The Convention on Contracts for the International Sale of Goods Scope, Interpretation and Resources

In addition, some courts have applied the CISG as though it were domestic law, thereby undermining its value as uniform international law.The nature of the problem this can present to ou

Reproduced with permission from the author and the Cornell Review of the Convention on Contracts for the International Sale of Goods (1995) 147-187

The Convention on Contracts for the International Sale of Goods: Scope,

Interpretation and Resources

Albert H Kritzer [*]

Introduction

The Uniform Commercial Code (UCC) is the U.S uniform domestic commercial code The Convention on Contracts for the International Sale of Goods (CISG) [1] is our uniform

international commercial code The CISG is designed to foster world trade by acting as a bridge

to improved understanding in business dealings between persons from different countries and cultures

When the CISG applies to a contract, its provisions replace those of otherwise applicable

domestic law A special virtue is its practicality in developing markets hampered by uncertainty

as to the interpretation of domestic law For example, in China, case law holds that where CISG provisions relating to a contract differ from those of domestic law, CISG provisions are

applicable

The United States took special steps to make the CISG practical:

"[C]harged with helping on this project to unify international sales law was a study group consisting of sales and contract law experts, about half of them law professors, the other half leading private attorneys, counsel for Fortune 500 corporations, and representatives

of the National Foreign Trade Council This Study Group provided the sales law expertise to ensure that the experts sitting for the United States were in touch with the "real world." [2]

Finalized at a diplomatic conference attended by delegates from sixty-two countries,[3] the CISGhas had an unusually high and rapid level of acceptance by national governments Ratification of conventions on international commercial law normally proceeds at a glacial pace.[4] However, CISG ratifications quadrupled in the few short years since it came into effect A spur to

ratification is "broad agreement that barriers to trade resulting from differences in laws should be removed." [5]

The CISG is today the uniform international sales law of countries accounting for over thirds of all world trade,[6] with a growing list of subscribing countries There has been an explosion of scholarly writings on the CISG, and case law is growing exponentially The volume

two-of CISG case law will likely exceed that two-of the UCC There are already more scholarly writings

on the CISG than have ever accompanied any other new sales code

Despite this attention, there are many attorneys who are not aware of the CISG A still larger number do not have experience in researching the CISG and are unfamiliar with its interpretationand application in the international setting for which it is designed As a consequence, many

lawyers faced with international commercial law problems are not prepared to properly counsel their clients In addition, some courts have applied the CISG as though it were domestic law, thereby undermining its value as uniform international law.

The nature of the problem this can present to our international traders has been put as follows:

"Domestically, the [US] law regarding sale of goods between merchants is dealt with in great detail by the provisions of Article 2 of the Uniform Commercial Code and the extensive case lawthat has developed over its application Traders [from the United States] and their lawyers have adopted its rules as the "natural" way of doing business The spill over into the area of

international trade was, not surprisingly, a rational consequence of its existence It can be said, that 'doing business the UCC way' has become, like driving an automobile, a conditioned reflex

to the American business community, both domestically as well as in international commerce

"With the appearance of the Convention on the scene, some of these reflexes must now be reprogrammed, unless the American international trader suddenly finds himself facing a legal (and consequently a financial) situation over which he no longer has any control."[7]

To counsel on the CISG and to apply it, the Bar and bench must understand it There are primers,basic texts, and other publications on this new sales code Computer technology, through the Internet and the World-Wide Web, provides another avenue for improved understanding of the CISG

The National Center for Automated Information Research (NCAIR) has funded the development

of an electronic platform to make information on the CISG more readily available A CISG World-Wide Web (W3) database has been created to handle the explosion of cases and scholarly writings The CISG W3 database is an aid to the practice of law that harnesses the collaborative potential of computer technology It is designed to provide practicing attorneys, jurists, and scholars an added opportunity to participate in the interpretation of the CISG by sharing their knowledge and insights

I Utilizing the CISG

A listing of environments encountered in international trade introduces situations in which the CISG can be helpful

A Environments

Most international contract environments are differentiable based on the legal cultures of the countries of the contracting parties and the maturity of their domestic legal systems These environments may be categorized as follows Category one consists of contracts between parties from common law and civil law countries Contracts between parties from different civil law countries comprise category two, while category three involves contracts entered between partiesfrom different common law countries Categories four through six are based on the relative maturity of legal systems Category four involves contracts between parties both of whom are from countries with developed legal systems When a party from a country with a developed

legal system enters into a contract with a party from a country with a developing legal system, it

is a category five environment Contracts between parties from countries with developing legal systems are listed in category six

B The Challenge that Led to the Creation of the CISG

"If two people come from different cultures, they can use the same words and mean two differentthings; and without planning to, either one of them can mislead the other." [8] When communicating with persons of different countries, a bridge to improve understanding is helpful,

"[e]ven if we prefer to speak in our own language, and even if we are able and willing to speak the language of an interlocutor In the same way, the [CISG] should be able to function

as a legal lingua franca for international sales among those who cannot agree to allow the law

of one of the parties to be the law of the contracts."[9]

A bridge to improve understanding is helpful in category one, because the legal cultures of the contracting parties are in many respects different Needs for a bridge to understanding arise in categories two and three, for example, when civil law regimes differ from one another or when

American approaches diverge from traditional English approaches A legal lingua franca has

similar utility in category four transactions Depending upon the respective legal cultures, the need for a CISG by both parties to a business transaction comes to the fore in categories five and six.[10]

