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Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods

Professor Jacob S. Ziegel, University of Toronto
July 1981

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Article 4

This Convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. In particular, except as otherwise expressly provided in this Convention, it is not concerned with:

(a) the validity of the contract or of any of its provisions or of any usage;

(b) the effect which the contract may have on the property in the goods sold.

COMMENT

1. As have been noted earlier (supra, Part I, para.33), this important article substantially reduces the scope of CISG and in effect brings into play in every international contract as defined in art. 1 two separate bodies of law, viz. (a) this convention, and (b) whichever municipal law or laws govern (i) the validity of the contract, and (ii) the property effects of the contract assuming it is a valid contract.

2. Unidroit has been working on a uniform law on rules governing the validity of international contracts, and these have been circulated by UNCITRAL. [Doc. A/CN.9/143]. However, in view of the difficulty of reaching consensus on a suitable set of rules the UNCITRAL working group preparing the draft convention did not attempt to incorporate such rules into CISG.

3. "Validity" is not defined in art. 4 or elsewhere in CISG. Presumably it includes any defence that may vitiate the contract under the proper law or laws of the contract because, for example, of lack of capacity, misrepresentation, duress, mistake, unconscionability, and contracts contrary to public policy. The exclusion will be of particular importance where the contract contains a disclaimer clause restricting or excluding liability for breach of warranty or other obligation imposed on the seller under the Convention and the buyer invokes the doctrine of "fundamental breach" or impeaches the clause on grounds of unconscionability. [On this see further infra Art. 6]. The exclusion of questions of validity from the reach of CISG is therefore a debilitating if unavoidable weakness.

4. The exclusion from CISG of the property effects of the contract is much less serious. Under the convention, unlike provincial sales law [See e.g., OSGA 12(3), 21, 34, 38, 47], the parties' rights and obligations do not turn on the locus of title. In this respect CISG adopts the same approach as the American Uniform Commercial Code (see UCC 2-401) and is greatly superior to existing provincial law. Property questions will of course remain very important but only for the purpose of determining the rights of buyer and seller vis-a-vis third parties, and vice versa.

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Pace Law School Institute of International Commercial Law - Last updated April 23, 1999
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