Reproduced with permission of the author

1. Introduction

2. Interrelation of the Conventions

3. Interpretation of the Conventions

4. Scope of the Conventions

5. Determining the Applicable Law

6. Validity and Formation of International Contracts

7. Scope of the Applicable Law

8. Conclusion

Table of Cases

Official Publications

Bibliography

Appendices

I. Table of the States party to the 1955 Hague Convention, the Rome Convention and the 1980 Vienna Convention; II. Convention sur la loi applicable aux ventes à caractère international d'objets mobiliers corporels (the 1955 Hague Convention); III. La Déclaration et la Recommendation suivantes relatives au domaine de la Convention sur la loi applicable aux ventes à caractère international d'objets mobiliers corporels, conclue le 15 juin 1955; IV. Convention on the Law Applicable to Contractual Obligations (the 1980 Rome Convention); V. First Protocol on the Interpretation by the Court of Justice of the European Communities of the Convention on the Law Applicable to Contractual Obligations; VI. Second Protocol Conferring on the Court of Justice of the European Communities Certain Powers to Interpret the Convention on the Law Applicable to Contractual Obligations; VII. United Nations Convention on Contracts for the International Sale of Goods [Part III omitted] (the 1980 Vienna Convention)

1. Introduction

This principle is recognised by all civilised countries. It is not a problem in itself. The problem is the uncertainty to which the parties to an international contract are exposed by not knowing beforehand which legal system will govern their contract and their respective rights and obligations. This uncertainty is as serious a threat to commercial trade as a protective legislation on import and export and likewise, it is a problem which neither the contracting parties nor the trade itself could solve. It must be solved interstately, i.e. by uniform rules of legislation.

Naturally, since the problem really is the uncertainty of the parties to the contract, these uniform rules of legislation could be either uniform conflict rules or uniform substantive rules. Consequently, under the former the same national substantive law would be identified as the applicable law of the contract regardless of which forum country, and under the latter the same substantive rules of law would be applied. Both solutions have been adopted within this field of law, i.e. contracts of international sales: the 1955 Hague Convention on the Law Applicable to International Sales of Goods (the Hague Convention) and the 1980 Rome Convention on the Law Applicable to Contractual Obligations (the Rome Convention); and the 1980 Vienna Convention on Contracts for the International Sale of Goods (the Vienna Convention), respectively.

One of the purposes of this paper is to show that a uniform substantive law will not render conflict of laws unnecessary or useless: it will only make the latter less used. The reason for this is simply that a uniform law, particularly when based on compromise, can never be comprehensive enough. This means that issues not regulated must be solved either under the uniform law by way of analogy or e contrario interpretation, or under a national domestic law as identified by conflict of laws rules. Another reason is that at times a uniform law will refer matters to local trade practices. In a situation where there are several relevant local trade practices, the conflict of laws rules could provide guidelines, at least by way of analogy or e contrario interpretation, when deciding which of these competing trade practices should be applied. Hence, the two will always work in tandem.

This paper is concerned with the interplay of the above introduced three Conventions, it does not deal with any other legal rules on the same issues within a Contracting State, nor does it deal with any other conflict of laws traditions but that of the European civil law. Its aim is to identify in which situations the substantive rules of the Vienna Convention, in the end, will govern some of the different legal aspects of an international contract. However, since the Rome Convention is not only concerned with international contracts of sale of goods, the other contractual obligations falling under that Convention will not be dealt with.

1.2 Terminology

The term `private international law´ will be used in the broadest sense, covering rules on jurisdiction, conflict of laws rules, internal rules of private international law[2], anational laws, principles of international law, lex mercatoria etc. The term `national substantive law´ is used as its very opposite. Naturally, `private international law´ does not include public international law, just as `national substantive law´ does not include public [national] law. Accordingly, all three Conventions, as interstate agreements on uniform rules for international contracts, are well within the field of private international law.

1.3 Historical Background and Purpose of the Conventions

1.3.1 The Hague Convention [3]

Already at the Sixth Hague Conference on Private International Law in 1928 [4], the issue of a private international law convention regarding sales of tangible goods was discussed. A Committee of experts was appointed to work out a draft. At the Seventh Conference in 1951, the delegates of the participating States came to an agreement on a Draft Convention, which was finally accepted on June 15 1955. The Convention came into force on September 1 1964, after ratification by the Nordic countries but Iceland.[5]

The purpose of the Convention is partly to remove the legal unpredictability the international commercial trade has suffered due to the different national conflict rules and thus prevent forum shopping, partly to remove the legal uncertainty created by the "individualising method" when the applicable law is not obvious.[6] It is also considered to be one of the first steps towards unification of the international sales law even though only twelve States have ratified the Convention.[7] Its importance in the context of this paper lies in that nine out of the fifteen Contracting States to the Rome Convention are parties to this Convention.

1.3.2. The Rome Convention [8]

The work on unification of private international law and codification of the conflict rules within the European Community, i.e. drafting the Rome Convention, started by a proposal by the Governments of the Benelux countries to the Commission of the European Communities in 1967. The Rome Convention was ready for ratification in 1980. In 1988 two Protocols on interpretation of the rules of the Convention by the European Court of Justice were introduced. However, they have not entered into force yet. The Convention came into force on April 1, 1991 after ratification by the United Kingdom.[9]

The Convention is commended to Member States of the European Union as a measure of harmonisation, designed to eliminate differences between national conflict rules which impede the free movement of persons, goods, services and capital.[10] Consequently all new Member States of the European Union have ratified the Rome Convention.

1.3.3 The Vienna Convention [11]

At a Diplomatic Conference in Vienna in 1980, the United Nation Convention on International Sales of Goods was accepted on April 11, 1980. It is the final step of the work on the uniform rules of international sales of goods, a task that has taken more than fifty years to conclude if one takes into account the previous work undertaken by UNIDROIT and not only that of UNCITRAL. The Convention came into force on January 1, 1988 after ratification by China, Italy and the United States.[12]

The purpose of the Convention is to introduce a uniform regime more responsive to the particular needs of international trade than the great number of different national laws could provide and to rule out the uncertainty created by the parties' ignorance of each other's national substantive law. This uniform regime has been criticised by some legal scholars as being even more difficult to predict than the different national laws, since it, being a compromise between different legal traditions, contains references to the applicable law and main rules with equally broad exceptions. Moreover, it only contains few improvements compared with the different domestic laws. However, the number of Contracting States continues to increase, so it is broadly accepted.[13]

The Hague [14] and Rome [15] Conventions are international agreements on uniform conflict of laws rules in contract. They are both of universal character, which means that their application is not limited as between Contracting States. They are also mandatory in the sense that the parties to the contract cannot contract out of their application.[16] This of course does not mean that neither Convention does not recognise the principle of party autonomy: under both Conventions the parties' choice of governing substantive law is recognised and given effect. Through the application of these uniform rules the same national law will be identified as the governing law of the contract, regardless of in which Contracting State the forum is situated. Thus parties to international contracts will be ensured of the necessary predictability needed in commercial trade and deterred from forum-shopping between fora in different Contracting States.

The Vienna Convention [17] on the other hand, is an international agreement on uniform substantive rules governing international sales of goods. It is not of universal character, i.e. it will only apply in relation to Contracting States, neither is it mandatory, since the parties can either contract in or out of its application.[18] In other words, this Convention too recognises the principle of party autonomy. This uniform sales law has been incorporated within the national substantive laws of the Contracting States. Thus it forms an integral part of those laws. Accordingly, the Convention will correspond with what is usually meant by the lex contractus or the governing law in contract. However, despite its incorporation, the Convention will remain an autonomous body of law, which is particularly clear in regard of its interpretation.[19] Here too, the aim is to ensure predictability and deter forum-shopping, though the Convention will also provide a neutral alternative to the otherwise applicable national domestic law of a particular country.

Consequently, the former two Conventions, as sets of universally applicable conflict rules, will occasionally identify the latter, as a set of substantive rules governing international sales, as the law applicable to a contract. Or rather, the law of a Contracting State to the Vienna Convention will be identified as the lex contractus and thus the uniform substantive rules governing international sales of goods are applicable as part of that law.[20]

However, it is important to appreciate that even though the Vienna Convention fits the description of a substantive law, the very subject matter of the Convention, i.e. international sales, is a matter falling under private international law, and the Convention, unlike the substantive domestic laws, contains its own rules regarding its application instead of relying on the national conflict rules. This suggests that the character of the Vienna Convention is dual; that it also contains rules of a private international law character.

According to its Article 1(1)(a) the Vienna Convention is "directly" applicable when the parties to the contract have their relevant places of business in different Contracting States, provided that the Convention has taken effect in the forum State.[21] This means that the traditional applicable law as identified by conflict rules will be disregarded.[22] Logically, since the provision is a rule of the lex fori and it identifies which law, or rather which set of rules, will be applied to such a contract, the provision performs the task of a conflict rule and not that of a rule of substantive law.

One of the differences between the provision in Article 1(1)(a) and traditional conflict rules is that the former identifies the actual situation in which the Convention is applicable and the latter determine which national law will be applied to the contract. That is to say, the former is an in casu rule and the latter are general rules. However, a simple rephrasing will show that the difference is not really substantive as concerns the actual identification of the rules applicable to a contract. Article 1(1)(a) could be generalised as follows: "international contracts shall be governed by the Convention rules when the parties have their relevant places of business in different Contracting States", its connecting factor being the location of the parties' relevant places of business. The conflict rules on the other hand could be concretised as follows: "Swedish domestic law applies to international contracts when the parties have chosen Swedish domestic law or the contract is most closely connected to Swedish domestic law; Finnish domestic law . . . etc., etc."

The fact that Article 1(1)(a) is a rule of a peculiar kind is further emphasised by the various efforts undertaken to classify it. Philip suggests that the provision is an internationally mandatory rule as defined in Article 7 of the Rome Convention.[23] That is to say, it will be applied by the forum regardless of the governing law, which is exactly what all fora of the Contracting States do. The implication of this suggestion is that recourse to the traditional conflict rules is unnecessary, rather than excluded, since the internationally mandatory character of Article 1(1)(a) will render the governing law inapplicable in favour of the uniform substantive rules in the Vienna Convention. However, this does not deal with the question of the proper characterisation of the provision.

In Germany, on the other hand, it is well settled that Article 1(1)(a) is a conflict rule. However, since it only applies in one specific situation, i.e. where the parties have their relevant places of business in different Contracting States, and it only identifies one specific set of rules, i.e. the Vienna Convention, it is classified as a unilateral conflict rule. The German term Anwendungsbestimmende Kollisionsnorm, which could be translated into something like "application-determining conflict rule", is probably the most descriptive one, though the term most commonly used is einseitige Kollisionsnorm (unilateral conflict rule).[24] Hence, the unilateral conflict rule in Article 1(1)(a) differs from the traditional conflict rules in that the latter apply in any possible international situation and identify any one of an indefinite number of national substantive laws as the governing law. That is to say, since they are universal in their scope and application and Article 1(1)(a) is not, it is possible to distinguish between universal conflict rules on the one hand and unilateral conflict rules on the other. It is this distinction that makes Article 1(1)(a) applicable instead of the traditional [universal] conflict rules, when the parties have their relevant places of business in different Contracting States, in accordance with the principle of lex specialis derogat generalis.[25]

Accordingly, the statement that Article 1(1)(a) makes the Vienna Convention generally applicable without recourse to private international law,[26] cannot be altogether correct. The implication of the statement is namely that an international sale would be regarded as a domestic one, which, in considering that all other contractual aspects of the contract outside the scope of the Vienna Convention along with all the non-contractual aspects of it nevertheless will be regarded as international, is really illogical.

The dual character of the Vienna Convention is further supported by Article 7(2), which ultmately refers questions of law unsettled within the Convention to the proper law of the contract, as identified by the conflict rules of the lex fori; and by the presence of the private international law principle of party autonomy in Article 6.[27]

The substantive character of the Vienna Convention is shown inter alia by Article 1(1)(b). The provision expresses a general principle within the field of private international law: that the substantive rules of a legal system will be applied when it is identified as the governing law. Article 1(1)(b) also distributes legal issues between different bodies of law within a legal system, i.e. between the domestic sales law and the uniform international sales law. It follows that the provision is not in itself an international conflict rule.[28]

2.1.1 Illustration

2.2 The General Interplay of the Conventions

Where the parties to contracts of international sales of goods have their relevant places of business in different Contracting States to the Vienna Convention, there will hardly be any interplay between the Conventions, since such contracts will fall exclusively under the Vienna Convention by virtue of Article 1(1)(a) as lex specialis. Any interplay will be restricted to such questions which under Article 7(2) are to be settled in conformity with the law applicable by virtue of the rules of private international law. The Hague and Rome Conventions will only apply to matters within their scope but outside the scope of the Vienna Convention.[29]

Where the Vienna Convention is not directly applicable under Article 1(1)(a), the applicable law of the contract must be identified by the national conflict rules of the lex fori, e.g. the Hague and Rome Conventions. However, according to Article 1(1)(b) of the Vienna Convention, the Convention rules will still govern the contract when the rules of private international law lead to the application of the law of a Contracting State.[30] Within the field of conflict of laws the concept of "law", means the law in force in a State other than its choice of laws rules, i.e. its substantive law. Due to the substantive character of the Vienna Convention, the rule in Article 1(1)(b) will apply whether the forum country is a Contracting State or not. The court seized will apply it as a provision of the internal law of the Contracting State, the application of which is prescribed by the conflict rules of the lex fori. Hence, the court is not performing an obligation under the Vienna Convention as an international treaty by applying its uniform substantive rules to an international sales contract, but simply applying the governing law, of which the Convention rules form an integral part.[31]

The application of the substantive rules is not dependent on the fact that the conflict rules of the Contracting State, the law of which has been identified by the forum as the applicable law, also will identify the law of a Contracting State as the lex contractus, which Bernstein contends.[32] Apart from being contrary to the principle of exclusion of renvoi,[33] as it includes application of the conflict rules of the applicable law, such an interpretation of Article 1(1)(b) would create an additional requirement of "double identification", i.e. that conflict rules of both the lex fori and the lex contractus must identify the law of a Contracting State as the governing law in order for the Convention rules to apply. There is no support for Bernstein's contention in the wording of Article 1(1)(b). The provision simply refers the matter to `the rules of private international law´, which, according to Jayme means that: "[i]n such cases, the applicability of the Convention depends on the rules of private international law of the respective forum . . . [and] it is sufficient that [they] lead to the law of a Contracting State." [34]

Accordingly, when the Vienna Convention is not applicable under Article 1(1)(a), the court seized in a Contracting State will use its other conflict rules, e.g. the Hague and Rome Conventions, to determine the applicable law. Where the law of a Contracting State to the Vienna Convention is identified as the lex contractus, Article 1(1)(b) is fulfilled and the substantive rules of the Vienna Convention will be applied as part of the governing law.[35]

All three Conventions recognise the principle of party autonomy.[36] That is to say, the parties' choice of law will be upheld. However, a choice of law clause simply referring the matter to the law of a Contracting State to the Vienna Convention, will by virtue of Article 1(1)(b) lead to the application of the Convention rules. In order for the domestic law of the chosen Contracting State to apply, the parties' intention must under Article 6 of the Vienna Convention make an express or at least an evident reference to the domestic rules.

Naturally, where the law chosen by the parties is the law of a Contracting State taking the reservation under Article 95 that it will not be bound by Article 1(1)(b), the presumption will be the opposite, i.e. its domestic rules will be applied, rather than the Convention rules, unless the parties contract into the Convention. The reason for this is that a choice of law by the parties renders their contract outside the scope of the Vienna Convention. That is to say, Article 1(1)(a) does not apply and where a reservation under Article 95 precludes the application of Article 1(1)(b), the Convention rules will not apply at all, unless the parties incorporate them by an express or at least evident reference.[37]

The Doctrine of Exclusion of Renvoi

2.3.1 The Hague Convention

The expression `la loi interne du pays´ means that the contract will be governed by the substantive rules of the applicable law. Consequently, the conflict rules of the applicable law will not be applied, i.e. renvoi is excluded.[38]

2.3.2 The Rome Convention

In accordance with the general approach regarding the conflict of laws in contract, the principle of renvoi is explicitly excluded in the Convention. The provision will not be of any major importance between the Contracting States due to the uniformity of the conflict rules. However, when the uniform rules lead to the application of the law of a non-Contracting State, the provision will be important, since the conflict rules of such a State might identify another law as the governing law.[39]

According to the Report,[40] the exclusion of renvoi is simply logical. A choice of law by the parties will exclude any possibility of renvoi to another law, since the parties clearly have intended the substantive rules of their chosen law to apply. Where the parties have not made a choice of law, it would not be reasonable for a court to apply a particular law simply because that law is considered by the applicable law as identified by the conflict rules of the lex fori, to be the proper law of the contract. It would be far too unpredictable.

However, there are national legal rules which, without being conflict rules, nevertheless will govern when other substantive rules are applicable. These rules are sometimes referred to as internal rules of private international law [42] and their application is not excluded under Article 15. They establish either which set of substantive rules is to be applied to the transaction, or the choice could be between a set of substantive rules and no statutory regulation at all. An example of the former kind is Article 1(1)(b) - and consequently Article 95 too - of the Vienna Convention which governs whether the uniform sales law or the domestic rules of the applicable law will be applied.[43] Naturally, the application of the internal rules of private international law is neither excluded under the Hague Convention.

2.3.3 The Vienna Convention

The reference in Article 1(1)(b) to `the rules of private international law´ of the respective forum is not qualified in any way, i.e. the contents of these rules is a matter strictly for the lex fori. Accordingly, whether the principle of renvoi could be used in identifying the law of a Contracting State as the governing law and thus rendering the Convention rules applicable as part of that law, is outside the scope of the Convention.[44]

2.4 The Primacy of the Conventions inter se

2.4.1 The Hague Convention

Apart from the doctrine of exclusion of renvoi, there are no guidelines as to the relationship with other conventions within the Convention.

2.4.2 The Rome Convention

The Rome Convention is subordinate to all other Community acts already in force or later adopted which contain rules of private international law with regard to contractual obligations. This is to avoid conflicts between these acts and the Convention and to allow further development within this field of law regarding particular types of contractual obligations.[45]

The Community provisions contemplated by Article 20 are Regulations, Directives and Conventions concluded by the institutions of the European Community and national laws harmonised in implementation of such acts.[46]

Once ratified, the Rome Convention will completely replace all national conflict rules in force in a Contracting State which are of purely national origin and not part of any convention to which the Contracting State is a Party.[47] These "international" conflict rules will not be replaced and according to the provision the Convention will not prejudice their application.

However, the Article does not provide any uniform procedure, so the difficulties arising from the combined application of the Convention and another concurrent convention are not eliminated and the different Contracting States must seek their own solutions.[48] If the other concurrent convention contains a similar provision on subsidiarity, the issue could be solved by applying general principles of interpretation, in particular the principle of lex specialis derogat generalis, though it is recommendable that the issue is properly settled within the implementation process of the conventions.[49] Where the concurrent convention does not have such a provision, e.g. the Hague Convention, that convention will prevail, though see Plender's suggestion described below in section 2.4.4.

2.4.3 The Vienna Convention

This Article regulates the relation between the Vienna Convention and other international agreements concerning the same matters, i.e. substantive rules on international sales of goods. Since reference is made to `international agreements´, situations falling under Article 94 [50] will not be within the meaning of this provision. The effect of Article 90 is to displace the application of the Convention, but in order not to weaken the universal character of the Convention the provision will only apply where both parties have their relevant places of business in States Parties to another agreement concerning matters governed by the Convention.[51]

Article 90 will not regulate the relationship between the Convention on the one hand and the Hague and Rome Conventions on the other, since the latter two are concerned with the choice of law and do not contain any substantive rules. The fact that the Convention contains a unilateral conflict rule [Anwendungsbestimmende Kollisionsnorm], i.e. Article 1(1)(a), does not mean that its subject matter is conflict of laws. [52]

Article 90 is a rule of priority, therefore it is not necessary for a Contracting State to make a declaration under the provision in order for it to have effect. Despite this, Hungary has made an interpretative declaration, in which it is stated that Hungary regards COMECON General Conditions of Supply to fall under the Article. This declaration has not been contested by any Contracting States and it should state the law as it stands. The provision should cover any international agreement regardless of whether it is bilateral or multilateral.[53]

Herber has suggested that the law of the European Community would be able to claim priority under this provision.[54] He argues that the secondary EC law by way of analogy, since it is a sui generis legal system and not international law, should be given priority because of its basis in the Treaties of Rome and the fact that it, due to this basis, "objectively forms part of a set of rules governed by an international agreement."[55]

However, it is here argued that, first, the correct interpretation of Article 90 should be according to its wording, i.e. analogies are not appropriate. This is even more emphasised by the provisions in Article 94, under which Contracting States can make reservation against the application of the Convention inter se, if their substantive law constitutes a regional uniform legal order.[56] So far there has been no such reservation referring to EC law. Secondly, the secondary EC law is not uniform enough. It consists of de minimis rules, which will be implemented in due course (and sometimes later) by the Member States of the European Community, so how will the contents of the EC law be established? Should all Member States have implemented the Directive; should it be according to the actual Directive, i.e. the de minimis rules; the implementation [of stricter rules] in an individual Member State; or in any other way? Furthermore, even though an unimplemented Directive may have so called direct effect, i.e. that individuals can seek its enforcement it even though it is not yet implemented, this right is usually only against the Member State in question and not against other individuals.[57] All taken together, and apart from the fact that there is no EC contract law, let alone any EC law on international sales of goods, it is arguable that EC law should not even qualify for a declaration under Article 94.[58]

Article 99 concerns the transition from the 1964 Hague Sales Conventions to the new regime established in the Vienna Convention. The essence of the provision is that the rules of the Vienna Convention will replace those of the others.

