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Article 2 words and phrases

Categories of exclusions

EDITOR: Albert H. Kritzer

Articles 2 lists exclusions based on:


1. Goode explains the rationale for this exclusion as follows:

"Conventions regulating transactions are concerned almost exclusively with business transactions. Such Conventions are seen primarily as facilitators of international trade rather than as instruments of social policy.. . . [P]rovisions in Conventions dealing with commercial contracts are almost entirely dispositive in nature, the parties being left free to exclude the relevant Convention entirely or to vary or derogate from its effects [see CISG Art. 6]. This permissive attitude is generally acceptable to States in relation to business transactions . . . but is likely to meet strong objection if applied to consumer transactions. Hence the exclusion of these from the Convention." Royston M. Goode, "Reflections on the Harmonisation of Commercial Law", Uniform Law Review (1991- I) 65-66.

The language of Article 2(a) is said to have been drawn from UCC 9-109(1) which states "Goods are . . .'consumer goods' if they are used or bought for use primarily for personal, family or household purposes." E. Allan Farnsworth, "Developing International Trade Law", 9 California Western International Law Journal (1979) 469. The phrase "are used" was deleted "so that applicability of the Convention would not depend on action taken by the buyer subsequent to the purchase". John O. Honnold, "Uniform Law for International Sales", 3rd ed. (Kluwer 1999), para. 50 [hereinafter Honnold, Uniform Law].

2. "The Convention applies, however, to a contract which seems to be a consumer contract but is not." Fritz Enderlein & Dietrich Maskow, "International Sales Law . . ." (Oceana 1992) 34. "The structure of Article 2(a) and practical considerations applicable to the allocation of the burden of proof suggest that the buyer has the burden of proving that it bought the goods for personal, family or household use; the seller would have the burden of proving that it did not know (and had no means of knowing) the buyer's purpose." Honnold, Uniform Law, supra note 1.

3. "The character of the goods is not decisive; the Convention applies to the international purchase of furniture for a business office even though this type of furniture is customarily bought by consumers. . . ." Id.

4. "At auctions, buyers may not be identified. But even if the place of business of the successful bidder should be known to the seller, the applicable law could not depend on that circumstance since at the opening of the auction the seller could not know which buyer would make the purchase and hence could not know whether [the uniform law] would apply. It was concluded therefore, that [the uniform law] should only apply to sales by auction if the parties agreed to apply it to their contract." UNCITRAL Yearbook II, A/CN.9/SER.A/1971, p. 56, para. 58; John O. Honnold, "Documentary History of the Uniform Law for International Sales" (Kluwer 1989) 62. However, "sales on commodity exchanges are not sales by 'auction' but rather extremely quick communictions of offers and acceptance. Therefore, so long as a commodities trading contract is between companies with places of business in different Contracting States and the transaction is not otherwise excluded from coverage under the Convention, the Convention is applicable to international sales of goods consummated on such U.S. exchanges as the Chicago and New York Mercantile Excanges, the Commodity Exchange in New York and the Chicago Board of Trade." Mark Kantor, "The Convention on Contracts for the International Sale of Goods: An International Sales Law, 1 International Law Practicum (NYS Bar Assoc. Autumn 1988) 10; accord: Honnold, Uniform Sales, supra note 1 at para. 51, n.3.

5. "Such sales are excluded because they are governed by special and mostly mandatory rules in numerous countries." Enderlein & Maskow, supra note 2 at 35. The phrase "otherwise by authority of law" does not include a "sale without any intervention of the court in pursuance of a security document giving power to one party to sell in the event of default." Warren L.H. Khoo, in: Bianca/Bonell eds., "Commentary" (Milan: Giuffre 1987) 38. Nor does this phrase encompass the situation in which "the buyer fails to pay for the goods [and] the seller may be empowered to 'avoid' the contract and resell the goods. Similar rights may be given to the buyer when the seller delivers seriously defective goods (Arts. 49, 64, 75, 81, 88). Such resales by a party to the contract, even though authorized by the Convention, are not excluded from the Convention as sales '(c) on execution or otherwise by authority of law.' The same principles apply when a secured party on default by the debtor resells the collateral at a private sale rather than by auction. . . ." Honnold, Uniform Sales, supra not 1 at para. 52.