An example is trade between the United States and China When dealing with the Chinese, I have encountered difficult negotiating the UCC or the domestic law of any country other than China as the governing law of contracts I have been reluctant to accept Chinese domestic law as the governing law because I am uncertain as to its interpretation Among my pre-CISG

alternatives were general principles of international law or no governing law clause and a

reference to arbitration, perhaps in Stockholm (because Nordic law has considerable certainty and with the hope that Swedish arbitrators would draw on principles of their law when ruling on the contract) The CISG is now the law of China, and CISG case law from China holds:

"Article 6 of the Foreign Economic Contract Law [of the Peoples Republic of China]

stipulates that where the provisions of an international treaty to which [China] is a signatory or a participant and which is related to a contract are different from those of the laws of [China], the provisions of such international treaty are to be applied."[11]

challenge Another is our courts must have regard to the "international character" of this law

"and to the need to promote uniformity in its application" [14]

There is a mass of information to be assimilated Scholars must be equipped to assist attorneys and judges struggling to comprehend the ramifications and applications of this new law A majorhelp they can provide to the Bar and the bench is by "collect[ing] cases and

analyz[ing] the literature of [our country and of] other countries as thoroughly as possible in order to present the full picture of interpretations and opinions to our [attorneys and] jurists." [15]

II Scope of the CISG

The scope of the CISG is defined in Article 1:

"This Convention applies to contracts of sale of goods between parties whose places of business are in different States: (a) when the States are Contracting States; or (b) when the rules of privateinternational law lead to the application of the law of a Contracting State."[16]

A Legal Families That Subscribe to the CISG

The different legal systems of Contracting States illustrate the need for "a common language [for] civil law and common law jurists alike." [17]

Common Law

Family

Civil Law and Other Families

* Quebec is a civil law province of Canada.

** Louisiana and Puerto Rico are civil law jurisdictions within a common law republic.

B Transactions Governed by the CISG

1 Transactions Between Parties from Contracting States

The CISG applies to transactions where each party has his relevant place of business in a

different Contracting State.[18]

2 Transactions Between Parties from Contracting States and Non-Contracting States

The CISG also applies to transactions between parties from Contracting and non-Contracting States in the following circumstances:

(a) When the parties so state in their contracts.[19] Such contractual election is valid to the extentthat it does not affect the application of mandatory provisions of applicable domestic law.[20]

(b) "[W]hen the rules of private international law lead to the application of the law of a

Contracting State." [21] This application is authorized by CISG Article 1(1)(b) Countries that donot wish to be bound by Article 1(1)(b) may so declare The United States, China, the Czech Republic, Singapore, and the Slovak Republic have so declared pursuant to CISG Article 95

(c) When a tribunal deems it applicable For instance, even though the parties did not refer to the CISG in their contract and the CISG was not by its terms applicable to the transaction, a tribunal may use the CISG as evidence of international usages.[22] Through this use, "the doors for the application of the CISG are wide open."[23]

3 Transactions Between Parties Who Are Not from Contracting States

The CISG can also apply to transactions where both parties are from non-Contracting States pursuant to (a) or (c) above and in other situations For example,

"In November 1988, a German seller contracted to supply steel bars to a Syrian buyer According

to the terms of the sales contract, the 'substantive laws of France' applied A dispute subsequentlyarose as to the quality of goods delivered, and the matter was submitted to ICC arbitration in France The tribunal held that since the parties had chosen French law, the dispute should be decided in accordance with the CISG which had been in effect in France since January 1, 1988 Obviously, the CISG did not apply to this contract by default [since neither Germany nor Syria were Contracting States when the contract was made] However, since the arbitrators considered themselves bound by the parties' choice of French law, and since the CISG has been an integral part of French law since January 1, 1988, the parties were held to have 'contracted in' to the Convention regime."[24]

C Limitations on the Scope of the CISG

The CISG does not cover every aspect of international sales contracts It governs only the

formation of the contract and the rights and obligations of the seller and buyer.[25] Generally, the CISG defers to domestic law on validity issues and does not address the contract's effect on the property interest in the goods sold.[26] The CISG does not apply to liability of the seller for death or personal injury caused by the goods.[27] The CISG applies to the sale of goods,[28] but not to consumer sales or the sale of securities, ships, vessels, hovercraft, aircraft, or electricity.[29] It also does not apply to contracts where the party who orders the goods undertakes to

supply a "substantial part" of the materials necessary for the manufacture or production of the goods, or where the "preponderant part" of the seller's obligation is to supply services.[30]

III Interpretation of the CISG

Case law (jurisprudence), scholarly writing (doctrine), and legislative history (travaux

préparatoires) play prominent roles in interpreting the CISG.