2.4.4 Conclusion

It is clear that formally the Hague Convention will always prevail in regard to the other two Conventions in case of a collision. The probability of such a collision between the Vienna Convention on the one hand and the Hague and Rome Conventions on the other, is however minute, since they concern different matters, i.e. uniform conflict law and uniform substantive law, respectively.

In this context it must be emphasised, that even though Article 1(1)(a) of the Vienna Convention is a conflict rule, it is not a universal conflict rule, but a unilateral conflict one. As was explained above, the provision in Article 1(1)(a) will identify the specific situation in which the Vienna Convention is applicable, unlike the traditional universal conflict rules which are capable of identifying one, or more national legal systems out of an indefinite number as the governing law. Accordingly, since the unilateral conflict rule in Article 1(1)(a) constitutes lex specialis, it will prevail over the lex generalis contained in the traditional [universal] conflict rules. Therefore, apart from the fact that Article 90 strictly is concerned only with the subject-matter of the Vienna Convention, it is arguable that the provision will not be applicable to the relation between Article 1(1)(a) and any universal conflict rule, since it is aimed only at the principle of lex posterior derogat priori rather than the principle of lex specialis derogat generalis. Be that as it may, it is well settled that international sales of goods between parties who have have their relevant places of business in different Contracting States to the Vienna Convention will fall under its Article 1(1)(a), regardless of whether these places of business are in States parties to international agreements on private international law, such as the Hague and Rome Conventions.[59]

As between the Hague Convention and the Rome Convention, a collision is however quite likely to appear before courts of the nine States parties to both Conventions, since they are both universally applicable. For instance, the Hague and Rome Conventions have similar but inconsistent provisions concerning consumer sales of tangible goods. According to Article 21 of the Rome Convention, the Hague Convention should prevail, which would deprive the consumer of the protection afforded to him by the former. This is not a satisfactory solution and it is likely to jeopardise the observance by the Contracting States of the obligations under the Rome Convention.[60]

However, regarding this particular problem, the Contracting States to the Hague Convention are now by virtue of the 1980 Déclaration[61] allowed to make specific conflict of laws rules regarding consumer sales without committing a breach of their Convention obligations. Accordingly, consumer sales can be excluded altogether from its scope, thus making the Rome Convention exclusively applicable to these transactions.[62]

Regarding the problem in general [63] there are several alternatives: First, the Contracting States of both Conventions could make an additional agreement in which they agreed not to apply the rules of the Hague Convention inter se, but exclusively those of the Rome Convention. Secondly, the Contracting States could revoke the Hague Convention. However, that is likely to create even greater ambiguity and is therefore not really an option.[64]

Plender has suggested a third solution within Article 21 itself. The 1969 Vienna Convention on the Law of Treaties states namely that an earlier treaty will only be applied if it is compatible with later treaties.[65] This general principle of international law could be applied so as to prejudice the application of the Hague Convention, thus making the Rome Convention applicable where appropriate.[66] The wording of Article 21 seems to be able to harbour such a solution. Presuming that such a solution is possible, the crucial question is then whether this should be done rule versus rule, or Convention versus Convention - and here too the wording seems able to harbour both alternatives, since Article 21 refers to the actual application of other international conventions and not only to conventions.

Denmark, Finland and Sweden have, regarding consumer sales of tangible goods, chosen to exclude these from the scope of the Hague Convention. However, the suggested alternative interpretation under Article 21 might prove useful for other collisions between the two Conventions which are not as easily solved without revoking the Hague Convention.

The importance of interpretation should not be underestimated. Clearly the choice of some principles and criteria of interpretation, i.e. methods of interpretation, over others will ultimately be decisive for the precise meaning and application of the individual provisions of the Conventions. Moreover, a method of interpretation could be abused so as to alter the intended meaning of the provision in a more favourable direction, or even to circumvent it. This applies of course to any legislation, whether of national or international origin. However, in applying domestic statutes, one can rely on long established principles and criteria of interpretation to be found within each legal system. This is not the case in regard of international agreements, at least not to the same extent.[67] Accordingly, it is recommendable to include methods of interpretation within a Convention, particularly where its future Contracting States will have different legal traditions. Otherwise those subjected to its rules could be tempted to interpret those rules in accordance with their own national standards and thus seriously threaten a uniform interpretation and application.

3.1.1 The Hague Convention

In the preamble to the Convention reference is made to the desire of the Contracting States to establish uniform conflict rules regarding international sales of tangible goods. However, there is no reference in regard of their interpretation. It was thought best solved by the individual Contracting States. On the other hand, the actual conflict rules are rather straight forward.[68] The rules likely to suffer from different interpretative contents are those concerning the scope of the Convention,[69] since there are no general definitions within it.[70] The Swedish Secretary of State for Justice expressed the following view when recommending the Swedish ratification of the Convention:[71]

3.1.2 The Rome Convention

According to Article 18 the courts are not allowed to define concepts in the uniform rules by reference to national systems of law, instead these should be given independent community meanings.[72] It is stated in the preamble that the Convention is a continuation of the harmonisation endeavours of law within the Community. It must also be remembered that the Convention is a part of the Community legal order and is therefore likely to be interpreted and applied in the light of the principles established by the Treaties of Rome and by other Conventions concluded under Article 220 of the Treaty.[73]

Accordingly, the implications of Article 18 are that the courts are under an obligation to use the method of teleological interpretation [74] and "interpret [the Convention rules] by reference mainly to its structure and objectives in order to make it fully effective."[75] Such objectives are, e.g. the unification of the conflict rules; predictability; and further development of the European Community's internal market.

The Giuliano and Lagarde Report explains that the problem of classification must be solved within the spirit of this Article, since there is no special Convention rule concerning this issue.[76]

3.1.3 The Vienna Convention

As has already been explained, the Convention forms part of the internal law of the Contracting States. However, "[the Convention] remains an autonomous body of law even after its formal incorporation into the different national legal systems",[77] which is a characteristic particularly emphasised in the context of its interpretation. Arguably, a court should not be allowed to rely on ordinary national principles and criteria of interpretation, since this would risk corrupting the Convention's international character and the promotion of its uniform application. Instead, the general approach should be liberal and flexible, giving regard to the underlying purposes and policies of the individual provisions and the Convention as a whole.[78] However, the promulgation of six authentic language versions of the Convention and the different reservations adopted by some Contracting States, suggest that this body of law is not truly autonomous at all. Consequently, strict global uniformity is impossible and arguably even inappropriate. In addition, the so called homeward trend, i.e. nationally based application, is difficult to avoid.[79]

Article 7 contains three different provisions: the first part of paragraph 1 states the basic criteria for interpretation of the Convention rules; the second part of paragraph 1 concerns the relevance of the principle of good faith within the scope of the Convention; and paragraph 2 concerns the gap-filling process.

The reference to `its international character´ in the first part of Article 7(1) means that it is necessary to interpret its terms and concepts autonomously within the context of the Convention itself. That is to say, the traditional meaning of a term or a concept within a particular domestic law cannot be decisive. The contents and formal presentation of the Convention and its provisions are a result of negotiations and as such based on a common understanding, which must be respected in their application and interpretation.[80]

The second part of Article 7(1) concerns `good faith in international trade´. It is an additional criterion to be used in the interpretation of the Convention, but its relevance is not limited to this: it is also a general principle capable of imposing additional positive obligations on the parties to the contract. However, since the principle is construed in the light of the specific conditions and requirements of international trade, it will not be applied in accordance with any national legal system. Instead, just as the rest of the Convention, it has an autonomous meaning derived from the Convention itself.[81]

Article 7(2) concerns the process of gap-filling. In order for this provision to apply, the issue at hand must be governed by the Convention but not expressly settled within it. That is to say, issues outside the scope of the Convention [82] will not be settled under Article 7(2) but under non-Convention rules of law as identified by the conflict rules of the lex fori.[83]

It is clear that the provision calls for the code-style interpretation familiar to the civil law systems, since the Convention, representing a veritable codification on the international sales law, wholly replaces the existing domestic law. It is not to be interpreted in the same strict manner as the statutory law in the common law countries which only replaces the common law rules and principles within its strictly defined scope based on its wording.[84]

There are two complementary methods to be used: application by analogy of specific provisions and application of general principles derived from the rules of the Convention. An analogous application of a particular provision presupposes that the case at hand is similar to the ones governed by the provision. However, this is not sufficient, because the rule could be of such exceptional character that it should be applied e contrario instead. Provided that there is no such impediment, the provision can be applied only if the case is so analogous to the ones falling under it, that it would be inherently unjust not to apply the rule analogously.[85]

The recourse to general principles differs "as it constitutes an attempt to find a solution for the case at hand not by a mere extension of specific provisions dealing with analogous cases, but on the basis of principles and rules which because of their general character may be applied on a much wider scale."[86] Some of these principles are expressly stated, such as the principles of good faith and party autonomy, but most of them must be derived from one or more Convention rules, as is the case with the principles of the reasonableness test on the parties' behaviour; of favor contractus; of cooperation between the parties; of estoppel / venire contra factum proprium; and of reasonable measure to mitigate loss. Furthermore, some of these principles are directly applicable, such as the principle of party autonomy, whereas others must be further specified in the particular case in order to provide an adequate solution, such as the principle of the reasonableness test. Even this specification referred to should be performed in an autonomous way, i.e. within the Convention.[87]

The last resort, according to Article 7(2), is the applicable law, which due to the anational character of the Convention only will be used if and to the extent a solution cannot be found any other way. Advocates and activists of the Convention might well prefer to settle matters clearly deemed insoluable by its drafters "within" the Convention.[88] It is clear though, that the provision renders the applicable law not only admissible but even obligatory, when fulfilled.[89]

According to Article 6, the parties may exclude the application of this Convention or, subject to Article 12, derogate from or vary any of its provisions.[90] This is not possible in regard to Article 7. The Convention is an autonomous body of law and as such it will be interpreted in accordance with the criteria specifically laid down in it.[91]

3.1.4 Conclusion

It is clear that the historical contexts of the respective Conventions have affected the choice of methods of interpretation and in particular the very existence of an obligation to use a specific method. The Hague Convention is one of the earlier conventions in this field and simply agreeing on uniform conflict rules, albeit with various national scopes of application, was at the time of its coming into existence considered an achievement. Since then the international efforts to facilitate and encourage international trade have increased. The Vienna Convention is one of these later efforts and is actually more or less a revision of earlier achievements of uniform laws.[92] It contains obligations to use particular interpretative methods in order to ensure its uniform and autonomous application. The Rome Convention differs from the other two, in that it already belongs to a legal context of established principles and criteria of interpretation, i.e. the Community law. It constitutes one of many means to develop the internal market of the European Community.

3.2 Aids to Interpretation

3.2.1 The Hague Convention

The preparatory work by the Conférence de la Haye, the Documents 1951 p. 4 et seq. is an important aid to understanding the Convention.[93] However, since the questions of definition and limitation of its scope were explicitly left to the Contracting States to solve, i.e. classification by the lex fori, the importance of these preparatory works is at least in this respect limited.

Consequently, a court in a Contracting State will have recourse to its own traditional national legal sources: e.g. statutory law; case law; the preparatory work of the Justice Department, etc. [94]; and legal doctrine. The definitions in the substantive law will be used when interpreting expressions such as `tangible goods´, unless the private international law has its own definitions in which case they will be used. The case law and the legal doctrine of other Contracting States could also be of help, at least if the respective legal systems have similar features regarding the issue at hand.

3.2.2 The Rome Convention

The main aid in the interpretation of the Convention is the Giuliano and Lagarde Report,[95] an official commentary written by members of the Working Group responsible for drafting the Convention. The different equally authentic language versions of the Convention should also be considered in applying the Convention. Decisions on interpretation of courts of other Contracting States, and even those of non-Contracting States provided they are based on the same principles, are of persuasive authority. Naturally, the weight of such judgments are dependent on their relevance and cogency and the status of the tribunal in question.[96]

There are also two Protocols [97] on the interpretation of the Convention by the European Court [98], neither of which is ratified. The first Protocol defines the scope of the jurisdiction of the European Court and the conditions under which it is to be exercised. The second Protocol confers powers on the European Court to interpret the Convention and contains rules of procedure. When ratified, these Protocols will enable, but not obligate, the courts of the Contracting States to refer a case to the European Court for a preliminary ruling. It should be noted that there is a distinct separation of functions between the European Court and the national courts. The former will be concerned only with the interpretation of the rule[s] referred and the latter with the application of the interpreted rules. The rulings will have the same authority as the Report.[99]

3.2.3 The Vienna Convention

It is clear that even though the application of the Convention is to be uniform and autonomous, divergent interpretations are still very possible and in fact very likely to occur. This could of course be avoided if an international tribunal with the competence to make preliminary rulings were introduced. However, given the fact that the Convention is not as the Rome Convention restricted to a particular regional area, it would be entirely unrealistic to expect all adhering States to subject themselves to the authority of such a tribunal.

Consequently, the task of ensuring the uniform application of the Convention has in practice been left to the national judges and arbitrators. However, interpretative aids do exist: First, there are several equally authentic language versions of the Convention. The difficulty in understanding a particular rule may not appear within all these versions. As far as a translation of the Convention is concerned, recourse to the official versions is obligatory. Where there are differences between different official language versions, recourse is to be had to the intention of the conference.[100]

Secondly, the case law of Contracting States is an important source of law. If not given the character of binding precedent, its pursuasive value should at least be taken into consideration. Naturally, the appropriate case law to rely upon in this respect should consist of concording and authoritative judgments from more than one Contracting State.[101] In the absence of such a case law, it is possible to either choose the most appropriate solution or to find a new one.

In the case of divergent solutions between various jurisdictions, it has been suggested that the proper interpretation should be the one which is used within the legal system as identified by the relevant conflict rules of the lex fori. The suggestion has been criticised since it involves recourse to conflict rules within the field of the uniform law. But, as Bonell puts it: [102]

There are several reasons for considering this suggestion as `the only possible remedy' in a situation of `insuperable conflict of interpretation between the Contracting States'. First, it is preferable to have an acknowledged lack of uniformity rather than a number of national "autonomous" interpretations, and ultimately a situation of "pope-banning" between the Contracting States in question. Secondly, compared to an application of the interpretation favoured by the lex fori, it would be more in line with the principles underlying Article 7(2). Thirdly, as between fora in different States which have uniform conflict rules, this solution would also lead to the same interpretation regardless of the forum chosen by the parties, thus enhancing predictability for the parties and equally preventing forum-shopping. This would to a certain extent also apply where the parties have made a choice of law, since most countries recognise the principle of party autonomy.[103] That is to say, in this case there is at least similar conflict rules, if not uniform ones.

Thirdly, there is the legislative history of the Convention, the travaux préparatoires, which consists of the acts and proceedings of the Vienna Conference and the summary records of the previous deliberations within UNCITRAL. However, its importance should not be overestimated, since it contains differences in opinions and the arguments put forward are not necessarily decisive for a particular rule. It could also be obsolete due to case law. Therefore the intentions of the drafters should only be relied upon when they are clear and supported by other elements of interpretation. The Secretariat Commentary to the 1978 Draft Convention has also often been referred to.[104]

The application of any of the three Conventions depends, as usual, on whether the contractual obligation in question will be classified, or characterised, by the court as one falling within their respective scope. Traditionally, classification is a matter strictly for the lex fori. However, a Convention may provide further guidelines, such as a definition, for this issue too.[105]

Each Convention contains provisions which lay down the limits of its scope. Unlike the Rome Convention, the Hague and Vienna Conventions are, with some modifications, only concerned with a particular type of contractual obligation, i.e. international sales of tangible goods. Accordingly, the contractual obligation in question must be further characterised in order to find out whether it is within the scope of any of these two Conventions. In some areas the borderlines of the Conventions' scope are not clearly defined, but nevertheless they will provide sufficient guidance at this initial stage.

Some legal aspects of a contract, even though they are of great importance to its parties, are not of a contractual nature and thus inappropriate to be governed by the lex contractus.[106] There are also some contractual obligations which due to their specific character are not suitably governed by the lex contractus as derived from the contract itself.[107] Depending on the general scope and character of the Convention, the matter will be solved either by restricting its scope leaving these issues outside altogether; or by adopting a complementing choice of laws rule thus restricting the scope of application of the lex contractus instead of that of the convention.[108]

When a contractual obligation is caught by such a restriction it is clearly outside the scope of the Convention in question. Hence, the court might not have to deliver an exact classification of any of the above mentioned borderline-cases: it will simply apply its national rules outside that Convention.

Sometimes a Convention contains provision allowing its Contracting States to make reservations against the application of some of its provisions. There is an important difference between a reservation and a restriction. As already explained, a restriction affects the scope of the Convention, thus narrowing it down. A reservation on the other hand, affects only the scope of the application of the Convention, and only in regard of that Contracting State making the reservation: the issue is still within the conventional scope, but the rules of the Convention will not fully be applied. The cardinal example is the doctrine of ordre public or public policy, which will not render a choice of law by the parties nor the application of a conflict rule invalid, but simply in the concrete case "correct" the offensive result otherwise achieved by the full application of the substantive law in question. The doctrine of ordre public is discussed infra section 4.4.

4.2 Limits of the Scope - the Positive Definition

4.2.1 The Hague Convention

There is no definition of what is meant by `ventes à caractère international d'objets mobilier corporels´ in the Convention. This issue was left to be defined by each Contracting State. It is clear though, that the scope within the concept of `international´ is meant to be very wide.[109] In fact, one of the objectives was to create a simple, uniform and universally applicable conflict of laws rule which would promote predictability for anyone, not only lawyers, involved in an international sale of movable corporate objects, i.e. tangible goods. This lead to the rejection of a suggestion during the Seventh Hague Conference [110], that the transaction in question should be defined as a sale between persons habitually resident in different States, since it was regarded as too narrow a definition.[111] The meaning of `objets mobilier corporels´ is discussed infra in section 4.3.1.

The concerns raised that leaving the definition of `international´ to the case law would create discrepancies between the Contracting States and harm the uniform application of the rules in this respect are quite unwarranted. The Convention is primarily concerned with the international commercial trade and from that perspective the borderline cases will be of minor importance, since the transactions of the international commercial trade usually are well within its scope.[112]

Within the field of international commercial trade where the parties normally are in different States the international character is easily established. This is also the case regarding a contract between parties in the same State in which there are concrete international criteria of a constant nature, such as the fact that the conclusion or the performance of the contract is to take place abroad; or that the tangible goods are situated abroad. However, parties to a contract without these concrete international criteria could also have a reasonable interest in the application of a foreign law if, e.g. the performance of the contract is dependent on another international contractual obligation; or, due to its specific nature, the sale of tangible goods by virtue of international trade customs will be governed by the law of a certain country.[113] Naturally, the latter situations are also considered to have an international character.

Note that if the sale of tangibles is connected to only one country, regardless of which and how foreign to the forum, the Convention will not be applicable. Such a transaction has not an international character.[114]

In conclusion, there need not be a very strong connection to another country. In fact, it is safe to say that whenever there is any doubt as to which law should govern the transaction, the Convention is applicable.[115] However, according to paragraph 4 a choice of law clause, an arbitration agreement or an agreement on the choice of court will not suffice on its own.

Any other character of a sale of tangibles is quite irrelevant. The Convention is applicable to commercial sales, consumer sales, contracts of delivery of goods and sales with a public authority as a party to the contract.[116]

4.2.2 The Rome Convention

The Giuliano and Lagarde Report states that the Rome Convention applies "generally to contractual obligations in situations involving a conflict of laws".[117] This renders it necessary to identify the character of the obligation in question in order to establish whether it is contractual, i.e. the normal procedure of classification. However, this classification differs due to the character of the Convention. No particular legal system can be applied to define the obligation as contractual since this would corrupt the uniformity of the uniform rules.[118] Instead, a uniform and autonomous law derived from the Convention itself should be applied. After comparative law studies of the national contract laws of the Contracting States a general and common concept of a contractual obligation within the European Community was identified for the purpose of classification. Plender summarises the results as follows[119]:

Further support can be found within the Convention itself, e.g. Article 18 and impliedly in Article 10(1)(e); and in the case law from the European Court, i.e. the Community law. For example, in Peters v. ZNAV [120], a case concerning the application of Article 5(1) of the Brussels Convention and the interpretation of "matters relating to a contract", the European Court held that `a contract´, for the purposes of the application of the Brussels Convention, is an independent concept which must be interpreted be reference chiefly to the system and objectives of the Brussels Convention. That assumption ought to apply when classifying an obligation as contractual for the purpose of the Rome Convention. Thus, for the purpose of classification of an obligation as contractual, `a contractual obligation´ is defined as `a voluntary agreement giving rise to obligations capable of being enforced by law´.[121]

However, there will still be adjacent areas of law where a uniform classification is not readily performed: the law of tort, restitution, quasi-contract, property, succession and family law. This is so because most of the matters excluded from the scope of the Convention are to be classified by the lex fori.[122]

The Report explains further that a situation involves a conflict of laws when it contains "one or more elements foreign to the internal social system of a country (for example, the fact that one or all parties to the contract are foreign nationals or persons habitually resident abroad, the fact that the contract was made abroad, the fact that one or more obligations of the parties are to be performed in a foreign country, etc.), thereby giving the legal systems of several countries claims to apply."[123]

The wording of the Article means that the Convention rules, subject to reservations under Article 19(2), are applicable also to co-existing systems of law within the same State.[124]

There have been suggestions made that the Convention should apply only in connection with the European Community, as the object and purpose of the Convention are harmonisation and further integration of the internal market of the Community.[125] However, this would be contradictive to the wording of Article 1(1), i.e. `any situation´, and to a Commission's Opinion [126] in which it was stated that the Contracting States must always apply the uniform rules whenever they decide the applicable law of a contractual obligation. In other words, the Convention is universal in its application and thus its scope is very wide. This is also indicated by Article 2, which states that any law specified by the Convention should be applied, not only the laws of the Contracting States.[127]

Article 1(1) refers to `laws of different countries´, which means that a direct choice of an anational law such as the Vienna Convention; international law; general principles of law; or any species of lex mercatoria would not be upheld under the Convention.

