) [available at <http://cisgw3.law.pace.edu/cisg/biblio/honnold4.html>]. Although, CISG jurisprudence has become more comprehensive since Professor Honnold's commentary in 1998 a deeper jurisprudence still needs to be developed in numerous areas of CISG coverage.

49. D. King, The New Conceptualism of the Uniform Commercial Code 9 (1968).

50. "Before the reference to the proper domestic law ... one may follow two methods ... first is the analogical application of specific provisions ... second is the reference to general principles which are explicitly stated ... or are derived from the set of the Convention's provisions." Anna Kazimierska, The Remedy of Avoidance under the Vienna Convention on the International Sale of Goods, in Review of the Convention on Contracts for the International Sale of Goods: 1999-2000 (Pace Int'l Law Review, ed. 2000) at 172 [hereinafter Kazimierska, Remedy of Avoidance] (reference to the Review Of The Convention On Contracts For The International Sale Of Goods: 1999-2000) [hereinafter, Review Of The Convention] [available at <http://cisgw3.law.pace.edu/cisg/biblio/kazimierska.html>].

51. Contra, Henry Gabriel, Practitioner's Guide To CISG And UCC (1994). "[I]f the express words of a particular article fails to resolve a conflict, the CISG requires the conflict to be resolved by the underlying principles that led to the adoption of the provision in question." Id. at 29.

52. See generally Michel J. Bonell, Introduction to the Convention, in Commentary On The International Sales Law 79 (Cesare M. Bianca & Michael J. Bonell, eds. 1987); see also Phanesh Koneru, The International Interpretation of the UN Convention on Contracts for the International Sale of Goods: An Approach Based on General Principles, 6 Minn. J. Global Trade 105 (1997) [available at <http://cisgw3.law.pace.edu/cisg/biblio/koneru.html>]

53. "If the Convention failed to anticipate and thus provide a specific solution to an issue, an analogical extension from the existing provisions to the new situation is then appropriate." Koneru, supra note 52, at 122, citing, John O. Honnold, Uniform Law For International Sales 3 (2d ed. 1991); see also Mark N. Rosenberg, The Vienna Convention: Uniformity in Interpretation for Gap-Filling -- An Analysis and Application, supra note 15.

54. See generally Kazimierska, Remedy of Avoidance, supra note 50, at 172 (arguing that both methods are non-hierarchical in application).

55. The use of domestic law "represents under the ... uniform law a last resort to be used only if and to the extent a solution cannot be found either by analogical application of specific provisions or by the application of general principles underlying the uniform law as such." Bonell, supra note 52, at 83 cited in Franco Ferrari, Uniform Interpretation, supra note 15, at 228.

56. Professor Miller states the importance of deterring interpreters from acting on such temptation. Uniformity is especially important "where the uniform provision perhaps represents a less desirable position but nonetheless forms an important part of a compromise reflecting a desirable, overall balance and where, if one provision is altered by non-uniformity, significant threat to the overall consensus is posed." Miller, supra note 28, at 722-23.

57. Ferrari, Uniform Interpretation, supra note 15, at 198-201.

58. "In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade." CISG, supra note 4, at art. 7(1).

59. Ferrari, Uniform Interpretation, supra note 15, at 215-17.

60. "[T]he Convention, once adopted, is intended to replace all rules in [domestic] legal systems previously governing matters within its scope ... . This means that in applying the Convention there is no valid reason to adopt a narrow interpretation." Id. at 202. See also Kazimierska, supra note 50, at 160-67 (arguing that the validity exclusion in Article 4(a) should be interpreted narrowly so that the scope of the CISG is more broadly applied).

61. CISG, supra note 4, at art. 7(2).

62. Id. at art. 9(1). For a discussion of the principles of "international character" and "good faith," see generally Bruno Zeller, The UN Convention on Contracts for the International Sale of Goods -- A Leap Forward Towards Unified International Sales Law, 12 Pace Int'l L. Rev. 79 (2000) [available at <http://cisgw3.law.pace.edu/cisg/biblio/zeller3.html>].

63. See generally Lisa M. Ryan, The Convention for the International Sale of Goods: Divergent Interpretations, 4 Tul. J. Int'l L & Comp. L. 99, 100 (1995); Amy Kastely, Unification and Community: A Rhetorical Analysis of the United Nations Convention, 8 Nw. J. Int'l L. & Bus. 601, 601-02 (1988) (stating that the CISG must be interpreted "as a text that is shared by an international community") [available at <http://cisgw3.law.pace.edu/cisg/biblio/kastely.html>].

64. Kazimierska, supra note 50, at 175. See also Romito & Saint 'Elia, Homeward Trend, supra note 10, at 200 ("requiring that notice be given by an avoiding party of a remedy as drastic as avoidance to encourage certainty in transactions."); Article 57(1)'s default rule that place of payment is based upon the general principle that payment should be made at the domicile of the creditor. SCEA des Beauches v. Société TesoTen Elsen, Cour d'appel Grenoble [Regional Court of Appeals][CA], 94/3859, Oct. 23, 1996 (Fr.), available at <http://cisgw3.law.pace.edu/cases/961023f1.html> [English translation by Katarina Kunce Kern, translation edited by Kirstin Stadtländer].

65. See also infra Part V.A. (Duty of Delivery).

66. UCC § 2-601 (1977).

67. Kazimierska, supra note 50, at 175.

68. Helsingin Hoviokeus [Helsinki Court of Appeals][HO] S00/82, Oct. 26, 2000 (Fin.), available at <http://cisgw3.law.pace.edu/cases/001026f5.html> [English translation by Jarno Vanto].