CISG Article 7(1) states that "[i]n the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application ." [31] This calls for consideration of CISG interpretations by judges, arbitrators, and scholars of other countries as well as of rulings on the CISG in our country

Under U.S domestic law, a ruling on a UCC provision by a New Jersey court is not binding on aNew York court, but litigants before a New York court may refer to the New Jersey ruling and the New York court will consider it The U.S Supreme Court treats international conventions in

a similar manner

In Air France v Saks, the U.S Supreme Court found "the opinions of our sister signatories [to an

international convention are] to be entitled to considerable weight." [32] In his testimony before the US Senate Committee on Foreign Relations, John Honnold elaborated:

"[U.S.] sales law has grown with an acceptable degree of uniformity because of the regard that courts in each state give to the development of the same legal text in other states The

obvious need for harmony in international trade that has led to the preparation and acceptance of the Sales Convention can be expected to lead to similar cross-fertilization and harmonious growth of international sales law subject to the Convention."[33]

A Aids to Uniform Interpretation: Case Law (Jurisprudence)

1 Sources of Data on CISG Case Law

Sources of data on CISG case law include: Lexis, Westlaw, the United Nations Commission on International Trade Law (UNCITRAL), Unilex, a CISG case compendium, reports by the

International Chamber of Commerce, among others, and the CISG W3 database Lexis has published data on fourteen CISG cases, and Westlaw has published data on ten cases.[34]

UNCITRAL's CLOUT reporting service provides data on fifty-one CISG cases.[35] Unilex is an electronic database service which contains information on 146 CISG cases.[36] Professor

Michael R Will of the University of Geneva has produced a case compendium which contains over 220 CISG case citations.[37]

There are also several new developments The International Chamber of Commerce has

commenced publishing data on arbitral awards involving the CISG.[38] National databases are also emerging For example, in 1996 the University of Freiburg commenced reports on German case law This databank already contains extensive information on sixty-eight German court rulings on the CISG.[38a] And the Institute of International Commercial Law of the Pace

University School of Law has introduced a World-Wide Web database (CISG W3) containing data on court rulings and arbitral awards under the CISG and antecedent treaties.

2 Countries of Parties and Products Involved in Reported CISG Cases

The CISG has been cited in cases involving contracting parties from Argentina, Australia,

Austria, Belgium, Brazil, Bulgaria, Canada, China, Croatia, Czech Republic, Denmark, Egypt, Finland, France, Germany, Hong Kong, Hungary, Iran, Italy, Japan, Mexico, Netherlands,

Nigeria, Portugal, Spain, Sweden, Switzerland, Syria, Turkey, United Kingdom, United States, and Yugoslavia Of these countries, Belgium, Brazil, Croatia, Hong Kong, Iran, Japan, Nigeria, Portugal, Turkey, and the United Kingdom are not yet Contracting States evidence of CISG

impact on parties from such countries as well as from Contracting States.[39]

The CISG has been cited in cases involving contracts entered into by parties in many lines of

business (italicized entries involved U.S contracting parties):

Automatic storage system Electronic components Machinery Test tubes

Compressors Kitchen furnishings Software

Of the cases involving parties from the United States, many were tried outside the United States evidence of the offshore as well as domestic impact of the CISG on US businesses.[40]

3 Case Law on Antecedent Conventions that Can Be Relevant to the Interpretation of the CISG

Cases under laws that preceded the CISG can also be relevant to the interpretation of the CISG The Hague Convention Relating to a Uniform Law on the Formation of Contracts for the

International Sale of Goods (ULF) [41] and the Hague Convention Relating to a Uniform Law

on the International Sale of Goods (ULIS) [42] are antecedents to the CISG ULIS and ULF werethe uniform international sales laws of Belgium, Gambia, the Federal Republic of Germany, Israel, Italy, Luxembourg, Netherlands, San Marina, and the United Kingdom ULIS or ULF case law can be useful where the CISG adopted provisions of these uniform laws because

"[i]t is common sense that if the Convention adopts a phrase which appears to have been taken from one [uniform] legal system where it is used in a specific sense, the international legislators are likely to have had that sense in mind and to intend its introduction into the

Convention."[43]

For example, the CISG language on consequential damages in Article 74 is substantively

identical to ULIS language The drafters of Article 74 considered ULIS Article 82,[44] and

carried this provision forward with no substantive changes.[45] A comparison of ULIS Article

82 with CISG Article 74 demonstrates their consanguinity:

[D]amages for a breach of contract by one

party shall consist of a sum equal to the loss,

including loss of profit, suffered by the other

party

Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a

consequence of the breach.

Such damages shall not exceed the loss which

the party in breach ought to have foreseen at

the time of the conclusion of the contract, in

the light of the facts and matters which then

were known to him, as a possible consequence

of the breach of contract

Such damages may not exceed the loss which the party in breach foresaw or ought to have foreseen

at the time of the conclusion of the contract, in the light of the facts and matters of which he then knew or ought to have known, as a possible consequence of the breach of contract.

While many of the CISG's ULIS or ULF antecedents are not so similar, some provisions are more similar to their ULIS or ULF antecedents:

The seller shall not be entitled to rely on the

provisions of Articles 38 and 39 if the lack of

The seller shall not be entitled to rely on the provisions of Articles 38 and 39 if the lack of

conformity relates to the facts of which he knew,

or of which he could not have been unaware, and

which he did not disclose

conformity relates to facts of which he knew or could not have been unaware and which he did not disclose to the buyer.

