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Reproduced with permission from Juridisk Tidskrift (1991/92) 1-28

excerpt from

Uniform Sales Law - The Experience with Uniform Sales Laws in the Federal Republic of Germany

Peter Schlechtriem [*]

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Borderlines and Gaps

a) International Uniform Law always cuts certain segments out of very complex economic and legal relations. Uniform Law necessarily is only a partial regulation. My colleague Hein Kotz, in response, has described Uniform Laws as islands in a vast ocean of domestic laws; islands with a rather foggy coastline.[28] That makes it necessary to think about the exact borderline that separates the sphere of application of the Uniform Law from the sphere beyond. A part of this borderline was already mentioned. Only contracts concerning movables are governed by the Uniform Sales Law. In addition, it must be a sales contract -- leases or agency contracts do not fall under the Convention. In a given case, however, there might be problems of characterization, for example regarding leasing contracts which in fact are financed sales. Leasing contracts are characterized under German law as instalment sales if the lessee in the end pays the entire price of the object (i.e., price and credit costs) and has an option to acquire title to the object when the lease is terminated.[29] Such a case has not yet been decided under Uniform Sales Law but I expect that if the requirements for an installment sale under domestic (i.e., German) law are met, the German courts would regard such a contract as a sales contract also under Uniform Sales Law rules. If it were a consumer sale, however, the exception of Art. 2(a) would apply . . . As another example, let us take a case decided under ULIS, where under a contract the German party was to be an agent for an Italian manufacturer of heating systems but was obliged to accept a certain number of these systems per year and pay for them whether he could resell them or not.[30] In cases of this kind it was held that there was, basically, a series of contracts "framed" by an agency agreement, and ULIS was applied to the sales parts of the transaction.[31]

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The validity of a contract is generally governed by domestic law unless it concerns the conclusion of the contract by offer and acceptance, Art. 4(a). The capacity to contract, the powers of an agent, the consequences of mistake, gross unfairness, unconscionability and fraud are governed by domestic law. Domestic law prevails especially when contracts are considered invalid because the underlying sale is immoral or illegal and void according to domestic law. Economic regulations such as export or import controls, or consumer protection laws which prohibit certain clauses, may void contracts falling under the Convention. Thus, the buyer's right to revoke a contract under certain conditions provided for by consumer protection law has to be reckoned with if the respective domestic law contains such a right to revoke. The applicability of domestic law in this regard does not depend upon whether the invalidity occurs by operation of law, by judicial decision or government intervention, or by an act of a party, such as a declaration to revoke.[33]

This priority of domestic provisions on the validity of contracts must, however, cede where the issue is specifically covered by the Uniform Sales Law Convention -- but I have to add that there is a growing discussion in this regard. Let me give a few examples. Under German law, as in many other legal systems stemming from Roman law and contrary to Common Law and Swedish law, a contract is void if it requires performance of something which was objectively impossible at the time of the conclusion of the contract (impossibilium nulla est obligatio). However, under Uniform Sales Law, a contract to deliver goods that have already perished at the time of the conclusion is to be regarded as valid. The impossibility of the seller to deliver is a breach of his obligation which gives the buyer the appropriate remedies, but does not make the contract void as under an applicable domestic law.[34] More important is the priority of the Convention in regard to non-conformity of goods or rights of third parties to the goods. Even if non-conformity of goods or third-party claims to the goods may give rise to avoidance for error, as, e.g., under Swiss and Austrian law, the remedies under the Convention should have priority over the domestic law and its provision on avoidance for error.[35] One last example: if one of the parties was in error about the capacity of the other party to perform or about his creditworthiness, this again may be a cause for avoidance for error under domestic law. Under the Convention, however, this problem is dealt with in Art. 71 by granting the party only a right of suspension which can be rebutted by an adequate assurance of performance by the other party. Therefore, there is no room for national rules to avoid the contract for error.[36] The uniformity reached by the Convention would be in grave danger if in these instances national provisions could be applied because the application leads to invalidity or avoidance of a contract and thereby could be brought under Art. 4(a).[37]