69. Id. at 12.

70. Id.

71. A party must pay damages "in the light of the facts and matters of which he knew or ought to have known, as a possible consequence of the breach of contract." CISG, supra note 4, at art. 74.

72. A French court held that the principle against abrupt discontinuance is applied through an inter-party business usage as permitted under Article 9: "[B]y virtue of Article 9 CISG, [a party is] liable for abrupt discontinuance of business relations between parties bound by long-standing practices." Caiato v. SA.S.F.F. Court d'appel Grenoble [Regional Court of Appeals][CA], 93/4126, Sept. 13, 1995 (Fr.), available at [<http://cisgw3.law.pace.edu/cases/950913f1.html>] [English translation by Annabel Teiling, translation edited by Yvonne Salmon].

73. For example, the CISG fails to define key terms such as "fundamental breach." "A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract ... ." CISG, supra note 4, at art. 25 (emphasis added). See also CISG, supra note 4, at art. 46(2) ("fundamental breach"), at art. 51(2) ("fundamental breach"), at art. 64(1) ("fundamental breach"), at art. 70 ("fundamental breach"), at art. 64(2) ("in respect to any breach), at art. 70 ("committed a fundamental breach"), at art. 71(1) ("not perform a substantial part"), at art. 73(1) & (2) ("fundamental breach"), at art. 82(2) ("substantially in the condition").

74. See generally CISG, supra note 4, at art. 8 ("reasonable person"), at art. 18(2) ("reasonable time"), at art. 25 ("reasonable person"), at art. 27 "means appropriate in the circumstances"), at art. 33(c) ("within a reasonable time"), at art. 34 "(unreasonable inconvenience or unreasonable expense"), at art. 35(b) ("unreasonable for him to rely"), at art. 37 "(unreasonable inconvenience or unreasonable expense"), at art. 38(1) ("short a period as is practical under the circumstances"), at art. 39 ("reasonable time"), at art. 43(1) ("reasonable time"), at art. 44 ("reasonable excuse"), at art. 46(2) ("reasonable time"), at art. 46(3) ("unreasonable having regard to all circumstances" and "reasonable time"), at art. 47(1) ("reasonable length for performance"), at art. 48(1)("without unreasonable delay" and "unreasonable inconvenience and uncertainty"), at art. 48(2) ("unreasonable time"), at art. 55 ("price generally charged"), at art. 60(a) ("reasonable be expected"), at art. 63(1) ("time of reasonable length"), at art. 64(2) ("within a reasonable time"), at art. 65(1) ("within a reasonable time"), at art. 65(2) ("fix a reasonable time"), at art. 68 ("if the circumstances so indicate"), at art. 75 ("reasonable manner and within a reasonable time"), at art. 76(2) ("reasonable substitute"), at art. 77 ("measures as are reasonable in the circumstances"), at art. 79(1) ("could not reasonable be expected"), at art. 79(4) ("within a reasonable time"), at art. 85 ("takes steps as are reasonable in the circumstances"), at art. 86(1) ("reasonable in the circumstances"), at art. 86(2) ("without unreasonable inconvenience or unreasonable expense"), at art. 87 ("not unreasonable"), at art. 88(1) ("any appropriate means," "unreasonable delay, and "reasonable notice"). See, e.g., infra Part V.A.2. (time of delivery).

75. The cases reviewed were taken from abstracts, summaries, and commentaries provided mainly in "CISG Case Presentations" in the Pace Law School website at <http://cisgw3.law.pace.edu/cisg/text/casecit.html>, the UNILEX database at <http://www.unilex.info>, and CLOUT Abstracts at A/CN.9/SER.C/ABSTRACTS or at the UNCITRAL website at <http://www.un.or.at/uncitral>. UNCITRAL regularly releases abstracts of CISG court and arbitral decisions under the name CLOUT. These abstracts are prepared by National Reporters of countries that have ratified or adopted the CISG.

76. Professor Ferrari states that "most general principles have not been expressly provided for by the Convention. Consequently, they must be deduced from its specific provisions ... ." Ferrari, Uniform Interpretation, supra note 15, at 224.

77. See, e.g., Kazimierska, supra note 50, at 79. "The remedy of avoidance should not be analyzed without taking into account the general provisions of the Convention ... . The Convention constitutes one whole and its general provisions are of the utmost importance while considering particular issues regulated under it." Id. at 155.

78. Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft [Arbital Tribunal Vienna], SCH-4366, Jun. 15, 1994 (Aus.), available at <http://cisgw3.law.pace.edu/cases/940615a3.html>.

79. CISG, supra note 4, at art. 74 (losses that are a consequence of breach), at art. 78 (buyer must pay interest on payments in arrears), at art. 84 (seller must pay interest on monies refunded).

80. An Argentine court incorrectly argued that the "CISG contains no express provision recognizing payment of interest." See Elastar Sacifia v. Bettcher Industries Inc., Juzgado Nacional de Primera Instancia en lo Comercial No. 7 Buenos Aire) [National Commercial Court of First Instance Number 7], 50.272, May 20, 1991 (Arg.), available at <http://cisgw3.law.pace.edu/cases/910520a1.html> [English translation by Alejandra Truscello].

81. "It was also found that in relations between merchants it was expected that the seller, due to delayed payment, would resort to bank credit at the interest rate commonly practiced in its own country." Id. The implication of a principle of full compensation will be further discussed in Part VI.C.2.a.'s discussion of "foreseeability."

82. CISG, supra note 4, at art. 7(1).

83. Honnold, Documentary History, supra note 4, at 369.

84. Corte Constitucional [Constitutional Court of Columbia] Sentencia C-529/00 Referencia: expediente LAT-154, May 10, 2000 (Colom.), available at <http://cisgw3.law.pace.edu/cases/000510c7.html> [English translation by Pablo A. Santos Jiménez, translation edited by Jorge Oviedo Albán].