A different matter, in the context of conflict of laws, is that these sources of law may still be applied indirectly, either as part of the governing law or by way of incorporation by reference, i.e. as actual terms of the contract. In other words, whether they are applicable in principle and whether they are applicable in a particular case, depend entirely on the internal rules of private international law of the governing law, which, as was explained above [128], do not form part of the international conflict rules of the governing law. For instance, where the Vienna Convention forms part of the governing national substantive law as a set of special rules for international sales, it will be applied indirectly by virtue of Article 1(1)(b), being an internal rule of private international law of the governing law.[129]

That is to say, if, by virtue of the uniform conflict rules, Swedish law is identified as the applicable law, the rules of the Vienna Convention will be applied to the contract as part of that law, provided the contract falls within its scope. An example of a specie of lex mercatoria, which may be applied indirectly through the governing law is usage of trade under Article 9 of the Vienna Convention. Where these anational laws are made to apply by way of incorporation by reference, whether they are applicable will depend entirely on the contents of the substantive law, i.e. whether there are any mandatory rules governing the matter.[130]

The Report does more than just indicate the universal character of the Convention. It is said that "the Convention is a uniform measure of private international law which will replace the rules of private international law in force in each of the Contracting States, with regard to the subject matter which it covers and subject to any other convention to which the Contracting States are party (see Article 21)."[131]

4.2.3 The Vienna Convention

There is no definition of `contracts of sale of goods´ in the Convention. However, the exclusions in Articles 2 and 3 of some types of sales and contracts of services, respectively, and what under Articles 30 and 53 constitutes the reciprocal obligations of seller and buyer should provide some guidelines. There are different opinions whether hire-purchase contracts and leasing contracts fall under the provision.[132] In the majority of the cases, the expression will refer to a sale of tangible goods, but the Convention is not limited to such sales: sales of computer standard software and sales of water and gas are within its scope.[133]

If the Convention is to apply to the contract, the parties' places of business must be located in `different States´. This is not the case if they are simply located in different legal units within the same Contracting State. The reference to `different States´ will also have the consequence that the Convention will be applicable to a transaction which takes place within one State only, simply by the fact that the parties have their relevant places of business in different States.[134]

There is no definition of `place of business´ either. However, it is clear that the expression does not refer to the place of contract nor the place of negotiations. It is to be understood as the place of a permanent and stable business organisation including any subsidiary, such as a branch, an agent or any other establishment, which excludes places of temporary sojourn such as an international fair or a hotel.[135] It has been suggested that the mere presence of an agent's place of business who has authority to conclude a contract, is not enough to establish that his principal has his place of business in that same State. It would not be reasonable to let the mere presence of a subsidiary be decisive when determining the location of a principal's place of business.[136]

Under subparagraph (a) the rules of the Convention will "automatically" apply even though the conflict rules of the lex fori would identify the law of a third country as the applicable law. That is to say, the traditional applicable law will be disregarded.[137] However, since the Convention is concerned with the contract of sale itself and not the conflict of laws, a choice of law clause will at least be of importance for contractual issues left outside the scope of the Convention [138], e.g. under Articles 2, 3 and 7(2) and due to reservations.[139] By virtue of subparagraph (b) the Convention will apply when the conflict rules of the lex fori identify the law of a Contracting State as the applicable law. Accordingly the Convention may apply even though neither of the parties have their places of business in Contracting States.[140]

In the situation where one of the parties to a contract has more than one place of business, the place relevant for the application of Article 1(1) and the rest of the Convention will be, by virtue of Article 10, the place which has the closest relationship to the contract and its performance. Naturally, this connection has to be real, a fictitious registration will not be enough.

Some difficulties may occur when determining which one of a party's places of business should be the one with the closest relationship to the contract, if the contract is entered into and concluded by one of the party's places of business and the contract stipulates that its performance is to be executed by another of her places of business located in another State, i.e. the conclusion and the performance of the contract are separated. Which one of these places of business should be considered to have the closest relationship to the contract and thus be the relevant one? Unfortunately, there is no indication given in Article 10 as to which of its criteria should prevail,[141] even though the factors on the scales may be reduced by the rule in Article 10(a).[142]

Where one of the party's two places of business is located in the same Contracting State as that of the other party, it has been suggested that a principle of in dubio pro conventione should be invoked so as to give preference to the place that leads to an application of the Convention, since the Convention is becoming the global law of international sales. That is to say, that party's place of business which is situated in the other Contracting State should prima facie be regarded as the relevant place of business, regardless of whether it was the place of conclusion or performance of the contract.[143] Whether this is appropriate can be discussed.

Provided that both the States, in which the party's two places of business are situated are Contracting States, the issue will not cause any substantive differences: the rules and principles of the Convention will apply (subject to Article 7(2)). However, if one of these States has not ratified the Convention, and given that - after taken all relevant factors under Article 10 into account - there is a total equilibrium between these two places of business, this preliminary question must be solved.

In order to do this, it is vital to understand the proper function and nature of Article 10. This provision is concerned with the singling out the relevant place of business from a number of possible ones, for the purpose of determining whether the Vienna Convention, primarily under Article 1(1)(a), is applicable. Hence, it forms an interpretative part of the unilateral conflict rule contained in that provision. That is to say, Article 10 together with Article 1(1)(a), constitute the lex specialis of conflicts of laws in contract applicable to contracts of sale of goods between parties whose places of business are in different Contracting States to the Vienna Convention.

Therefore, in such an unusual case of total equilibrium [144], where neither Article 10 nor its case law will provide an answer, this preliminary question, it is suggested, should be solved under the traditional, universal conflicts rules in contract of the lex fori. This seems to be the logical conclusion to follow from the principle of lex specialis derogat generalis, as applied e contrario. The reason for this is that, whereas it is true that a rule of lex specialis will prevail over lex generalis, it is equally true that where the specific rule in question cannot provide the answer, recourse must be had to more general principles. Accordingly, recourse should be had to the universal conflict rules of the lex fori, e.g. Article 4(2) of the Rome Convention [145], when Article 10 cannot provide the answer to the preliminary question of which one of a party's equally connected places of business is the one relevant for determining whether the Convention is applicable or not.[146]

Honnold gives the following piece of advice: "However, where the balance seems close the parties would be well advised to settle the point by contract - by stating whether the Convention or specific domestic law is applicable."[147]

The second paragraph of Article 1 contains a requirement that the parties must have knowledge ab initio of their places of business, or habitual residences, being in different States, or at least that this fact is not concealed. Note that the provision does not refer to different Contracting States, nor is it necessary that the application of the Convention was foreseeable. If not, the location of their places of business will be disregarded and consequently the Convention will not apply. This is to protect an unknowing party from a surprise application of the Convention rules, such as in the situation of an undisclosed principal.[148]

Paragraph (3) of Article 1 clarifies the rule in the first paragraph of Article 1. It emphasises the importance given to the location of the parties' places of business as the sole requisite. Thus it will not matter that a party is a national of a non-Contracting State for the purpose of whether the Convention is applicable, nor will a party's civil or commercial character.[149]

4.2.4 Conclusion

The differences in the wordings of the three Conventions suggest that different criteria should be examined when determining whether they are applicable. To start with, a comparison between the Hague Convention and the Rome Convention suggests that under the former the provisions of the contract are primarily of importance, and under the latter it is the circumstances of the case.[150] In one sense, this difference is really negligible. The character of both Conventions as universal conflict rules are the same: any element of "internationality" will bring the contractual obligation within their respective scope. The Conventions are of a universal character.

However, since the Hague Convention only regulates the choice of laws issues for a certain type of contractual obligations, i.e. international sales of tangible goods, the provisions of the contract do have to be examined in order to classify the contractual obligation properly to see whether it will apply. Formally, the Rome Convention will not prejudice the application of the Hague Convention [151] and accordingly the classification of a contractual obligation as an international sale of tangibles will be enough for the latter to prevail.[152]

There is also another difference between the two Conventions: the scope of the Rome Convention is not limited to contracts of an international character, but any matter of private international law in contract will render it applicable.[153] This means that a sale of tangibles which is not international but nevertheless contains a choice of laws will only be within the scope of the Rome Convention. One example of such a situation would be where there is a conflict between co-existing systems of laws within the same State. This is definitely a conflict of laws, but it is certainly not international. It is questionable whether there are any more examples, since the connection to another country need not be very strong in order to bring a sale of tangibles within the scope of the Hague Convention.[154]

Under the Vienna Convention on the other hand, no regard is given to criteria referring to the actual transaction. Instead, prima facie, a personal objective criterion is used, i.e. that the parties' relevant places of business are in different States. Its scope as a "conflict rule", or Anwendungsbestimmende Kollisionsnorm rather, i.e. its scope under Article 1(1)(a),[155] is even more limited compared with the other two Conventions. That is to say, it has only a unilateral application in this respect, since the Convention, under that provision, only applies between Contracting States.

The Hague Convention and the Vienna Convention both concern the same type of contractual obligation, i.e. international sales of tangible goods, though the latter is not limited to such goods.[156] However, since the Vienna Convention has a limited scope of direct or unilateral application, it will only prevail over the Hague Convention where the parties' relevant places of business are in different Contracting States, i.e. under Article 1(1)(a).[157] In all other situations the choice of laws issues will be solved by the application of the Hague Convention. A different matter is that the rules of the Vienna Convention may govern the contract of sale in the end by virtue of Article 1(1)(b), where the parties have their relevant places of business in different States, but that is not the same as solving the choice of laws issues.

Just as the Rome Convention, the Hague Convention will identify the law of a country as the applicable law, i.e. `la loi interne du pays´. This would mean that a direct choice of an anational law such as the Vienna Convention; international law; general principles of law; or any species of lex mercatoria would not be upheld under the Convention.

A different matter, in the context of conflict of laws, is that these sources of law may still be applied indirectly, either as part of the governing law or by way of incorporation by reference, i.e. as actual terms of the contract. In other words, whether they are applicable in principle and whether they are applicable in a particular case, depend entirely on the internal rules of private international law of the governing law, which, as was explained above [158], do not form part of the international conflict rules of the governing law. For instance, where the Vienna Convention forms part of the governing national substantive law as a set of special rules for international sales, it will be applied indirectly by virtue of Article 1(1)(b), being an internal rule of private international law of the governing law.[159]

That is to say, if, by virtue of the uniform conflict rules, Swedish law is identified as the applicable law, the rules of the Vienna Convention will be applied to the contract as part of that law, provided the contract falls within its scope. An example of a specie of lex mercatoria, which may be applied indirectly through the governing law is usage of trade under Article 9 of the Vienna Convention. Where these anational laws are made to apply by way of incorporation by reference, whether they are applicable will depend entirely on the contents of the substantive law, i.e. whether there are any mandatory rules governing the matter.[160]

Due to its subordinate nature in relation to other private international law conventions, the Rome Convention will normally not within the meaning of Article 1(1)(b) of the Vienna Convention, identify the rules of the latter as the applicable legal system of a contract. Only when the contract concerns a sale of intangibles within the scope of the Vienna Convention but outside that of the Hague Convention, will the Rome Convention be capable of rendering the rules of the Vienna Convention, as part of the governing law, applicable to a contract of sale between parties who have their relevant places of business in different States.

It has been explained above that the Vienna Convention, by virtue of Article 1(1)(a), could be applicable to what would be a national contract of sale were it not for one party having his place of business abroad. It could be argued that these contracts are outside the scope of the Hague Convention, since the contracts themselves do not have an evident international character. However, such a literal reading of Article 1(1) of the Hague Convention would be contradictive to its universal character as a conflict rule. The fact that one party has his place of business abroad is a strong enough connection to another country for the purpose of that Article. Especially when considering that according to paragraph 4 of that Article, the only thing which will not suffice on its own to give the contract an international character is the sole declaration by the parties. E contrario, this would mean that such a contract has an international character.

4.3 Restrictions of the Scope - Negative Definition

4.3.1 The Hague Convention

Since the Convention only applies to international sales of tangible goods, an interpretation e contrario of Article 1(1) seems to be appropriate in order to identify some of the matters excluded from its scope. It follows from such an interpretation that international sales of immovables, including fixtures; intangible movables, such as debts, companies, patents, copyright, goodwill, stocks and shares; and electricity are outside the scope of the Convention.[161]

All matters excluded, both explicitly and implicitly, are to be classified in accordance with the lex fori, since the definition of `ventes à caractère international´ in Article 1(1) has been left to each Contracting State. Their governing law will be identified by its conflict rules.

According to paragraph 2, the Convention will not apply to `ventes de titres´. Clearly, the expression covers negotiable instruments as a term of art. That is to say, an instrument which will give a bona fide transferee a better title than that possessed by the transferor, e.g. bills of exchange, cheques and promissory notes. However, it is arguable that any negotiable document and money should be included in the expression.[162]

Registered ships, vessels and aircraft are excluded. The requisite is the actual registration and not the duty to register. Thus, a contract with a shipbuilding yard to buy a ship not yet built, or simply not yet registered, is within the Convention; and a sale that will lead to an "unregistration" of such a registered object is excluded.[163] The register in question must be sanctioned by the national authorities and its registration carry legal rights.[164]

"Fixtures" of immovables, ships, vessels and aircraft are excluded from the Convention when they are sold in connection with a sale of immovables, ships, vessels and aircraft, respectively. However, it is not quite clear how sales of fixtures should be classified when they are not connected with such an excluded sale, e.g. a contract of sale of spare parts for an aeroplane. Arguably they should be included.

Sales on executions and otherwise by authority of law are also excluded.

Note that documentary sales are not excluded. In these cases the documents are only the means of the transaction and not its object. It has been argued that a subsequent sale by the first buyer of such documents would be within the scope of the Convention.[165]

According to paragraph 3, a contract of delivery is within the scope of the Convention when the seller will provide the material necessary for the delivery. So called mixed sales, where the "buyer" will provide some of the material himself, is not within the Convention.

The capacity of the parties, formal validity, transfer of title in the goods as between the parties and other proprietary aspects of the contract are excluded from the scope of the Convention and will consequently be governed by the lex fori including its conflict rules. According to some legal systems the transfer of risk and title are not separated, therefore it is explicitly stated that the transfer of the risk is to be governed by the proper law of the contract, even though it could be included among the parties' obligations.[166]

It is a common comprehension that the Convention is not applicable to the questions of agency. It has been argued though, that the exclusion should only affect the relationships between principal and agent; and principal and third parties, since an international sale of tangibles between an agent and a third party will still be an ordinary international sale of tangibles.[167]

The reason for adopting the Déclaration is of course the changes over the last quarter century in the substantive law regulating consumer sales contracts which required some form of adaption of the Convention. It has the effect of permitting the Contracting States to the Convention to adopt specific conflict rules for consumer sales contracts, i.e. exclude these sales from its scope, without violating their Convention obligations. It does not, however, ac-tually exclude consumer sales from the scope of the Hague Convention[169]

Another reason for excluding consumer sales from the scope of the Convention is that it is not reasonable to single out sales of tangible goods from all other consumer transactions when determining their respective governing law. Instead they should all fall under the same set of uniform conflict rules, i.e. the Rome Convention.[170]

4.3.2 The Rome Convention

The Report states that: [171]

Unlike the other two Conventions, these matters are not expressly excluded in the text of the Rome Convention. The exclusion is to be understood e contrario.

The reason for an explicit exclusion of status and legal capacity is that in the common law systems these issues are regarded as aspects of contract. This is not the case in the civilian traditions. The exclusion means that they will be governed by their proper law according to the conflict rules of the lex fori, subject to Article 11.[172]

The purpose of subparagraph (b) is to exclude all matters of family law from the scope of the Convention.[173] It is not meant to exclude contractual obligations between family members per se, but only those which are covered by family law. That is to say, contracts which either vary or record a legal obligation which otherwise would be imposed between the parties by operation of law in consequence of family law are excluded. Gifts and other voluntary unilateral obligations are within the scope of the Convention.

Subparagraphs (a) and (b) use the same terminology as the Brussels Convention in order to obviate any possibility of misconstruction. Thus, the case law under the Brussels Convention has authority within the wording of the Articles.[174]

Obligations arising from bills of exchange, cheques and promissory notes are excluded since the uniform rules are too flexible to suitably regulate them. Commercial considerations make it necessary to identify their applicable law very precisely and the instruments themselves are sufficiently homogenous to be regulated by a set of rules with greater precision.[175] There are also international conventions regarding these matters which several of the Member States of the Community already are parties to. Moreover, these obligations are regarded as non-contractual by certain Contracting States.

As far as `other negotiable obligations´ are concerned, only the obligations which arise out of their negotiable character are excluded. This means that neither the contracts pursuant to which such instruments are issued nor contracts for the sale and purchase of such instruments are excluded. The classification of a document as a negotiable instrument is for the lex fori, its conflict rules included.[176]

The exclusion of arbitration agreements and agreements on the choice of courts depends mostly on their procedural character. Both free-standing agreements and clauses within a contract are excluded. In the latter case, the rest of the contract will not be excluded. Notwithstanding its exclusion, such a clause may be used as a connecting factor when identifying the applicable law under Article 4. The applicable law of the agreement itself will be identified by the conflict rules of the lex fori.

According to subparagraph (e) questions covered by the law of companies, etc. will not be governed by the Convention. One of the reasons is that the European Union have already made quite separate progress on harmonisation on company law under the Treaties of Rome.[177]

All acts within the scope of company law are excluded, accordingly the list in the provision is an exemplification and not confined to its wording. However, acts or preliminary contracts between interested parties in order to create such a legal entity [178]; and agreements of cooperation between a number of companies, etc.[179] are within the scope of the Convention. Plender suggests "that the relations between a member and an association, resulting from membership, are not (or not necessarily) excluded from the Rome Convention" [180], since the language of the provision is not broad enough to cover these issues.

The exclusion in subparagraph (f) only concerns the relationships between the principal and third parties. That is to say, "whether the principal is bound vis-à-vis third parties by the acts of the agent in specific cases."[181] Other contractual aspects of agency are within the Convention.

Trusts as understood under the common law and similar institutions of continental law are excluded because they are alien to many legal systems of the Contracting States and they are also ill-suited for the test of characteristic performance under Article 4.[182]

By virtue of subparagraph (h) evidence and procedure are excluded, subject to Article 14.[183] Accordingly, the burden of proof and the admissibility of modes of proving are governed by the applicable law, to the extent that it raises presumptions of law and establishes the onus of proving any fact. How these matters are to be proved is left to the lex fori as a matter of procedure, but what facts are allowed will be decided by the lex contractus.

Contracts of insurance which cover risks situated in the territories of the Member States of the European Community are excluded. Instead, the European Community has harmonised certain rules related to these contracts. Accordingly the governing law is the law of the country where the policy-holder has her habitual residence or central administration.[184]

To establish where the risk is situated within the Community, the internal rules of the lex fori, i.e. excluding its conflict rules, will be applied. By a council directive [185] this issue has been settled within the Community law, thus creating uniformity. Reinsurance contracts are not excluded, since here there is not the same need to protect those insured as there is under an insurance policy.[186]

4.3.3 The Vienna Convention

Here too, since the Convention only applies to international sales of goods, an interpretation e contrario of Article 1 seems appropriate. This would mean that a sale of immovable property is excluded from the scope of the Convention. However, a sale of a mobile building which is intended to be permanently affixed to immovable property would be within its scope. That would also be the case where the goods as a result of the sale will become movable, e.g. growing crops.[187] Furthermore, it has been held by a Hungarian court [188], that a contract for the acquisition of part of an enterprise does not constitute a sale of goods under the Convention, i.e. it falls outside its scope.

The purpose of Article 2 is to further clarify the scope of the Convention in order to avoid unnecessary conflicts between the rules of the Convention and the mandatory domestic law.

The definition of a consumer sale in subparagraph (a) gives an objective and simple formula, "there [is] no longer any reference to the "kind" and "quantity" of the goods sold, or to the goods being bought by an individual."[189] However, as it is important for the parties, and especially for the seller, to know ab initio whether the Convention is applicable, it must be shown that the seller had knowledge of the consumer character of the sale before or at the time of its conclusion. The Convention does not deal with the question of burden of proof, that is left to the lex fori as a matter of procedure. However, it is very likely that the onus will be on the seller to show her absence of knowledge and on the buyer to show that she did clarify the purpose of the purchase, i.e. the onus is placed on the party claiming the applicability of the Convention.[190] The reason for excluding consumer sales is to avoid a conflict between the rules of the Convention and the mandatory domestic consumer law.

Auctions are excluded because otherwise the seller would not know until the hammer was down whether the Convention, by virtue of Article 1(1), would apply, as the identity of the buyer and the place of his business would be unknown until that point. The choice of laws principle of lex loci contractus is the most appropriate for auctions. Besides, this category of sale transactions is only of minor importance to the international commercial trade.

