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Masterarbeit, 2005, 59 Seiten
Chapter 1 : Introduction
1.1 Problems facing cross-border transactions and possible solutions
1.2 Aim of the study
Chapter 2 : Theoretical concept of uniformity
2.1 Significance of the principle of uniformity
2.2 Legal Character of the Convention
2.3.1 Introductory remarks
2.3.2 Article 7(1) CISG
2.4 Standard of uniformity
2.5 Recognition of the method by courts
Chapter 3 : Review of CISG jurisprudence
3.1 Research basis
3.2 Interpreting party conduct, usage and practices
3.2.1 Interpreting party conduct
3.2.2 Usage and established practice
3.3 Application issues
3.3.1 Article 1: sale of goods
3.3.2 Distribution agreements
3.3.3 Goods under the Convention
3.3.4 Article 3(1): substantial part
3.3.5 Article 3(2): preponderant part
3.3.6 Article 6: exclusion of the Convention
3.3.7 Observation on the application issues
3.4 Formation issues
3.4.1 Standard terms
3.4.2 Commercial letters of conformation
3.4.3 Determination of the parties to the contract
3.4.4 Impact of article 55 on contract formation
Chapter 4 : Observations and final conclusion
Index of cases
The main prerogative for the international trader is to implement the business transaction as conveniently and quickly as possible. Besides choosing reliable business partners, a governing body of law that facilitates the transaction successfully is required. International business transactions are rarely conducted under a tailor-made law and are therefore dependent on the law that governs the transaction in terms of the rules of private international law.
Determining the applicable law of the contract is one of the major problems facing a cross-border transaction. One way in which this question can be addressed is by means of the rules of private international law. Yet, these rules are rather complex and often subject to uncertainties. Even unification of the rules of private international law is unlikely to serve the needs of modern international business. If the proper law is determined, at least one of the parties to the transaction will be faced with an unknown body of rules. This party is forced to act in alien surroundings under a law with which it is unfamiliar.
An alternative, is to unify law on the domestic level. This would avoid the difficulties in applying the rules of international private law. However, to harmonise domestic law on world wide basis is a matter of impossibility. Some divergences based on settled legal traditions are irreconcilable. Furthermore, there is the obstacle that a harmonised law may affect the concepts of another area of law. For example the issue of sales law affects the issue of transfer of property – an area of law with fundamentally varying concepts.
The adoption of uniform sales law at the international level represents a third approach. These rules only apply to a particular range of sales transactions and therefore do not compel a State to abandon all of its own legal traditions. The UN Convention on Contracts for the International Sale of Goods has established a uniform international law of this character.
The overall goal of the CISG is to harmonise domestic laws for international sales transactions. A precondition for this goal is the achievement of uniformity. The achievement of uniformity comprises a two-fold process. The mere adoption of the Convention is the first step towards the ultimate aim of achieving the broadest degree of uniformity in the law of international sales. The second step is the uniform application and interpretation of its provisions. Developing a code of uniform international law requires creating a compromise among participants of the drafting process who are experts in the field of international sales law. Uniform application, on the other hand, involves not only experts, but users with varying legal, economic and social backgrounds from every corner of the world. The huge danger is “the natural tendency to read international text through the lenses of domestic law.” One commentator has expressed his scepticism towards uniform application in distinct words:
“The uniform law from the very moment of its coming into operation starts to differ from itself. Every judge in every country is a sovereign interpreter of the text, and the judge became judge by learning the system of law of his own country. And as the speediest bird is unable to fly out of itself, so the judge is unable to forget the law that he has learned. Divergent or contradictory interpretations, like the application of different rules of different countries lead to different judgements.”
Admittedly, this statement was attributed to a specific time, namely the introduction of the unified law. However, it suggests that a judge will never be able to adapt to the method of interpretation necessary for achieving uniformity. Therefore the future development of the CISG is deemed to be a failure. This statement paints a gloomy picture. It furthermore reduces the judge to a mere machine applying domestic interpretation rules.
Another commentator even states
“that the CISG [as such] is actually an obstacle to uniformity in the law of international sales. The failure of the CISG to create uniformity is the result of the treaty’s misguided goal, its character as a multinational treaty, its specific provisions, and its incorporation into the United States as a self-executing treaty.”