85. Arbitration Court of the Chamber of Commerce and Industry of Budapest, VB/94 124, Nov. 17, 1995 (Hung.), available at <http://cisgw3.law.pace.edu/cases/951117h1.html>.

86. "It is suggested that the good faith principle, applied in the interpretation of the provisions of the Convention, has at the same time an effect on the contract between the parties to which the Convention is applied." Review of the Convention, supra note 50, at 169.

87. "[T]he general principles underlying many provisions of the Convention collectively impose an obligation of good faith on the parties." See, e.g., Koneru, supra note 52, at 107.

88. The commentary refers to Articles 16(2)(b), 21(2), 29(2), 37, 38,39, 40, 49(2), 64 (2), 82, & 85-88 as examples of the influence of the principle of good faith on CISG rules. Guide to CISG, supra note 6, at Art. 7.

89. "From the medieval lex mercatoria to the present, most specific rules of business can be traced to the norm of good faith and fair dealing." DiMatteo, Presumption of Enforceability, supra note 11, at 146.

90. See infra Part III.B.3 and note 253.

91. S.r.l. R.C. v. BVBA R.T. [Antwerp Appellate Court], 1997/AR/1554, Jun. 27, 2001 (Belg.), available at <http://cisgw3.law.pace.edu/cases/010627b1.html> [English translation by Vincent Naveaux, translation edited by Sieg Eiselen].

92. As discussed above, the CISG recognizes the right to the payment of interest. However, it fails to provide specific rules as how the interest is to be calculated. Interpreters have had to fabricate more specific default rules. For example, in a case from the Netherlands, a court held that the parties agreed that payment was to be in German currency the rate of interest should be determined under German law. Nieuwenhoven Viehandel GmbH v. Diepeveen-Dirkson B.V., Arrondissementsrechtbank Arnhem [District Court] [RB], 1992/1251, Dec. 30, 1993 (Neth.), available at <http://cisgw3.law.pace.edu/cases/931230n1.html>. An ICC arbitration panel applied the rate commonly applied to Eurodollar settlements in international trade. CLOUT Case No. 103, available at [<http://cisgw3.law.pace.edu/cases/936653i1.html>].

93. Obergericht de Kantons Luzern [Lucerne Appellate Court][OG] 11 95 123/357, Jan. 8, 1997 (Switz.), available at <http://cisgw3.law.pace.edu/cases/970108s1.html> [English translation by Martin Eimer, translation edited by Ruth M. Janal].

94. Id.

[...]

826. Trib. Civile di Cuneo, 45/96, Jan. 31, 1996 (It.), translation available at <http://cisgw3.law.pace.edu/cases/960131i3.html> [English translation by Bruno Cilio, translation edited by Angela Maria Romito].

827. Id.

828. Id.

829. Id.

830. CISG, supra note 4, at art. 39(1).

831. OG, 11 95 123/357, Jan. 8, 1997, supra note 93.

832. Id.

833. Id.

834. Id.

[...]

871. See, e.g., supra Part III.C.1 (Battle of the Forms).

872. Beijing Metals & Minerals v. Am. Bus. Ctr., Inc., 993 F.2d 1178 (5th Cir. 1993). Another example of the use of the procedural-substantive distinction to avoid application of the CISG is Judge Posner's opinion in Zapata Hermanos v. Hearthside Baking Co., Inc., 313 F.3d 385 (7th Cir. 2002). Posner reasoned that attorney fees could not be given under Article 79 because they are a matter of procedure. In reaching his decision, Posner poses a question that is left unanswered: "And how likely is it that the United States would have signed the Convention had it thought in doing so it was abandoning the hallowed American rule?" 313 F.3d at 389. The question begs a more substantive response then the implied response offered by Posner. It should be remembered that the United States failed to opt out of Article 11 and in the process jettisoning the more longstanding statute of frauds and parol evidence rule, and in the process creating a stark contradiction between the CISG and the UCC. But cf., OLG Düsseldorf 6 U 152/95, Jul. 11, 1996, supra note 767 (under Articles 61(1)(b) and 74, party could collect attorney fees).

873. CISG, supra note 4, at art. 11.

874. Id. at art. 8(3).

875. Beijing Metals & Minerals, 993 F.2d at 1178.

876. MCC-Marble Ceramic Ctr. v. Ceramica Nuova D'Agostino, S.p.A., 144 F.3d 1384 (11th Cir. 1998). See generally Paolo Torzilli, The Aftermath of MCC-Marble: Is This the Death Knell for the Parol Evidence Rule? 74 St. John's L. R. 843 (2000) [available at <http://cisgw3.law.pace.edu/cisg/biblio/torzilli.html>].

877. MCC-Marble, 144 F.3d at 1391.

878. Id.

879. Schmitz-Werke GmbH v. Rockland Indus., Inc., No. 00-1125, 2002 U.S. App. LEXIS 12336 (4th Cir. Jun. 21, 2002).

880. Id. at *8-9.

881. See, e.g., St. Paul Ins. Co., 2002 U.S. Dist. LEXIS 5096; see also , supra notes 827-30 and accompanying text.

882. Med. Mktg. Int'l. v. Medco Scientifica S.r.l., Civ. No. 99-0380 § "K" (1), 1999 U.S. LEXIS 7380 (E.D. La. May 17, 1999), CLOUT Case No. 418, available at [<http://cisgw3.law.pace.edu/cases/990517u1.html>].

883. Id.

884. "This problem was evidently overlooked at the creation of the CISG." Case Commentary, Peter Schlechtriem, Conformity of the Goods and Standards Established by Public Law Treatment of Foreign Court Decision as Precedent (Andre Corterier trans., 1999), available at <http://cisgw3.law.pace.edu/cases/990517u1.html>.

