Convention International Sale of Goods

Extract 1 : Common Law v Civil Law
Extract 2 : East v West
Extract 3 : North v South

East v West

The drafters of the CISG encountered further scope for dispute, from the differing legal systems socialist (Eastern) and capitalist (Western) States. Socialist states (as befitting the requirements of planned economies) generally advocated security of contract and predictability. However capitalists nations, preferred flexible standards, which allowed 'the parties to adjust the contract without judicial interference' .1

Requirement of Writing

The drafters of the CISG successfully compromised between the socialist and capitalist viewpoints, in the case of Articles 11 and 96. Most Western legal systems have gradually become detached from the principle of requiring sales of moveable property to be evidenced by writing. Primarily this is because documentation interferes with 'the necessary speed of commercial transactions' 2 . The Convention respects this understanding of international sales, and so Article 11 provides that a contract of sale need not be in writing, and may be proved by other means 3 . However, as stated, Socialist systems often prefer certainty to flexibility, and so unsurprisingly they assume that documentation is required for a contract to become effective. Consequently, as a compromise, Article 96 empowers States that require contracts of sale to be in writing (Socialist) to declare Article 11 inapplicable4 in a contract for sale governed by the CISG. Thus, contracting states may apply choice of law rules to determine whether writing is necessary. Whilst this compromise may not achieve perfect uniformity, it manages to avoid ambiguity or resentment.

When the Terms of the Acceptance deviate from the Terms of the Offer

Where an offeree submits an acceptance to an offeror that contains slightly different terms to the original offer, there are alternative opinions as to the enforceability of the contract. When this issue was addressed in the deliberations leading up to the Convention, delegates of socialist origins argued, for the sake of certainty and predictability, that the acceptance and offer must contain exactly the same terms 5. Thus any amendments in the acceptance operates to disregard the initial offer, and instead becomes a counter-offer, to which the original offeror becomes the new offeree. However, delegates from the common law countries proposed that the nature of modern international sales necessarily requires that such deviating acceptances do not operate to disregard the initial offer. These acceptances should be valid and therefore capable of concluding a contract, providing that the additional terms of the acceptance do not 'materially' alter the forms of the offer .6

Article 19(1) of the CISG states the general rule that if the submitted acceptance makes an 'addition or modification'7to the offer, then it automatically deems the original offer to be ineffective, as it constitutes an independent counter-offer. However, by way of compromise, Article 19(2) proclaims the exception that a contract may still be concluded where the terms of the acceptance differ from the offer, as long as the alterations do not materially alter the terms of the offer (common law), and the offeror does not object. The fact that Article 19(3) then purported to define 'materiality' 8 for the sake of clarity, has led to comments that the Convention's drafters struck upon a fair compromise . 9

Open-Price Terms

Socialist governments typically devise 'macroeconomic governmental' plans, as part of a planned economy, to which the contracts of their national traders' must conform. Naturally therefore, socialist delegates wished to exclude open-price terms from international contracts, during the negotiations of the CISG. This view was supported by some civil law systems, and certainly by all developing countries 10 , as the allowance of open-price terms favours nations with large corporations who can afford to leave the price and quantity of goods open to be adjusted, if changes in the market deem it beneficial 11 . Furthermore, if an open-price term were to lead to litigation between parties, the price would be fixed by the particular national court who saw the case, and with reference to the value of those goods in that Country at that time; they argued that this would diminish from the uniformity of the CISG, as cases are concluded differently depending on the location of the forum.

In seeking to balance these interests, it is argued that the drafters of the Convention constructed a hollow compromise, devoid of clarity. While Article 14(1) requires the offeror to either expressly or implicitly fix the price before it is 'sufficiently definite', Article 55 provides that a contract may be 'validly concluded' even if it 'does not expressly or implicitly fix or make provision for determining the price'. This seems to contradict Article 14(1), and therefore leaves confusion as to whether open-price terms are permitted or not. Whilst some interpret Article 55 to mean that contracts with open-price terms may be validly concluded 12 , others have declared it to be without effect, because it only applies to contracts that have already been 'validly concluded' 13 . Garro has deemed the former to be the correct interpretation, saying that the requirement of Article 14(1), that the price be 'implicitly' fixed to be valid, is supported by Article 55, which merely indicates that open prices are sufficiently implicit 14 . Nevertheless, one cannot reasonably expect traders (especially smaller ones, who may enter contracts without legal advice) to predict how a particular national court would interpret open-price terms. Thus, this compromise is somewhat detrimental to uniformity and legal predictability.

Good Faith

The legal systems of many Countries impose a good faith obligation on parties when performing their obligations and exercising their rights. As the CISG necessarily requires certain matters to be dealt with by national courts, there was therefore much support for the requirement to be included in the Convention. Furthermore, it was thought that the inclusion of a 'good faith' clause would help implement the UN resolutions on the New Economic Order 15 . However, despite its global use, the concept of "good faith" has been awarded vastly divergent interpretations 16, and so unsurprisingly the CISG's drafters had to balance conflicting views in this area.

