Convention International Sale of Goods

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

North v South

Since the adoption of the Convention, some parties within the developed world have proclaimed that the drafters were 'held hostage' by the 'more numerous delegates from Third World countries in order to force compromise solutions' 1. The counter argument to this, is that the above is above view is merely typical of those who are accustomed to dominating international relations and agreements 2 . Professor Eorsi has attributed the debate between developing and developed nations during the negotiations over the CISG, to the fact that the former mainly export raw materials and agricultural products, and import technology and finished goods, while the latter conduct the opposite. He also said that the debate has emanated from traditional mistrust held by developing countries for their developed counterparts .3

The Buyer's timely notice of non-conformity

Another controversial aspect of the CISG, was the buyer's requirement in Article 39(1), to notify the seller of any defect in the goods, within a 'reasonable time after he has discovered it4 or ought to have discovered it' . The word 'reasonable' is largely subjective, and it has been argued that 'for the purpose of a legal context, a larger degree of objectivity is required'5 . The intended uniform application of the Convention means that different national courts should be discouraged from judging CISG cases creatively, and the only way to prevent this is to reinforce the Convention with certainty and predictability. If it is shown that the phraseology of Article 39(1) has led to inconsistent decisions in this particular area of the law, then one might conclude that it has contributed to weakening the Convention.

There are more than 30 provisions in the CISG that contain the word 'reasonable'6 , and thus one may conclude that 'reasonableness' is one of the general principles on which the Convention is based 7 . Whilst the term is has some merit seemingly uncertain, it also injects flexibility into the Convention. The CISG contains many provisions that are merely the result of compromise, and so undoubtedly their rigid application would result in unjust decisions. Furthermore, 'reasonableness' is regarded as one of 'the cornerstones of all legal systems, and so it sits appropriately within the CISG, especially as it is probably one of the few legal techniques that could be adopted without too much opposition 8. However, in the particular context of Article 39(1), the drafters did have to contend with conflicting points of view (from the developing and developed countries), and this has led to inconsistent application of the Article, and uncertainty as to it actual scope.

The developing countries argued against the requirement to give timely notice of non-conforming goods, on grounds that it is likely to have a particularly severe impact on developing countries. Professor Date-Bah, representing Ghana in at the Convention's negotiations, (and also a campaigner for the general rights of the developing countries) gave several reasons why a requirement of timely notice would discriminate against developing countries. Firstly, such countries are more likely to import complex machinery than developed countries (meaning that defects are harder to spot); also they have less technical capability to examine goods; and finally, delivered goods in developing countries often remain at the port of arrival for long periods of time before collection 9 . Furthermore, it was argued that the consequence of failing to give notice within reasonable time, a complete loss of remedy, was too harsh on the buyer. Conversely, delegates of the developed countries argued that the provision was in keeping with the rapid process of international trade, and so was such a drastic penalty, as this is the only way in which compliance could be guaranteed. Not only do the provisions provide protection for the seller, but the buyer also benefits from a 'swift cure' .10

The drafters of the CISG sought to accommodate both these views through a compromise 11 . This resulted in Article 39(1), to the pleasure no doubt to the adulation of the developed States, and Articles 40 and 44, which provided exceptions to the general rule in Article 39(1). These exceptions symbolise an attempt to appease the developing countries, but they have been criticised for their lack of clarity, and so again, the drafters seem to have buried a controversial issue, in order to appease the to the maximum number of State interests.

