UNCITRAL Digest of Article 3 case law

DIGEST OF ARTICLE 3 CASE LAW

1. This provision extends the Convention's sphere of application to some contracts that include some act in addition to the supply of goods.[1]

Contracts for the sale of goods to be manufactured or produced

2. Paragraph (1) makes the Convention applicable to contracts for the sale of goods to be manufactured or produced,[2] thus making clear that the sale of these goods is as much subject to the provisions of the Convention as the sale of ready-made-goods.[3] The extension of the Convention's sphere of application is, however, limited in so far as paragraph (1) excludes that the contracts where the party who "buys" the goods to be manufactured or produced supplies a "substantial part" of the materials necessary for the manufacture or production of the goods can be considered a contract for the sale of goods.[4] The provision does not provide a specific criterion to be used in determining when the materials supplied by the buyer constitute a "substantial part" of the goods necessary to manufacture or produce the goods. One decision is based upon the idea that a purely quantitative criterion should be used to determine whether the goods delivered by the "buyer" constitute a "substantial part" of those necessary for the production and manufacture of the goods.[5]

3. A different -- albeit related -- issue is that of whether the buyer's supply of instructions, design specifications, etc., compares to the buyer's supply of "material necessary" for the manufacture or production of the goods which leads to the contract‘s exclusion from the Convention's sphere of application. In one case, a court held that the Convention was inapplicable, on the grounds of article 3(1), to a contract according to which the seller had to manufacture goods according to the buyer's design specifications.[6] The court considered the plans and instructions handed to the "seller" by the "buyer" as being a "substantial part of the material necessary" for the production of the goods. Other courts have found that specifications are not considered "material necessary for the manufacture or production of goods."[7]

Contracts for the delivery of labour and services

4. Article 3(2) extends the Convention's sphere of application to also cover contracts pursuant to which the seller undertakes to supply labour or other services alongside the obligations to deliver the goods, transfer the property and hand over the documents,[8] as long as the supply of labour or services does not constitute the "preponderant part" of the seller's obligation.[9] In order to determine whether the obligations of the seller consist preponderantly in the supply of labour or services, a comparison has to be made between the economic value of the obligations regarding the supply of labour and services and the economic value of the obligations regarding the goods,[10] as if two separate contracts have been made.[11] Thus, where the obligation regarding the supply of labour or services amounts to more than 50% of the obligations of the "seller", the Convention is inapplicable. It is on this basis that a  court decided that a contract asking for a market study did not fall under the Convention's sphere of application.[12] On the other hand, a contract for the dismantling and sale of a second-hand hangar was considered to fall within the Convention's sphere of application on the grounds that the value of the dismantling amounted only to 25% of the total value of the contract.[13]

5. One court stated that -- as a clear calculation would not always be possible -- other circumstances such as those surrounding the conclusion of the contract as well as the purpose of the contract should also be taken into account in evaluating whether the obligation to supply labour or services is preponderant.[14] Another court referred to the essential purpose of the contract as a criterion to determine whether the Convention was applicable or had to be disregarded.[15]

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 also 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.

2. See [BELGIUM Hof van Beroep [Appellate Court] Gent 15 May 2003, available online at <http://cisgw3.law.pace.edu/cases/030515b1.html>]; [AUSTRIA Oberster Gerichtshof [Supreme Court] 18 April 2001, available online at <http://cisgw3.law.pace.edu/cases/010418a3.html>]; [GERMANY Oberlandesgericht [Appellate Court] Saarbrücken 14 February 2001, available online at <http://cisgw3.law.pace.edu/cases/010214g1.html>]; [GERMANY Oberlandesgericht [Appellate Court] Stuttgart 28 February 2000, available online at <http://cisgw3.law.pace.edu/cases/000228g1.html>]; CLOUT case No. 325 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 8 April 1999, available online at <http://cisgw3.law.pace.edu/cases/990408s1.html>]; CLOUT case No. 331 [SWITZERLAND Handelsgericht [Commercial Court] 10 February 1999, available online at <http://cisgw3.law.pace.edu/cases/990210s1.html>]; CLOUT case No. 253 [SWITZERLAND Handelsgericht [Commercial Court] 21 September 1998, available online at <http://cisgw3.law.pace.edu/cases/980921s1.html>] (see full text of the decision); 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. 164 [HUNGARY Budapest Arbitration award, case No. Vb 94131 of 5 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951205h1.html>]; [NETHERLANDS Gerechtshof [Appellate Court] 's Hertogenbosch 9 October 1995, available online at <http://cisgw3.law.pace.edu/cases/951009n1.html>]; [GERMANY Landgericht [District Court] Oldenburg 9 November 1994, available online at <http://cisgw3.law.pace.edu/cases/941109g1.html>]; CLOUT case No. 167 [GERMANY Oberlandesgericht [Appellate Court] München, case No. 7 U 3758/94 of 8 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950208g2.html>] (see full text of decision); CLOUT case No. 262 [SWITZERLAND Gerichtskommission Oberheintal 30 June 1995, available online at <http://cisgw3.law.pace.edu/cases/950630s1.html>]; [GERMANY Landgericht [District Court] Memmingen 1 December 1993, available online at <http://cisgw3.law.pace.edu/cases/931201g1.html>]; [ICC Court of Arbitration, case No. 7660 of 1994, available online at <http://cisgw3.law.pace.edu/cases/947660i1.html>]; [ICC Court of Arbitration, case No. 7844 of 1994, available online at <http://cisgw3.law.pace.edu/cases/947844i1.html>]; CLOUT case No. 97 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 9 September 1993, available online at <http://cisgw3.law.pace.edu/cases/930909s1.html>]; CLOUT case No. 95 [SWITZERLAND Zivilgericht [Civil Court] Basel 21 December 1992, available online at <http://cisgw3.law.pace.edu/cases/921221s1.html>] (see full text of decision).