Executions and sales by authority of law are excluded due to the fact that these are governed by special rules of the domestic laws and their definition will vary considerably according to the respective systems of law. However, it must at least be a compulsive procedure of law performed by a judicial or quasi-judicial power. Notwithstanding, a sale in accordance with Article 88 or on a similar basis ought not to be within the exclusion.[191] According to Khoo, a sale without any intervention of the court in pursuance of a security document giving power to one party to sell in the event of default would also be outside the scope of this paragraph.[192]

Sales of commercial papers and money are excluded since some national laws do not regard them as "goods". Apart from that there are problems peculiar to these kinds of goods, which the Convention is not designed for. The same reasons will apply to the sales of electricity.[193]

It is not quite clear what exactly is meant by ships, vessels, hovercraft or aircraft, since there are no registration requirements.[194] That has been left to the lex fori to define in accordance with Article 7. Though it is clear that the sales of aircraft components are within the Convention.[195]

There is no distinction made between contracts of sale relating to objects already in existence and objects which do not exist at the time of conclusion of the contract.[196] However, contracts where the presumptive "buyer" already owns a substantial part of the materials are excluded, since such a contract is more akin to a contract for the supply of services or labour.

`A substantial part´ does not mean that the material supplied must be essential for the manufacture or the production or even that it is an essential part. Instead, it is a matter of degree and should be understood as "a considerable part" which need not be a major part. Honnold has suggested that in certain circumstances 15 % could constitute `a substantial part´.[197] `A preponderant part´ on the other hand is "a major part".[198]

Whether such a mixed contract is to be considered as one contract or could be separated into two different contracts, thus making the Convention applicable to the actual sale of goods, is a matter for the lex fori including its conflict rules, and having regard to Article 7.[199]

Legal issues not concerned with rights and obligations of the buyer and the seller arising from a contract of sale; validity of the contract, etc.; and property in the goods are excluded from the Convention, unless there are express provisions dealing with them. Arguably, neither validity nor property are expressly dealt with in the Convention.[200] However, it should be noted that validity is not completely excluded: for example Article 29(1) - `A contract may be modified or terminated by the mere agreement of the parties.´ - complements Part II - Formation of the Contract - in that it deals with the common law doctrine of consideration in the situation of modification or termination of a pre-existing contract.[201] Claims against other parties in the manufacturing or distribution chain should be excluded as well.[202] Instead these excluded issues will be governed by their respective applicable law, as identified by the conflict rules of the lex fori.[203]

However, there may arise difficult problems of interplay between the Convention and the applicable domestic law under this Article. What are rights and obligations "arising from" a contract? If a contractual issue is not dealt with in the Convention the domestic contract law will apply, since the Convention will not take away rights outside its scope which the parties otherwise would have under the law. The problem is that some of these issues can be made to "arise from" the contract by presenting the claim in a certain way, where others can be incorporated as a provision of the contract.[204]

The purpose of this Article is to remove the law of product liability from the scope of the Convention, as this is too complex a matter to be regulated by it. This means that a recourse action by the buyer due to personal injury will be classified and governed by the lex fori including its conflict rules.

The Article ought to be interpreted e contrario, which would mean that the seller's liability for damage caused to the buyer's property by defective products is within the scope of the Convention.[205]

The first part of this Article recognises one of the basic principles of private international law, i.e. the principle of party autonomy. Thus the parties may exclude the application of the Convention.[207] As has been explained, the Convention is not a set of conflict rules but a uniform anational substantive law on international sales of goods and one of its purposes is to constitute a neutral alternative to the various national substantive laws. It is clear, though, that in order to be an alternative it cannot be superior to these other laws. In this respect it must have the same status as they. This includes the parties' right to exclude its application to the advantage of another [national] substantive law, e.g. the domestic rules of a Contracting State, just as their choice of law would exclude the application of any other national law, subject to the conflict rules of the lex fori.

The second part recognises one of the basic principles of contract law, i.e. the principle of freedom of contract. Traditionally this area of contract law is governed by non-mandatory rules and since consumer sales are excluded from the scope of the Convention, there was no need to include mandatory rules in the Convention. Thus the parties may derogate from or vary the effect of any of its provisions. [208]

In conclusion, since the Convention is not mandatory, its scope may be altered by the parties to the contract. However, its scope can only be decreased, not increased. Should the parties wish the Convention to apply to transactions outside its scope, i.e. where Articles 1, 2 and 3 are not fulfilled, the matter will be solved under the conflict rules of the lex fori and the governing law of the contract, and not by virtue of Article 6, as will any agreement of incorporation.[209]

4.3.4 Conclusion

It is important to appreciate the differences in character between the three Conventions. Simplified it could be said that the Hague and Rome Conventions contain a number of conflict of laws rules for different types of contractual obligations. The Vienna Convention on the other hand replaces the applicable substantive law as identified under two of their conflict rules, i.e. the lex contractus as derived from the contract itself from either the parties' intention or other objective connecting factors, and in some cases the lex loci solutionis.[210] Consequently, matters within the scope of the former two which will be governed by another applicable law than the lex contractus strictly so defined, will not be within the scope of the Vienna Convention.

Another important fact is that even though the Rome Convention has a much broader scope than the Hague Convention its conflict rules will not identify the lex contractus strictly so defined, as the applicable law any more often, or in any other situation within the scope of the Hague Convention, than will those rules of that Convention. Thus, the differences in the matters excluded are not as profound as they may first appear. Taken all together, this will explain why some issues excluded from the scope of one Convention are within the scope of another without causing any contradictory results. One could even take as far as to say that the scope of the Hague Convention is well within the scope of the Rome Convention.

Matters excluded from the scope of all three Conventions are: property; intellectual property; capacity; agency though only the relationship between the principal and third parties according to the Rome Convention; negotiable instruments; negotiable documents though only obligations out of their negotiable character according to the Rome Convention; evidence and procedure; company law; arbitration and choice of court agreements; trusts; insurance; and family law.[211]

Matters excluded from the scope of the Hague and Vienna Conventions are: intangibles though the Vienna Convention is not restricted to tangibles; money; immovables; ships, vessels, aircraft and hovercraft, though under the Hague Convention only those registered; fixtures when connected to the above mentioned sales; electricity; sales on executions or otherwise by authority of law; mixed sales, though under the Vienna Convention only where the "buyer" provides a substantial part of the material required; and supply of services.[212]

However, under the Rome Convention immovables; fixtures when connected to a sale of immovables; and the supply of services will not be governed by the lex contractus strictly so defined. Instead other conflict rules are used, e.g. the lex situs. Accordingly, the private international law regarding these matters has not been changed.

Auctions; consumer sales; and non-contractual liability are all excluded from the Vienna Convention. Under the Hague Convention auctions are explicitly governed by the lex loci contractus and not the lex contractus as derived from the contract itself from either the parties' intention or other objective connecting factors. Probably, the so-called most closely connection test under the Rome Convention would lead to the same applicable law. Consumer sales are within the scope of the Hague and Rome Conventions, though the scope of the lex contractus is somewhat limited under the latter.[213] Whether the rules of the Hague Convention will be applied to consumer sales depends entirely on the existence of any additional "consumer conflict rules" within the law of the Contracting State in question. The Déclaration only permits the Contracting States to have these additional rules, it does not actually exclude consumer sales from the scope of the Hague Convention.[214] Liability is not explicitly dealt with under these two Conventions. That is to say, if the matter is dealt with by the applicable law, it will as a consequence indirectly be under the Conventions. If not, the conflict rules in tort must be used to settle the question.

The question of validity has long been considered to be a delicate matter. Hence it is, with a few exceptions, expressly excluded from the scope of the Vienna Convention. According to the Hague and Rome Conventions material validity of the contract is governed by the lex contractus, though the conflict rule is more refined under the latter. Formal validity is excluded from the Hague Convention, which leaves the matter to the conflict rules in the Rome Convention, i.e. Article 9 which expresses the principle of favor validitatis.[215]

4.4 Reservations by the Contracting States

4.4.1 The Hague Convention

By tradition the Swedish doctrine of ordre public will be used only in such exceptional cases when the application of a rule of the foreign law would lead to results "distinctly inconsistent with the legal foundations of Swedish law".[216] This is not fulfilled simply by the fact that the applicable foreign law is in violation of Swedish mandatory rules.[217]

This strict view did not change by the introduction of this provision. In fact it was emphasised that an explicit reservation regarding ordre public should not be used so as to avoid the commitments undertaken by becoming a party to the Convention.[218]

However, by alteration of the interpretation of the conflict rules within the process of classification it is to a certain degree possible to achieve the non-application of an otherwise applicable foreign law which would set aside a Swedish mandatory rule.[219] This is due to the fact that there are no general definitions within the Convention.

Apart from the doctrine of ordre public, the Contracting States cannot make any other reservations.

4.4.2 The Rome Convention

There are two requisites in this Article that must be fulfilled for it to apply. First, it is the actual application of the foreign rule of law that must be manifestly incompatible, not the foreign law itself. Or as it was expressed by Plender:[220]

Secondly, the incompatibility has to be `manifest´, which requires the court to find special grounds for upholding an objection.[221] This means that the application of the foreign rule of law must be "so plainly incompatible with the public policy of the forum that it would be considered wholly repugnant to proceed to its application in the particular case",[222] or "distinctly inconsistent with the legal foundations of [the lex fori]."[223]

The provisions of Article 7(1) [224] concern the application of `the mandatory rules of the law of another country with which the situation has a close connection´, i.e. mandatory rules of neither the lex contractus nor the lex fori. The novelty of this provision and the fear of the uncertainty to which it could give rise, led to the incorporation of the reservation.

The provisions of Article 10(1)(e) [225] states that the lex contractus is the applicable law of the consequences of nullity of the contract. According to some legal systems these consequences are considered to be non-contractual in nature, which led to the incorporation of the reservation.

The reservations under Article 22 will only be applied when the forum country is a declaring Contracting State. In all other cases the provisions of Articles 7(1) and 10(1)(e) will be applied even if the law of such a declaring Contracting State is identified as the applicable law of the contract. This is due to the fact that this Convention is concerned with conflict of laws issues only and not substantive rules. According to the conflict of laws principle of exclusion of renvoi, which is explicitly stated in Article 15, a reference to a certain "law" does not include its conflict rules. Hence, conflict rules will only be applied by the forum when they form part of the lex fori.[226]

4.4.3 The Vienna Convention [227]

This provision enables States to opt out of either Part II or Part III and still become parties to the Convention. The practical effect is that the Convention rules of the respective Parts cannot apply by virtue of Article 1(1)(a), since a declaring State is to be regarded as a non-Contracting State. Instead, the issue in this respect will be treated as an ordinary case with an international element, and thus the governing law will be identified under the conflict rules in contract of the lex fori. However, the excluded Parts of the Convention may anyway be applied pursuant to Article 1(1)(b), i.e. where the law of a Contracting State, which has not made any reservations under either Article 92 or Article 95, is identified as the governing law of the contract.[228]

Denmark, Finland, Norway and Sweden have made a reservation with respect to Part II. No Contracting State has made a reservation with respect to Part III.[229]

The purpose of this reservation is to encourage States which have already achieved a regional uniform legal order to become parties of the Convention without throwing that achievement away, by enabling them to apply inter se their own uniform rules rather than those of the Convention. The effect is that neither Article 1(1)(a) (under paragraph 1) nor Article 1(1)(b) (under paragraph 2) are to be applied. Article 94 complements Article 90 in that harmonisation which is not based on a treaty also will be respected and given precedence. However, an exclusion of the Convention under Article 94 would be more complete, since Article 90 only gives priority to divergent rules. The extent of the declaration is not clear, but the wording seems to allow even smaller subject areas.

Since the Convention is not to apply where the parties' places of business are located in such declaring States, the contract will instead be governed by a domestic law including any other special rules for international sales. This domestic law will be identified by the conflict rules of the lex fori, which means that the regional uniform law does not necessarily apply. Where the parties have their places of business in such States as referred to in paragraph 2, the unilateral declaration under that provision will have the same effect where conflict rules identify the law of that declaring Contracting State as the governing law, that is to say, the Convention rules will not be applicable.[230]

It is argued that the expression `the Convention is not to apply' in Article 94(1) means that a reservation under this provision is universal.[231] That is to say, a reservation under Article 94 should be respected by any court in any country, not just a court in a declaring Contracting State [232] (subject to the suggestion below). This is so, because the rules of the Convention form an integral part of the national substantive laws of the respective Contracting States. Consequently, a reservation will affect the contents of the national substantive law of the particular Contracting State which has made the declaration. Where this law is identified as the governing law of the contract, its rules, which regarding international sales of goods consist of the Convention rules including the reservation, will be applied to the contract. Hence, the reservation should be respected by any court in any country.

A literal reading of the Article would suggest that a court will not apply the Convention in a situation where the parties' places of business are in such declaring States and the law of a third Contracting State is identified as the applicable law. However, the policy aim of the Article, i.e. application of the regional uniform law, is not as paramount in such cases,[233] since the identification of the law of a third [Contracting] State as the governing law would normally indicate either that the parties have made a choice of law or that this law, and not the regional uniform law, according to the conflict rules of the lex fori is the proper law to govern the contract in question.[234] It is therefore suggested that the rules of the Convention should apply unless the parties have made a valid reference to the domestic law of this third Contracting State. This is further supported by the fact that the Convention is not concerned with conflict of laws issues. Accordingly, a reservation under Article 94 would not be universal in so far as the law of a third Contracting State is identified as the applicable law.

Denmark, Finland, Norway and Sweden have made such a declaration, which means that their essentially uniform domestic sales acts will be applied to "inter-Scandinavian" sales, in-stead of the Convention.[235]

The rule of Article 1(1)(b) that the Convention will apply when the rules of private international law lead to the application of the law of a Contracting State proved controversial and consequently a reservation was introduced.[236] China, the Czech Republic, Singapore, Slovakia and the United States, have made reservations accordingly.

There are two possible interpretations of the reservation: first it could be that a court in a Contracting State that has taken the reservation can never apply the Convention rules in this context; or secondly that the reservation simply refers to cases where the law of such a Contracting State is identified as the applicable law of the contract.[237]

The latter interpretation would be the appropriate one, since Article 1(1)(b) simply is intended to permit a wider application of the Convention but not to change the rules of conflict of laws. Accordingly, the applicable law will be identified by the conflict rules of the lex fori, where the Convention is not included since it does not deal with this issue.[238] Once the applicable law is identified, the court will determine the precise rules governing the contract, that is to say interpreting and applying this law. Within the field of conflict of laws the concept of "law" means the law in force in a State other than its choice-of-laws rules, i.e. its national substantive law. As has already been explained, the Convention, including Article 1(1)(b), is a set of substantive rules for international sales of goods and thus forms part of this "law". Consequently, any reservation will only affect the contents of the national substantive law of the Contracting State taken the reservation. This is also in line with the legitimate interest of a declaring Contracting State in having a uniform application of its law also before a foreign court.[239] In other words, a court of a declaring Contracting State is not bound by Article 1(1)(b) as the provision no longer forms part of its law, i.e. the lex fori, but it may still have to apply the provision as part of the lex contractus as identified by its conflict rules.

Hence, a reservation under Article 95 is only relevant where the law of a declaring Contracting State is identified as the applicable law. Where a court in such a Contracting State identifies the law of a Contracting State not taken the reservation, it will still have to apply the rules of the Convention.[240]

The German government declared when ratifying the Convention, that it would not apply Article 1(1)(b) in respect of any State that had made an Article 95 declaration.[241] According to Schlechtriem, the German declaration merely restates the legal situation as it exists ipso iure.[242]

4.4.4 Conclusion

The reservations under Articles 92, 94 and 95 of the Vienna Convention and under Article 22 of the Rome Convention are all aimed at provisions concerned with the process of selection and application of the relevant rules of the governing law, i.e. Article 1, and Articles 7(1) and 10(1)(e) respectively. Accordingly, a reservation will affect this process, and thus contents and scope of the governing law of the contract [243] will differ between the Contracting States taken the reservations and those which have not.

The reservations can be divided into two groups: Articles 92, 94 and 95 of the Vienna Convention will always and only take effect when the law of a declaring Contracting State is identified as the applicable law. Article 22 of the Rome Convention on the other hand will only take effect when the declaring Contracting State is the forum country. This is due to the fact that the former group forms part of the national substantive law of these States; and the latter part of their conflict rules.

The doctrine of ordre public on the other hand is concerned with the process of rejection, or limitation, of the applicable law. As has already been explained, the implication of the doctrine of ordre public is that the court will refuse the application of the foreign law if the result in the concrete case otherwise would be distinctly inconsistent with the legal foundations of the lex fori. It is only the rule or rules which create the offensive result that will not be applied and thus the remainder of the governing law will be applied. Even though ordre public is not mentioned within the Vienna Convention, it is evident that the doctrine, as part of the private international law, will be applied whenever the application of a rule of the Convention would lead to such a repugnant result.[244]

Today, as the quotation evidences, the recognition of the principle of party autonomy is fully accepted. The Report explains that the rule of party autonomy "is a rule currently embodied in the private international law of all the Member States of the Community and of most other countries."[246] The reason for this is that the principle is considered the best choice of laws rule for the commercial convenience of world trade and for the protection of the parties' interest in legal predictability.

The principle operates in the following way:[247] the choice of law - expressed or implied - by the parties of a contract is a matter of fact, and not one of law. It is to be treated as a connecting factor, the exclusive connecting factor in fact, referring all contractual questions to that particular law - the law chosen by the parties. In this function it plays the same role as any connecting factor, i.e. domicile, nationality, place of performance, currency etc., with the difference, however, that it cannot be deduced from objective elements, but from an examination of the parties' intention at the time of the conclusion of the agreement. This leads us to the following conclusions:

(i) The function of the parties' intention is just a matter of fact, which, by the choice-of-laws rule, is to be considered the connecting factor to the chosen law, and it is not a right defined and conferred upon the parties by a rule of law. That is to say, the parties do not possess an autonomous legislative ability, they are simply permitted to make a choice of law. Hence, it is really incorrect to use the expression party "autonomy" when referring to the intention of the parties as a connecting factor.

(ii) Whether the parties' intention is a connecting factor depends strictly on the conflict of laws rules of the lex fori.

(iii) The function of the parties' intention as a connecting factor and its effects will be the same as of any other connecting factor, and consequently, limitations such as ordre public or a combination with other objective connecting factors are possible and as such defined by the lex fori. An example of the latter limitation is the Polish Conflict of Laws in Contract Act of 1926, where the parties' intention was given effect only if it concurred with at least one objective connecting factor recognised by the Act.

Naturally, this freedom of contract cannot be unlimited. A choice of law clause must at least be legal and not contrary to ordre public of the lex fori in order to be upheld, and in some legal systems it may even be subject to other additional restrictions and limitations.[248] Ordre public has been discussed supra section 4.4 and the question of whether a choice of law is validly concluded will be discussed in Chapter 6. This Chapter is concerned with the legal requisites which constitute a choice of law, or, in the absence of a choice, identify the applicable law objectively.

5.2 Freedom of Choice

5.2.1 The Hague Convention

The principle of party autonomy is fully recognised under the Convention. Accordingly, the parties' choice of a law considerably divergent from the objective governing law, or a law without any connection whatsoever to the parties or the contract other than their choice of law, will be upheld as long as it is not contrary to ordre public. The choice is not restricted to the law of a Contracting State, since the Convention has universal application.[249] However, since the provision refers to `la loi interne du pays´, a direct choice of an anational law such as the Vienna Convention; international law; general principles of law; or any species of lex mercatoria would not be upheld under the Convention.

A different matter, in the context of conflict of laws, is that these sources of law may still be applied indirectly, either as part of the governing law or by way of incorporation by reference, i.e. as actual terms of the contract. In other words, whether they are applicable in principle and whether they are applicable in a particular case, depend entirely on the internal rules of private international law of the governing law, which, as was explained above[250], do not form part of the international conflict rules of the governing law. For instance, where the Vienna Convention forms part of the governing national substantive law as a set of special rules for international sales, it will be applied indirectly by virtue of Article 1(1)(b), being an internal rule of private international law of the governing law.[251]

That is to say, if, by virtue of the uniform conflict rules, Swedish law is identified as the applicable law, the rules of the Vienna Convention will be applied to the contract as part of that law, provided the contract falls within its scope. An example of a specie of lex mercatoria, which may be applied indirectly through the governing law is usage of trade under Article 9 of the Vienna Convention. Where these anational laws are made to apply by way of incorporation by reference, whether they are applicable will depend entirely on the contents of the substantive law, i.e. whether there are any mandatory rules governing the matter.[252]

Apart from the special rule in Article 4, only one law can be identified as the applicable law, i.e. depeçage is not allowed. However, the parties may replace the non-mandatory rules of the applicable law by the law of another country, or even countries, by way of incorporation either by reference or as terms of the contract.[253]

According to paragraph 2, a choice of law can be either express or `unambigously result from the provisions of the contract´. This would mean that a fictitious agreement based on the parties' hypothetical intention will not suffice, though it is not necessary to make an express choice of law clause. The reason for introducing a qualified implied choice of law was to prevent more or less unpredictable interpretations by the courts of the parties' intention as to the choice of law.[254]

In order for a choice of law to unambigously result from the provisions of the contract, it must appear from the contents of the contract that the parties have anticipated the problem; reached consensus in regard of a certain law; and made their choice of law appear from the contract, e.g. by their choice of language, legal terms, standard agreements or a choice of court clause.[255] There is no requirement as to form within the Convention, so any agreed provisions not in writing may also be considered. However, this will ultimately depend on the forum, since questions of evidence and other procedural matters are governed by the lex fori.[256]

According to Philip, the crucial time for making a choice of law is before or at the conclusion of the contract of sale of tangibles. Possibly even as late as before any of the parties has started to fulfil her contractual obligations. After this point, however, the applicable law will be determined under Article 3. Should the parties wish to vary the governing law of the contract, they may only do so as an incorporation of the law in question and provided that the rules of procedure of the lex fori will allow it.[257] Naturally, the parties could always achieve the same result by making a new contract with identical terms but for a new choice of law.