6. Honnold refers to this exclusion as "explicit and clear-cut". Id. at para. 56. Fakes, however, calls attention to a question applicable to electronic databases. He states "Databases come in many forms. Some exist as copyrighted print material that is sold in the form of books, magazines, journals, or reports. Others reside on computer memory and are accessed from remote locations through dial-up access and the use of search software. . . . Printed material sold overseas is a likely candidate for coverage by the Convention absent contract drafting to nullify its application. In contrast, on-line electronic databases are a less likely candidate for Convention application. Electricity is specifically excluded from the types of goods covered by the Convention under Article 2(f). Therefore electronic transmissions would not seem to qualify for Convention coverage . . ." Arthur Fakes, "The Application of the United Nations Convention on Contracts for the International Sale of Goods to Computer Software and Database Transactions", 3 Software Law Journal (1990) 586.

7. Ziegel states "The exclusion of all four types of goods is based on two grounds: first, because in some legal systems their sale is assimilated to sales of immovables and, secondly, because in most legal systems at least some ships, vessels and aircraft (and presumably also hovercraft) are subject to special registraton requirements." Jacob S. Ziegel, "Analysis from a Provincial Common Law Perspective", in: Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods (Toronto 1981) 38. Réczei calls attention to a possible ambiguity. He states that the terms "ships" and "vessels" are "fairly vague in particular when a wording other than English has been accepted for ratification. In the English language . . . the terms 'ship' and 'vessel' are used to denote watercraft of larger dimensions. The question is, how other languages are capable of expressing the shades and hues distinguishing the one term from the other." Lásló Réczei, "The Rules of the Convention Relating to its Field of Application and to its Interpretation", in: Problems of Unification of International Sales Law (Oceana 1980) 71. Honnold states "Does the exclusion of the sale of 'ships, vessels' (Fr: navires, bateaux; Sp.: buques, embarcaciones) extend to small pleasure craft such as sailboats and rowboats? UNCITRAL's inability to find a workable basis for distinguishing between large and small craft and the difficulty that courts would encounter in developing such a distinction suggest that Article 2(d) must be read without qualification: Sales of small pleasure craft do not fall within the Convention. . . ." Honnold, Uniform Sales, supra note 1 at para. 54. Schlechtriem, however, adds a possible qualification. He states that "a purposive construction should be given to the exclusion of ships from the sphere of application. Accordingly, those boats whose transfer (according to whichever domestic law in question) is not governed by the special rules for ships should not be excluded . . . Against this argument must be set the drafting history: the obligation to register a ship, which was the basis for excluding ships from ULIS, was deleted for the very reason that it gave rise to national differences . . " Peter Schlechtriem, "Vienna Sales Convention 1980 - developed countries' perspectives", in: L.R. Penna ed., Current Developments in International Transfers of Goods and Services, 6th Singapore Conference on International Business Law, September 1992 (Singapore: Butterworths Asia 1994) 18 n.40. Because of the opportunity for confusion, Enderlein & Maskow recommend that, in cases of doubt, parties expressly agree when to apply the Conventon. Enderlein & Mascow, supra note 2 at 35.

8. Kantor, supra note 4 at 11; see also Peter Winship, "Aircraft and the International Sales Convention", 50 Journal Air Law & Commerce (1985) 1059.

9. John P. McMahon, "Review", 21 Journal of Maritime Law and Commerce (1990) 306. See also Pratt & Whitney v. Malev, Supreme Court of Hungary, 25 September 1992. Honnold is in accord with McMahon and this ruling on the applicability of the CISG to sales of aircraft engines. However, he points out that if Article 90 of the CISG comes into play, another applicable treaty may control. Honnold, Uniform Sales, supra note 1 at para. 54.

Pace Law School Institute of International Commercial Law - Last updated August 2, 1999

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