885. Med. Mktg. Int'l., 1999 U.S. Dist. LEXIS 7380, at *5-6 .

886. Id. at *6.

887. Supra notes 571-94 and accompanying text.

[...]

Go to complete text of Analysis of Fifteen Years of CISG Jurisprudence


ANNOTATED COMPARATIVES
-  UNIDROIT Principles
-  PECL comparatives

Remarks on good faith

Ulrich Magnus [*]

1. Good faith in the CISG and the UNIDROIT Principles
2. The contents of the good faith principle
     a) International good faith
     b) The object of good faith
     c) Specific good faith rules
3. Final remarks

1. Good Faith in the CISG and the UNIDROIT Principles

The CISG mentions the good faith principle in art. 7 (1) which rules on the interpretation of the Convention as a uniform international law text. According to that provision, the CISG is to be interpreted and applied in a way that "the observance of good faith in international trade" is promoted. The CISG, however, does not contain an express provision that the individual contract has to obey the maxim of good faith as well.

Just on the opposite, the UNIDROIT Principles address good faith as a principle directed to the parties of international contracts: "Each party must act in accordance with good faith and fair dealing in international trade" (art. 1.7 (1) Principles). Even more specifically art. 4.8 (2) (c) of the Principles refers to good faith and fair dealing as a determining element when and which omitted contract term has to be implied. On the other hand the provision on the interpretation of the Principles (art. 1.6) does not mention the maxim of good faith.

But despite these obvious differences of wording both texts accord in their essence. For, it is common ground that under the CISG the good faith principle also applies to the interpretation of the individual contract and to the parties contractual relationship as such.[1]

On the other hand the UNIDROIT commentary to the Principles acknowledges that the good faith principle "may also be seen as an expression of the underlying purpose of the Principles" and may be used in interpreting the Principles.[2]

Thus the interpretation of the unified law texts themselves as well as the interpretation of individual contracts and also the whole contractual relationship of the parties have to be guided by the maxim of good faith. Under both instruments the maxim therefore fulfills a twofold function: it governs as one of the decisive factors the meaning of the abstract law rules as well as the individual contract. There is only a slight gradual difference in weight that the CISG and the Principles grant to good faith.

2. The Contents of the Good Faith Principle

a) International good faith

Under the CISG and under the Principles it is clear that no specific national good faith concept can be applied but only one which fits for international trade relations. Both texts expressly stress this idea.[3]

Partly an international standard of good faith may already exist and may clearly be revealed and defined -- at least in business branches with a long-standing tradition. Partly that standard may not exist but remains to be developed by business circles, arbitrators and courts, for instance in fresh and modern trade branches like telesales, etc.

b) The Object of Good Faith

Evidently under the Principles the object of the good faith and fair dealing maxim is the behavior of the contract parties. The parties shall act in accordance with the maxim; their conduct is regulated.

Under the CISG the object of the principle is less clear. But the Convention also intends to secure that (sales) contracts between parties from different countries are governed by the good faith principle.[4]

Thus, the Principles can help to clarify the actual object of the good faith principle contained in the CISG.

c) Specific Good Faith Rules

Both the CISG and the Principles provide for a number of rules specifying what good faith is designated to mean in certain situations. And although CISG constitutes the more specific regulation concentrating on a single type of contract only, it is the Principles that despite or because of their general character contain more provisions and more detailed provisions on good -- and bad -- faith.

aa) Precontractual Obligations in the Negotiation Process

The CISG addresses the precontractual phase only indirectly by art. 16 (2) (b). The provision makes an offer irrevocable once the offeror has created a situation in which the offeree reasonably relied on the offer as irrevocable and acted in reliance on the offer. The same rule in identical wording is also adopted by the Principles (art. 2.4 (2) (b) Principles).

The binding effect of some particular conduct and reliance on it emanates from the good faith principle that no one should take advantage of acts or situations which are irreconcilable with his prior conduct (prohibition of venire contra factum proprium).

But in contrast to the CISG, the Principles establish a further duty not to continue or break off precontractual negotiations in bad faith (art. 2.15 (2) Principles). And according to art. 2.5 (3) Principles, it is bad faith when a party starts or continues negotiations while "intending not to reach an agreement with the other party". The good faith principle thus demands fair negotiations with a clear view to reach agreement. Misuse of the negotiation process to the detriment of the other party offends the standard of good faith recited in the Principles.[5]

And although the CISG does not govern the precontractual phase the regulation in the Principles will be helpful for cases where the parties negotiate on a modification or termination of an existing CISG contract. The solution envisaged by art. 2.15 Principles suits also under the CISG.

bb) Formation and Modification of Contract

Under both the CISG and the Principles a contract and its alteration need no form in order to be valid.[6] Only if a written contract contains a no oral modification clause then any modification must also be in writing or in the form the parties agreed upon.[7] But to this exception, the CISG as well as the Principles allow an identical sub-exception grounded on the good faith principle: "a party may be precluded by its conduct from asserting such a clause to the extent that the other party has acted in reliance on that conduct."[8] Again conduct which creates a situation of reliance and acting on it override rules of strict formality.

cc) Material Validity

Unparalleled in the CISG are those provisions of the Principles which deal with questions of material validity of contracts (art. 3.1 - 3.20 Principles) since CISG does not govern these questions (art. 4 (a) CISG). The Principles also here apply the good faith principle.[9]

dd) Interpretation of Contracts

As already mentioned, only the Principles provide more or less clearly that also contract interpretation must be guided by good faith and fair dealing (art. 1.7 and 4.8 Principles). Under the CISG the same solution should prevail. Application of the Principles could and should help one interpret the CISG.

ee) Express Contractual Obligations

Under the CISG a few provisions on the parties' statutory obligations contain good faith elements: thus, for instance, art. 35 (2) (b) CISG obliges the seller to supply goods which are fit for a particular purpose indicated to the seller except where the buyer could not reasonably rely on the seller's skill. Or, under art. 42 (2) (b) CISG a seller is not in breach of his obligations if he delivers goods not free from third-party rights when these rights resulted from the seller's compliance with buyer's particular wishes as to the manufacture, design, etc. of the goods.