Examples of decisions under the Hague Conventions that can help interpret other provisions of the CISG include a ULIS case from the Netherlands that has been cited to support the conclusionthat "reasonableness" is a general principle of the CISG,[46] and a ULIS case from Germany said to support the proposition that the CISG is a "yardstick for the validity of clauses that the parties have not really agreed upon but that one has imposed upon the other through the use of standard terms or other means." [47]

4 Sources of ULIS and ULF Case Law

European attorneys, especially German and Dutch attorneys Germany and the Netherlands are the two most prolific sources of CISG case law are familiar with ULIS and ULF case law Material on these conventions is regularly published in those countries For example,

Internationale Rechtsprechung zu EKG and EAG has a good collection of ULIS and ULF case

law.[48] Israel can be another good source of ULIS and ULF case commentary.[49]

Commentators from these jurisdictions are not the only persons to cite ULIS and ULF case law

as an aid to the interpretation of the CISG For example, from the United States, John Honnold writes:

"Problems invoking the general rules of article 74 can arise from changes in exchange rates subsequent to the date when the buyer should have paid For a 1978 German decision under ULIS 82 awarding damages for loss from changes in exchange rates during delay, see

UNIDROIT, 1979 Uniform Law Review, No 1, 344-348, citing Neue Juristische Wochenschrift

1979, 2480."[50]

Caveat: While the comparative use of ULIS and ULF case law to interpret the CISG can be

helpful, in some cases the analogy between the conventions can be taken too far.[51] It is always important to closely scrutinize analogies between CISG and ULIS or ULF provisions

B Aids to Uniform Interpretation: Scholarly Writings (Doctrine)

There are thousands of scholarly writings on the CISG Much of this material is in English There are also many collections of articles on the CISG in, among others, French, Japanese, Russian, Spanish, and Mandarin After English, the next largest volume of CISG literature is in German The following examples of subjects discussed in articles published in German journals illustrate the wealth of material contained in this literature:

Allocation of burden of proof

Anticipated breach of contract

Conformity of goods

Consequences of breach of contracts: damages, winding up, and options for restructuring

contracts

Contract avoidance and seller's right to cure

Contract negotiations and culpa in contrahendo under the CISG

Contracts for work and materials

Continuing effect of seller's collateral obligations after dispatch of and payment for the goods

Damages, force majeure, and frustration of purpose

Delivery issues, including duty to install

Error regarding characteristics of the goods

Excluding the CISG

External gaps and private international law

Foreign industrial property rights, seller's liability

Formation of the contract

Forum selection clauses and place of performance

Fundamental breach of contract and rescission

Gaps in the CISG

Letters of credit and the CISG

Liability for refusal to perform

Limitations upon exclusions of liability

Rejection of non-conforming goods

Seller's right of stoppage in transit

Sphere of application of the CISG

Undetermined purchase price

Unforeseeability of damages

Usages under the CISG

Warranty for conformity; implied warranties

C Aids to Uniform Interpretation: Legislative History (Travaux Préparatoires)

The CISG has a rich and detailed legislative history, much of it contained in UNCITRAL Yearbooks However, the Yearbooks are not easy to access They are not indexed and the article numbering system has been changed often Absent a guide, locating relevant segments of the legislative history can be "like looking for a needle in a haystack." [52] Furthermore, many law libraries do not have the Yearbooks

Professor Honnold has prepared a documentary history of the studies, deliberations, and

decisions which led to the CISG.[53] It contains cross-referenced photo-offset pages from the Yearbooks His work makes this wealth of material much more accessible The CISG W3 database also contains aids to accessing this material

Travaux préparatoires can be highly valuable As Professor Lookofsky states:

"In some quarters the Convention's legislative history ranks high on the list of sources of law: perhaps the next best thing to an official commentary, the travaux are seen as evidence of the founding fathers' collective intent And indeed, a fair number of the CISG decisions already rendered by certain national courts justify their rulings, inter alia, by reference to this 'process' bywhich the Convention text came to be ."[54]

Travaux préparatoires also come with a caveat Noting a US Supreme Court case in which "the

majority and minority each pick and choose excerpts from the same legislative history to reach different results," [55] Lookofsky points out that:

"our experience with legislative history at the national and international levels gives grounds for a certain measure of skepticism We might not expect the proposals, counter-

proposals and comments made by various national delegates during years of drafting (and drafting) of the CISG text to provide simple solutions to complex questions of Convention interpretation."[56]

re-IV Challenges for Persons Unfamiliar with the CISG

A Recognizing When the CISG Applies

Attorneys should recognize that in each country where the CISG applies there are two sales codes.[57] In the United States, we have the UCC and the CISG This can present a challenge If

an international contract specifies that it will be governed by the law of New York, this can be regarded as an election to have the contract governed by the CISG even though that may not have been the intent of the parties

Cases under antecedents to the CISG so hold The logic underlying these cases is equally

applicable to the CISG In ICC Arbitration Case No 6076, the tribunal noted that "ULIS applies [because] the contracts provide for the application of the Dutch law [and] [t]he applicability of Dutch law implies the applicability of ULIS." [58] The tribunal explains: "Legal writers and modern jurisprudence generally admit that if the parties designate the applicable law of a

Contracting State, ULIS is applicable, failing obvious arguments in favour of the contrary." [59]

In a similar vein, Réczei states:

"In a given case the contracting parties have stipulated the municipal law of the Federal Republic

of Germany as the law governing their contract, but have failed to specify whether they subject their contract to the municipal law of the Federal Republic or to ULIS The court has applied ULIS In other cases the court did not consider ULIS precluded by the parties [even though it appeared that] the parties did not even know of the existence of ULIS when they had made their contract ."[60]

Recent cases in Germany, for example apply similar reasoning to the CISG.[61] These rulings by civil law tribunals are in accord with legal maxims that also exist in common law jurisdictions Both legal cultures subscribe to the principle that ignorance of the law is no excuse

In the absence of an affirmative indication of intent to displace the uniform law, this can readily lead to rulings that the parties intended to apply the uniform law.