Article 40 provides that the seller cannot rely on the buyer's duty to give timely notice of non-conformity where the seller was aware, or ought to have been aware of the non-conformity himself. However, this seems to be merely a compromise of rhetoric, as in practice this awareness on behalf of the seller will be virtually impossible to prove12 . Furthermore, there are assorted interpretations of what is meant by 'could not have been aware'; where some legal scholars assume this to mean that the defect is very obvious, and so the seller was grossly negligent in not noticing it 13 , others believe the phrase to encompass simple negligence and the failure to adhere to the basic standard of care which may be expected 14 . Under the exception in Article 44, a buyer who has failed to notify the seller of a non-conformity in the goods within a reasonable time, may not necessarily have forfeited his right to claim any remedies, if he can provide a 'reasonable excuse' for this failure; specifically, this exception allows a buyer to deduct the value of the defect from the price. However, this provision has also been criticised for not clarifying what constitutes a 'reasonable excuse' 15 . Once again, the drafters have drafted ambiguously, rendering uniform results unlikely. Nevertheless, more criticism has been directed at the wording of Article 39(1), for its failure to adequately define a 'reasonable time' .16

As the Convention does not specify when timely notice has been given17 , it is left to practitioners, scholars and jurists to provide an answer. One scholar, Professor Honnold, expressed that buyers and courts must account for a 'wide range of factors'18 when interpreting what length of time is 'reasonable', in order to inject objectivity and subjectivity into the requirements, which is helpful for achieving uniformity in practice 19 . However, the question as to what factors may be included is also vague, as it is unclear whether domestic factors may be relevant; domestic trade usages may be the genuine reason for the failure, but it is inconsistent with the notion of uniformity to include domestic aspects in an assessment of an obligation under the Convention. This problem has led other scholars to suggest that there should be less flexibility, and therefore fixed conditions as to what constitutes a 'reasonable time'. For example, Schwenzer suggested the 'noble month', which states a recognisable benchmark, while permitting some flexibility. However it is dangerous to create a 'typical situation' which represents the norm20 . It is unrealistic to construct a standard situation of this sort, as there will always be specific circumstances affecting the buyer's ability to notify the seller of a defect.

This divergent opinion is also reflected in the decisions of national courts, showing that the ambiguity of Article 39(1) plays a destructive role in the uniformity of the CISG in practice, as well as in theory. In the German Courts, acceptable time-frames for notification have varied greatly. For example, whilst the German Supreme Court has judged in accordance with Schwenzer's 'noble month' 21 , the District Court of Landhut expressed only a few weeks later, that notification must occur within a few days of discovering a defect, to be considered 'reasonable' 22. Regardless of disparities that occur in different countries23 , the lack of agreement within one country dispels the likelihood of uniformity on the application of Article 39(1).

One final criticism relating to the requirement in Article 39(1), is that it is not adequately separated from the obligation in Article 38(1). This latter Article prescribes a duty for the buyer to inspect the goods delivered to him within a short period of time. Clearly this provision is closely linked with Article 39(1), as Article 38(1) determines precisely when the reasonable period for notification begins, and also, without discovering the defect, the period of notification cannot commence at all. However, it is argued that as both provisions are vague, the time period for notification has been interpreted to begin on delivery of the goods, rather than on discovery of the defect. This misinterpretation would place an undue burden on the buyer, and may mean that courts assess the reasonableness of the obligation under Article 39(1) using factors that should only be used for assessing the obligations under Article 38(1) 24 . Arguably, this potential problem could have been avoided with more careful drafting.

Gap-Filling under the CISG

Article 7(2) of the CISG addresses a situation where the provisions of the Convention do not adequately settle a matter of dispute, expressly providing two methods of dispute resolution that may be invoked by national courts;

'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.'25 (emphasis added)

By admitting that there are such 'questions', it is submitted that the drafters are aware that there are gaps in the text 26. One could not reasonably criticise the Convention on grounds of the existence of gaps, as these are inevitable in an instrument governing as many transactions as the CISG. However, it has been argued that the methods provided by the Convention for filling these gaps are overly ambiguous, casting serious doubt on the ability of the Convention to have universal application. If this is the case, then the CISG cannot be deemed to be a success, as uniformity was a primary goal of the project. Good analysis

One major question that Article 7(2) fails to answer effectively is whether courts may use the process of analogy as an additional means of gap-filling. The use of analogy is based on the acknowledgement that the ratio legis of a provision is suitable for a situation not strictly covered by the wording of the provision, by virtue of that situation being analogous with circumstances that are explicitly governed by the provision. The use of this legal technique is neither condoned nor forbidden in the CISG, and there are feasible arguments why either might be the case.