A similar problem is caused by concurring actions under domestic law. The same rule of priority of the Convention should apply if issues regulated by the Convention could lead to a remedy under domestic law which is inconsistent with the Convention. A good example is the Israeli case Harlo & John's Ltd. v. Adras. An Israeli buyer had bought steel from a German seller. The contract was improperly performed. The buyer, however, had lost his remedies under ULIS by lapse of time and lack of notice, and he had lost a litigation in which the courts up to the Israeli Supreme Court applied the Hague Uniform Sales Law. Then the seller started a new litigation saying in nuce that the German seller, by not performing the contract and not being held liable under ULIS, was unjustly enriched. The buyer succeeded in claiming benefits which the German party allegedly had derived from not performing the contract properly under unjust enrichment rules. In this instance, the rules of the Convention and its requirement for certain remedies were pushed aside by a restitutionary remedy under domestic law.[38 Even more frequent could be a concurrence of remedies for breach of contract and tort actions. Concurring actions that overlap with the remedies of the Convention and could lead to a derogation of the requirements for certain remedies under the Convention can sometimes also be based on tort law. If, for example, cattle feed delivered under a contract is contaminated and the buyer's livestock dies, he not only has a claim for damages under the Convention -- because these consequential damages surely were within the contemplation of the parties [39] -- but also a tort action under domestic law, for example product liability rules. If the buyer does not give notice in time he loses his remedies under the Convention (Art. 39), could he nevertheless claim damages under domestic tort law? Even more dangerous is a tort action if it lies for purely economic loss. This, as far as I know, is a rare exception in most legal systems, but is nevertheless possible. Under German law there is special legislation dealing with feed. The violation of this legislation by the delivery of contaminated feed is a tort, and the buyer can claim damages under tort provisions for his purely economic loss.[40] Could such a claim supercede the requirements of the Convention? I can only give a very tentative answer.[41] The two cases, in my opinion, have to be distinguished. As to property damages, tort rules are applicable and an action for damages is not barred by lack of notice.[42] A tort action in these cases is based on the general obligation not to harm another person's body or property. As Art. 5 shows, these general rules and obligations are not dealt with in the Convention and therefore not pushed aside even in cases where a concurring remedy under the Convention is possible. Quite different, however, is the situation in regard to purely economic loss. The protection of purely economic interests is primarily a domain of contract law. These interests are created and protected by contracts and contract law. As such, the special requirements for actions under contract law should have priority even in cases, where for some historical or policy reasons, a legislator protects these interests also by tort law rules. Deciding otherwise would open the door for national legislators to deviate from the Convention at will. A national legislator could enact a law creating tort claims for every buyer if the object of a sales contract is defective and the buyer suffers a purely economic loss. Leaving aside the possible impact such legislation and such a rule on the concurrence of action could have within the domestic law, it would signal the end to the uniformity reached by Uniform Sales Law. Purely economic loss suffered by a buyer because the goods purchased do not conform to the contract, therefore, should be a question regulated exclusively by the Uniform Sales Law.

. . . The Convention does not regulate periods of limitation. In Vienna, the Limitation Convention of 1974 was adjusted to the rules of the Convention. But the success of this Limitation Convention is questionable. The FRG will not enact it. Instead, we have a special provision dealing with the remedies of the buyer for non-conformity of the goods which sets a 6-month period of limitation for the buyer running from the time of notice of defects.[43] There is, however, a peculiarity stemming from the reunification of Germany: The former GDR had already enacted the Limitation Convention. While under the Unification Treaty, the law of the FRG was generally extended to the territory of the former GDR, there are some exceptions leaving certain acts or single provisions of certain acts for the GDR in force. One of these exceptions concerns the Limitation Convention.[44] Therefore, we now have two bodies of law applicable in regard to the period of limitation in case of sales falling under the Convention, a state of affairs that I regard as very regrettable.

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FOOTNOTES

* Dr. jur. ord. Professor Albert-Ludwigs-Universität Freiburg i. Breisgau, Director of the Institute of Foreign and Private International Law, Freiburg. President of the German Association of Comparative Law. The following article is based on a paper read to the Law Faculty of the University of Stockholm on Jan. 25, 1991. I have added footnotes and some remarks, but in general preserved the text of the oral lecture.

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28. Kötz, Rechtsvereinheitlichung-Nutzen, Kosten, Methoden, Ziele, RabelsZ 50 (1986), 1, at 12.

29. BGHZ 94, 195; Graf v. Westphalen, Die Rechtsprechung des BGH zum Leasingvertrag als Umgehungsgeschäft gem. 6 AbzG. WM 1991, 529.