Another way to focus on the issue is to compare the CISG with a club with which we are more familiar, the Book-of-the-Month Club When subscribing to the Book-of-the-Month Club, a member automatically receives a book each month unless he has affirmatively indicated

otherwise The CISG is such a "club." When a country subscribes to the CISG, parties can automatically receive this "book" of laws, as the governing law of their applicable contracts, unless the parties indicate otherwise

This feature of the CISG can have an especially negative impact on businesses served by

attorneys who are not specialists in international trade law Cases have arisen in which attorneys have found their clients' contracts to be governed by the CISG rather than by the law they

thought applicable Parties who wish to preclude the application of the CISG should use specific contract language that so states Article 6 of the CISG honors such contract language or other satisfactory indications of such intent

Challenges can also arise when pleading CISG cases Situations have arisen in which counsel arenot aware of the applicability of the CISG, plead domestic law, and lose where they might have won under the applicable CISG At one time in Germany, there were said to be many such disservices to clients; a situation said to have changed due to, among others, the attention given

to the CISG by the Supreme Court of Germany

B US Cases: Hurdles to Overcome

The proceedings reported below document instances in which U.S attorneys and courts have not recognized CISG applicability; also included are cases where they have, but in which citations toavailable interpretations of the CISG are restricted, and in which relevant citations to cases underantecedents to the CISG are non-existent.[62] Setting aside cases that simply contain obiter reference to the CISG, brief comments are presented on the following US cases

1 Filanto, S.p.A v Chilewich International Corp.

In Filanto,[63] neither party is reported to have mentioned the CISG in brief or in argument.[64]

The court, however, concluded sua sponte that the CISG applied rather than the UCC.[65]

After citing a 1991 report of "virtually no U.S case law interpreting the Sale of Goods

Convention," [66] the Filanto court limited its remaining citations, outside of the CISG itself, to interpretations of U.S domestic law other than the CISG, such as the Restatement (Second) of Contracts and judicial rulings on the UCC.[67]

A key issue in this case turned on Part II of the Convention (Formation of the Contract) and, in particular, CISG Article 18(1) There are numerous detailed scholarly writings on Part II of the CISG, including material by leading authorities on the manner in which CISG Article 18(1) is to

be interpreted.[68] In addition, "[t]he rules under Part II of the CISG are based largely on the

Uniform Law on the Formation of Contracts concerning movable goods (ULF)," [69] which should prompt litigants in such cases to wish to mine ULF case law authority.

2 Beijing Metals & Minerals Import/Export Corp v American Business Center, Inc.

Beijing Metals is also a case in which the court cited neither CISG case law from other

jurisdictions nor the multitude of scholarly writings on the CISG This court simply stated, as did

the Filanto court, that "there is as yet virtually no U.S case law interpreting the Sale of Goods

Convention."[70]

In Beijing Metals, the trial judge is reported to have ignored a request for judicial notice of the

CISG,[71] and the issue is said to have been raised again on appeal.[72] The appellate court noted plaintiff's contention that the CISG applied but elected not to resolve this issue.[73]

Richman points out, "Ironically, as supreme law of the land, the Fifth Circuit and Texas courts would have to apply Texas law, which would include the Convention ." [74] Flechtner adds,

"the agreement in Beijing Metals may well have been within the scope of CISG If so, the

Fifth Circuit should have applied the Convention's approach with results likely to differ from those the court obtained by applying the Texas rule." [75]

3 GPL Treatment, Ltd v Louisiana-Pacific Corp.

The ruling of the Oregon Court of Appeals in GPL Treatment [76] seems in some respects analogous to Beijing Metals Judge Leeson, in his dissent, appears to properly take the majority

to task for its failure to address the plaintiff's allegation that the trial court erred in refusing to apply the CISG law of Oregon instead of the UCC.[77]

4 Delchi Carrier, S.p.A v Rotorex Corp.

Like Filanto, the court in Delchi Carrier [78] applied the CISG This case involved an

interpretation of CISG Article 74, which is substantively identical to ULIS Article 82 In his

comparison of the Delchi opinion with a leading German ruling on ULIS Article 82, Schneider

reports:

"The US Federal District Court in Delchi referred only briefly to two scholarly comments on the

CISG before going on to apply it in a manner totally consistent with New York law, which was the place of business of the seller The Court did not avail itself of more detailed analysis

available in the literature

"The German Supreme Court, in applying [Article 82 of ULIS] made a greater effort to consult the available literature on the principles underlying that Convention It followed those

principles rather than its national law in many particulars

"The US court, accustomed to referring more often to code annotations or prior decisions, was able to rely on neither [G]iving only a terse mention of the articles of the CISG it used, [the

court] ignor[ed] the extensive literature on the CISG and interpret[ed] its articles according toNew York law without analysis of the Convention ."[79]

C Pinpointing Current Problems

There is clearly a need for a better understanding of the CISG and relevant interpretative sources.Former New York Court of Appeals Judge Stewart F Hancock, Jr., stated:

"Various explanations have been suggested for the failure of the legal profession (including the judiciary and many law schools) to appreciate the significance of the UN Sales Convention and that an important body of substantive commercial law which must be studied and understood has come into being One is most often cited The Sales Convention was enacted in this

country as a treaty Thus, it became binding on each of our fifty states by action of the President with the concurrence of the Senate without the need for attention or action by the legislatures

of the states The concurrence of the United States Senate was preceded by committee hearings And the Senate had the benefit of studies and reports recommending approval of the Sales Convention from, among others, a committee of the American Bar Association However, because no state approval was required, an important code of international substantive law governing commercial transactions of the sort covered in domestic commerce by Article 2 of the UCC became binding New York law without the analysis by the New York Law Revision Commission, legislative committees, professional groups, academics and bar associations which had preceded the adoption of the UCC in New York."[80]