No wonder, the Principles as a general regulation for all kinds of contracts contain no comparable specific obligations.

ff) Implied Obligations

The Principles expressly state that contractual obligations may be implied under the maxim of good faith (art. 5.2 Principles).[10] The CISG does not contain a comparable rule. Nevertheless, it is widely accepted that also under the CISG additional obligations can be implied, in particular, a general duty to cooperate.[11] Just that same rule is now expressly provided for by art. 5.3 Principles: "Each party shall cooperate with the other party when such co-operation may reasonably be expected for the performance of that party's obligations." The rule can be understood as expression of the general principle -- based on good faith -- that neither party must hinder performance through the other nor otherwise militate against the contractual purpose.[12] The Principles' rule prominently assists the mentioned CISG interpretation.

gg) Non-performance Caused by Creditor

Both the CISG and the Principles state that a "party may not rely on the non-performance of the other party to the extent that such non-performance was caused by the first party's act or omission" or -- as only the Principles add -- "by another event as to which the first party bears the risk."[13] This provision again can be traced back to the sub-principle of good faith that no one should profit from own unlawful or otherwise forbidden acts. And the addition in the Principles seems to be a helpful rule for a situation not explicitly regulated by the CISG.

hh) Mitigation of Damage

A principle very similar to that one just mentioned explains the well-known mitigation rule. An aggrieved party cannot claim damages for losses which she herself could have avoided. The aggrieved party should not profit from own omissions. Both the CISG and the Principles contain mitigation rules although they are differently worded.[14] The Principles' mitigation rule seems to reduce the aggrieved party's claim in any case when that party's failure to mitigate was causally connected with the loss while the CISG formulation gives some discretion in that respect ("may claim a reduction in the damages in the amount by which the loss should have been mitigated").

3. Final Remarks

The differences between the CISG and the Principles can be nearly neglected as far as the general concept of good faith in international contracts is concerned. Some textual differences do not matter in essence.

Both the CISG and the Principles acknowledge that good faith plays an important rule for international contracts. Furthermore, both texts do not exclusively rely on one abstract and general rule of good faith but try to specify the concept by more specific rules which elaborate the principle in some detail. In a number of situations the Principles prove to be of helpful assistance for the good faith interpretation in the CISG. Combining the CISG and the Principles one gets a good impression what good faith in international commercial relations should and could mean.


FOOTNOTES

* Professor of Law at the University of Hamburg, also Judge at the Court of Appeal of Hamburg.

A match-up is available setting CISG Article 7 alongside the following provisions of the UNIDROIT Principles of International Commercial Contracts: Articles 1.6 [Interpretation and supplementation of the Principles] and 1.7 [Good faith and fair dealing] <http://cisgw3.law.pace.edu/cisg/principles/uni7.html>. The match-up is accompanied by Official UNIDROIT Comments on these provisions describing and illustrating the manner in which they are to be applied.

1. Compare Bianca/Bonell (-Bonell), Commentary on the International Sales Law (1987) Art. 7 no. 2.4.1; von Caemmerer/Schlechtriem (-Herber), Kommentar zum Einheitlichen UN-Kaufrecht (2nd ed. 1995) Art. 7 no. 7; Staudinger (-Magnus), Kommentar zum Bürgerlichen Gesetzbuch (CISG) (13th ed. 1994) Art. 7 no. 10.

2. UNIDROIT (ed.) Principles of International Commercial Contracts (1994) 15.

3. See also UNIDROIT, Principles 18; Bonell, An International Restatement of Contract Law (1994) 81.

4. Bianca/Bonell (-Bonell) Art. 7 no. 2.4.2; von Caemmerer/Schlechtriem (-Herber) Art. 7 no. 15.

5. For further examples of bad faith see UNIDROIT, Principles 51 et seq.

6. Art. 11 CISG; art. 1.9 (1) Principles.

7. Art. 29 (2) (1) CISG; art. 2.18 (1) Principles.

8. Art. 29 (2) (2) CISG and - in identical terms - art. 2.18 (2) Principles.

9. See art. 3.5 (1) (a): if "it was contrary to reasonable commercial standards of fair dealing to leave the mistaken party in error"; similar art. 3.8; 3.10 (2).

10. For examples of implied duties see UNIDROIT, Principles 102.

11. See Bianca/Bonell (-Bonell) Art. 7 no. 2.3.2.2; Honnold, Uniform Law for International Sales Under the 1980 United Nations Convention (2nd 1991).

