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(1) Contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production.
(2) This Convention does not apply to contracts in which the preponderant part of the obligations of the party who furnishes the goods consists in the supply of labour or other services.
1. Art. 3(1) probably corresponds with the prevailing Canadian law, although one cannot be sure because of the conflict between the two leading British decisions, Lee v. Griffin [(1861) 1 B. & S. 272.] and Robinson v. Graves [ 1 K.B. 579 (C.A.)]. In any event, art. 3(1) appears to embody the sounder and simpler rule [cf. Benjamin's Sale of Goods (Guest ed.), para. 35]. The same rule is supported in the OLRC Sales Report with respect to domestic contracts [p. 46].
2. Art. 3(2) deals with contracts under which the seller undertakes to supply labour or other services in addition to supplying goods, and excludes them from the scope of the convention. The same exclusion applies in Anglo-Canadian law although the courts have applied by analogy sales rules with respect to the supplier's warranty liabilities under such a contract. [see Young & Marten Ltd. v. McManus Childs Ltd. (1969) 1 A.C. 454].
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