One argument is that analogy is permissible by necessity. This technique of gap-filling is consistent with civil law principles27 , and whilst this may seem a reason not to invoke its use, because the CISG seeks to avoid recourse to domestic legal techniques in order to achieve uniformity, it is noted that like the CISG, civil law codes are designed to 'displace the entire body of pre-existing law', and so logically they should share the same techniques for gap-filling 28. Additionally, it is argued that if recourse to general principles is permitted as a means of gap-filling 29, then so must analogy, as the latter is closer to the text of the convention30 . The stated objective of the CISG is to achieve uniformity in the context of international sales, and the only true way of attaining this, is to limit the opportunity of national judges to fill any gaps in the Convention by referring to knowledge outside the text of the CISG . 31

Conversely, it has been argued that if the drafters of the CISG had intended national courts to invoke the use of analogy as a gap-filler, this would have been expressed in Article 7(2). If perhaps the 'general principles' on which the Convention is based were to be regarded as mere generalisations, then perhaps it could be accepted that single provisions should be used to interpret situations not 'settled' by the Convention. However, the Convention is not based on any of its provisions, as 'one can only speak of a general principle on which the Convention is based if the principle is a pillar of the Convention' 32. Individual provisions apply to specific situations, rather than general principles. Moreover, because the drafters utilised legal techniques from diverse legal systems (i.e common law, civil law, socialist etc) as a way of negotiating a final text, the principles upon which the Convention is based cannot be said to be represented in individual provisions.

Nevertheless, clearly the vagueness of Article 7(2) has led to different interpretations on the status of analogy in gap-filling. This will inevitably lead to inconsistent results33 in different national courts of law, and thus may hamper the CISG's drive for uniformity.

Do the Successes of the Convention outweigh its Flaws?

The fact that the negotiations leading up to the Convention were so protracted reflects the difficulties that the drafters faced. Highly diverse legal, economic and cultural traditions were represented, and these differences militated greatly against uniformity. This resulted in many compromises, the success of which differed greatly. This has led many commentators to declare that the CISG is devoid of any meaningful content .34

However, despite these views, there are those who recognise the CISG as a 'triumph of cooperative international work' 35, and believe that its 'accomplishments outweigh its flaws'36 . The mere fact that there are 61 parties to the Convention37 , testifies to its global appeal, and although the phrasing of many of the Convention's provisions seems to hamper its uniformity, some have argued that this does not actually detract from its success. Arguably the existence of the CISG is rather more desirable then its non existence, which rather then leaving interpretive measures to national courts, would leave little to interpret at all, bar national, and often conflicting national law in the lacunae created by its devoidity. In 1961, Professor Sundberg commented "A margin of imperfection is not necessarily an actual defect as long as it does not invite plaintiffs to go "shopping" for the most generous jurisdiction." . This suggests that the problems of uniformity in the CISG are more damaging in theory, rather than in practice. The very fact that the Convention does produce unpredictable results in certain areas, acts to discourage traders from 'shopping' for a 'generous jurisdiction'. Perhaps over time different national judicial attitudes may gather sufficient consistency to provide substance for forum shopping, but until then, if traders genuinely fear the CISG, they would be better advised to capitalise on the principle of party autonomy in Article 6.