12. Magnus, Int. Trade and Bus L Ann III (1997) 46.

13. Art. 80 CISG; art. 7.1.2 Principles.

14. Art. 77 CISG; art. 7.4.8. Principles.


PECL COMPARATIVES

Good faith and fair dealing under the CISG and
the Principles of European Contract Law

John Felemegas [*]
October 2001

1. General scheme of interpretation and supplementation in the CISG and PECL

The nature and content of PECL article 1.106, as well as its function within the instrument to which it belongs, are very similar to those of article 7 CISG. In both cases, the respective provisions provide the built-in interpretation and supplementation mechanism that the drafters have embedded to their corresponding instruments. The relevant provisions provide that the interpretation of the law in both instruments must pay regard to the concept of good faith.[1]

The Notes to article 1.106(1) PECL confirm that the basic elements found in the structure of art. 1.106 either are virtually identical or express similar ideas to the ones of the corresponding provision in article 7(1) CISG.[2]

2. Good faith and fair dealing in the interpretation of the contract

The concept of "good faith and fair dealing" does not operate merely as a rule of interpretation of each PECL article. The duty of good faith, as this is embedded in PECL article 1.201, is mandatory on the parties.[3]

In contrast to article 7(1) CISG (or any other CISG provision), article 1.201 PECL imposes upon each party a positive duty of good faith and fair dealing in exercising its rights and performing its duties under the contract. The PECL Comments to article 1.201 not only refer to good faith as "a basic principle running through the Principles," but also expressly state that "[g]ood faith and fair dealing are required in the formation, performance and enforcement of the parties' duties under a contract, and equally in the exercise of a party's rights under the contract." (See PECL Comment A.)

On the other hand, the Vienna Convention does not contain any express provision that the individual contract has to obey the maxim of good faith.[4] The text of article 7(1) CISG covers only the application of the Convention, rather than the parties' rights and obligations and their exercise and performance directly. The wording was agreed upon only after lengthy deliberations and it was meant as a final rejection of more far-reaching proposals to apply the principle of "good faith and fair dealing" to the obligations and the behavior of the parties themselves.

There is, however, a strong body of academic opinion holding that the evaluation of the relations, rights and remedies of the parties, could also be subject to the principle of good faith and fair dealing. In accordance with this view, additionally to its interpretative role on the CISG provisions, good faith has at times been recognized as one of the general principles laid down by the Convention [5] and, further, it has found its way into operation of article 7(2) CISG.[6]

The concept's innate definitional difficulties are accentuated by the maxim's suggested dual role in the CISG -- i.e., the concept's operation in the Convention's interpretation (in the context of article 7(1) CISG) and in its gap-filling mechanism (in the context of article 7(2)), respectively.

3. Examples of specific manifestations of good faith in the CISG and PECL

The Convention provides that a contract may usually be concluded, modified or terminated without any formal requirements (see articles 11, 29(1) CISG; cf. articles 12, 96 CISG). The PECL also have a similar regime (see art. 2.101(2) PECL).[7]

Both instruments allow for an exception to this regime, based on the principle of good faith. A party may be precluded by his conduct from asserting such a clause to the extent that the other party has reasonably relied on that conduct. One of the general principles upon which the Convention is based relates to the duty of cooperation, according to which the parties must cooperate "in carrying out the interlocking steps of an international sales transaction."[8] This duty is closely related to the principle that a party can not contradict a representation on which the other party has reasonably relied [9] -- i.e., that the parties must not act venire contra factum proprium.[10]

However, unlike the Convention, the PECL also provide stringent rules on pre-contractual negotiations -- emanating from the concept of good faith -- not to continue or break off pre-contractual negotiations "contrary to good faith", making the offending party liable for losses caused to the other party (art. 2.301(2) PECL).[11]

In addition to the negotiation and pre-contractual stage, the concept of good faith in the PECL also manifests itself prominently in the manner that the PECL deal with issues of material validity [12] that the Convention leaves untouched (see art. 4(a) CISG). Elements of good faith can be found in the operation of certain Convention provisions.[13] For instance, the parties' express contractual obligations contain elements that can be identified as manifestations of a broader principle of good faith.[14]

The PECL are "… intended to be applied as general rules of contract law" (article 1.101(1) PECL), and thus they contain no comparable express obligations. Conversely, the PECL expressly state that contractual obligations may be implied under the concept of good faith and fair dealing (article 6.102(c) PECL), whereas there is no comparable rule in the Convention's provisions.

The argument in favor of extending the scope of good faith to the behavior of the parties and attributing to it the quality of a "general principle" of the CISG [15] runs the risk of being driven to the conclusion that, as such, the principle of good faith in Article 7(2) may even impose on the parties "additional obligations of a positive character."[16]

The possibility of imposing on the parties additional obligations is clearly not supported by the legislative history of the CISG.[17] Article 7(1), as it now stands in the CISG's text, is the result of a drafting compromise between two diverging views, which reflects the political and diplomatic maneuvering necessary for the creation of an international convention. It cannot now be given the meaning originally suggested by those advocating the imposition of a positive duty of good faith on the parties (i.e., the role of good faith under article 1.201 PECL), as this runs contrary to the letter of the law and its legislative history.[18]

4. Conclusions

Good faith occupies an integral position in the interpretation and supplementation of the CISG and the PECL. The concept of good faith is called upon in the CISG to guide the interpretation of the unified law text itself, whereas in the PECL it prescribes the behavior of the parties in every specific contract.

The two instruments, apart from a generic textual affinity, have many similarities in origin and substance, as well as a common purpose, which is the unification of international commercial law. Although the PECL could aid the interpretation and application of the CISG where it can be shown that their respective provisions share a common intent, the present writer maintains that the concept of good faith has a different and distinct role in the Convention. As such, good faith in the context of CISG will acquire its own and unique identity with the further development of relevant CISG case law.[19]

Although particular applications of the concept of good faith are present in various settings of the contractual relationship as conceived by the PECL -- and to a lesser extent by the CISG as well -- the definitional and functional parameters of the concept of good faith in the CISG cannot be provided by a simple synthesis of the relevant provisions in these two instruments.[20]

It is submitted that the concept of good faith in the CISG, as it stands presently, is circumscribed to the interpretation of the law and should not be allowed to impose additional duties of a positive nature to the parties, as it does in the PECL. This limited reading of the role of good faith in the CISG is clearly the one supported by the text and the legislative history of the Convention.