Professor Peter Schlechtriem cites a similar lack of sufficient attention in his country when ULISand ULF were first promulgated He states:

"It took several years before ULIS and ULF were really noticed After the Hague Conventions had come into force in the Federal Republic of Germany, about five years passed before the German Federal Supreme Court first applied them in a decision Amongst the replies to our 1987survey were questions from some courts, asking what the Uniform Sales Law actually was Although it was valid law, some had not even heard of it No doubt many practitioners shied away from applying the Hague Conventions because it was unknown and unfamiliar to them

A personal experience is indicative: from 1984 until 1991 I was a member of the German law reform commission where I had the opportunity to talk to two presidents of German courts of appeal, who were also members One of these senior judges repeatedly emphasized that he frequently applied the Hague Uniform Sales Law The other said that his court preferred to avoidUniform Sales Law whenever possible and even suggested to the parties during proceedings that they agree on another law i.e domestic law a choice of law which is still possible during proceedings according to German law Nevertheless, between 1974, when the Hague Uniform Sales Laws came into force, and our survey in 1987, some 250 cases were decided in Germany under the ULIS and [ULF] Since then, there have been many more such decisions applying Uniform Sales Law, and the same court president, who in 1984 preferred to avoid applying Uniform Sales Law, admitted in 1991 that he has now learned to appreciate the individual rules and solutions of the CISG

"This is an indication of the positive acceptance of the CISG."[81]

Germany overcame the challenges presented by its first uniform international sales law The United States faces other challenges.

The US Supreme Court encourages us to examine foreign interpretations of uniform laws such asthe CISG.[82] However, many of the cases and commentaries are located in sources that are not familiar to most of us Also, most of the cases are in languages other than our own, and foreign languages are not taught to the same extent in our country as in others This has impeded our ability to access foreign case law and commentaries on the CISG The CISG W3 database is being designed to help respond to this obstacle by providing data on available commentaries and ready access to foreign CISG decisions and English translations of them

Another challenge arises from the CISG itself The UCC has civil law overtones that we have learned to understand and respect.[83] The CISG has more civil law overtones.[84] They are particularly relevant in the context of gaps in the code No sales code can purport to cover all issues that may arise There are three ways to deal with gaps in a code of law:

By reference to external legal principles This is the common law approach Under common

law, the law exists in the absence of statute and reigns except to the extent derogated by statute Thus, when a solution is not to be found in the express words of a statute, there is normally less need to extrapolate from it

By internal analogy This is the civil law approach For the civilian, the statute and

extrapolations properly derived from it constitute the primary source of law

By a combination of these approaches The UCC combines these approaches;[85] so does the

CISG, but in a manner more civilian.[86]

While Americans are aided by the fact that the CISG has much in common with the UCC, the CISG is more of a civil code than a common law code.[87] To apply it in the proper manner, we need to recognize a fundamental difference between it and the style of the laws to which

common law attorneys are generally accustomed

Canada's leading common law participant in the development of the CISG, Jacob Ziegel, notes that:

"The general drafting style of the Vienna provisions follows civilian models in its

succinctness and brevity, and in its emphasis on broad statements of principle and general lack ofsituational settings To those familiar with Article 2 of the Uniform Commercial Code the contrast will be striking

"[T]he laconic style of the Vienna provisions results in many detailed, and sometimes obvious, questions being left unanswered Civilians have for a long time accepted and successfully

overcome a similar challenge in the interpretation of their domestic codes ."[88]

Interpretation and gap-filling has been a challenge for civilians It is a challenge for us as well And we need to "re-examine our traditional approach." [89] John Honnold states that "[a]

generous response to the invitation of [CISG] Article 7(2) to develop the Convention through thegeneral principles on which it is based is necessary to achieve the mandate to interpret the Convention with regard to the need to promote uniformity in its application." [90] He continues:

"[The CISG] presents a delicate balance between (1) developing the Convention's general

principles and (2) recourse to domestic law a choice that inevitably will be influenced by the traditions and mind-set of the tribunal [C]ivil law practice is generally hospitable to the first alternative and common law to the second Which is more compatible with the objectives of the Convention? This writer, although nurtured in the common law, has come to believe that

international unification calls for us to reexamine our traditional approach."[91]

These challenges call for concerted responses to the need for further education on the CISG and the manner in which it should be interpreted

V Resources for Interpreting the CISG

The Cornell Review of the Convention on Contracts for the International Sale of Goods (CISG)

is an important contribution to the need to educate the legal profession on the manner in which the CISG should be interpreted Its advisory board, chaired by Judge Hancock, was constituted tohelp respond to this educational need Other English-language aids to understanding the CISG are discussed below

A Primers and Basic Texts on the CISG

1 Primers on the CISG

The Institute of International Commercial Law at the Pace University School of Law manages several learning events on the CISG, including an essay contest [92] and an arbitration moot.[93]From time to time, participants approaching the CISG for the first time have requested

information on primers on the subject The listing provided below may also be of interest to others

a Law review articles (listed alphabetically by author)

Bernard Audit, The Vienna Sales Convention and the Lex Mercatoria [94]

Eric E Bergsten, The Law of Sales in Comparative Law; [95] Basic Concepts of the UN

Convention on the International Sale of Goods [96]

Gyula Eörsi, A Propos the 1980 Vienna Convention on Contracts for the International Sale of Goods [97]

