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GUIDE TO CISG ARTICLE 10

Secretariat Commentary (closest counterpart to an Official Commentary)


Guide to the use of this commentary

The Secretariat Commentary is on the 1978 Draft of the CISG, not the Official Text, which re-numbered most of the articles of the 1978 Draft. The Secretariat Commentary on article 9 of the 1978 Draft is quoted below with the article references contained in this commentary conformed to the numerical sequence of the Official Text, e.g., article 9 [draft counterpart of CISG article 10].

To the extent it is relevant to the Official Text, the Secretariat Commentary on the 1978 Draft is perhaps the most authoritative source one can cite. It is the closest counterpart to an Official Commentary on the CISG. A match-up of this article of the 1978 Draft with the version adopted for the Official Text is necessary to document the relevancy of the Secretariat Commentary on this article. See the match-up for this article for a validation of citations to this Secretariat Commentary. This match-up indicates that article 9 of the 1978 Draft is identical to CISG article 10.


Text of Secretariat Commentary on article 9 of the 1978 Draft
[draft counterpart of CISG article 10]   [Place of business]

PRIOR UNIFORM LAW

ULIS, article 1(2). ULF, article 1(2). Prescription Convention, articles 2(c) and (d).

COMMENTARY

1. This article deals with the determination of the relevant "place of business" of a party.

Place of business, subparagraph (a)

2. Subparagraph (a) deals with the situation in which a party to a contract has more than one place of business. The question arises in this Convention in respect of a number of different matters.

3. First, the determination of the relevant place of business may be important in determining whether this Convention applies to the contract. For this Convention to apply, the contract must be between parties whose places of business are in different States [see footnote 1]. Moreover, in most cases those States must be Contracting States [see footnote 2]. For the purpose of determining whether this Convention applies no problem arises where all the places of business of one party (X) are situated in Contracting States other than the Contracting State in which the other party (Y) has his place of business. Whichever one is designated as the relevant place of business of X, the places of business of X and Y will be in different Contracting States. The problem arises only when one of X's places of business is situated either in the same State as the place of business of Y or in a non-Contracting State. In such a case it becomes crucial to determine which of X's different places of business is the relevant place of business within the meaning of article 1 [draft counterpart of CISG article 1].

4. The determination of the relevant place of business is also necessary for the purposes of articles 11, 18(2), 22, 29(c), 40(1)(b), 53(1)(a) and (X) [draft counterparts of CISG articles 12, 20(2), 24, 31(c), 42(1)(b), 57(1)(a) and 96]. In the case of articles 18(2), 22, 29(c) and 53(1)(a) [draft counterparts of CISG articles 20(2), 24, 31(c) and 57(1)(a)] it may be necessary to choose two places of business within a given State [as well] as to choose between places of business in two different States.

5. In addition, article 81(2) [draft counterpart of CISG article 69(2)] provides the rule in respect of passage of risk of loss when "the buyer is required to take over the goods at a place other than any place of business of the seller . . ." In this case it is not necessary to determine the relevant place of business under article 9 [draft counterpart of CISG article 10].

6. Subparagraph (a) lays down the criterion for determining the relevant place of business: it is the place of business "which has the closest relationship to the contract and its performance." The phrase "the contract and its performance" refers to the transaction as a whole, including factors relating to the offer and the acceptance as well as the performance of the contract. The location of the head office or principal place of business is irrelevant for the purposes of article 9 [draft counterpart of CISG article 10] unless that office or place of business becomes so involved in the transaction concerned as to be the place of business "which has the closest relationship to the contract and its performance."

7. In determining the place of business which has the "closest relationship," subparagraph (a) states that regard is to be given to "the circumstances known to or contemplated by the parties at any time before or at the conclusion of the contract." Therefore, when article 9(a) [draft counterpart of CISG article 10(a)] refers to the performance of the contract, it is referring to the performance that the parties contemplated when they were entering into the contract. If it was contemplated that the seller would perform the contract at his place of business in State A, a determination that his "place of business" under article 9(a) [draft counterpart of CISG article 10(a)] was in State A would not be altered by his subsequent decision to perform the contract at this place of business in State B.

8. Factors that may not be known to one of the parties at the time of entering into the contract would include supervision over the making of the contract by a head office located in another State, or the foreign origin or final destination of the goods. When these factors are not known to or contemplated by both parties at the time of entering into the contract, they are not to be taken into consideration.

Habitual residence, subparagraph (b)

9. Subparagraph (b) deals with the case where one of the parties does not have a place of business. Most international contracts are entered into by businessmen who have recognized places of business. Occasionally, however, a person who does not have an established "place of business" may enter into a contract of sale of goods that is intended for commercial purposes, and not simply for "personal, family or household use" within the meaning of article 2(a) [draft counterpart of CISG article 2(a)] of this Convention. The present provision provides that in this situation, reference is to be made to his habitual residence (OFFICIAL RECORDS, pp. 19-20).


FOOTNOTES

1. Article 1(1) [draft counterpart of CISG article 1(1)]. See, however, article 5 [draft counterpart of CISG article 6].

2. Article 1(1)(a) [draft counterpart of CISG article 1(1)(a)].


Pace Law School Institute of International Commercial Law - Last updated August 29, 2006
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