Reproduced with permission from 8 Journal of Law and Commerce (1988) 53-108
Harry M. Flechtner [*]
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The Convention does not define "validity," and it is not clear what domestic law doctrines will apply to remedy clauses in contracts governed by CISG. There is agreement that the general unconscionability provision of Article 2 (U.C.C. section 2-302) is a rule of "validity" which, if applicable under choice-of-law principles, is not displaced by the Convention. This analysis presumably applies to U.C.C. section 2-719(3), which invalidates contract terms that unconscionably limit or exclude consequential damages. U.C.C. section 2-718(1), which strikes down liquidated damages clauses if they operate as penalties, also states a rule of "validity."  The Article 2 provision forbidding enforcement of a limited or exclusive remedy "[w]here circumstances cause [it] to fail of its essential purpose"  is, however, more problematic. Because the doctrine denies legal effect to a contract clause even if the provision was clearly expressed, it might constitute a rule of "validity."  On the other hand, the circumstances that cause a limited remedy to fail of its essential purpose will often occur after contract formation. CISG contains an excuse provision dealing with the enforceability of contract terms in light of post-formation developments. If "failure of essential purpose" is deemed an excuse doctrine rather than a rule of validity, it will be preempted by the Convention. To avoid this problem, a party who agrees to a limited or exclusive remedy in a contract governed by the Convention should insist that the agreement include a "failure of essential purpose" clause.
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* Assistant Professor, University of Pittsburgh School of Law. . . .
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124. Winship, The Scope of the Vienna Convention on International Sales Contracts, in International Sales: The United Nations Convention on Contracts for the International Sale of Goods § 1.02 at 1-37 (1984); Honnold, supra note 25, at 260; Ziegel, supra note 80, § 9.05 at 9-39.
125. Draft Commentary, supra note 86, art. 66, ¶ 5 reprinted in Official Records, supra note 71, at 57.
126. U.C.C. § 2-719(2) (1978).
127. See Honnold, supra note 25, at 260.
128. See Sales Convention, supra note 1, art. 79.
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