On the other hand the majority of commentators expresses optimism concerning the future development of the CISG. However, some of them stress the necessity to scrutinise judicial decisions dealing with CISG issues. This study shall reveal how these issues are dealt with by courts and commentators descending from different legal heritage.
The aim of this study is to analyse the degree of uniformity in the application of CISG provisions.
The study will be restricted to analysing CISG case law on selected issues. Although scholarly commentary is used as an interpretative tool, this will not be the main focus of consideration in this study. The attention is focussed on a particular aspect. Do decisions of courts and arbitral tribunals provide an adequate body of material to interpret CISG provisions in a uniform manner? In other words do they ‘breathe the spirit of uniformity’ ?
In order to answer this question, Chapter Two will discuss the theoretical concept of achieving uniformity in the application of uniform international sales law. First, the legal character of the Convention will be addressed. This provides essential background for understanding the issue of uniformity of application. Moreover, it will deal with the meaning and standard of uniformity as well as the method to achieve it. Chapter Three will present a case analysis. The issues of applicability, interpretation of party conduct, usage and practices and the formation of contracts are chosen for this analysis. This choice was made with reference to CISG issues that are crucial to the goal of achieving uniformity. The rules of application serve as threshold for the applicability of the Convention. The issue of interpreting party conduct was chosen due to the fact that judges in almost every case need to deal with this question. Closely linked to that is the issue of usage and practices, since it impacts on the meaning of party behaviour. The last issue was chosen since all CISG matters firstly involve the formation of a contract. The cases represent both extremes on the scale of successfully applying the CISG in a uniform manner. Chapter Four will present a conclusion on the issue of uniformity in the application of CISG provisions.
This section addresses the theoretical background to the principle of uniform application and deals with the standard of uniformity. In light of this discussion as well as the specific character of the Convention, namely self-executing and international, a method will be introduced to achieve uniformity in the interpretation and application of the Vienna Convention.
Before discussing the issue of uniformity in the application of CISG provisions, this study has to elaborate on the significance of this principle. It has to address the question why it is of high priority to achieve uniform application. The importance originates from three aspects of legal and economic character.
Provisions of a codified law are likely to be subject to varying interpretations. There are two reasons for that. Firstly, the interpretation of one party may differ from that of another party. Secondly, the more users with different legal, economic or social backgrounds apply the provision, the higher the probability of varying outcomes to the interpretation process. Some may narrow down the scope of the provision, some may extent it, some may draw an analogy. This has a direct impact on the outcome of the interpretation and can cause a diversity of interpretations. For that reason it is justified to assert that the more users a particular law has, the more difficult it is to achieve uniformity in the application. Conversely, that would mean that uniformity is easier to achieve when a provision is used by fewer people.
However, the CISG can only succeed if a great number of sales transactions is conducted under its rules, in other words if the Convention can attract many users. The contracting parties deserve to apply a body of rules which provides a high degree of predictability with regard to the outcome of potential disputes. Widespread uniformity in the application of provisions can serve to warrant predictability. This is one of the main criteria if trust is to be placed in the CISG as the governing law of the contract. Differences in application are contradictory to this goal. Traders will be reluctant to make their contract subject to a body of rules that is not tested on various occasions and therefore not well-established. This consideration shows that the uniformity issue is one of high relevance – not only from an academic point of view, but also from a practical and economic point of view. This is in line with the very goal of the CISG, namely to promote international trade.
Another aspect indicating the significance of promoting uniformity is the assumption that a widespread uniform application will be most likely based on a just and fair interpretation of the Convention. The CISG was intended to put seller and buyer in an equal bargaining position. From the perspective of the trader this is a decisive criterion. It is important that a provision be interpreted in a balanced fashion and not rates the interest of one of the contracting parties higher than the other. To reach a balanced application requires considering as much views and opinions as possible. It is necessary to take into account views from users with different legal, economic and social backgrounds. In essence, the same approach is required for the achievement of uniformity. That is why it can be concluded that uniform interpretation brings about a balanced and fair application of the Convention.