30. LG Marburg 22.4.1982 in: Schlechtriem/Magnus, supra note 5, Art. 2 EAG no. 4.

31. BGHZ 74, 136 et seq. sub II.2.a); see also OLG Hamm 18.10.1982 in: Schlechtriem/Magnus supra note 5, Art. 6 EAG no. 13.

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33. Schlechtriem in: v. Caemmerer/Schlechtriem, supra note 7, Vor Art. 14 3; P. Schlechtriem, supra note 27, at 33.

34. Huber in: v. Caemmerer/Schlechtriem, supra note 7, Art. 46 7; P. Schlechtriem, supra note 27, at 33; see O.R. at 55, Art. 65 4 (Secretariat's Commentary).

35. Accord: Herber in: v. Caemmerer/Schlechtriem, supra note 7, Art. 4 13; Huber in: v. Caemmerer/Schlechtriem, supra note 7, Art. 45 86; Enderlein/Maskow/Stargardt, supra note 7, Art. 4 6; Khoo in: Bianca/Bonell, supra note 18, Art. 4 3.3.5; Reinhart, supra note 7, Art. 45 10; J. Honnold, supra note 20. 240; Schwenzer, supra note 6, at 603; Herber/Czerwenka, supra note 7, Art. 14 13, 22; contra: Bydlinski, Das allgemeine Vertragsrecht, in: Doralt (ed.). Das UNCITRAL-Kaufrecht im Vergleich zum österreichischen Recht, 57, at 84 et seq. (Wien 1985); Ebenroth, Internationale Vertragsgestaltung im Spannungsverhältnis zwischen ABGB. IPR-gesetz und UN-Kaufrecht, östJB1. 1986, 681, at 688; Lessiak, UNCITRAL-Kaufrechts-übereinkommen und Irrtumsanfechtung, östJB1. 1989, 487. For Swiss law see Honsell, Das Übereinkommen über den intenrationalen Warenkauf (Wiener Kaufrecht), Plädoyer 1990, 38, at 39; Wiegand. Die Pflichten des Käufers und die Folgen ihrer Verletzung. in: Bucher (ed.)., supra note 22, at 143; Bucher, Überblick über die Neuerungen des Wiener Kaufrechts; dessen Verhältnis zur Kaufrechtstradition und zum nationalen Recht, in: Bucher (ed.), supra note 18, at 13. As to French law, which in general also allows avoidance for error in addition to remedies for non-conformity, see Niggemann, supra note 32, at 374.

36. Accord: Herber in: v. Caemmerer/Schlechtriem, supra note 7, Art. 4 13; Enderlein/Maskow/Stargardt, supra note 7, Art. 71 2; Reinhart, Zurückbehaltungsrecht und Unsicherheitseinrede nach UN-Kaufrecht im Vergleich zu EKG und BGB, in: Schlechtriem (ed.), supra note 27, at 378; Reinhart, supra note 7, Art. 71 10; Leser in: v. Caemmerer Schlechtriem, supra note 7, Art. 71 16; contra: Lessiak, supra note 35, 487.

37. During the conference some delegates, however, articulated their desire to preserve remedies of avoidance for error under domestic law in such cases, see UNCITRAL-YB IX (1978) 66; 139 8.

38. The first decision of the Supreme Court is reported in: Schlechtriem/Magnus, supra note 5, Art. 84 no. 1; the second decision is discussed by Friedman, Restitution of Profits Gained by Party in Breach of Contract, (1988) 104 L.Q.R. 383.

39. For such cases see Huber, Zur Haftung des Verkäufers wegen positiver Vertragsverletzung, AcP 177 (1977), 281, at 288 et seq.: e.g. RGZ 66, 289; RGZ 125, 76; BGH BB 1953, 992.

40. 3 Nr. 3 Futtermittelgesetz v. 2.7.1975 (BGB1.1.1745); BGH NJW 1989, 707.

41. Schlechtriem, The Borderland of Tort and Contract - Opening a New Frontier, 21 Cornell Int. L.J. 467 (1988).

42. Id.

43. Art. 3 VertragsG.

44. Einigungsvertrag Anlage 1 Kap. III Sachgebiet D Abschnitt III Nr. 5.

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Pace Law School Institute of International Commercial Law - Last updated August 16, 1999
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