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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 7

(1) In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade.

(2) Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.

COMMENT

1. There was much discussion in UNCITRAL about the desirability of including in the convention a general requirement of good faith and fair dealing, which would embrace the formation of the contract as well as application and interpretation of the provisions of the convention. Article 7(1) was eventually adopted as a compromise. Although paragraph (1) does not refer specifically to the observance of good faith in the formation of the contract, its language is sufficiently broad to admit of its inclusion. The [Secretariat] Commentary (p. 45) provides numerous examples of situations in which good faith may be a relevant factor and several of them include the formational phase of a contract.

2. Good faith, in the sense of fairness in the exercise of contractual rights and the performance of duties, is not clearly recognized under existing Anglo-Canadian law. Indeed, the contrary is often asserted but there are signs of a movement in the opposite direction. See e.g. Cehave N.V. v. Bremer HG m.b.H. (1976) 1 Q.B. 44 (C.A.). Good faith in the broader sense of fair dealing is a requirement between merchants under Article 2 of the Uniform Commercial Code and is also imposed in many civilian systems. Its adoption is also recommended in the OLRC Sales Report, ch. 7(B). Good faith in bargaining is a more radical concept though here too there are a growing number of common law precedents in Canada that support its adoption.

3. Article 7(2) did not appear in the draft convention and was added at Vienna. It is not however a radical innovation and has a counterpart in art. 17 of ULIS. See Graveson, op. cit., pp. 8-9. An example of a question not directly addressed in the convention is the effect of the buyer's negligence in a claim against the seller for delivering non-conforming goods. Presumably in most cases a tribunal will prefer to deduce the answer from the general provisions of the convention than to rely on a domestic law to which it is referred by the applicable choice of law rule.

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