3. See also 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, 17.

4. For the applicability of the CISG in cases where reference was made to article 3(1), but where the courts stated that the "substantial part of the materials necessary" was provided by the seller, see [GERMANY Landgericht [District Court] München 27 February 2002, available online at <http://cisgw3.law.pace.edu/cases/020227g1.html>] ; CLOUT case No. 313 [FRANCE Cour d'appel [Appellate Court] Grenoble 21 October 1999, available online at <http://cisgw3.law.pace.edu/cases/991021f1.html>] ; [GERMANY Landgericht [District Court] Berlin 24 March 1998, available online at <http://cisgw3.law.pace.edu/cases/980324g1.html>].

5. See CLOUT case No. 164 [HUNGARY Budapest Arbitration award, case No. Vb 94131 of 5 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951205h1.html>] (see full text of decision).

6. See CLOUT case No. 157 [FRANCE Cour d'appel [Appellate Court] Chambéry 25 May 1993, available online at <http://cisgw3.law.pace.edu/cases/930525f1.html>].

7. See CLOUT case No. 331 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 10 February 1999, available online at <http://cisgw3.law.pace.edu/cases/990210s1.html>] (see full text of decision); CLOUT case No. 2 [GERMANY Oberlandesgericht [Appellate Court] 17 September 1991, available online at <http://cisgw3.law.pace.edu/cases/910917g1.html>] (see full text of the decision).

8. For a definition of the contract for the sale of goods under the Convention, see the text of the Digest relating to art. 1.

9. See [NETHERLANDS Gerechtshof [Appellate Court] Arnhem 27 April 1999, available online at <http://cisgw3.law.pace.edu/cases/990427n1.html>] ; CLOUT case No. 327 [SWITZERLAND Kantonsgericht [District Court] Zug 25 February 1999, available online at <http://cisgw3.law.pace.edu/cases/990225s1.html>] ; CLOUT case No. 287 [GERMANY Oberlandesgericht [Appellate Court] München 9 July 1997, available online at <http://cisgw3.law.pace.edu/cases/970709g1.html>] (see full text of the decision); CLOUT case No. 192 [SWITZERLAND Obergericht [Appellate Court] Luzern 8 January 1997, available online at <http://cisgw3.law.pace.edu/cases/970108s1.html>] ; CLOUT case No. 196 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 26 April 1995, available online at <http://cisgw3.law.pace.edu/cases/950426s1.html>] ; CLOUT case No. 152 [FRANCE Cour d'appel [Appellate Court] Grenoble 26 April 1995, available online at <http://cisgw3.law.pace.edu/cases/950426f2.html>] ; CLOUT case No. 105 [AUSTRIA Oberster Gerichtshof [Supreme Court] 27 October 1994, available online at <http://cisgw3.law.pace.edu/cases/941027a3.html>] ; CLOUT case No. 201 [SWITZERLAND Richteramt [District Court] Laufen 7 May 1993, available online at <http://cisgw3.law.pace.edu/cases/930507s1.html>] ; for a decision in which article 3(2) was mentioned, but in which the court did not solve the issue of whether the contract was one for the sale of goods or one for the supply of labour and services see [BELGIUM Rechtbank van Koophandel [District Court] Hasselt 19 September 2001, available online at <http://cisgw3.law.pace.edu/cases/010919b1.html>].

10. See CLOUT case No. 327 [SWITZERLAND Kantonsgericht [District Court] Zug 25 February 1999, available online at <http://cisgw3.law.pace.edu/cases/990225s1.html>].

11. For an implicit affirmation of the principle referred to in the text, see CLOUT case No. 26 [ICC Court of Arbitration, case No. 7153 of 1992, available online at <http://cisgw3.law.pace.edu/cases/927153i1.html>].

12. See CLOUT case No. 122 [GERMANY Oberlandesgericht [Appellate Court] Köln 26 August 1994, available online at <http://cisgw3.law.pace.edu/cases/940826g1.html>].

13. See CLOUT case No. 152 [FRANCE Cour d'appel [Appellate Court] Grenoble 26 April 1995, available online at <http://cisgw3.law.pace.edu/cases/950426f2.html>] (see full text of the decision).

14. See CLOUT case No. 346 [GERMANY Landgericht [District Court] Mainz 26 November 1998, available online at <http://cisgw3.law.pace.edu/cases/981126g1.html>].

15. See [ITALY Corte Suprema di Cassazione [Supreme Court] 9 June 1995, available online at <http://cisgw3.law.pace.edu/cases/950609i3.html>].