5.2.2 The Rome Convention

The Report states that the conflict rule in Article 3, i.e. the principle of party autonomy, is a simple reaffirmation of a principle currently embraced in the private international law of most countries.[258] Under the Convention the parties choice of law cannot be set aside simply as arbitrary or because its objective is to circumvent the law otherwise applicable. The mandatory rules of this law may survive [259] but they will not frustrate the choice of law. It is conclusive. The effect of this is that at times two sets of mandatory rules will govern the contract.[260]

In order for the parties' choice to be upheld it must be either express or `demonstrated by reasonable certainty by the terms of the contract or the circumstances of the case´. The latter requisite may be fulfilled by their choice of a particular standard form of contract; the fact that they in their previous dealings have chosen a certain governing law; a reference to legal terms of a specific country; their correspondence preceding the agreement; and in some cases, together with other factors, a choice of court.[261]

It must be emphasised that the Article does not permit an inferred choice of law in situations where the parties had no clear intention of making a choice, i.e. the principle of the hypothetical intention of the parties. Instead, it must be demonstrated, with reasonable certainty, that the parties have made such a real choice.[262]

The rules of evidence may affect the showing of `reasonable certainty´. For instance, by English law subsequent conduct by the parties is not allowed, but other legal systems may permit it. However, since the issue arguably is one of interpretation of the contract, it should be governed by the applicable law under Article 14.[263]

The parties' choice may relate to the whole of the contract or to a part thereof, i.e. depeçage is allowed. In the latter case, if only one law is chosen, the applicable law to the remainder of the contract will be determined objectively by the rules in Article 4. The partial choice of law may then be one of the circumstances to which regard will be had, but it cannot be the exclusive one, since the parties may only have reached consensus regarding the governing law on this particular point.

However, depeçage has a more limited function compared with the other conflict rules in the Convention. The main rule is that one law governs the contract, so the rule of depeçage should be applied only when justified. The contract in question must in reality consist of several contracts or at least be separable into independent legal and economic parts. The choice of law must also be logically consistent, i.e. it must relate to elements in the contract which can be governed by different laws without giving rise to contradictions.[264]

Under paragraph 2 the parties are free to vary the law governing the contract. This promotes commercial convenience, since the parties always could achieve the same results by a new contract. The law which will govern the validity of the variation is the subsequent applicable law, i.e. the rule in Article 8. The variation of the applicable law will affect the mutual rights and obligations of the parties under the contract, but it will affect neither the formal validity of the contract nor any rights of third parties. Whether a contract which is invalid prior to the variation of the proper law will be validated by it, is not quite clear, though it is likely.[265]

Paragraph 3 concerns the situation in which the contract, but for the parties' choice of law is connected to one country only. That is to say, there are not enough connections to different legal systems for the purpose of Article 1(1). However, the parties' choice will nevertheless be upheld, though restricted, since it will not prejudice the application of the mandatory rules of the otherwise applicable law. Consequently, two sets of mandatory rules will be applied in their strict domestic sense,[266] i.e. the conflict rule is cumulative.[267] Whether the court in this situation always should apply the stricter rules of the two laws or it is allowed a certain amount of discretion is not clear.[268] The purpose of the provision is to prevent circumvention of mandatory rules in a wholly domestic situation.

It is clear from the above stated that it is important to establish whether the parties really meant to make a choice of law or simply to create contractual terms by way of incorporation by reference to the foreign law and its rules. The latter intention will not subject the contract to the cumulative application of the respective mandatory rules, since such a domestic contract will not fall under Article 3(3).

5.2.3 Conclusion

Both the Hague and Rome Conventions recognise the principle of party autonomy, though not to the same extent. The principles of depeçage and variation of the applicable law of the contract will not be upheld under the Hague Convention, apart from Article 4, despite the fact that these principles are the logical extensions of the principle of party autonomy.[269] This makes it clear that the Hague Convention, which will prevail by virtue of Article 21 of the Rome Convention, may not always lead to a satisfactory result. A combined application of Plender's "evasive interpretation"[270] and the principle of lex specialis could be used to solve this problem. However, reaching a decision upon which Convention should prevail may not be easy: on the one hand, rules governing contracts for the sale of tangible goods are more specialised than those concerning contracts in general, which would mean that the Hague Convention should prevail. On the other hand, the rules of depeçage and variation of the applicable law are more specialised features of the principle of party autonomy, which in turn would lead to the application of the Rome Convention.

Provided that a rule-by-rule approach is accepted, the latter suggestion should be the appropriate one, especially when considering that the rule of depeçage under the Rome Convention will only be applied in exceptional cases and that the parties to a contract always could achieve the same results as under the rule of variation of the applicable law by a new contract. Thus the rules of the Rome Convention should prevail regarding these issues.

Neither of the Conventions recognises the principle of the hypothetical party intention. Instead, in order to be upheld, an implied choice must under the Hague Convention be unambiguous and under the Rome Convention reasonably certain. This would mean that there is a difference between the two.[271] That is to say, where the implied choice is reasonably certain but not unambiguous, it will be upheld under the Rome Convention but under the Hague Convention the applicable law will be determined by the default rules. Whether this difference actually will appear in practice remains to be seen.

The Conventions also have different approaches in regard of contracts connected to only one country but for the parties' choice of law. The Rome Convention contains a specific rule for this situation in Article 3(3), unlike the Hague Convention which under Article 1(4) excludes these contracts from its scope of application, since they have not an international character. Consequently, this issue will fall solely under the Rome Convention.

The conflict rules of each Convention will only identify the law of a country as the applicable law. That is to say, a direct choice of an anational law such as the Vienna Convention; international law; general principles of law; or any species of lex mercatoria would not be upheld under the Convention.

A different matter, in the context of conflict of laws, is that these sources of law may still be applied indirectly, either as part of the governing law or by way of incorporation by reference, i.e. as actual terms of the contract. In other words, whether they are applicable in principle and whether they are applicable in a particular case, depend entirely on the internal rules of private international law of the governing law, which, as was explained above[272], do not form part of the international conflict rules of the governing law. For instance, where the Vienna Convention forms part of the governing national substantive law as a set of special rules for international sales, it will be applied indirectly by virtue of Article 1(1)(b), being an internal rule of private international law of the governing law.[273]

That is to say, if, by virtue of the uniform conflict rules, Swedish law is identified as the applicable law, the rules of the Vienna Convention will be applied to the contract as part of that law, provided the contract falls within its scope. An example of a specie of lex mercatoria, which may be applied indirectly through the governing law is usage of trade under Article 9 of the Vienna Convention. Where these anational laws are made to apply by way of incorporation by reference, whether they are applicable will depend entirely on the contents of the substantive law, i.e. whether there are any mandatory rules governing the matter.[274]

5.3 Absence of Choice

5.3.1 The Hague Convention

Where the parties have not agreed on a choice of law the court will have to identify the applicable law objectively. Since there are serious doubts as to the exact "location" of the conclusion of a contract, unless it is concluded inter praesentes, the Convention is aimed at identifying the law, the application of which is the most natural in considering the type of contract, i.e. sales of tangible goods.[275]

The main rule in Article 3 is that the law of the country where the seller has her business establishment or habitual residence at the time of receipt of the buyer's order will govern the contract of sale. `Business establishment´ refers to a permanent and stable business organisation owned by the seller. Thus an agency should be not enough in this respect [276] and certainly not an international fair or a hotel. Should the seller have more than one business establishment in different countries, the business establishment receiving the order is the relevant one. The relevant point in time is the actual receipt of the buyer's order, so a later change of the seller's location will not affect the identity of the applicable law.[277] This would also mean that a change of the seller's location between the buyer's dispatch of the order and its actual receipt is relevant. Both offer and acceptance are within the concept of `order´, but not a salesman's invitation to treat.[278]

Paragraph 2 contains an exception for the situations in which the seller or any representative of hers receives the buyer's order in the latter's country: the contract of sale will then be governed by that law instead. Consequently, the provision will not apply where the seller receives the order in a "third country", i.e. to which neither she nor the buyer belongs. Here too, the relevant time is the actual receipt of the buyer's order. Since the provision refers to the seller's `représentant, agent ou commis-voyageur´, authorisation simply to receive the buyer's order will be enough to make the rule of exception applicable. In the situation of all negotiations and other prepatory work taking place in the buyer's country, but the actual order is sent directly to the seller's country, the main rule in paragraph 1 will apply, i.e. the "seller's law" is applicable.[279]

The combined effect of these two rules has been criticised for at times producing random and inappropriate results:[280]

(i) Suppose that a salesman sent by a Swedish company, authorised to receive orders, visits and starts negotiations with a company in London. A few days later, the English company sends a definite order to the salesman's London hotel. Should the salesman receive the letter at his hotel, English law will be applied. However, should he travel to France while waiting for the order and the letter of order is sent forward to him in France, Swedish law will be applied by virtue of Article 3(1).

(ii) Or suppose that the salesman did receive the letter at his London hotel, but that the order later, by exchange of letters between Sweden and England was extended in regard of the quantity ordered. The original contract is governed by English law, but the extension contract is governed by Swedish law. If a part of the delivery is defective, which law should be applied? Perhaps the extension contract could be regarded as an alteration of the original contract and not an additional one; if so, the re-order would also, in principle, be governed by English law.

(iii) A Swedish company has received an order to build a hotel in England. Some of the material for the construction, e.g. the tiles for the bathrooms, are delivered by a local English sub-contractor. Suppose this contract of supply has been entered into in Sweden. According to Article 3(2), Swedish law will be the governing law, although the contract regards a delivery by an English company within England.

Paragraph 3 contains a special rule for sales at auctions and the stock exchange. These sales will be governed by the law of the country where the auction or stock exchange is situated, i.e. the lex loci contractus, unless the parties have chosen another law.[281] Since the Convention is not concerned with negotiable instruments and documents, the provision only refers to auctions and stock exchanges dealing with tangible goods. International fairs are not within the provision.[282]

According to Article 4 the lex loci actus will govern the procedure of delivery of the goods, unless otherwise agreed. Not all issues of delivery are included, only those which concern the the manner of delivery, time limits, notifications in regard of the delivery and the procedures to be taken in case of rejection, i.e. those of procedural character. The substantive aspects of delivery, such as whether to perform an inspection of the goods and if so to what extent, whether to reject the goods, the consequences of a failing or late rejection, etc., is governed by the applicable law in general. This separation is justified since local requirements as to form will apply to the procedure of delivery anyway and the participation of local national authorities or other more or less official organs normally is required.[283]

Should the parties wish the lex loci actus not to apply to the procedure of delivery, they must make an express choice of another law. Their choice of law in this respect is not limited to the lex contractus, thus depeçage is allowed within this context.[284]

The relevant place of delivery in regard of the conflict rule is the place where the delivery according to the contract was to take place, not where it actually took place. This is to prevent a party from unilaterally changing the applicable law by relocating the place of delivery. It has been suggested that occasionally it would be appropriate, by means of interpretation of the contract, to consider a relocation of the place of delivery to be within the contractual terms when the relocation is due to an accident or similar circumstances.[285]

5.3.2 The Rome Convention

In default of a choice of law by the parties, the contract will be governed by the law of the country with which it has the closest connection. This closest connection refers to a country rather than a legal system. When determining which country the contract is most closely connected with, a court may also take account of subsequent events to the making of the contract.[286] However, since there is no such rule governing the admission or exclusion of post-contractual conduct under this Article the issue would in the end depend on the lex fori as a matter of procedural law.[287]

The principle of depeçage is applicable also in situations of default of choice. The rule will apply where an independent and separable part of the contract, in terms of the contract and not of the dispute, has a closer connection with another country. It may be applied not only in the situation mentioned above where the parties have reached agreement on the applicable law to a part only of their contract and left to the court to determine the law governing its remainder, but also where there is no valid choice of law at all. Naturally, the court should have recourse to severance as seldom as possible.[288] Whether the contract is divisible is a matter of fact and not of law.[289]

Article 4(2) renders greater precision and predictability to the rather vague test of the `closest connection´ in paragraph 1. This is achieved by introducing the concept of the `characteristic performance´ of the contract and the presumption that the governing law of the contract is the law of the country in which the party liable for the characteristic performance has her place of business or habitual residence. Where a party has more than one place of business, the relevant one is the principal place of business, or the place of business through which performance is to be effected under the terms of the contract. In bilateral contracts whereby the parties undertake mutual reciprocal performance, the characteristic performance is usually the one which does not take the form of money. Accordingly, a typology of contracts will be developed based on the characteristic obligation of the different contractual categories. For instance, the characteristic performance of a contract for the sale of goods is that of the vendor. The connecting factor is the place of business etc. of the performing party and the relevant time for its identification is the time of the conclusion of the contract.[290]

The concept of the characteristic performance is already further qualified in paragraphs 3 and 4, which provide additional presumptions for two types of contract, i.e. carriage of goods and immovable property.[291]

The Report emphasises that, by virtue of paragraph 5, the presumptions in all three paragraphs only are rebuttable. Accordingly, where the characteristic performance cannot be deter-mined at all, or where, despite an identified characteristic performance, the contract is more closely connected with another country, the contract will be governed by the law of the country with which it is most closely connected.[292]

5.3.3 Conclusion

The main difference between the default rules of the Hague and Rome Conventions is that those of the former are firm rules and those of the latter are rebuttable presumptions. Another difference between the two Conventions is where the seller has more than one place of business. Under Article 3(1) of the Hague Convention, the place of business receiving the order is the relevant one, whereas under Article 4(2) it is the principle place of business, unless according to the contract performance is to be effected through another place of business, in which case that place of business is the relevant one.

Unquestionably, the characteristic performance of a contract of sale of tangible goods is that of the vendor, so in most cases, the presumption in Article 4(2) of the Rome Convention would coincide with the main rule in Article 3(1) of the Hague Convention, i.e. the same law would be identified as the applicable law under both Conventions.[293]

However, in accordance with Article 21 of the Rome Convention, the governing law is to be determined solely under Article 3(1) of the Hague Convention. The same is true of the relation between the exemption rules in Article 3(2) - (3) of the Hague Convention and that in Article 4(5) of the Rome Convention, i.e. the former will prevail.

The objection raised against the prevailance of the rules of the Hague Conventions in connection with the principle of party autonomy are even more of a concern in regard of the default rules and in particular their exemption rules. Strict rules may improve foreseeability but they will also at times produce inappropriate and even arbitrary results. The examples given above in section 5.3.1 are good illustrations to this problem. That is also why Article 4(2) of the Rome Convention was made a rebuttable presumption, which in turn actually is considered by some Contracting States as too strict a rule.

The question is whether the combined application of Plender's "evasive interpretation" [294] and the principle of lex specialis is capable of providing a more appropriate solution, since unquestionably, Article 3 of the Hague regulates the matter more specifically than Article 4 of the Rome Convention. The fact that the latter approach is both more balanced and in line with common sense and, usually, the expectations of the international commercial trade, does not alter this fact.

Consequently, the only option left under this suggestion, provided a rule-by-rule approach is accepted, is to consider the exemption rule in Article 4(5) of the Rome Convention as more specific than Article 3 of the Hague Convention, exemptions included, as well as Article 4(2) of the Rome Convention. That is to say, the question is whether a rule referring back to the general rule of the most closely connected law, is more specific than other specific rules regulating the matter substantively.

Be that as it may, it is clear that at least in some cases applying Article 4(5) of the Rome Convention in order to "rebut" the application of Article 3 of the Hague Convention would be equally appropriate to its rebutting the presumption in Article 4(2) of the Rome Convention.

However, it is important to remember that the default rule in Article 1(1)(a) of the Vienna Convention will always prevail over the default rules of both the Hague and Rome Conventions, since unilateral conflict rules prevail over universal conflict rules.[295] That is to say, where the parties' relevant places of business are in different Contracting States to the Vienna Convention, the uniform sales law will be identified as the governing law.[296] In such a case, the default rules in the Hague and Rome Conventions will only be applied in the situation referred to in Article 7(2) of the Vienna Convention.[297]

5.4 Application of the Vienna Convention

Due to its specific character as an anational uniform sales law [298], determining whether a particular contract of sale of goods falls within the scope of the Convention and whether its substantive rules apply to the contract, will coincide. Accordingly, the fact that the parties have their relevant places of business in different Contracting States establishes that the Convention rules will govern the contract, subject to the parties' intention under Article 6, and provided that the contract does not fall within its scope, e.g. by virtue of Articles 2, 3, 4 or 5.[299] Where the parties do not have their relevant places of business in different Contracting States, the Convention rules will nevertheless apply where the parties' relevant places of business are in different States and the conflict rules of the lex fori identify the law of a Contracting State as the applicable law (Article 1(1)(b) in conjunction with Article 95). The Convention will not apply in the situation under Article 1(2).

Article 6 recognises two basic principles of law: the principle of party autonomy and the principle of freedom of contract, thus the parties may exclude the application of the Convention and derogate from or vary the effect of any of its provisions, respectively. However, Article 6 only contains the negative aspects of the principle of party autonomy, i.e. that `the parties may only exclude the application of this Convention.´ It is not concerned with its positive aspects, i.e. whether the parties' choice of law will be upheld. This is a matter strictly for the [universal] conflict rules of the lex fori,[300] which is further emphasised by the fact that the Convention is not concerned with the conflict of laws. In other words, Article 6 expresses the "replaceability" of the uniform sales law in the context of conflict of laws. The purpose of the Article has already been explained.[301]

In order to make an exclusion, derogation or variation of the Convention, it is possible to either make a special agreement before the actual negotiations or to include it in the contract as one of its provisions. The latter would mean that an exclusion, derogation or variation could be made implicitly as well as explicitly. However, according to Article 7, the criteria for interpreting the contract in such a way is to be found within the Convention and not in any national domestic law. Essentially this would mean that the parties' statements and other conduct as regards the issue of exclusion, etc. are to be interpreted within the scope of Article 8.[302] That is to say, in accordance with the party's intention where the other party knew or could not have been unaware what that intent was, or, alternatively, in accordance with the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.

The indication of an exclusion, etc. has to be clear, such as the choice of a law of a non-Contracting State or that the contract terms are inconsistent with the provisions of the Convention either entirely or partially. Where the law of a Contracting State which has not made a declaration under Article 95 is indicated the situation is slightly different. Since the Convention forms part of the national substantive law of the Contracting States as a set of special rules for international sales, a simple reference to the law of a Contracting State will not suffice to exclude the Convention, not even impliedly. Instead, there must either be an explicit reference to its domestic rules or it must appear from the circumstances, such as the use of a standard contract or a set of general conditions clearly influenced by principles and rules of the domestic law of a particular State, that the parties' intention clearly was to exclude the Convention.[303] For instance, the parties' procedural conduct indicating the choice of the domestic law of a Contracting State is not enough to rebut the presumption of Convention application.[304]

Where the application of the Convention is excluded in its entirety, the contract will be governed by the governing law of the contract as identified by either the parties' choice of law or, in the absence of their [valid] choice, the conflict default rules of the lex fori. That is to say, the parties' choice of law brings the contract outside the Convention, i.e. it is no longer directly applicable under Article 1(1)(a), but only indirectly under Article 1(1)(b). Where the parties have only contracted out of particular provisions of the Convention, the superseding contractual terms will be applied instead. If there are no such terms, the situation, where needed, would be solved as if there were a gap in the Convention from the outset, i.e. under Article 7.[305] In this latter case, where there is no choice of law by the parties, the Convention can be directly applicable under Article 1(1)(a), provided the parties' relevant places of business are in different Contracting States.

5.5 Composite Application of the Three Conventions

The composite application of the three Conventions will lead to the application of the Vienna Convention where:

(i) the parties have their relevant places of business in different Contracting States to the Vienna Convention and they have not excluded their contract from its application either clearly or by a choice of law, the rules of the Vienna Convention are "directly" applicable;[306]

(ii) the parties have chosen the law of a Contracting State to the Vienna Convention as the governing law without disqualifying its application by a clear reference to the domestic rules of that law;[307] and

(iii) in the absence of choice, the law of a Contracting State to the Vienna Convention is identified as the governing law by the conflict rules of the lex fori.[308]

It should be noted that all the situations referred to above presuppose that the internal rules of private international law of the governing law refer the matter to the rules of the Vienna Convention. That is to say, that the Contracting State in question has not taken any reservation against its application in the particular cases. In situation (i) a reservation under Article 94 will render the Vienna Convention inapplicable and in situations (ii) and (iii) so will a reservation under Article 95.[309]

In order to avoid the application of the Vienna Convention, the parties can make a choice of law, expressly or impliedly, of a non-Contracting State; of a Contracting State taken a reservation under Article 95; or make a clear choice of the domestic rules of a Contracting State. Due to the presumption of application of the Vienna Convention contained in its Article 1(1)(b) [310], the parties must make sure to rebut properly. Whether this presumption is as easily rebuttable as the presumption of characteristic performance under the Rome Convention is not quite clear.

Where the parties wish to contract into the regime of the Vienna Convention, there are two separate situations to be considered. First, where the contract falls within the scope of the Vienna Convention, the parties need only to make a choice of the law of a Contracting State. The parties cannot refer the matter directly to the Vienna Convention since the Hague and Rome Conventions will identify only the law of a country as the applicable law.[311] Second, where the contract falls outside its scope, the matter will be solved just like any agreement of incorporation. That is to say, it will depend on the governing law and particularly its mandatory rules, whether the incorporation of the rules of the Vienna Convention as terms of the contract is recognised and upheld.[312]

5.6 Consumer Contracts

5.6.1 Rome Convention

The Report states that the definition of consumer contracts should be interpreted in the light of its purpose which is to protect the weaker party. A more precise definition of the concept was avoided in order to avoid any conflict with the various definitions already given by national legislation.[313] This would normally mean that consumer contracts are concluded between a person for a purpose which can be regarded as being outside her trade or profession and another person who supplies goods or services or provides credit and acts in the course of her trade or profession.[314] According to the Report, Article 5 will not apply in cases where the supplier in good faith did not know the true character of the consumer, i.e. believed her to act within her trade or profession.