Finally, the aspect of globalisation also has some impact on the significance of promoting uniformity in the application. The movement towards a common world market challenges the trader with a new situation which he must adapt to. It requires establishing business relations with parties from far away countries and adequately executing those business transactions. The Convention can only represent a viable instrument of law in these situations if it is convenient to the business partners. Convenience is increased by promoting uniformity of CISG provisions.
The legal character of the Convention has an influence on the issue of uniformity inasmuch that it plays a role in interpreting the Convention.
The legal character can best be described as national law of international character. The CISG does not require to be incorporated into domestic law by separate enactment. After ratification by the State the provisions of the Convention automatically become domestic national law. The text contains substantial rules which directly govern the legal relationship of the parties to the sales contract. In relation to domestic sales law they are lex specialis. The adjudicator immediately has to apply the rules arising form the Convention, unless excluded by the parties.
On the other hand the CISG is of international character. This is due to the fact that the Convention is not a piece of national legislation but a product of compromise drafted at a multinational conference. The international character is expressly mentioned in article 7(1) CISG and evidenced by its sphere and scope of application. The applicability of the CISG is determined by reference to the place of business of the contractual parties, regardless their nationality. Excluded from the scope of the Convention are matters of particular national interest.
A national law which is of international character: in the first instance this sounds paradox. However, it is this character that dictates the method of interpretation. It implies that one has to refrain from applying law with domestic connotation in the sphere of the CISG. The common will expressed in the Convention must prevail. Recourse to domestic case law or domestic legal concepts must be avoided. The reason is that domestic concepts cannot support the ideas expressed during the drafting process. In addition, they are of low persuasiveness to users not familiar with the particular concept. Consequently, the international character requires developing an autonomous interpretation of CISG provisions. It requires to first look to the text of the Convention – an important implication for the method to be applied by adjudicators when interpreting CISG provision.
After having discussed the legal character of the Convention, this section deals with the adequate method to achieve uniformity.
Because the CISG is to a large extent based on compromise, the Working Group was forced to make use of rather vague concepts and general terminology. The Convention comprises provisions that are drafted in an abstract language. This maintains flexibility, which is vital for the CISG to stay a considerable code of law. However, vague concepts have to be interpreted to have any legal significance.
Article 19(1) may serve as example. This provision deals with the issue of an acceptance that contains terms varying from the initial offer. Article 19 (1) enshrines the “mirror image” rule, which means that the acceptance has to accord to the terms set out in the offer. To describe the scope of admissible alterations, article 19 (1) employs the phrase “other modifications”. However, the provision fails to define this term. Whether an addition or limitation of terms represents a modification in the sense of article 19(1) must be determined by construing the rule. As a compromise, article 19 (2) allows certain alterations which do not render the reply a counter-offer. This subparagraph allows flexibility by using the vague phrase of “material terms.” Article 19(3) declares some terms to be a material alteration. However, the requirements of materiality are not mentioned. Article 19(3) only lists elements that are considered to alter the offer in a material manner. This list however is not exclusive as evidenced by the term “among other things.” This implies that interpretation is necessary.
Thus, the effective use of article 19 certainly requires determining the meaning of its vague language. In fact, interpretation is always necessary to apply an abstract provision to the specific circumstances of a case. A vague concepts needs to be interpreted in a uniform manner to be relevant at all. This reveals that the issue of uniform application is closely linked to the issue of interpretation. Only the proper method of interpretation can achieve a uniform application.
The Convention contains a provision dealing expressly with the interpretation of CISG provisions, namely article 7(1) CISG. Article 7 is labelled as the key provision in understanding the CISG. It is also described as the provision that must ensure the success of the CISG as such. Subparagraph 1 reads as follows:
In the interpretation of this Convention, regard has to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade.
Does article 7(1) provide a certain method of interpretation? Does the wording “need to promote uniformity” serve as a specific method of interpretation? The predominant view is that it cannot. Consequently, the high significance of this provision must be derived otherwise. However, one can argue that article 7(1) contains policies of interpretation that can be significant for interpretation purposes. To have regard to the international character and to promote uniformity cannot tell the interpreter how to interpret the rules. It only tells about what shall be borne in mind when interpreting the rules in accordance to the proper method.