There are three general schools of thought on the application of the requirement to act in 'good faith; whilst some believe that the requirement should only pertain to the performance and enforcement of contracts 17 , others assume that the concept also stretches to cover the pre-contractual bargaining18 , and some even believe that the concept is so vague, that it should not occupy any position in a uniform code of law such as the CISG 19 . This last view has been rebutted by claims that the concept of 'good faith' is necessarily vague; as such a requirement would be undermined if it was inflexible. Furthermore, it was argued that in most cases 'one knew what conduct was inconsistent with good faith' .20

Resulting from the disparity of opinion, Article 7(1) requires parties to interpret the Convention whilst observing a general 'good faith in international trade'. Thus, the CISG reduces the application of the requirement to the interpretation of the Convention, glossing over the question of whether it applies to just the performance and enforcement of contracts, or also to the formation. In consequence, this compromise has been described as 'uneasy'21 and 'strange'22, because it merely buries the issue, instead of seeking a sensible solution; Almost everybody thought it was a strange compromise, in fact burying the principle of good faith and thus covering up the lack of compromise"23 . Furthermore, Article 7(1) has led to different interpretations of the status of 'good faith' under the CISG, as whilst some say the requirement is redundant in practice 24 , others believe that it actually imposes 'obligations of a positive character' 25 ; this inconsistency obviously hinders the goal of uniformity.

  1. Eorsi 'A Propos the 1980 Vienna Convention on Contracts for the International Sale of Goods' 31 Am J. Comp, 333, 346, (1983)[^ Return]
  2. Same as footnote '39'[^ Return]
  3. i.e Such as witnesses[^ Return]
  4. The representative of the Soviet Union said that this provision was necessary to protect established practices within socialist states[^ Return]
  5. Eorsi 'A Propos the 1980 Vienna Convention on Contracts for the International Sale of Goods' 31 Am J. Comp, 333, 346, (1983)[^ Return]
  6. UCC S 2-207(2)(b) shows the common law view that variations in the acceptance that do not materially alter the terms of the offer do not effect its worth as an acceptance[^ Return]
  7. Same as footnote '39'[^ Return]
  8. Article 19(3) described that the alteration of any term relating to payment, quality, and the place and time of delivery constituted a material variation[^ Return]
  9. 'Reconciliation of Legal Tradition in the U.N. Convention on Contracts for the International Sale of Goods' Alejandro M. Garro (1989)[^ Return]
  10. Date-Bah 'The Convention on the International Sale of Goods from the Perspective of the Developing Countries' in La Vendita Internazionale (1980)[^ Return]
  11. One Country who favours the inclusion of open-price terms were the U.S.A., as shown by UCC S 2-305[^ Return]
  12. i.e Honnold, in 'Uniform Law for the International Sales under the 1980 Vienna Convention' (1982)[^ Return]
  13. Farnsworth 'Formation of Contract in International Sales' [^ Return]
  14. 'Reconciliation of Legal Tradition in the U.N. Convention on Contracts for the International Sale of Goods' Alejandro M. Garro (1989)[^ Return]
  15. Eorsi 'Problems of Unifying Law on the Formation of Contracts for the International Sale Of Goods' 27 Am. J. Comp.L 311, 315 (1979).[^ Return]
  16. Rosett, Critical Reflections on the United Nations Convention on Contracts for the International Sale of Goods, 45 Ohio St. L.J. 265, 272, 295-96 (1984).[^ Return]
  17. For example, the Uniform Commercial Code[^ Return]
  18. For example, Article 1137 and 1366 of the Italian Civil Code[^ Return]
  19. For example, the French delegate, Professor Dunc asserted that the presence of the 'good faith' requirement in the Convention would lead to arbitrary conclusions by national courts.[^ Return]
  20. Honnold 'Law of Sales, and Sales Financing' 25-26 4th ed. (1976)[^ Return]
  21. Bonell 'Methodology in Applying Uniform Law for International Sales under the UN Convention' (1986)[^ Return]
  22. Eörsi, A Propos the 1980 Vienna Convention on Contracts for the International Sale of Goods, 31 Am. J. Comp. L. (1983). [^ Return]
  23. Eorsi 'A propos the 1980 Vienna Convention on Contracts for the International Sale of Goods' 31 Am. J. Comp. L (1983)[^ Return]
  24. Farnsworth 'Problems of the Unification of Sales Law from the Standpoint of Common Law Contracts' 19 (1980)[^ Return]
  25. Bonell 'Methodology in Applying Uniform Law for International Sales under the UN Convention' (1986)[^ Retur

Extract 1 : Common Law v Civil Law
Extract 2 : East v West
Extract 3 : North v South

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