Article 5(2) will limit the parties' choice of applicable law in the situations referred to in the paragraph, to the extent that it would deprive the consumer of the protection afforded by the mandatory rules of the country in which she has her habitual residence. Since the parties' choice of law will still be recognised where it does not deprive the consumer of her protection, the consequence is that two sets of mandatory rules will be applied in their strict sense. That is to say, in this context `mandatory rules´ refers to rules from which the parties cannot opt out in a purely domestic situation.[315]

Article 5(3) is an exception to Article 4. In the absence of a choice of law, consumer contracts under Article 5 will be governed by the law of the country of habitual residence of the consumer. The formal validity of such a contract will also be governed by that law.[316]

5.6.2 Conclusion

The definition of a consumer sale in Article 5 of the Rome Convention corresponds with the one in Article 2(a) of the Vienna Convention.[317] This is also the case regarding the rule of good faith, i.e. where the seller had no knowledge of the buyer being a consumer, suggested in the Report and stated in Article 2(a) of the Vienna Convention, respectively. However, their respective scope differs considerably. Unlike the rule in Article 5, which refers only to certain consumer sales, the rule in Article 2(a) excludes all consumer sales from the scope of the Vienna Convention.

As regards the interrelation between the Rome and Hague Conventions, the Contracting States of the latter are now in accordance with the 1980 Déclaration allowed to make specific conflict of laws rules regarding consumer sales. This would mean that not only the special rule in Article 5 but also the general rules in Articles 3 and 4 of the Rome Convention will determine the applicable law of all consumer contracts.[318]

The schoolbook example of lack of consent is the situation in which the Vendor in Ruritania, a country, the law of which recognises passivity to constitute a valid acceptance, sends an offer to sell goods to the putative Purchaser in Sweden. Vendor stipulates that if Purchaser does not reject the offer within a week's time, she will consider him to have accepted the offer. The offer also contains a choice of Ruritanian law as the applicable law. By the principle of party autonomy, the Purchaser will be contractually bound unless he rejects the offer, despite the fact that Swedish law does not recognise passivity to constitute a valid acceptance.[319]

The very same results could also be achieved where the applicable law is determined objectively, both under Article 3 of the Hague Convention and Article 4 of the Rome Convention: the Vendor has her place of business in Ruritania, she is the seller and so her performance is the characteristic one.

Consequently, where the very fact of agreement itself is denied by one of the parties, the lex contractus is not the appropriate rule. However, as regards contracts invalid, or voidable, due to defences to their enforcement, rather than being void ab initio, these concerns do not apply and thus the lex contractus should be applied.

6.2 Material Validity under the Conflict of Laws Rules in Contract

6.2.1 The Hague Convention

According to the provision, the validity of the parties' agreement on the applicable law should be governed by that chosen law, i.e. the lex contractus. This is also the case regarding the questions of validity, including formation, of the actual contract of sale.[320] In the Swedish case NJA 1987 p. 885 högsta domstolen [the Supreme Court] held that: "[a]s far as the conflict of laws is concerned the basis must be that the question of validity of each [contract] shall in its entirety be governed by one and the same legal system. Different elements of importance for solving this question shall thus in principle be governed by the same law. To apply in a certain respect, e.g. regarding duress, another law than that determined as applicable to the contract in other respects is out of the question unless there is any particular reason in addition to it."[321] Accordingly, the contracts were held to be voidable due to duress, since the defendants' actions were unlawful by the applicable law of the contract. The fact that their actions were lawful according to the lex loci actus, i.e. Swedish law, did not constitute reason enough to make that law applicable in any respect to the question of validity of the contract.

Whether the provision covers the questions of consent and in particular consent by passivity is not quite clear. It is clear though, that in the situation where a contractual provision, or even the entire contract, was unilaterally introduced by one party and the other party did not consent according to his own law but according to the applicable law he did, the solution provided will not, at least not in all situations, be satisfactory. However, since there is no other specific provision dealing with this issue, it will be left to the discretion of the court to decide whether Article 6, i.e. ordre public, should apply.[322]

Paragraph 3 is concerned with the substantive validity of a choice of law. That is to say, validity and consensus in their traditional sense as matters of national substantive [contract] law. Whether a choice of law will be recognised by a court so as to lead to its application and thus be upheld as "valid" in that respect, is a matter of the private international law of the forum.[323] Under the Convention, this latter aspect of the validity of the choice of law will be governed by paragraphs 1 and 2 of Article 2.[324]

6.2.2 The Rome Convention

There is not yet any case law directly concerned with the application and interpretation of this Article. However, apart from the Report, it has been dealt with in the legal doctrine by several European scholars.

The Report[325] explains that Article 8(1) is intended to cover all aspects of formation of the contract other than general validity. It is explicitly stated that the existence and validity of the parties' consent as to the choice of applicable law is covered.

Giardina, an Italian scholar, has suggested that the Convention introduces an exception to the general conflict of laws rule that classification is a question for the lex fori. In the field of contractual obligations the general rule will now be classification lege contractus modified with the safeguard rule in Article 8(2).[326]

The reasoning for Giardina's suggestion is as follows: The Italian system of conflict of laws has long recognised the principle of party autonomy. The parties' choice of governing law would be given judicial effect and the validity of that choice governed by the chosen law. However, as all connecting factors were interpreted according to Italian law, i.e. classification lege fori, the existence of a valid choice would be determined according to substantive Italian law.[327] The Convention on the other hand, explicitly states that the existence as well as the validity are to be determined according to the governing law, that is to say that the legal dispute has to be classified in accordance with the lex contractus.

However, it is not appropriate to apply a term of the Convention in order to determine its applicability. It would also be contradictive to the principle of uniformity in Article 18. The classification of an obligation as contractual is a matter for application of a uniform and autonomous law derived from the Convention itself. Thus, for the purpose of classification, `a contractual obligation´ is defined as `a voluntary agreement giving rise to obligations capable of being enforced by law´.[328]

The assumption that there is an existing valid contract will take care of the circular argument that where there is a choice of the applicable law no law can be said to be applicable until the contract is found to be valid.[329]

Lagarde explains this assumption made in Article 8(1) that the contract is valid, is not the same as a prima facie rule of validity.[330] In fact, the latter was not accepted by the Convention. This should mean that the assumption only provides a take-off for the court's analysis of the alleged contract, comparable with the number `x` in algebra. A prima facie rule of validity on the other hand means that the court should try to validate an otherwise void contract by splitting the proper law, i.e. by depeçage. Such a practice would have affected the predictability of the solution and was therefore rejected.

Article 8(2) relates only to the existence and not to the validity of consent. Either party can rely on the so called safeguard rule as the paragraph simply refers to `a party´. It is wide enough to cover any issue of offer and acceptance, not only the problem of implications by silence, as the word `conduct´ ought to cover both action and failure to act by the party in question.[331] The paragraph is designed to protect a party from being contractually bound against his intentions only because of ignorance of the differences between the law of his social and legal environment and the applicable law.

In this context it is important to appreciate that the concept of silent acceptance contains two aspects. Firstly, acceptance by silence alone, and secondly acceptance by conduct of which an eloquent silence may form part. In most, if not all, systems of law, only the latter will construe a valid acceptance. Since the legal requisites for such a valid acceptance will differ considerably in the different systems of law, it is only logical, and fair, that the significance of silence coupled with conduct should be assessed by the law of the place where the actor was habitually resident.[332]

In order for the safeguard rule to apply it must appear from the circumstances that the result derived from the application of paragraph 1, i.e. the applicable law of the contract, would not be reasonable. The Report emphasises that all circumstances should be taken into account and particularly the parties' previous practices inter se and their previous business relationships.[333] This is meant to provide sufficient protection from abuse of the rule. Whether it will and what weight different circumstances will have remains to be seen.

In regard of a legal entity or a party acting within her trade or profession, the law as identified by the rule of presumption in Article 4(2) may be considered as the law of the country in which a party has her habitual residence, for the purpose of Article 8(2).[334]

The application of Article 8(2) can only result in a decision releasing a party from a contract. It cannot produce the opposite result, that is to say, it can never transform an alleged contract into an existing one where it by its proper law would be non-existent. This suggests that the basic policy in relation to consent is that of invalidating the contract.[335]

The reason for the cumulative application in Article 8 in order to establish whether there is consent, is that neither the proper law of the alleged contract, nor the law of the country in which the party whose conduct is in question has her habitual residence, would on their own provide a sufficient solution.[336] Provided that the concept of silent acceptance is recognised by one system of law and not by the other, application of the proper law of the contract alone could sometimes impose a contractual obligation on a party not rejecting an offer, and application of the latter alone could sometimes impose a contractual obligation on an offeror convinced that an offer, silently accepted, was rejected.

The German scholar Von Hoffmann is strongly in favour of the solution in Article 8. He is opposed to the new trend in German case law which generally submitted the effect of a party's silence to the law of her habitual residence. In Von Hoffmann's opinion "he who derives profit from participation in international business also should bear its risks. He who enters into negotiations for contracts with an international character should be aware that his behaviour may be scrutinized according to foreign law, and he should not be allowed always to fall back on his local law whenever foreign law is more burdensome to him."[337] Only exceptionally should a party be able to rely on the law of her habitual residence. The unreasonability test will provide for such an exceptional application of the safeguard rule. A uniform standard based on the test and in conformity with the Brussels Convention will develop.[338]

The unreasonability test in Article 8(2) gives the courts significant discretionary powers, which are only limited by the aim of the Convention to develop a uniform European case law. The onus of establishing the unreasonableness is apparently borne by the party relying on the law of her habitual residence.[339]

The rules in Article 8 are applicable to such acts referred to in Article 9(4), by way of analogy.[340] This is important to remember as Article 9(4) may be applicable to acts already performed by the parties in a situation, in which by virtue of Article 8(2), it has been held that there is no contract.

6.2.3 Conclusion

Regarding the issues of material validity, including formation, of the choice of applicable law as well as the rest of the contract, the Hague and Rome Conventions contain similar, if not identical, rules. That is to say, these issues will be governed by the applicable law of the contract, regardless of whether that law was chosen by the parties or determined by the court itself.

However, the Hague Convention does not contain any rule corresponding to the safeguard rule in Article 8(2) of the Rome Convention. Instead, the only possible recourse as far as questions of consent are concerned is ordre public under Article 6. Unlike Article 8(2), which only requires that it would not be reasonable to determine the effect of a party's conduct in accordance with the governing law of the contract, the requisites of ordre public are that the application of the relevant rules of the governing law would be manifestly incompatible and distinctly inconsistent with the legal foundations of lex fori. Accordingly, there is a rather deep discrepancy between the two as to their respective scope of application.

The actual effect of the rules is on the other hand similar: the court will refrain from application of particular rules of the governing law due to the unreasonable and manifestly incompatible result, respectively, which their application would otherwise produce.

According to Article 21 of the Rome Convention, the Hague Convention will prevail. However, under the combined application of Plender's "evasive interpretation"[341] and the principle of lex specialis the safeguard rule would prevail over the Hague Convention, or complete it rather. In relation to other Contracting States to the Rome Convention and to States parties to neither of the Conventions this seems like an appropriate solution. In relation to States parties to the Hague Convention but not to the Rome Convention, the Hague Convention must prevail according to Article 30(4)(b) of the 1969 Vienna Convention on the Law of Treaties.[342] On the facts only, this is also the most appropriate solution, since an application of the safeguard rule would harm the uniformity of the conflict rules between the Contracting States to the Hague Convention, thus making forum-shopping between fora in these Contracting States possible again.

6.3 Validity and Formation under the Substantive Rules of the Vienna Convention

6.3.1 Scope of the Vienna Convention Regarding Validity and Formation

According to Article 4, `formation´ of international sales contracts falls within the scope of the Convention. As regards `validity´, on the other hand, this is true only insofar as it is `expressly provided´ in the Convention.[343] Apart from Article 29, which is concerned with the formation of an agreement to modify or terminate a pre-existing contract, in the context of validity and formation there appear to be no such provisions and consequently most, if not all, issues of validity will be governed by the lex fori including its conflict rules.[344]

That is to say, the Convention is only concerned with the mechanics of consent and not with any defences to enforcement of the agreement, such as mistake, fraud, threat or abuse of unequal bargaining power, and nor with the validity of its substantive contents, such as invalidation of a sales contract where specified products are being sold, e.g. absinthe, Cuban cigars or elephant tusks.[345]

It is true that, notwithstanding the well-established distinction made between formation and validity in Article 4, the two concepts are in one respect overlapping: there will not be a [prima facie] valid contract, unless the rules governing formation are fulfilled. In other words, the concept of validity in this respect will include not only substantial validity and defences to enforcement, but also the need for fulfilment of all the mechanics of consent in order to create a [prima facie] legally binding agreement. Since rules governing the formation are expressly provided in the Convention, this particular part of validity is within the scope of the Convention. However, it is important to remember that this particular part of validity does not correspond to the concept of validity of consent.

Under Article 7(1) the Contracting States are under an obligation to consider the international character of the Convention and the need to promote its uniform interpretation. That is to say, since the Convention is an autonomous body of law it should be interpreted in accordance with the criteria specifically laid down within it, rather than with domestic criteria. Arguably, this should also include the process of classification. This would mean that classification of a domestic rule of law as concerned with a matter governed by the rules of the Convention, and thus barring its application, should be performed in accordance with the Convention rather than the domestic rules of the lex fori, at least where the Convention forms part of both the governing law and the lex fori.[346]

Accordingly, any additional [domestic] mechanics of consent to those provided in the Convention cannot be invoked where the Convention rules governing formation are applicable, regardless of whether they are classified as rules of formation or rules concerning validity under the domestic lex fori. Likewise, since a defective consent is not strictly the same as a non-fulfilment of these mechanics, rules governing this matter will not be classified as rules of formation under the Convention, but of validity and thus governed by the lex fori including its conflict rules, since there are no express Convention rules on this matter.

By virtue of Article 4, this would result in the non-application of the common law doctrine of consideration where the Convention, i.e. Part II and Article 29, is applicable,[347] since it consitutes an additional domestic mechanic of consent. Whereas full application of the concept of mistake in this context would be achieved, even though part of it in the common law jurisdictions is classified as a rule of formation, since the Convention is not concerned with that issue of validity.[348]

6.3.2 The Vienna Convention, Part II, Formation of Contract

Just as any national substantive law on contracts, the Convention contains rules on the formation of the contract. Part II of the Convention governs these mechanics of consent or, as put under the Rome Convention, the very existence of consent.

Without a detailed comparative study, it is clear that most, if not all, legal systems contain rules by which an acceptance by conduct of which an eloquent silence may form part is recognised as a valid one. Such rules have as their purpose to impede disloyal proceedings between the negotiating parties. Accordingly, there are situations in which a party actively has to reject an offer in order not be held bound to it; or where a party will find herself bound by contractual provisions she did not in her mind actually consent to. This is also the case under the Convention: see Articles 18(3); 19 in conjunction with 9; and 21.[349]

Where Article 8(2) of the Rome Convention identifies Part II of the Vienna Convention as the law of the country in which a party has her place of business [350], her being contractually bound by an eloquent silence in accordance with the rules in Part II cannot be unreasonable.

6.3.3 Conclusion

Unlike the existence of consent, which is governed by Part II of the Vienna Convention, substantive validity and validity of consent [as classified under the Vienna Convention where it forms part of the lex fori], i.e. both defects of consent and defences to enforcement, are excluded from its scope by virtue of Article 4 of the Vienna Convention. Hence these issues will be governed by the applicable domestic law of the contract as identified by the conflict rules of the lex fori.[351]

Part II of the Vienna Convention will be applied in order to establish whether there is any existence of consent in the situations where:

(i) the Vienna Convention is "directly" applicable under Article 1(1)(a), since the Convention rules then replace the traditional [domestic] applicable law;

(ii) the Vienna Convention is applicable under Article 1(1)(b) and, subject to Article 8(2) of the Rome Convention, the law of a Contracting State to the Vienna Convention is identified as the applicable law; and

(iii) as a defence under Article 8(2) of the Rome Convention, where the law of a non-Contracting State to the Vienna Convention is identified as the applicable law, since Article 1(1)(b) renders the Vienna Convention applicable for this purpose, and the existence of consent is within the scope of the latter.

In situation (i), Article 8(2) of the Rome Convention is not applicable due to Article 1(1)(a) of the Vienna Convention, since the existence of consent is within the scope of the latter. However, a practical consequence of the uniform sales law in this situation is that the protection offered to a party by Article 8(2) of the Rome Convention already exists ipso iure under the Vienna Convention, since Part II forms part of the national substantive law of the different Contracting States in which each party have her place of business. That is to say, the existence of each parties' consent will be determined under Part II. In situations (ii) and (iii) it is presupposed that the Contracting State to the Vienna Convention has not made a declaration under Article 95. In all situations it is presupposed that there is no declaration under Article 92, or in situations (ii) and (iii), only one such declaration.

Since Article 8(2) of the Rome Convention simply refers to `the law of the country´ and not specifically to its domestic law, an international sale which falls within the scope of the Vienna Convention would be governed by the Convention rules and not the domestic ones, where the law of a Contracting State to the Vienna Convention is identified as the relevant law for the purpose of that Article. That is to say, Article 8(2) includes the application of the internal rules of the private international law of the applicable law, such as Article 1(1)(b) of the Vienna Convention.

Note that the Nordic countries have made reservations under Article 92 of the Vienna Convention and therefore they will not be considered Contracting States within Article 1(1) in respect of matters governed by Part II.[352] Consequently, a party having her place of business in e.g. Sweden may always, when reasonable, rely on Swedish domestic law in order to establish that she did not consent.

6.4 Validity and Formation When Contracting Out of the Vienna Convention

The validity of an agreement to contract out of the Convention either in its entirety or out of any of its provisions will, by virtue of Article 4, be governed by the lex fori in accordance with its universal conflict rules. However, where the agreement to contract out of the Convention in its entirety is in the form of a [valid] choice of [domestic] law, the situation is slightly different, since a [valid] choice of law will bring the contract outside the scope of the Convention. That is to say, the validity, and the other contractual aspects, of the agreement will be governed by the lex fori including its conflict rules, because the Convention is no longer directly applicable under Article 1(1)(a), and not by virtue of Article 4.[353]

The formation of an agreement to contract out of the Convention will be governed by its applicable law as identified by the conflict rules of the lex fori, whereas formation, as defined under the Convention, of an agreement to contract out of particular Convention provisions will be governed by either Part II of the Convention, as "default rules", or its new version as previously agreed upon, but most likely unilaterally introduced by the offeror and later accepted and thus agreed upon by the offeree. However, she is not allowed to unilaterally derogate from the rule in Article 18(1), which states that "[s]ilence or inactivity does not in itself amount to acceptance."[354]

In regard of existence and validity of consent of an exclusion or derogation under Article 6, there are additional consequences in finding an exclusion or derogation invalid due to either an invalid consent or lack of it: either there is no contract at all, or there is no exclusion or derogation in which case the Convention rules will apply to the contract.[355]

The substantive validity of an exclusion of the Convention, i.e. a choice of law, will be governed by the conflict rules of the lex fori, e.g. Articles 2(1) - (2), 3 and 4 of the Hague Convention and Articles 3 and 4 of the Rome Convention. Where both parties have consented to a substantively invalid exclusion of the Convention, i.e. an invalid choice of law clause referring to a national [domestic] law, their intention of excluding the application of the Convention should nevertheless be respected. Accordingly, the applicable [domestic] law, as identified by the universal conflict rules in the absence of choice, i.e. the objective governing law, would be applied.[356]

Likewise, where a contractual term in derogation of the Convention is substantively invalid according to the mandatory rules of the governing law, the parties' intention of derogating from the Convention should be respected. Accordingly, the relevant issue should be governed by the mandatory rules of that domestic law rather than by the Convention.[357]

6.5 Formal Validity

6.5.1 The Hague Convention

Formal validity is excluded from the scope of the Convention, which means that the issue will be governed by the applicable law as identified by other conflict rules in contract of the lex fori, e.g. the uniform rules of the Rome Convention. The explicit exclusion of formal validity would mean that all other questions of validity are within the scope of the Convention and thus governed by the lex contractus.[358]

6.5.2 The Rome Convention

When the existence of a materially valid contract has been established by virtue of Article 8, the next step will be to establish whether the contract is formally valid. Paragraphs 1 - 3 will then be applicable. Paragraph 4 is applicable to acts related to either of the situations in Article 8, i.e. non-existing contracts as well as existing ones. Paragraphs 5 - 6 will not be dealt with in this paper, since they are concerned with consumer contracts and contracts related to immovable property.

The Report [359] explains that acts falling within the scope of Article 9 can be extremely varied, but they must be connected with a contract and the contract as such must be one falling within the scope of the Convention. There is no definition of `formal validity´, but nevertheless `form´ ought to include "every external manifestation required on the part of a person expressing the will to be legally bound, and in the absence of which such expression of will would not be regarded as fully effective."[360]

The applicable laws are the lex contractus and the lex loci actus alternatively. There is no priority between the two. Validity of the act under one of them is enough to prevent defects of form under the other from affording grounds for nullity. This solution is a compromise between the more liberal favor negotii and the due observance of formalities.