Furthermore, the simplicity and flexibility of the Convention must not be overlooked. Although these characteristics have led to some justifiable criticism, it is commendable to formulate a law of sales with nearly universal application, using language which is comprehensible to the businessmen and traders that it actually seeks to regulate; "free of legal short-hand, free of complicated legal theory and easy for businessmen to understand" .39

Moreover, many of the problems that the drafters faced in constructing compromises were inevitable. The negotiation process suffered problems of communication, as where a legal system has only ever operated under certain legal principles; it may struggle to grasp the reasoning behind the principles of a different system40. Also, State representatives want any global instrument to embody as many of their national laws and principles as possible. This is for a variety of reasons; it would enable a smoother transition from their country's domestic law to a uniform body of rules; their nationals may gain from having operated under similar rules prior to the global code ;41 and finally, because of the assumption that 'what is familiar is probably better than what is strange'42 . Finally, some nations are always less prepared to compromise than others, due to their position in the global market. In the case of the CISG, wealthier countries have less incentive to compromise because their interests lie in preserving the status quo which is currently serving them well. Even poorer countries may resist compromise, because of traditional wariness of the powerful industrialised States. The notion of a uniform law can scare poorer states, anxious that they may be committing themselves to something which may potentially lead to their exploitation .43

However, regardless of these arguments, it seems that the drafters of the CISG were guilty of making negligent assumptions that were designed to do nothing more then appease, which and have contributed to its criticisms. In formulating compromises, the drafters often chose a preferred legal technique, and then incorporated the opposing views as exceptions to the general rule. This may be the most effective method of pleasing the parties during negotiations, but it is questionable whether this results in an effective legal principle. Law does not develop in a vacuum; ideology and attitude form the basis for the development of domestic legal systems, and it is unlikely that a uniform statement of law can unify ideologies and attitudes that have conflicted for many years, in many capacities. The drafters sought to borrow legal principles from domestic systems, ignoring the fact that they are without meaning when separated from these ideologies and attitudes. This problem is only enhanced by the fact that the Convention is left stranded without a 'coherent conceptual framework'44 to thrust interpretations in the right direction.

It is fitting to conclude on the Convention's capacity for reform. This is perhaps not the most ingratiating worst feature of the CISG. The drafters sought to deny the competence of national bodies to modify and change the Convention, without allocating the role to any supranational body. The fifty years of negotiations that were required to agree upon a final text should have suggested that any uniform instrument must provide for rapid change. However, as it stands, reform is only achieved by unanimity, as UNCITRAL only possesses the authority to submit reports and recommendations to other UN organs. Thus, the Convention can only grow out of its faults by the same arduous process that led to its introduction .45