FOOTNOTES

* In October 2000 the author was awarded a Ph.D. from the University of Nottingham for his thesis on the interpretative provisions of the United Nations Convention on Contracts for the International Sale of Goods (1980). The author is a Fellow of the Pace Institute of International Commercial Law.

A match-up is available setting CISG Articles 7 alongside the following provisions of the Principles of European Contract Law: Articles 1:106 [Interpreting and supplementation], 1:107 [Application of the Principles by way of analogy], 1:201 [Good faith and fair dealing] and 1:202 [Duty to co-operate] <http://cisgw3.law.pace.edu/cisg/text/peclcomp7.html>. The match-up is accompanied by:

-   Comments on these provisions authored by the European Commission describing and illustrating the manner in which they are to be applied; and
-   Notes that compare these PECL provisions with continental and common law domestic rules, doctrine and jurisprudence.

1. See CISG article 7(1); PECL article 1.106(1).

2. Cf. PECL article 1.106 (1), CISG article 7(1). The wording of the two provisions is similar, although article 1.106 PECL, in addition to "good faith" and "uniformity of application" that are also prescribed by article 7 CISG, it includes the promotion of "certainty in contractual relationships" as a further relevant factor in the interpretation of the PECL provisions. See also PECL article 1.106(2) which refers to domestic law as an ultimate source of supplementation; CISG article 7(2). The PECL Notes state that "[t]his is in accordance with CISG art. 7(2)". See PECL Note 4.

3. The PECL Comments make it clear that "good faith" is not confined to specific rules and further elucidate the concept by stating that the concept's purpose is: "to enforce community standards of decency, fairness and reasonableness in commercial transactions […]. It supplements the provisions of the Principles, and it may take precedence over other provisions of these Principles when a strict adherence to them would lead to a manifestly unjust result." (see PECL Comment B). Note, however, that PECL Comment G unequivocally states that the courts may limit this duty in particular cases, in order to preserve the overriding objectives of "certainty and predictability in contractual relationships". As far as the Convention is concerned, the principle of party autonomy (article 6 CISG) is the dominant general principle. See, e.g., John O. Honnold, Uniform Law for International Sales Under the United Nations Convention 47 (2nd ed. 1991); Albert H. Kritzer, Guide to Practical Applications of the United Nations Convention on Contracts for the International Sale of Goods 115 (1989).

4. Such a provision was proposed and rejected at the 1980 Vienna Diplomatic Conference; see U.N. Official Records (1981), p. 86.

5. Article 7(1) CISG. See, e.g., Bernard Audit, La Vente Internationale de Marchandises: Convention des Nations Unies du 11 Avril 1980 [The International Sales of Goods, UN Convention of 11 April 1980] 51 (1990), where the author states that good faith is one of the general principles, even though it must be considered a mere instrument of interpretation. See also Enderlein & Maskow, International Sales Law (1992) at 59, where the authors list the good faith principle among those principles "which do not necessarily have to be reflected in individual rules;" Rolf Herber & Beate Czerwenka, Internationales Kaufrecht. Kommentar zu dem Übereinkommen der Vereinten Nationen vom 11 April 1980 überVertrage über den Internationalen Warenkauf [International Sales Law, Commentary on the United Nations Convention on Contracts for the International Sale of Goods 49 (1991), where it is stated that the good faith principle is the only general principle expressly provided for by the Convention.

6. As to the possibility of using the principle of "good faith and fair dealing" on the basis of CISG art. 7(2) as a rule for the contractual relations between the parties, see E. Allen Farnsworth, Duties of Good Faith and Fair Dealing under the UNIDROIT Principles, Relevant Conventions and National Laws, 3 Tul. J. Int'l & Comp. L. (1995), 56. See also Michael Joachim Bonell, General provisions: Article 7, in Commentary on International Sales Law, at 85, stating "[y]et, notwithstanding the language used in article 7(1), the relevance of the principle of good faith is not limited to the interpretation of the Convention ... if during the negotiating process or in the course of the performance of the contract a question arises for which the Convention does not contain any specific provision and the solution is found in applying, in accordance with article 7(2), the principle of good faith."; Joseph Lookofsky, Understanding the CISG in the USA 19, §2-10 (1995), stating "[a]nd since other (very) general CISG principles of loyalty and reliance-protection have also been deduced, the deduction of a general Convention principle requiring the parties to act in good faith seems no great leap, even if it does seem to fly in the face of the traveaux préparatoires." See also Arthur Rosett, Critical Reflections on the United Nations Convention on Contracts for the International Sale of Goods, 45 Ohio St. L.J. 265 (1984).

7. However, note that according to PECL article 2.106(1), a written modification clause establishes "only a presumption that an agreement to modify or terminate the contract is not intended to be legally binding unless it is in writing" (emphasis added). On the other hand, CISG article 29(2) states that contracts containing written modification clauses "may not be otherwise modified or terminated by agreement …".

8. Kritzer, op.cit., at 115. See also CISG arts. 32(3), 48(2), 60(a), 65. Cf. PECL article 1.202, which expressly imposes on the parties a duty to cooperate with each other in order to give full effect to the contract. It is stated in the Notes to the PECL that the duty to cooperate is derived from the principle of good faith and fair dealing (see PECL Note 1).

9. On contractual formation, both the CISG and the PECL provide that an offer is irrevocable once the offeror has created a situation in which the offeree reasonably relied on the offer as irrevocable and acted in reliance on the offer; cf. PECL article 2.202(3); CISG article 16(2)(b). Cf. also PECL article 2.106(2); CISG article. 29(2) CISG -- which provide a different illustration of the same point for contractual modification or termination.