E Allan Farnsworth, The Convention on the International Sale of Goods from the Perspective of the Common Law Countries [97]

J.D Feltham, The United Nations Convention on Contracts for the International Sale of Goods

[99]

Franco Ferrari, Uniform Interpretation of the 1980 Uniform Sales Law [100]

Alejandro M Garro, Reconciliation of Legal Traditions in the UN Convention on Contracts for the International Sale of Goods [101]

Jan Hellner, The UN Convention on International Sale of Goods An Outsider's View [102]

Joseph Lookofsky, The 1980 United Nations Convention on Contracts for the International Sale

of Goods [103]

Barry Nicholas, The Vienna Convention on International Sales Law [104]

Peter Schlechtriem, Uniform Sales Law The Experience with Uniform Sales Law in the

Federal Republic of Germany [105] Vienna Sales Convention (recent developments)

Developed Countries' Perspectives [106] Some Observations on the United Nations Convention

on Contracts for the International Sale of Goods [107]

Leif Sevón, Obligations of the Buyer under the UN Convention on Contracts for the

International Sale of Goods [108]

Material written by other notable commentators Peter Winship, for example is also

recommended It does not matter if the subject of the commentary is a single article of the CISG

or the entire Convention In general, to truly understand any article of the CISG, one needs a good understanding of all of its articles; one who masters the interpretation of one article in the context of the entire Convention is well on the way to mastering the entire Convention

b National reports

There are many national reports on the CISG usually one for each country that has considered the CISG The following are among the national reports the Pace Institute has recommended as CISG primers:

Canada: Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods [109]

New Zealand: The United Nations Convention on Contracts for the International Sale of Goods: New Zealand's Proposed Acceptance [110]

United States: Message from the President of the United States Transmitting the United Nations Convention on Contracts for the International Sale of Goods to the Senate of the United States

[111]

c Other material

1 The Guide to Practical Application of the United Nations Convention on Contracts for the International Sale of Goods also contains a primer on the CISG that might be considered

Designed for persons without extensive knowledge of the CISG, this pilot to the CISG

commences with an Executive Summary and Checklist prepared with the help of Axel H Baum, Managing Partner of the Paris office of Hughes, Hubbard & Reed.[112] It also contains

adaptations of customary contract clauses persons may wish to consider when their contracts are governed by the CISG

2 The Secretariat Commentary

Unlike the UCC, there is no official commentary on the CISG However, the UNCITRAL Secretariat prepared a commentary as an aid to the delegates to the 1980 Vienna Diplomatic Conference on the CISG.[113] This commentary summarizes relevant conclusions derived from the legislative history of the Convention prior to the Vienna Conference As an official documentprepared pursuant to a resolution of the United Nations General Assembly, the Secretariat Commentary is the closest available counterpart to an official commentary on the CISG The commentary was used extensively by the delegates to the Vienna Conference as a guide to the meaning of the 1978 Draft provisions they considered and, as to eighty-five percent of them, approved substantially as written Like the CISG, the Secretariat Commentary is not designed to favor legal interpretations prevalent in any one legal system Because of its credentials, when theSecretariat Commentary fits the Official Text as well as the 1978 Draft, it is perhaps the most persuasive citation one can present in any of the many nations in which proceedings may be held

3 Basic Texts on the CISG

The shelves of every English-language library on the CISG should contain:

John O Honnold, Uniform Law for International Sales under the 1980 United Nations Convention [114]

Peter Schlechtriem, Uniform Sales Law [115]

A helpful English-language text on the legislative history of the CISG is:

John O Honnold, Documentary History of the Uniform Law for International Sales [116]

Listed alphabetically are other good English-language texts I cite and quote from extensively in

my Guide to Practical Application of the United Nations Convention on Contracts for the International Sale of Goods: [117]

Commentary on the International Sales Law, C.M Bianca & M.J Bonell eds [118] International Sale of Goods, Peter Sarcevic & Paul Volken eds.[119]

International Sales: The United Nations Convention on Contracts for the International Sale of Goods, Nina M.Galston & Hans Smit eds.[120]

Fritz Enderlein & Dietrich Maskow, International Sales Law [121]

Unilex is a good electronic text and an especially good source of CISG case law.[122]

As each of the above works is commercially copyrighted, their contents cannot be entered in the CISG W3 database This database will, however, contain article-by-article indexes to subject coverage in the Honnold, Schlechtriem, Bianca & Bonell, Sarcevic & Volken, Galston & Smit, and Enderlein & Maskow texts

There is also much good law journal material on the CISG For scholars and others who wish to

publish law review articles on the CISG, the Cornell journal and the Journal of Law and

Commerce of the University of Pittsburgh School of Law are good reviews to consider.[123]

B New Publications

1 The UNCITRAL Thesaurus

The UNCITRAL thesaurus is a classification scheme, prepared for UNCITRAL in 1995 by Professor John 0 Honnold, working in conjunction with Professor Michael Joachim Bonell and Ambassador Mahmoud Soliman.[124] An excerpt from this classification scheme (without its coding numbers) is presented below The excerpt deals with Article 39, a notice provision of the CISG A notice provision is selected for this illustration because over twenty percent of the casesunder the 1964 Hague Sales Convention (the antecedent to the CISG) turned on notice issues,[125] and there have already been thirty-six Article 39 decisions under the CISG The treatment

of Article 39 in the UNCITRAL thesaurus is:

Article 39, Requirement to Notify Seller of Lack of Conformity: Sanctions

Buyer Must Notify Seller Within Reasonable Time (Art 39(1))

 Specification of nature of non-conformity

- Degree of specificity required

 Within reasonable time (on dispatch of notice, see art 27)

 Exception in case of seller's knowledge (see art 40)

 Excuse for failure to comply with art 39(1): see art 44

Cut-off Period of Two Years (Art 39(2))

 Starting point: actual handing over of goods

 Effect of time-limit: buyer loses right to rely on non-conformity

 Guarantee period (art 36(2)); seller's knowledge (art 40)

 Relationship to statutory limitation/prescription period

- See UN Convention on the Limitation Period in the International Sale of Goods (1974) and Protocol (1980)

- Independent effect of notice and limitation periods

Other Issues Concerning Notification

The UNCITRAL thesaurus was designed for recording, classifying, and retrieving decisions under the CISG As a detailed breakdown of the subjects addressed in each provision of the CISG, it has broader utility: to professors and students as a lecture and learning aid, and to practitioners and jurists as a guide to the contents of each article of the CISG

2 Professor Joseph Lookofsky's New Student Text

Until now, the United States has not had an exceptional student text on the CISG Professor

Joseph Lookofsky's Understanding the CISG in the USA is highly recommended.[126]

Professor Lookofsky identifies the challenge the CISG presents as follows:

"The United States was one of the first countries to ratify the Convention on Contracts for the International Sale of Goods, and on January 1, 1988 the Convention took effect as the law of the land The age of internationalization and the global market is upon us, and the CISG sets the ground rules for international contracts of sale."

Yet the Convention remains unknown territory for most law students and lawyers in the USA The subject has yet to find its rightful place in the JD curriculum, just as many practicing

attorneys (and their clients) seem destined to meet the CISG (and its pitfalls) in court, with some surprise.[127]

Lookofsky's book is "a compact and informative Convention guide [that] keep[s] things concrete and down to earth, close to the practical student's and practitioner's point of view." [128]

3 Professor Michael R Will's Contributions

No individual has done more to share knowledge on citations to scholarly writings and case law

on the CISG than Professor Michael R.Will of the University of Geneva.[129] The fourth edition

of his bibliography on the CISG became available in September 1995 It contains 200 pages of citations to scholarly articles on the CISG The third edition of his collection of citations to CISGdecisions was published in December 1995 It contains data on "222 or so" cases in which the CISG has been cited As a scholar anxious to freely share his research on the CISG, Professor Will publishes these texts himself and does not charge for them.[130]

4 Professor Peter Schlechtriem's New Works

The leading US authority on the CISG has referred to Professor Peter Schlechtriem as Europe's foremost authority on the CISG.[131] I concur The work of this scholar from Germany is especially important because, of the over 220 cases cited by Professor Will, the vast majority are European Of these, almost half are German cases

Professor Schlechtriem is President of the German Comparative Law Association In 1995, he and his colleagues produced the second edition of a classic German text on the CISG,

Kommentar zum Einheitlichen UN-Kautrecht [132] It contains analyses by Klaus Bacher, Hans

Hermann Eberstein, Günter Hager, Rolf Herber, Ulrich Huber, Werner Junge, Hans G Leser, Peter Schlechtriem, Ingeborg Schwentzer, and Hans Stall An English translation is scheduled for publication in 1996.[133] It will update the German language edition

5 The English Edition of Dr Burghard Piltz's Text

Also from Germany, Dr Burghard Piltz is chair of the Executive Committee of the International Section of the German Lawyers' Association His text, written to help practicing attorneys find

their way through transactions governed by the CISG, is entitled Das UN Kaufrecht

praxisorientierter Darstellung [The CISG from the viewpoint of a practitioner].[134] An

updated English translation of his work is also being prepared

6 A New Text by Professor Franco Ferrari on the Sphere of Application of the CISG

Our understanding of the CISG benefits from analyses by persons from different legal cultures.[135] Professor Franco Ferrari is affiliated with the University of Bologna of Italy and the University of Tilburg of the Netherlands He has published texts on the CISG in Europe and

commentaries on it there and in the United States His newest text, The Sphere of Application of the Vienna Sales Convention, [136] is relevant (Does the Convention apply? Can the Convention

apply? These are normally the first questions asked when considering the CISG.); informative (Ferrari seeks to provide definitive answers to the above questions, identifying issues that might not have occurred to many of us.); user-friendly (easy to read, well outlined, and with a good index); concise (thirty-nine pages); annotated (sixty-four pages of endnotes); and current

(October 1995)

C The CISG World-Wide Web Database

Professor Peter Martin and Thomas Bruce of Cornell Law School, and Ralph Amissah, Lecturer

in Law at the University of Tromsø of Norway, pioneered the concept of Internet access to CISGmaterial.[137] The CISG W3 database of the Institute of International Commercial Law of the Pace University School of Law expands upon their electronic innovations This database is beingmade available through the World-Wide Web to all with Internet access

1 The Rationale for CISG W3

Professor Michael Joachim Bonell [138] cites Professor Honnold's assessment of US experience with the UCC and questions whether it is realistic to expect an international cross-fertilization of CISG case law comparable to the domestic cross-fertilization in the United States under the UCC He states:

"If Honnold views the first twenty years of the Code's application as a success, in the sense that it has been interpreted uniformly throughout the country, this is due to two main reasons: to the existence in the Code itself of a provision inviting courts to take into account, in its