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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 2

This Convention does not apply to sales:

(a) of goods bought for personal, family or household use, unless the seller, at any time before or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for any such use;

(b) by auction;

(c) on execution or otherwise by authority of law;

(d) of stocks, shares, investment securities, negotiable instruments or money;

(e) of ships, vessels, hovercraft or aircraft;

(f) of electricity.


1. The exclusions in Article 2 turn either on the nature of the goods, the character of the parties, or the mode of sale. The exclusions have no exact parallel in the provincial Sale of Goods Acts, although the Acts do distinguish for warranty purposes between sales by merchant and sales by non-merchant sellers.

2. Exclusion (a) is justified in the [Secretariat] Commentary on the ground that consumer sales are frequently regulated by special legislation and that this makes it desirable to continue to apply the appropriate domestic law. All the Provinces have adopted a substantial volume of consumer protection legislation whose provisions are generally non-excludeable. The CISG exclusion is therefore consistent with provincial public policy.

3. Exclusions (b) through (f) rest on different grounds and several of them are perhaps more difficult to justify:

(b) Sales by auction. These are excluded from CISG because they "are often subject to special rules under the applicable national law and it was considered desirable that they remain subject to those rules even though the successful bidder was from a different State" ([Secretariat] Commentary, p. 40). There is no similar exclusion in the provincial Acts.

(c) Sales on execution or otherwise by authority of law. This exclusion again rests on the existence of separate national rules governing execution sales. Another reason is that such sales are unimportant in international trade.

(d) Sales of stocks, shares, investment securities, negotiable instruments or money. "Money" and "things in action" are also excluded from the definition of goods (and therefore from the scope of the Act) in the provincial Acts. It is well settled that "things in action" in the Canadian common law cover all forms of incorporeal property "whether or not the thing in action is evidenced by or incorporated in documents or instruments or other forms of writing, negotiable or otherwise": OLRC Sales Report, p. 54. The sale of stocks, shares, etc. are also governed by separate federal and provincial legislation, thus furnishing another reason for supporting their exclusion from CISG.

(e) Sales of ships, vessels, hovercraft or aircraft. The draft convention did not include hovercraft and this amendment was adopted at Vienna. 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 registration requirements.

The Canadian delegation did not think these reasons were sufficiently persuasive, and a resolution was introduced to delete the exclusion. The resolution was not successful.

(f) Sales of electricity. The rationales for this exclusion are that in many legal systems electricity is not considered to be goods and because international sales of electricity present unique problems. See [Secretariat] Commentary, p. 40.

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Pace Law School Institute of International Commercial Law - Last updated April 1, 1999

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