2008 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods
Digest of Article 2 case law [reproduced with the permission of UNCITRAL] [*]
[Text of article
This Convention does not apply to sales:
(a) of goods bought for personal, family or household use, unless the seller, at any time before or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for any such use;
(b) by auction;
(c) on execution or otherwise by authority of law;
(d) of stocks, shares, investment securities, negotiable instruments or money;
(e) of ships, vessels, hovercraft or aircraft;
(f) of electricity.
1. This provision identifies sales that are excluded from the Convention's sphere of application. The exclusions are of three types: those based on the purpose for which the goods were purchased, those based on the type of transaction, and those based on the kinds of goods sold.
2. According to article 2(a), a sale falls outside the Convention's sphere of application if it relates to goods which at the time of the conclusion of the contract are intended to be used personally, in the family or in the household. It is the buyer's intention at the time of the conclusion of the contract that is relevant, rather than the buyer's actual use of the goods. Thus, the purchase of a car  or a recreational trailer  for personal use falls outside the Convention's sphere of application.
3. If the goods are purchased by an individual for a commercial or professional purpose, the sale does not fall outside the Convention's sphere of application. Thus, the following situations are governed by the Convention: the purchase of a camera by a professional photographer for use in his business; the purchase of a soap or other toiletries by a business for the personal use of its employees; the purchase of a single automobile by a dealer for resale.
4. If goods are purchased for the aforementioned "personal, family or household use" purposes, the Convention is inapplicable "unless the seller, at any time before or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for any such use". If this "unless" clause is satisfied the CISG applies, provided the other requirements for its applicability are met. This narrows the reach of the article 2(a) exception, and leads to the possibility of a conflict between domestic consumer protection law and the Convention in those cases where applicability of the domestic law does not require that the seller either knew or ought to have known of the buyer's intended use.
5. The exclusion of sales by auction (article 2(b)) covers auctions resulting from authority of law as well as private auctions. Sales at commodity exchanges do not fall under the exclusion, as they merely constitute a particular way of concluding the contract.
6. Under article 2(c) sales on judicial or administrative execution or otherwise by authority of law are excluded from the Convention's sphere of application as such sales are normally governed by mandatory laws of the State under whose authority the execution is made.
7. The exclusion of sales of stocks, investment securities, and negotiable instruments (article 2(d)) is intended to avoid a conflict with mandatory rules of domestic law. Documentary sales do not fall within this exclusion.
8. Under article 2(e) sales of ships, vessels, aircraft, and hovercraft are also excluded from the Convention. However, sales of parts of ships, vessels, aircraft, and hovercraft -- including essential components, such as engines  --may be governed by the Convention since exclusions from the Convention's sphere of application must be interpreted restrictively. According to one arbitral tribunal, the sale of a decommissioned military submarine is not excluded by article 2(e).
9. Although the sale of electricity is excluded from the Convention's sphere of application (article 2(f)), a court has applied the Convention to a sale of propane gas.
* This presentation of the UNCITRAL Digest is a slightly modified version of the original UNCITRAL text at <http://www.UNCITRAL.org/pdf/english/clout/CISG_second_edition.pdf>. The following modifications were made by the Institute of International Commercial Law of the Pace University School of Law:
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1. 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, 16 (hereinafter "Official Records").
2. See [GERMANY Bundesgerichtshof 31 October 2001 (Machinery case)].
3. See [AUSTRIA Oberster Gerichtshof 11 February 1997 (Automobile case)].
4. See [SWITZERLAND Kantonsgericht Nidwalden 5 June 1996 (Second hand car case)]; [AUSTRIA Oberster Gerichtshof 11 February 1997 (Automobile case)].
5. See [NETHERLANDS Rechtbank Arnhem 27 May 1993 (Caravan case)].
6. See, however, [GERMANY Landgericht Düsseldorf 11 October 1995 (Generator case)], applying the Convention on the sale of a generator destined for personal use.
7. For these examples, see Official Records, supra note 1, at 16.
8. See [GERMANY Bundesgerichtshof 31 October 2001 (Machinery case)].
10. For decisions excluding the Convention's applicability to the sale of shares, see [SWITZERLAND Zurich Chamber of Commerce Arbitral Tribunal, ZHK 273/95 of 31 May 1996 (Aluminum case)].
11. For cases of inapplicability of the Convention to contract for the sale of ships, see [RUSSIA Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, Award 236/1997 of 6 April 1998 (Ship case)]; [YUGOSLAVIA Yugoslav Chamber of Economy Arbitration Proceeding T-23/97 of 15 April 1999 (Fishing boat case)].
12. For the inapplicability of the Convention to a contract for the sale of an aircraft, see [RUSSIA Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, Award 255/1996 of 2 September 1997 (Aircraft case)].
13. See [HUNGARY Legfelsóbb Biróság 25 September 1992 (Airplane engines case)].
14. See [RUSSIA Maritime Commission Arbitral Tribunal 18 December 1998 (Out-of-commission military submarine case)].
15. See [AUSTRIA Oberster Gerichtshof 6 February 1996 (Propane case)].