In the doctrine it is said that, here too, there is no prima facie rule of formal validity [361], though the system laid down in the Convention is flexible and on the extreme limit of favor validitatis. This can be illustrated by the following example: "if a person, in country A, concludes a contract with another person in country B, and if the law of country C is first chosen by the parties, then replaced by the law of country D, the contract is formally valid if it complies with the formal requirements of the laws A, B, C or D."[362]

Article 9(4) ought to, on principle, be applicable to an act relating to contemplated contracts in general. It should not have to be related to some specific contract. This means that a salesman's invitation to treat is within the scope of the provision.[363]

6.5.3 The Vienna Convention

Article 11 establishes one of the basic rules of the Convention: the theory of consensualism, i.e. that a contract is not subject to any specific formal requirements. This principle is widely accepted in the international commercial trade. Under Article 11 an international contract of sale governed by the Convention is not subjected to any requirements as to form, and consequently any such requirements under the domestic law of the Contracting States will not apply to these contracts irrespective of the nature or purpose served. In order to enhance uniformity and prevent abuse of the provision through characterisation, such a requirement should, in accordance with Article 7(1), be characterised according to its function, i.e. if non-compliance with the rule renders the contract invalid, it is a formal requirement.[364]

The provision is non-mandatory, so the parties are perfectly able to agree on their own requirements as to form, e.g. a stipulation that the acceptance should be in writing, or that the conclusion of the contract is conditioned on written confirmation. Such an agreement can be express or implied, the result of a usage or practice under Article 9, or a term in a standard contract. A unilateral demand will not be efficient, though, and an implied agreement should be a rare exception. However, in accordance with the principle of informality of transactions, such a provision for contractual formality may lose its effect due to subsequent waiver. Neither is a subsequent agreement by the parties subject to any formal requirements and it may be proved by any means.[365]

Article 12 accommodates the special demands of some Contracting States in regard of requirements of written form for contract of international sales for the purposes of validity, evidence and administrative control. It does not concern any requirement other than writing and its operation is confined to Articles 11, 29 and Part II of the Convention. That is to say, those provisions related to formation of the contract and its modification and termination by agreement. Any other notices provided for by the Convention are not within the scope of Article 12 and may thus be delivered by any means appropriate in the given circumstances. The provision is mandatory, i.e. the parties cannot contract out of it.[366]

It must be emphasised that Article 12 determines only the effect of a declaration made by a Contracting State under Article 96, i.e. that the principle of informality in Article 11 is not to apply. It is not concerned with the actual requirements as to form which are to be observed. The question as to which requirements, if any, are to be observed is dealt with below in the context of Article 96.

In the negotiation of the Convention it was proposed that the effect of a declaration under Article 96 would be that the formal requirement of the law of the declaring Contracting State should be applied to the contract. However, this proposal was rejected, since it would make the formal requirements of that law too widely applicable.[367]

Despite this rejection, the true effect of an Article 96 declaration remains a matter of controversy. In fact, there are two school on the effect of an Article 96 reservation: the minority [368], which argues that the true effect is the preservation of the formal requirements of the declaring Contracting State, because the Convention should respect the underlying purposes of such legislation, e.g. protection against claims unsupported by a written agreement. However, where there are two competing sets of formal requirements, it is not clear whether only one should be applied exclusively, or both cumulatively.

The majority, on the other hand, argues that the issue should be solved under the conflict rules of the lex fori, because these formal requirements would otherwise not only be made internationally applicable mandatory law, but they would also exclude the conflict rules of the other Contracting States.[369] Ziegel, who belongs to neither of the schools, suggests that "obviously … a writing will be required", but is not sure of which law should be complied with, and therefore concludes that such a reservation is better avoided.[370]

Arguably, the majority view is the more appropriate one, since it better respects the sovereignty of both declaring and non-declaring Contracting States. That is to say, the principle of informality is not imposed on the declaring Contracting States, and nor is any writing requirements imposed on the non-declaring Contracting States. The issue, as prior to the Convention, is simply solved under the [traditional] conflict rules of the lex fori.

Accordingly, the effect of such a declaration is that any of the enumerated provisions will not apply to contracts where at least one of the parties has her relevant place of business in a declaring Contracting State. That is to say, in these situations formal validity, or the lack of it rather, is excluded from the Convention and thus an Article 96 reservation reduces the scope of the Convention. This means that even where the law of a non-declaring Contracting State is identified as the applicable law, its domestic law, rather than the Convention rules, should be applied, i.e. the reservation is universal and should therefore be respected by any court, not just a court in a declaring Contracting State.[371]

Consequently, whether any formal requirements will be applied to the contract in question depends entirely on the applicable [domestic] law as identified by the conflict rules of the lex fori, e.g. Article 9 of the Rome Convention. This approach was also followed in a Hungarian case, where the Hungarian court held that the governing law in matters of form was German domestic law and thus the contract concluded by telephone was valid, even though Hungary is a declaring Contracting State.[372]

Schlechtriem, on the other hand, is of the opinion that where the applicable law is the law of a non-declaring Contracting State, the relevant provisions of the Convention should apply rather than its domestic rules. "Otherwise, rules as to form would be applicable which would not apply at all unless that Contracting State had made a reservation. That is not unfair towards the reservation state, since it would also have to accept freedom as to form if the forum state's conflict rules required the application of domestic `freedom of form´ rules."[373]

However, it is argued that this suggestion does not take into account that the effect of an Article 96 reservation as towards the parties to a contract is declared mandatory in Article 12. It would be both contradictory and contrary to this mandatory rule if the parties are not allowed to contract into the relevant provisions, but they will still apply indirectly where the applicable law as to form is the law of a non-declaring Contracting State. In addition, Articles 12 and 96 aim at the full exclusion of the principle of informality, whereas Article 94 only aims at a regional restriction of the application of the Convention rules in favour of a regional uniform law. Therefore, it is argued that there are no similar justifications for an exception to the universal application of an Article 96 reservation, as there are in regard of one under Article 94.[374]

A different matter is that commercial prudence dictates that where one of the parties has her relevant place of business in a declaring Contracting State, its requirements for writing should be observed, at least where it cannot be ruled out that the matter may be decided by a court in that declaring Contracting State.

Argentina, Belarus, Chile, China, Estonia, Hungary, Lithuania, the Russian Federation and Ukraine have taken the reservation under Article 96.

6.5.4 Conclusion

Formal validity is excluded from the scope of the Hague Convention, which leaves the issue as a matter of conflict of laws to be settled exclusively under Article 9 of the Rome Convention. This would mean that either the lex contractus or the lex loci actus will govern the formal validity of the contract.[375]

Where the Vienna Convention is applicable, at least where it also forms part of the lex fori [376], formal validity, or the lack of it rather, is a matter governed exclusively by the Vienna Convention and thus the imposition of further [domestic] requirements is not allowed.

However, where at least one of the parties has her relevant place of business in a Contracting State to the Vienna Convention which has taken the Article 96 reservation, the principle of informality will no longer apply, since formal validity [arguably] will be excluded from the Convention scope. Accordingly, formal validity will in such a case be governed by the applicable [domestic] law as identified by the conflict rules of the lex fori, e.g. Article 9 of the Rome Convention. A reservation under Article 96 would be regarded as universal, and thus the excluded provisions should not be allowed to govern the mater indirectly as part of the applicable law, i.e. where that law is determined to be the law of a non-declaring Contracting State to the Vienna Convention.[377]

Accordingly, where an issue forming part of the parties' contractual dispute is classified by the lex fori as a non-contractual issue, it will not be governed by the lex contractus, but by its proper law, as identified by conflict rules other than those in contract of the lex fori, regardless of whether it is considered contractual under the lex contractus. Similarly, where the issue is classified by the lex fori as contractual, the court will apply all lex contractus rules corresponding to its own contract law, regardless of whether that would mean including non-contractual rules of the lex contractus, according to a "classification" by the latter.[378]

Traditionally, this "classification" too is a matter strictly for the lex fori, though a Convention on the conflict of laws, e.g. the Hague and Rome Conventions, may provide further guidelines in order to secure uniformity between its Contracting States and avoid this conflict of characterisation.

A different matter, in this context of conflict of laws, is that the actual contents and structure of the lex fori, which is the blue-print for this "classification", may emanate from an international Convention on substantive law, e.g. the Vienna Convention. Consequently, where the Vienna Convention forms part of the lex fori, it will be used as part of such a blue-print for this "classification". This means that all substantive issues regulated in the Vienna Convention and interpreted in accordance with its Article 7(1), are contractual in the sense that where "gap-filling" under Article 7(2) renders recourse to the governing [domestic] law necessary, a court in a Contracting State to the Vienna Convention, i.e. where the rules of the Vienna Convention form part of the lex fori, should apply all rules of this domestic law corresponding to those of the Vienna Convention.[379]

7.2 Guidelines for Determining the Scope of the Applicable Law

7.2.1 The Hague Convention

According to the Convention the effects of a contract of sale as between the parties, i.e. their reciprocal rights and obligations including the passing of risk, and the examination of the goods are to be governed by the applicable law.[380] However, it does not provide any guidelines for which rules of the applicable law should be applied on the contract, such as whether all relevant substantive rules in contract should be applied or simply those specifically concerned with sales of tangible goods. This issue too has been left to the lex fori to decide. It is implied that the general rules of at least formation of contract of the applicable law will be applied, since validity and formation of the contract is not explicitly excluded from the scope of the Convention. The public rules of the applicable law will not be applied, at least not under the Convention rules, as the Convention is concerned with rules of private law.[381]

7.2.2 The Rome Convention

Article 10 regulates which matters are to be governed by the applicable law. The list in paragraph 1 is not exhaustive, `in particular´, which means that any additional matters will depend on the lex fori.[382]

According to subparagraphs 1(a) and 1(b) the applicable law governs the `interpretation´ and `performance´ of the contract. Interpretation encompasses determination of the parties' intention as well as of the matters which may be taken into account in interpreting the contract.[383] Performance of the obligations arising from the contract refers to "the totality of the conditions, resulting from the law or from the contract, in accordance with which the act is essential for the fulfilment of an obligation must be performed."[384] This is however modified by the rule in paragraph 2, which submits that in relation to `manner of performance´ regard may be had to the lex loci solutionis. The distinction between the two has been left to the lex fori. Examples of the former are the diligence with which the obligation has to be performed; conditions relating to the place and time of performance; and of the latter are rules governing public holidays; the manner of which goods are to be examined; and the steps to be taken if they are refused.[385]

Subparagraph 1(c) states that the consequences of breach will be governed by the applicable law. There are two limitations, one general referring to the limits of the court's powers according to the procedural law of the lex fori. The other limitation is that the assessment of damages only will be governed by the applicable law insofar as it is regulated by rules of law.[386]

By subparagraph 1(d) the applicable law is to govern "the various ways of extinguishing obligations, and prescriptions and limitations of actions". According to the Report [387] it must be applied with due regard to the limited admission of depeçage in Article 3 and 4.

It is explained in the Report [388] that the principal objective of the provision was to make the refunds which the parties have to pay each other subsequent to a finding of nullity of the contract subject to the applicable law. However, since in some legal systems the consequences of nullity of a contract are considered to be non-contractual in nature the provision in Article 22(1)(b) allowing Contracting States to enter a reservation on this matter was introduced. The only Contracting State which has entered such a reservation is the United Kingdom.[389]

Conclusively, it is clear that most issues will be governed by the lex contractus. The only exceptions are issues of formal validity, incapacity and the existence of consent.[390]

Article 14 is the exception to the rule in Article 1(2)(h) which excludes matters of evidence from the scope of the Convention. Accordingly only two questions of evidence are governed by the applicable law: the burden of proof and the admissibility of any mode of proof, to the extent that the applicable law raises presumptions of law or establishes the onus of proving any fact. The admissibility of such mode of proof depends on, in the alternative, the lex fori and the laws referred to in Article 9, as long as it can be administered by the forum.[391]

However, the applicable law will be applied to these issues only to the extent that those rules form part of the law of contract. The reason for their application is that these rules of substance contribute, in the law of contract, to making clear the obligations of the parties and therefore cannot be separated from the law which governs the contract. It is for the applicable law, and not the lex fori or for any autonomous principle derived from the Convention to determine whether the rule is characterised as contractual.[392] The evidential value of a mode of proof will be governed by the procedural law of the lex fori.[393]

Article 7 concerns the application of mandatory rules, not any mandatory rules though. They have to be "internationally mandatory", i.e. mandatory irrespective of the applicable law. Here too, under paragraph 1, it is for the applicable law, and not the lex fori, or for any autonomous principle derived from the Convention to determine whether the rule is characterised as internationally mandatory. Under the second paragraph, naturally, the relevant rule is characterised under the lex fori. The concept includes rules of both public and private law and it is not static. That is to say, the same rule could be considered as internationally mandatory in some situations but not in others.[394] According to Philip, an example of these internationally mandatory rules is Article 1(1)(a) of the Vienna Convention.[395] However, since that provision is a [unilateral] conflict rule, its application under Article 7 is barred by virtue of Article 15, i.e. the doctrine of exclusion of renvoi.[396]

According to paragraph 1 the court may, regardless of the applicable law of the contract, apply these internationally mandatory rules of any other law to which the contract has a close connection. However, their application must be justified by `their nature and purpose and to the consequences of their application or non-application´. The provision is optional. This means that the delicate task of determining whether to apply these rules is a plain exercise of discretion.[397]

Paragraph 2 concerns the application of the internationally mandatory rules of the lex fori. Thus it merely restates the rule in paragraph 1, though in a different way.[398] The distinction between these internationally mandatory rules and the rules of ordre public is that "[t]he former preserves, in extreme language, the rules of the law of the forum in a situation in which they are mandatory irrespective of the law otherwise applicable to the contract. The latter uses guarded and restricted language authorising the forum to refuse to apply the law of a country specified by the Convention where such application is manifestly incompatible with the public policy of the forum."[399]

Due to the novelty of the provision in Article 7(1) the fear of the uncertainty to which it could give rise; the risk of ex officio application of depeçage; and its complicated application in general, a reservation may be entered against the provision under Article 22(1)(a). Austria, Germany, Ireland; Luxembourg, Portugal and the United Kingdom have entered such reservations.[400]

7.2.3 The Vienna Convention

Where the Convention is applicable to an international sale of goods, its rules will be applied to it as the applicable law of such a sale. Accordingly, the scope of the Convention and the applicable law are per definition the same, at least in regard of matters governed by the Convention. This means that in order to establish the scope of the Convention in this respect, its substantial rules must be examined.[401]

The following issues are within the scope of the applicable law when the Vienna Convention is identified as the applicable law: interpretation of the contract (Article 8), usages and practices (Article 9), formation (Part II), performance, the parties' reciprocal obligations, remedies, passing of risk, damages, interest, etc. (Part III). The exact scope of these rules and their interpretation are governed by Article 7.[402]

7.2.4 Conclusion

It is clear that Article 10 of the Rome Convention follows the pattern of the Hague Convention,[403] albeit in a more organised way since it is a codification of the conflict rules, of which the Hague Convention forms part, of the Member States of the European Community.

Article 10(2) of the Rome Convention corresponds with Article 4 of the Hague Convention, i.e. recourse to the lex loci solutionis, since delivery of the goods is the act of performance under a contract of sale. However, the two differ in that under the latter the court is to have recourse to that law, unless the parties have expressly chosen another law, whereas under the former the court shall only have regard to that law, but on the other hand the parties' choice of law is of no significance.[404]

The application of internationally mandatory rules of the law of a "third" country under Article 7(1) of the Rome Convention, could have the effect of subjecting the Vienna Convention, where it is applicable by virtue of Article 1(1)(b), to such internationally mandatory rules, at least if the "third" country is a non-Contracting State. This is of course not very likely, since this field of law normally consists of default rules.

These are the main situations in which there will be an interplay between the three Conventions:[405]

(i) Where the parties have made a choice of law, even without any clear reference to any domestic rules, and the uniform sales law forms part of that law - the Hague and Rome Conventions will be applied before the Vienna Convention in order to determine whether this choice of law is valid and thus should be given effect.[406]

(ii) Where the parties have made an incorporation by reference of the rules of the uniform sales law - the Hague and Rome Conventions will be applied before [the rules of] the Vienna Convention in order to identify the applicable law which will determine whether and to what extent this incorporation is allowed, and thus ultimately whether the uniform rules should be applied.[407]

(iii) Where the uniform sales law is applicable, either under (i), or in some situations under (ii), or by virtue of the unilateral default conflict rule in its Article 1(1)(a), and "gap-filling" renders recourse to the applicable law necessary - the Hague and Rome Conventions will be applied under the Vienna Convention by virtue of its Article 7(2).[408]

(iv) Where reservations under the Vienna Convention have been taken by its Contracting States and thus the uniformity of its contents has been affected - the Hague and Rome Conventions will be applied in order to determine whether these reservations should be given effect and thus whether or to what extent the Vienna Convention should be applied.[409]

(v) In the context of validity and formation of an international sale of goods, the Hague and Rome Convention will be applied in order to identify the applicable [domestic] law which will govern substantive validity and validity of consent, whereas the Vienna Convention will govern existence of consent.[410]

After classification of the parties' transaction in order to determine whether it falls within the scope of any of the three Conventions concerned with international sales of goods; after determining whether it should be governed by the uniform sales law, i.e. the Vienna Convention, or by the [national] substantive law as identified by the conflict rules in the Hague and Rome Conventions; after determining whether the contract was validly concluded; and after determining the scope of the governing law, the next step would be interpretation and application of this governing law. However, that would be completely outside the scope of this paper, since there would no longer be any interplay between the three Conventions in question. Moreover, it involves the procedural law of the lex fori. For instance, whether the court will apply the foreign law ex officio in line with the principle of iure novit curiae, or treat the rules of the foreign law as matters of fact and thus in need of being proven.

It is clear that the interplay between the Hague, Rome and Vienna Conventions is a rather complicated matter and not at all fully settled. In addition to these uncertainties, contracting parties in the real world will have to deal with the questions of property, capacity, etc. and the identification of their proper law. Moreover, an international sale of goods is really only a part of an international commercial transaction. Such a transaction will also involve contracts of carriage, insurance, financing et cetera.

FOOTNOTES

1. The Report, p 10.

2. Infra, section 2.3.2.

3. Prop. 1964:149; SvJT 1955 p. 81; Bogdan; Gihl; and Philip DIPP.

4. La Sixième Session de la Conférence de la Haye de Droit International Privé.

5. Prop. 1964:149, pp. 4 - 5.

6. Philip DIPP, p. 322.

7. Belgium, Denmark, Finland, France, Italy, Luxembourg, the Netherlands, Niger, Norway, Spain, Sweden and Switzerland, of which Niger, Norway and Switzerland are not parties to the Rome Convention.

8. The Report, p. 38; Prop. 1997/98:14; Cheshire & North; Plender; and Philip, EU-IP.

9. The Report, p. 4; and Prop. 1997/98:14, p. 9.

10. Plender, p. 1.

11. Prop. 1986/87:128; Bianca & Bonell; Honnold; Bernstein; Ramberg; and Schlechtriem.

12. Prop. 1986/87:128, p. 81.

13. Bonell, in Bianca & Bonell, pp. 7 et seq.

14. Prop. 1964:149.

15. Prop. 1997/98:14.

16. North, Essays in Private International Law, pp. 186 - 187.

17. Prop. 1986/87:128.

18. Article 6 of the Vienna Convention.

19. Article 7 of the Vienna Convention; and infra, Chapter 3.

20. Article 1(1)(b) of the Vienna Convention, and infra, section 4.2.3.

21. Reczei, p. 516; Ferrari, para. III.1; Bernstein, p. 7; Herber, in Schlechtriem, Intro. to Arts. 1 - 6, paras. 25 et seq.; and Article 100 of the Vienna Convention.

22. Bogdan, p. 236; Ferrari, para. III.1; Herber, in Schlechtriem, Intro. to Arts. 1 - 6, para. 4; Mistelis, p. 202; and infra, section 4.2.3.

23. Philip EU-IP, p. 181; and infra, section 7.2.2.

24. Kropholler IEAL, pp. 190 et seq.; Schurig, pp. 232 et seq.; Kropholler, p. 85; Herber, in Schlechtriem, Intro. to Arts. 1 - 6, para. 2; and Mistelis, p. 202.

25. Kropholler IEAL, p. 190.

26. Bernstein, p. 138, f.n. 11.

27. Infra, section 4.3.3.

28. JT 1991/92 p. 1, p. 5; and infra section 2.3.2. However, this is a matter often misunderstood, ibid. p. 6, f.n. 18.

29. Infra, sections 3.1.3 and 4.3.

30. Infra, section 4.2.3; Reczei, p. 517; Jayme, in Bianca & Bonell, p. 31; and Herber, in Schlechtriem, Art. 1, para. 34. Note that under Article 95 a Contracting State can make a reservation against the application of Article 1(1)(b): the implications of such a reservation will be discussed infra, section 4.4.