  1. Brooks 'Why Congress should be wary of the UN convention on the International Sale of Goods' Heritage Foundation, No. 361, 1984; as noted in 'Reconciliation of Legal Tradition in the U.N. Convention on Contracts for the International Sale of Goods' Alejandro M. Garro (1989)[^ Return]
  2. ie Alejandro M. Garro (1989)[^ Return]
  3. Eorsi 'A propos the 1980 Vienna Convention on Contracts for the International Sale of Goods' 31 Am. J. Comp. L (1983)[^ Return]
  4. Article 39(1)[^ Return]
  5. Camilla Baasch Anderson 'Reasonable Time in Article 39(1) of the CISG- Is Article 39(1) Truly a Uniform Provision?' [^ Return]
  6. For example, Article 39(1), 8(2), 16(2)[^ Return]
  7. Kritzer 'Practical Application of the United Nations Convention on Contracts for the International Sale of Goods' p. 116[^ Return]
  8. Camilla Baasch Anderson 'Reasonable Time in Article 39(1) of the CISG- Is Article 39(1) Truly a Uniform Provision?'[^ Return]
  9. However, it should be noted that Article 38(1) seems to take account of this disadvantage, as in requiring buyers to examine the goods for defects within a 'short' period, it provides that this period is too be judged in relation to a particular circumstance; 'as is practicable in the circumstances'. [^ Return]
  10. Professor Enderlein and Maskow 'International Slaes Law' p. 159[^ Return]
  11. Kastely 'Unification and Community: A Rhetorical Analysis of the United Nations Sales Convention' S N.W J Int'l L & Bus. (1988)[^ Return]
  12. P. Schlechtriem 'Commentary on the UN Convention on the International Sale of Goods' Oxford Uni Press, 1998[^ Return]
  13. Huber[^ Return]
  14. Professors Enderlein and Maskow[^ Return]
  15. By Professor Schlechtriem[^ Return]
  16. Bianca and Bonnell's 'Commentary on the International Sales Law' p. 74[^ Return]
  17. The Convention has provided such guidelines in other provisions where the word 'reasonable is used; e.g Article 8(2)[^ Return]
  18. Professor Honnold 'Uniform Law for International Sales'[^ Return]
  19. Camilla Baasch Anderson 'Reasonable Time in Article 39(1) of the CISG- Is Article 39(1) Truly a Uniform Provision?'[^ Return]
  20. Same as footnote '95'[^ Return]
  21. Bundesgerichtof 08/03/95 (vIII ZR 159/94)[^ Return]
  22. Landgericht Landhut 05/04/95 (54 O 644/95)[^ Return]
  23. For example, in the Italian case of Tribunale Civile di Cuneo of 31 January 1996 [45/96] (Sport D'Hiver di Genevieve Culet v. Ets. Louyes et Fils)[^ Return]
  24. For example, the discernability of the defect[^ Return]
  25. Article 7(2) of the Convention on the International Sale of Goods[^ Return]
  26. Gert Brandner 'Admissibility of Analogy in Gap-Filling under the Convention on the International Sale of Goods' (1999)[^ Return]
  27. The use of analogy as a means of dispute resolution is frequent to civil law systems, for example, Article 12(2) of the Italian Civil Code 1942[^ Return]
  28. Gert Brandner 'Admissibility of Analogy in Gap-Filling under the Convention on the International Sale of Goods' (1999)[^ Return]
  29. Article 7(2) gaps are to be settled 'in conformity with the general principles on which the Convention is based'.[^ Return]
  30. Enderlein/Maskov, P. 64[^ Return]
  31. Gert Brandner 'Admissibility of Analogy in Gap-Filling under the Convention on the International Sale of Goods' (1999)[^ Return]
  32. Gert Brandner 'Admissibility of Analogy in Gap-Filling under the Convention on the International Sale of Goods' (1999)[^ Return]
  33. Bonnell was the first to pose the question of the use of analogy, in Bonell (in Bianca/ Bonell, pp.78 et seq.)[^ Return]
  34. Such as Rossett in 'The International Sales Convention: A Dissenting View' 18 Int'l Law 445 (1984)[^ Return]
  35. Honnold, in Hearings on Treaty Document No. 9 before the Senate Committee on Foreign Relations, 98th Congress 2d Session (1984)[^ Return]
  36. Eorsi 'A propos the 1980 Vienna Convention on Contracts for the International Sale of Goods' 31 Am. J. Comp. L (1983)[^ Return]
  37. Although interestingly, England has refrained from ratification[^ Return]
  38. Professor Sundberg here was referring to general problems of uniformity in the Warsaw Convention, quoted by Giles in "Uniform Commercial Law", p. 23-24. [^ Return]
  39. Kuzaki Sono 'The Vienna Sales Convention: History and Perspective' International Sale of Goods: Dubrovnik, Lecture 7[^ Return]
  40. Enderlein 'Zur Ausarbeitung einer Konvention uber den Abschluss Internationaler Kaufvertrage durch die UNCITRAL' (1977)[^ Return]
  41. 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]
  42. Same as footnote '12'.[^ Return]
  43. Same as footnote '13'.[^ Return]
  44. Rossett 'Critical Reflections on the United Nations Convention on Contracts of the International Sale of Goods' 45 Ohio State Journal (1984) 265-305[^ Return]
  45. Rossett 'Critical Reflections on the United Nations Convention on Contracts of the International Sale of Goods' 45 Ohio State Journal (1984) 265-305 [^ Return]

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

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