The international character of the Convention, however, contains an important aspect for establishing the proper method. It requires accepting that the choice of words used in the Convention is a compromise on international level. The issue of passing of risk may serve as an example. Article 67 makes use of non-technical language, which means that wording with domestic connotation was rooted out. The text speaks of “goods [which are] handed over to the first carrier for transmission to the buyer...” It was used as a descriptive formulation. The provision does not comprise technical terms one would expect when dealing with the passage of risk, like title, property or possession. This implies that in interpreting these words a domestic technique of interpretation cannot be used.
If domestic techniques cannot be employed, one has to find an autonomous technique. This might be seen as a considerable obstacle or even as a task impossible to fulfil. However, in terms of interpretation there already exists a fixed canon of methods. As matter of logic there is only room for a limited number of interpretation approaches, namely the grammatical, systematic and historical methods. Finally, there is the method which asks for the purpose of the rule. Due to the reference to promote uniformity in the application this canon must be supplemented by a comparative element. In effect, this means reference to foreign case law and considering pertinent scholarly writings when interpreting CISG provisions.
To determine the success of the uniform application of CISG provisions one first has to define the standard of uniformity that should be achieved. This will serve as the yardstick against which the jurisprudence is to be tested. There is a wide range of possible standards to think of. It ranges from a low degree, merely intended to decrease the legal impediments on international trade, to the goal of absolute uniformity. In between one can locate the standard of relative uniformity. One commentator uses the phrase of a “useful level of uniformity.”
Strict uniformity, in other words an interpretation that has the same outcome world wide, has the advantage of a high degree of certainty. Due to predictability of the outcome of potential disputes, the trust in the CISG would be very high in such an event. However, this idea must be banned into the world of utopia. Even in domestic surroundings strict uniformity is a matter of impossibility. Certain provisions are under permanent discussion concerning their interpretation. Additionally it has practical difficulties. At first glance such a standard might be desirable. However, in order to be prepared for new developments in international trade, the Convention must be able to cover occurrences and circumstances that were not foreseen by earlier interpretations. The CISG must remain flexible. The issue of means of communication may serve as an example. Article 13 equals telegram and telex with writing. Modern forms of communication are not completely covered by the wording. If there was a decision interpreting the provision in a narrow way and one clings to strict uniformity, that interpretation would be a thing of eternity. This contravenes the need for flexibility. Due to the huge legislative effort, alteration of the CISG is very unlikely to happen. That is why the CISG deserves some degree of flexibility. This is the only way how the Convention can remain a “living” law that has practical significance in international trade.
To promote the other extreme, namely to merely decrease legal barriers to international trade, should also be prevented. That would mean that no considerable effort will be made to achieve a certain degree of uniformity. The effort would be restricted to removing the hardship of extremely differing interpretations. It is questionable whether such an approach can reach any standard of uniformity and will be contrary to the wording of article 7(1). It states that “regard shall be had ... to the need to promote uniformity.” This formulation expresses the need to have this principle in mind when interpreting the CISG provision. The outcome of the interpretation must mirror the principle.
Several aspects of the Convention itself serve as an indication of the degree of uniformity that is required. These aspects affirm the assumption that a useful standard should lie in between the mentioned extremes.
Firstly, one has to bear in mind, that the Convention itself is not contained in a single autonomous document. It was adopted in six equal official languages. Due to the fact that the meaning of an expression in one language cannot always be transferred precisely into another language, the basis for some diversity is given. This becomes clear by having a look at the text of article 71 and 72 CISG. Article 72 CISG requires a threat of a fundamental breach of the contract. Under article 71, however, it suffices that a party fails to perform a substantial part of its obligation. This textual difference can be used to argue that contract avoidance requires a more serious breach than suspension. However, the French text uses the same term, namely “essentielle”, in both provisions to describe the seriousness of a breach. This shows that even the text of the CISG itself– serving as basis for the interpretation – is not uniform.
 Audit B “The Vienna Sales Convention and the Lex Mercatoria“ in Carbonneau Thomas E (ed) Lex Mercatoria and Arbitration 173 [available on <http://www.cisg.law.pace.edu./cisg/biblio7audit.html>].