10. For similar affirmations, see, e.g., Gyula Eörsi, General Provisions, in International Sales: The United Nations Convention on Contracts for the International Sale of Goods, ch. 2, at 2-12 (Nina M. Galston & Hans Smit eds., 1984); Rolf Herber, Article 7, in Commentary on the UN Convention on the International Sale of Goods 9, 99 (Peter Schlechtriem ed., 1998); Dietrich Maskow, The Convention on the International Sale of Goods from the Perspective of the Socialist Countries, in La Vendita Internazionale, La Convenzione di Vienna dell' 11 Aprile 1980 41, 57 (1981).

11. PECL article 2.301(3) states: "It is contrary to good faith and fair dealing, in particular, for a party to enter into or continue negotiations with no real intention of reaching an agreement with the other party." See also PECL article 2.302, which provides a remedy for breach of confidentiality in the course of negotiations. For comments on pre-contractual liability under the CISG, refer to "Pre-Contract Formation", A.H. Kritzer ed., available at <http://cisgw3.law.pace.edu/cisg/biblio/kritzer1.html>.

12. See, e.g., PECL article 4.109, providing that a party may avoid the contract if the other party takes unfair advantage of the former party's dependence, economic distress or other weakness.

13. There are numerous applications of the good faith principle in particular provisions of the Convention; see the examples offered in the Secretariat Commentary to the Draft Convention as manifestations of the concept (e.g. CISG articles 16(2)(b), 21(2), 29(2), 37, 38, 40, 85-88); Text of Secretariat Commentary on article 6 of the 1978 Draft [draft counterpart of CISG article 7(1)], available at: <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-07.html>. Note also, that the Secretariat Commentary states: "The principal of good faith is, however, broader than these examples and applies to all aspects of the interpretation and application of the provisions of this Convention", id. at 4.

14. See article 35(3) CISG, which provides that the seller is not liable 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 the non-conformity.

15. See Isaak I. Dore & James E. De Franco, A Comparison of the Non-Substantive Provisions of the UNCITRAL Convention on the International Sale of Goods and the Uniform Commercial Code, 23 Harv. Int'l. L.J. 49, 61 (1982), where the authors state that the good faith provision does not constitute a mere instrument of interpretation, but rather, it "appears to be a pervasive norm analogous to the good faith obligation of the U.C.C." Id.

16. Bonell, op.cit., at 85. According to Bonell, "this will be the case, if during the negotiating process or in the course of performance of the contract a question arises for which the Convention does not contain any specific provision and the solution is found in applying, in accordance with Article 7(2), the principle of good faith." Id.

17. Cf. Ruling c-529/00 of the Constitutional Court of Colombia (10 May 2000). In that case, the Constitutional Court of Colombia established the validity of the CISG in Colombia by declaring valid Colombia Law Number 518 of 1999, which approved the Convention. In regards to good faith, in the course of its opinion the court stated: "[T]he exercise of the commercial activity that the individuals develop with other citizens of different States must fit the principle of good faith, just as the Convention stipulates in paragraph number one of article 7. This principle should not only be observed in the contractual relationships or negotiations, but in the relationships between individuals and the State and in the procedural performances."; at V. Considerations and Foundations, 3. Constitutionality of the Convention, Ibid. In other words, the Colombian court, in accordance with the good faith postulate found in article 83 of the Constitution of Colombia, appears to have treated the concept of good faith as expansively as it is treated under the PECL. See <http://cisgw3.law.pace.edu/cases/000510c7.html>.

18. See also Disa Sim, The Scope and Application of Good Faith in the Vienna Convention on Contracts for the International Sale of Goods (Sept. 2001), at <http://cisgw3.law.pace.edu/cisg/biblio/sim1.html>. The author provides a thorough discussion of the scope and application of the doctrine of good faith in the CISG, concluding that "… good faith can be said to play two roles in the Convention. Firstly, it is a compendious term for the collection of more specific "good faith" principles that can be used to resolve matters governed by the Convention but not expressly resolved by it. Secondly, these very same principles can be used to resolve questions of textual ambiguity. There does not exist, however, a general doctrine of good faith that can serve as a fount of additional rights and obligations."

19. Professor Schlechtriem has commented that the importance of the general principle of "good faith and fair dealing" and the details developed out of it depend on the structure and content of the specific legal system in which they are implemented, and on the concrete and specific contract in question. See Peter Schlechtriem, Good Faith in German Law and in International Uniform Laws, in Saggi, Conferenze e Seminari No. 24 (Centro di studi e ricerche di diritto comparato e straniero & Michael Joachim Bonell eds., 1997), available at <http://www.cnr.it/CRDCS/frames24.htm>.

20. Contra Ulrich Magnus, Editorial Remarks, in Guide to Article 7 (available on the Pace website: <http://cisgw3.law.pace.edu/cisg/principles/uni7.html>). Professor Magnus' analysis relates to a comparison between article 7 CISG and corresponding articles 1.6, 1.7 of the UNIDROIT Principles. However, the value of that analysis is pertinent to our own comparative study, as both the UNIDROIT Principles of International Commercial Contracts (1994) and the Principles of European Contract Law (PECL) (complete and revised version 1998) are in the form of international Restatements of Contracts and as such they can be regarded as companions to the CISG. Professor Magnus is of the opinion that the UNIDROIT Principles can aid in the interpretation of the Convention's provisions and states that "the Principles can help to clarify the actual object of the good faith principle contained in the CISG." Id., at para. 10.


Pace Law School Institute of International Commercial Law - Last updated September 11, 2009
Go to Database Directory || Go to Information on other available case data
Comments/Contributions