 United Nations Convention on Contracts for the International Sale of Goods, April 10, 1980, S. Treaty Doc. No. 98-9(1983); see also Final Act of the United Nations Convention on Contracts for the International Sale of Goods, Annex I, U.N. Doc. A/Conf.97/18(1980), in Official Records, Conference on Contracts for the International Sale of Goods 178, U.N. Doc. A/Conf.97/19. Hereinafter referred to as CISG or Convention.
 Felemegas J “The United Nations Convention on the International Sale of Goods: Article 7 and Uniform Interpretation“ (2000-2001) Pace Review of the Convention on Contracts for the International Sale of Goods (CISG) 115 ch 3.4 (online available < http://www.cisg.law.pace.edu/cisg/biblio/felemegas.html>].
 Rossett A “Unification, Harmonisation, Restatement, Codification and Reform in International Commercial Law” 1992 A merican J of Comparative L 683 697 however points out that the adoption of uniform laws as such is not the major force for harmonisation, but a shared legal culture.
 Honnold J “The Sales Convention in Action - Uniform International Words: Uniform Application ?“ 1988 8 J of L & Com 207 208.
 Réczei L “Process and Value of the Unification of Commercial Law: Lessons for the Future Drawn from the Past 25 years in 25th UNCITRAL Congress (1992) 5 6.
 Bailey J E “Facing the Truth: Seeing the Convention on Contracts for the International Sale of Goods as an Obstacle to a Uniform Law of International Sales“ 1999 32 Cornell Int’l Law J 273 276.
 See e g Behr V “The Sales Convention in Europe: From Problems in Drafting to Problems in Practice 1998 17 J L & Com 263 264 (“[f]rom the point of view of legislation as well as from the point of view of practical application, the Convention seems to be a success. Moreover, this success may fuel further uniformity as it is already influencing other fields of international trade law.”); Ferrari F “General Principles and International Uniform Commercial Law Conventions: A Study of the 1980 Vienna Sales Convention and the 1988 UNIDRIOT Conventions on International Factoring and Leasing“ 1998 10 Pace Int'l L Rev 157 157 (observing that “[a]mong the most important conventions on uniform commercial law in force... [is] the 1980 United Nations Convention on Contracts for the International Sale of Goods [...] The CISG assumes importance due to its great success [at unifying commercial law]”); Flechtner H M “The Several Texts Of the CISG in a Decentralized System: Observations on Translations, Reservations and Other Challenges to the Uniformity Principle in Article 7(1) 1998 17 J L & Com 187 216 (mentioning that “compared to the 'Babel of diverse domestic legal systems' that it replaced, the Convention represents vast progress towards a uniform international sales law. However, it does not and could not achieve perfect uniformity.”)
 Hackney P “Is the United Nations Convention On the International Sale of Goods Achieving Uniformity” 2001 61 Louisiana Law Review 473 486; Lookofsky J “Digesting CISG Case Law: How much regard shall we have” 2004 8 Vindobona J of Int’l Com L & Arbitration 181 193.
 Lookofsky P 2004 8 Vindobona J of Int’l Com L & Arbitration 181 193.
 One should realise that different legal traditions differ in terms of the extent of considering legal commentary when reasoning a decision. Especially in common law tradition the judge is moving within the corners of the system of precedents and stare decisis. This leads to the conclusion, that case law plays a slightly more important role than doctrinal writing. However, this shall not mean to disregard doctrinal writing on CISG issues. Although case law from a traditional point of view has a slightly higher level of persuasiveness, other legal sources must also be considered. To disregard them would mean to close the eyes to an essential part of legal writing.
 Zeller B “Four-Corners - The Methodology for Interpretation and Application of the UN Convention on Contracts for the International Sale of Goods 2003” ch 1.3.a. [online available at <http://www.cisg.law.pace.edu/cisg/biblio/4corners.html>].
 This is evidenced by the legislative history of the Convention. It was decided that the CISG shall be applicable to sales transactions without effectuating domestic legislation. See: Volken P “The Vienna Convention – Scope, Interpretation and Gap-filling” in: Petar Sarcevic & Paul Volken (eds), International Sale of Goods: Dubrovnik Lectures (1986) 20 [online available at <http://www.cisg.law.pace.edu/cisg/biblio/volken.html#ii>].
 See article 1 CISG. This means that the CISG may even apply between nationals of the same State. This occurs under the circumstance that the goods in question cross the border and one party has its place of business in another State, which also is a Contracting State or if the rules of private international law lead to the law of a contracting State.
 See articles 2 CISG. With regard to consumer sales or the sale of sensible goods like stocks, shares, ships, aircraft, electricity, the States may wish to enact individual legislation.
 Zeller B supra ch 3 5.a
 An exception may be seen in the situation where a domestic concept is mutually accepted by all participants.
 Article 19 (2) reads: However, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially alter the terms of the offer constitutes an acceptance, unless the offeror, without undue delay, objects orally to the discrepancy or dispatches a notice to that effect. If he does not so object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance.
 Listed are price, payment quality and quantity of the goods, place and time of delivery, extent of one party’s liability to the other, the settlement of disputes.
 For further provisions that are open to different interpretation see Viejuebueno S “Progress through Compromise: The 1980 United Nations Convention on Contracts for the International Sale of Goods” (1995) 28 CILSA 200 203.
 Article 8 is also concerned with interpretation issues. This rule governs how the parties conduct needs to be interpreted.
 Zeller B supra ch 3.2.a states that “[a]rticle 7 is the key to understanding the CISG, as without fully understanding article 7, the application of the CISG cannot produce consistency and hence predictability.”
 Koneru P „The International Interpretation of the UN Convention on the Contracts for the International Sale of Goods: An Approach based on General Principles“ 1997 6 Minnesota Journal of Global Trade 105 105 [online available at <http://cisgw3.law.pace.edu/cisg/biblio/koneru.html>].
 The Draft Convention of 1978 employed the wording “to promote uniformity.” In Vienna, “in its application” was removed from the phrase “In the interpretation of this Convention (and its application ... )” following proposals by the U.S. (A/Conf. 97/C.1/L.5= O.R. 87) and France (A/Conf. 97/C.1/L.22= O.R. 87) and then inserted behind "uniformity" as an editorial correction. This change was not intended to limit the scope of the provision.
 Lookofksy J 2004 8 Vindobona J of Int’l Com L and Arbitration 181 184; Magnus U „Währungsfragen im einheitlichen Kaufrecht“ 1989 53 RabelsZ 116 122; Schlechtriem P Commentary on the UN Convention on the International Sale of Goods (CISG) 2 ed (1998) Art 7 n 19.
 Zeller B supra ch 3.2.a.
 Magnus U 1989 53 RabelsZ 116 123.
 Réczei L „Process and Value of the Unification of Commercial Law: Lessons for the Future Drawn from the Past 25 years“ (1992) in 25th UNCITRAL Congress 5 6.
 See inter alia Honnold J Uniform Law for the International Sales under the 1980 United Nations Convention 3 ed (1999) 95; Magnus U 1989 53 RabelsZ 116 123.
 DiMatteo L et al “The Interpretative Turn in International Sales Law: A Analysis of Fifteen Years of CISG Jurisprudence” 2004 24 Nw J Int’l L & Bus 299 310.
 Hackney P “Is the United Nations Convention on the International Sale of Goods achieving uniformity ?“ 2001 61 Louisiana L Rev 473 476.
 CISG-AC Opinion no 1, Electronic Communications under CISG, 15 August 2003 [online available at http://www.cisg.law.pace.edu/cisg/CISG-AC-op1.html
 The official languages are Arabic, Chinese, English, French, Russian, Spanish. Austria, West-Germany, former East Germany and Switzerland have agreed upon a unified German text, which however does not belong to the official languages.
 Flechtner H M 1998 17 J of L & Com 187 191.
 See in general: Eiselen S „Remarks on the manner in which the Principles of European Contract Law may be used to interpret or supplement Articles 71 and 72 of the CISG“ 2002 [online available at http://www.cisg.law.pace.edu/cisg/text7peclcomp71,72.html].
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