31. JT 1991/92 p. 1, p. 6; Ferrari, para. VI.2; Bernstein, p. 12; and Herber, in Schlechtriem, Art. 1, para. 44.

32. Bernstein, p. 12.

33. Infra, section 2.3.

34. Jayme, in Bianca & Bonell, pp. 32 - 33, emphasis added.

35. Subject to Article 95 of the Vienna Convention.

36. Infra, Chapter 5.

37. Infra, section 5.4.

38. Prop. 1964:149, p. 17 et seq.; SvJT 1955 p. 81, pp.83 et seq.; Bogdan, pp. 53 et seq.; Philip DIPP, p. 331.

39. Prop. 1997/98:14, p. 52; and Philip EU-IP, p. 186.

40. The Report, p. 37.

41. The Report, p. 37.

42. Plender, p. 54.

43. Schlechtriem, JT 1991/92, p. 1, pp. 6 - 7, incl. f.n. 18; and Philip EU-IP, p. 186.

44. Bezirksgericht für Handelssachen Wien, February 20, 1992, RdW 239, i.e. prior to Austria becoming a Contracting State to the Rome Convention, (application of the Vienna Convention entirely precluded due to the reference back to Austrian substantive law); Jayme, in Bianca & Bonell; and Karollus, III.1

45. The Report, p. 39; Philip EU-IP, p. 131.

46. The Report, p. 39; Prop. 1997/98:14, pp. 53 - 54.

47. Philip EU-IP, p. 131.

48. The Report, p. 39.

49. Philip EU-IP, p. 132.

50. Infra, section 4.4.3.

51. Evans, in Bianca & Bonell, pp. 636 - 637.

52. Tribunal de Commerce de Bruxelles, 7eme ch., October 5, 1994, n.RG 1.205/93. This Belgian case concerned the interrelation between the Vienna Convention and the Rome Convention and it was held that there is no conflict between the two, since the former is concerned with substantive law and the latter with conflict of laws. See also Prop. 1986/87:128, p. 159; Honnold, §§ 464 - 464.3; and Bonell & Liguori, para. 3.1(a), incl. f.n. 46. Honnold explores in depth the effect of giving Article 90 such a broad interpretation as to include agreements on conflict of laws in `matters governed by the Convention.' I.e. if priority were given to Article 3 of the Hague Convention instead of Article 1(1)(a) of the Vienna Convention; and Article 4 of the Hague Convention instead of Articles 39 and 44; 49 and 81 - 84; and 85 - 88 of the Vienna Convention. He finds the result unacceptable and highly unlikely to have been intended. Thus both a teleological approach and a strict interpretation of its wording will lead to a narrow construction of Article 90. For a different view, see Herber, in Schlechtriem, Art. 90, paras. 3 et seq.

53. Herber, in Schlechtriem, Art. 90, paras. 10 and 13.

54. Herber, in Schlechtriem, Art. 90, para. 12.

55. Ibid.

56. Infra, section 4.4.3.

57. E.g. EC Law by Weatherill & Beaumont (2^nd edition) (1995), chapter 11, and in particular pp. 345 et seq.

58. In support of this view: tutorials with Associate Professor David Fisher, Faculty of Law, Stockholm University and Dr. Mistelis, C.C.L.S., Queen Mary & Westfield College, University of London, respectively.

59. Supra, section 2.4.3.

60. The Report, p. 39.

61. La Quatorzième Session de la Conférence de la Haye de Droit International Privé, in 1980.

62. Prop. 1997/98, pp. 23 - 24 and 34; and infra section 5.6.

63. Discussed infra, Chapter 5.

64. Prop. 1997/98:14, p. 24.

65. Articles 30(3) and (4)(a) of the Vienna Convention on the Law of Treaties, May 23, 1969, 1155 UNTS 331, SÖ 1975:1, Prop. 1974:158. However, in relation to States parties to the Hague Convention but not to the Rome Convention, the Hague Convention must prevail according to Article 30(4)(b) of the 1969 Convention. On the facts only, this is also the most appropriate solution, since application of the Rome Convention [rules] would harm the uniformity achieved between the Contracting States to the Hague Convention.

66. Plender, p. 9.

67. The Vienna Convention on the Law of Treaties, May 23, 1969, 1155 UNTS 331, SÖ 1975:1, Prop.1974:158.

68. Infra, Chapters 5 and 7.

69. Infra, Chapter 4.

70. Prop. 1964:149, pp. 10 et seq.; and Philip DIPP, p. 329.

71. Prop. 1964:149, p. 16, translation by the author.

72. The Report, p. 38; Prop. 1997/98:14, p. 53; and Cheshire & North, p. 464.

73. Plender, p. 8; and Cheshire & North, p. 463.

74. Cheshire & North, p 464; and Plender, p. 29.

75. Case 201/82 Gerling v. Amministrazione del Tesoro dello Stato [1983] E.C.R. 2503 at 2515 (§11), which did concern the application of the Brussels Convention, but the principle should be applicable on the Rome Convention too; Plender, p. 30.

76. The Report, p. 38; and infra, section 4.2.2.

77. Bonell, in Bianca & Bonell, p. 73.

78. Herber, in Schlechtriem, Art. 7, paras. 19 et seq.

79. Flechtner, paras. II.A.2 and B.

80. Prop. 1986/87:128, p. 100; Bonell, in Bianca & Bonell, pp. 72 et seq.; Bernstein, p. 21; and Herber, in Schlechtriem, Art. 7, para. 14. For an alternative view, see Flechtner.

81. Bonell, in Bianca & Bonell, pp. 83 et seq.; Bernstein, pp. 22 - 23; and Herber, in Schlechtriem, Art. 7, paras. 15 et seq.

82. Infra, sections 4.3 and 4.4.

83. Prop. 1986/87:128, p. 101; Bonell, in Bianca & Bonell, pp. 75 - 76; Bernstein, p. 24; and Herber, in Schlechtriem, Art. 7, paras 27 et seq.

84. Bonell, in Bianca & Bonell, pp. 76 et seq.; Bernstein, p. 24; and Herber, in Schlechtriem, Art. 7, para. 26.

85. Bonell, in Bianca & Bonell, pp. 78 - 79; Hellner, in particular section 4; and Herber, in Schlechtriem, Art. 7, paras. 29 - 30.

86. Bonell, in Bianca & Bonell, p. 80. See also Hellner; and Herber, in Schlechtriem, Art. 7, paras. 33 et seq.

87. Bonell, in Bianca & Bonell, p 81; Hellner, section 4; and Bernstein p. 25.

88. Bernstein, p. 27.

89. Bonell, in Bianca & Bonell, p. 83; and Herber, in Schlechtriem, Art. 7, paras 30 - 31.

90. Infra, section 4.3.3.

91. Bonell, in Bianca & Bonell, pp. 93 - 94.

92. The 1964 Hague Conventions on Uniform Law on the Formation of Contracts for the International Sale of Goods and on Uniform Law on the International Sale of Goods.

93. Philip DIPP, p. 321.

94. This source of law is much favoured in Sweden, but this will certainly not apply to all the Contracting States.

95. 1980 OJ C282/20.

96. Plender, p. 32; and Cheshire & North, pp. 464 - 465.

97. Infra, Appendices V and VI.

98. The Court of Justice of the European Community.

99. Prop. 1997/98:14; p. 14; Plender, pp. 36 et seq.; Philip EU-IP, pp. 191 - 192; and Cheshire & North, pp. 461 et seq.

100. Article 33(4) of the Vienna Convention on the Law of Treaties, May 23, 1969, 1155 UNTS 331, SÖ 1975:1, Prop. 1974:158. Prop. 1986/87:128, pp. 90 et seq.; Bianca & Bonell, p. 90; Ferrari, para. II.1; and Herber, in Schlechtriem, Arts. 1 - 6, paras. 28 - 29. In accordance with this, the Convention was in Sweden implemented through incorporation instead of the usually more favoured method of transformation, i.e. translation and adaption to Swedish statutorial standard; the Swedish International Sales of Goods Act.

101. Prop. 1986/87:128, p. 100. In order to enable exchange of decisions concerning the Vienna Convention and other UNCITRAL Conventions, an information system has been established under the name of `CLOUT' (`Case Law On UNCITRAL Texts'). There is also this very useful website: www.cisg.law.pace.edu/cisg.

102. Bonell, in Bianca & Bonell, p. 93. For further support of the idea that irreconcilable conflicts between different interpretations should be solved under the traditional conflict rules, see Honnold, section 464, last sentence.

103. Plender, p. 87.

104. Prop. 1986/87:128, p. 100; Bonell, in Bianca & Bonell p. 90; and Bernstein, p. 20.

105. Strictly speaking, it is still a matter for the lex fori as a Convention once ratified and come into force is a part of the lex fori.

106. E.g. property rights; and, under civil law, status or capacity - under common law the latter are traditionally classified as contractual issues and thus governed by the lex contractus.

107. E.g. auctions; executions; rights and obligations under family law; and, at least to a certain extent, consumer contracts.

108. Infra, section 4.3 and Chapter 5.

109. SvJT 1955 p. 81, p. 82.

110. La Septième Session de la Conférence de la Haye de Droit International Privé, in 1951.

111. Prop. 1964:149, p. 10.

112. Philip DIPP, p. 324.

113. Philip DIPP, p. 325.

114. Bogdan, p. 231.

115. Bogdan, p. 230.

116. Prop. 1964:149, p. 13, though note the Déclaration of 1980 on consumer sales, infra section 4.3.1.

117. At p. 10.

118. See discussion infra, 6.2.2.

119. Plender, pp. 51 - 52.

120. Case 34/82 Peters v. ZNAV [1983] E.C.R. 987 at 1009.

121. Plender, p. 51.

122. Philip, EU-IP, p. 128 and the Report at pp. 13 et seq.

123. At p. 10.

124. The Report at p. 10.

125. Plender, p. 53.

126. Opinion, March 17, 1980.

127. Infra.

128. Supra, sections 2.1; and 2.3.2. See also Plender, p. 54; and Nygh, pp. 307 et seq.

129. This is yet another aspect of the dual character of the Vienna Convention, see supra, section 2.1. The Vienna Convention is both anational and national in character, since it at the same time is an autonomous body of law and forms part of the national substantive law of its Contracting States.

130. See also supra, section 2.3.2; and infra, sections 4.2.4; 5.2.1; and 5.2.3.

131. The Report at p. 13.

132. Infra section 4.3.3; Ferrari, paras. IV.1 - 2 and 5; Winship, p. 532; Bonell & Liguori, para. 2.1; Ramberg, p. 37; and Herber, in Schlechtriem, Art. 1, paras. 14 et seq.

133. Ferrari, para. IV.5; Winship, p. 533; Landgericht München, February 8, 1995, n. 8 HKO 24667/93, unpublished; Bernstein, pp. 15 - 16; Bonell & Liguori, para. 2.1(c); and Herber, in Schlechtriem, Art. 1, paras. 20 et seq.

134. Ferrari, paras. II.3 - 4.

135. Jayme, in Bianca & Bonell, p. 30; Ferrari, para. II.4; Winship, p. 535; and Herber, in Schlechtriem, Art.1, paras. 25 et seq.

136. Jayme, in Bianca & Bonell, p. 30; and Herber, in Schlechtriem, Art. 1, para. 30. The situation of an undisclosed principal is covered by Article 1(2), infra.

137. Reczei, pp. 516 et seq.; Bogdan, p. 236; and Ferrari, para. III.1.

138. Prop. 1986/87:128, p. 97; and Article 6, discussed infra section 4.3.3.

139. Articles 92 - 96 of the Vienna Convention, infra sections 4.4 and 6.5.3..

140. Tribunal de Commerce de Bruxelles, 11eme ch., November 13, 1992, n.RG 4.825/91; Oberlandsgericht Düsseldorf (Germany), January 8, 1993, n. 17 U 82/92; and Tribunal de Commerce de Bruxelles, 7eme ch., October 5, 1994, n. RG 1.205/93; Ferrari, para. III.2; Bonell & Liguori, para. 3.1, incl. f.n. 44. For a more in depth analysis, see Herber, in Schlechtriem, Art. 1, paras. 34 et seq. However, in para. 40, Herber - wrongly - assumes that where the law of another Contracting State is identified as the governing law, the court of a Contracting State must apply the Convention as lex fori. This taken together with the effect Herber renders the German Article 95 declaration as enacted together with the Convention in the so called Vertragsgesetz, lead to his misconception of the effect of a reservation under Article 95, Herber, ibid., Art. 1, para. 43 and Art. 95. Reservations under the Vienna Convention is discussed infra, section 4.4.3.

141. Rajski, in Bianca & Bonell, pp. 118 - 119; and Herber, in Schlechtriem, Art. 10, paras. 3 et seq.

142. Honnold, § 42; and Herber, in Schlechtriem, Art. 10, paras. 5 et seq..

143. Bernstein, p. 11 including footnotes.

144. An example could be where one party, the other party fully aware, carefully distributes the involvement of her business equally between her two places of business in order to anticipate/circumvene changes in e.g. export legislation. The contract contains no choice of law clause as that would disturb the equilibrium. A dispute arises and its outcome will depend on whether the Vienna Convention is applicable, i.e. one party is arguing for and the other against its application.

145. Infra, section 5.3.2.

146. Note that Article 7(2) of the Vienna Convention would not apply, since this case does not concern an interpretation of its rules of substantive law.

147. Honnold, § 42.

148. Réczei, pp. 520 - 521; Bianca & Bonell, p. 31; Ferrari, paras. II.6 and III.1; and Herber, in Schlechtriem, Art. 1, paras. 48 et seq. For a discussion regarding the burden of proof under this provision, see Herber, ibid., paras. 49 et seq.

149. Jayme, in Bianca & Bonell, p. 32; Ferrari, II.4; and Herber, in Schlechtriem, Art. 1, paras. 59 et seq.

150. Plender, p. 16.

151. Article 21 of the Rome Convention.

152. Supra, Chapter 2, and in particular section 2.4.4 for Plender's suggestion of an alternative interpretation.

153. Philip EU-IP, p. 130.

154. Philip DIPP, p. 325 and Bogdan, p. 230. See discussion regarding Article 3(3) of the Rome Convention, infra section 5.2.2.

155. Supra, section 2.1.

156. It is for instance questionable whether sales of computer standard software and the supply of water and gas, even though they fall within the scope of the Vienna Convention, should be considered sales of `goods´. Another example is services, i.e. to the extent they are not regarded as tangibles, but where they are still covered in a contract for the sale of goods because the services are not the preponderant part of the obligations of the party furnishing the goods.

157. Supra, section 2.1.

158. Supra, sections 2.1; and 2.3.2. See also Plender, p. 54; and Nygh, pp. 307 et seq.

159. This is yet another aspect of the dual character of the Vienna Convention, see supra, section 2.1. The Vienna Convention is both anational and national in character, since it at the same time is an autonomous body of law and forms part of the national substantive law of its Contracting States.

160. See also supra, sections 2.3.2; and 4.2.2; and infra, sections 5.2.1; and 5.2.3.

161. Prop. 1964:149, p. 12 and Philip DIPP, p. 326.

162. Bogdan, p. 231. On the other hand, they are arguably alredy excluded e contrario under Article 1(1), see Prop. 1964:149, p. 12.

163. Philip DIPP, p. 326.

164. Prop. 1964:149, p. 12.

165. Philip DIPP, p. 326.

166. Prop.1964:149, pp. 6 and 14.

167. Philip DIPP, p. 327.

168. La Déclaration et la Recommendation suivantes relatives au domaine de la Convention sur la loi applicable aux ventes à caractère international d'objets mobiliers corporels conclue le 15 juin 1955, infra Appendix III

169. Conférence de La Haye, Quatorzième Session 1980, Actes et Documents II-186.

170. Prop. 1997/98:14, pp. 23 - 24.

171. The Report, p. 10.

172. Plender, p. 58; and Philip EU-IP, p. 172.

173. The Report at 10.

174. Plender, p. 59.

175. Plender, p. 63.

176. The Report at 11.

177. The Report, p. 11; Plender, p. 71; and Philip EU-IP, p. 134.

178. The Report, p. 11.

179. Though only as long as the agreement of cooperation does not create a new legal entity, Philip EU-IP, p. 134.

180. Plender, pp. 74 - 75.

181. The Report, p. 13.

182. Plender, p. 76.

183. Infra, section 7.2.2.

184. Plender, p. 80.

185. The Second Council Directive 88/357 of June 22, 1988 on the Co-ordination of Laws, Plender, p. 81.

186. The Report, p. 13.

187. Ferrari, para. IV.5; and Herber, in Schlechtriem, Art. 1, para. 23.

188. Arbitral Award of Court of Arbitration of the Hungarian Chamber of Commerce, December 20, 1993, Vb 92205.

189. Khoo, in Bianca & Bonell, p. 35. See also JT 1991/92 p. 1, p. 10; Ferrari, paras. V.2 - 3; and Herber, in Schlechtriem, Art. 1, paras. 60 - 61, and Art. 2, paras. 5 et seq.

190. Khoo, in Bianca & Bonell, pp. 39 - 40; Ferrari, para. V.3; and Herber, in Schlechtriem, Art. 2, paras. 15 - 16.

191. Prop. 1986/87:128, p. 98.

192. Khoo, in Bianca & Bonell, p. 38.

193. Ferrari, para. V.4. Note that an analogous application of this rule in Article 2(f) to gas and water has been rejected by commentators: Khoo, in Bianca & Bonell, p. 38; Bernstein, p. 15, footnote 32; and Herber, in Schlechtriem, Art. 2, paras. 25 et seq. and 37.

194. Ferrari, para. V.5; Ramberg, p. 37; and Herber, in Schlechtriem, Art. 2, paras. 31 et seq.

195. Legfelsóbb Biróság [Supreme Court] of Hungary, September 25, 1992, 13 J.L. & COM. 31 (1993)(aircraft engines); Ferrari, para. V.5; Bernstein, p. 14, f.n. 26.

196. Arbitral Tribunal ICC, No. 7153 of1992, 14 J.L. & COM. 217 (1995): Cour d'appel Chambéry (France), May 25, 1993, 93-648 (a criticised analogisation of `a substantial part'); JT 1991/92 p. 1, p. 8; Ferrari, para. IV.3; and Ramberg, p. 38.

197. Honnold, § 59.

198. Khoo, in Bianca & Bonell, p. 42; Ferrari, paras. IV.3 - 4; and Herber, in Schlechtriem, Art. 3, paras. 3 et seq.

199. Prop. 1986/87:128, p. 99; JT 1991/92 p. 1, p. 9 incl. f.n. 27; Ferrari, para. IV.4; Bonell & Liguori, para. 2.1(b); and Herber, in Schlechtriem, Art. 2, paras. 3 et seq. For criticism, see Ferrari, ibid.

200. Khoo, in Bianca & Bonell, p. 45.

201. This problem does not exist in civil law jurisdictions and thus the effect of the provision is harmonisation on this matter. Date-Bah, in Bianca & Bonell, pp. 241 - 242.

202. Oberlandsgericht Koblenz, January 16, 1992, n. 5 U 534/91 (validity of retention of title clause); Cámara Nacional de Apelaciones en lo Comercial, October 14, 1993, 45.626 (validity of forum selection clause in standard form contract)(Argentina); Amtsgericht Nordhorn, June 14, 1994, n. 3 C 75/94 (validity of standard terms); Roder v. Rosedown, Federal Court, South Australia District Adelaide, April 28, 1995, 57 FCR (1995) 216 (effect of retention of title clause). Other matters excluded are inter alia capacity; agency; the right to set-off against other party's claim; the validity of the assignment of one party's right to third parties; limitation periods and defects in consent.

203. Prop. 1986/87:128, p. 99; Bonell, in Bianca & Bonell, pp. 59 - 60; JT 1991/92 p. 1, p. 11; Winship, pp. 532 and 536 - 537; Bonell & Liguori, para. 2.2; Bernstein, p. 46; and Herber, in Schlechtriem, Art. 4, paras. 7 and 18.

204. An example of when two different claims concur, are (i) a claim of lack of due care in the manufacture of the goods and (ii) a claim for non-conformity of the goods, the former is outside the Convention and the latter within. Khoo, in Bianca & Bonell, pp. 46 - 47. See also JT 1991/92 p. 1, pp. 11 et seq.; and Flechtner, para. II.B.

205. Handelsgericht Zürich, September 9, 1993, n. HG 930138 U/H93; Prop. 1986/87:128, p. 100; Khoo, in Bianca & Bonell, p. 50; JT 1991/92 p. 1, p. 11; Bonell & Liguori, para. 2.2(c); Bernstein, p. 17; Ramberg, p. 27; and Herber, Schlechtriem, Art.5, paras. 8 et seq.

206. The effects of an exclusion, derogation or variation under Article 6 and the validity of such an agreement are discussed infra, sections 5.2.4 and 6.3.3.

207. Ferrari, para. VI.1.

208. Bonell, in Bianca & Bonell, pp. 53 - 54; Winship, p. 537; and Herber, in Schlechtriem, Art. 6, paras. 24 et seq.

209. Ferrari, para. VI.5; Winship, p. 539; Bernstein, p. 19; Herber, in Schlechtriem, Art. 6, para. 31; and infra, section 5.2.3.

210. In fact, where it is applicable, the Vienna Convention replaces the proper law of contracts for the international sale of goods as identified by any [traditional] conflict rule in contract.

211. The issues are explicitly excluded; excluded by interpretation e contrario; or follows from general principles of private international law, supra sections 4.3.1 - 4.3.3.

212. Ibid. Regarding the non-restriction to tangibles under the Vienna Convention, it is for instance questionable whether sales of computer standard software and the supply of water and gas, even though they fall within the Convention scope, should be considered sales of `goods´. Another example is services, i.e. to the extent they are not regarded as tangibles, but where they are still covered in a contract for the sale of goods because the services are not the preponderant part of the obligations of the party furnishing the goods.

213. Infra, section 5.6.1.

214. Conférence de La Haye, Quatorzième Session 1980, Actes et Documents II-186

215. Infra, section 5.6.1 and further discussed infra, Chapter 6.

216. Bogdan, p. 70.

217. Prop. 1964:149, p. 27; SvJT 1955 p. 81, p. 87; Bogdan, pp. 70 - 78, Philip DIPP, pp. 64 - 72.

218. Prop. 1964:149, p. 27; and Bogdan, p. 73.

219. Philip DIPP, p. 329.

220. Plender, p. 158.

221. The Report, p. 38.

222. Plender, p.158.

223. Bogdan, p. 70.

224. Infra, section 7.2.2.

225. Ibid.

226. At least in regard of conflict rules in contract. In other fields of law Austria and the common law countries may apply renvoi.

227. The so called `federal state clause' in Article 93 is not dealt with in this work. However, the effects of such a reservation is the same as that of a reservation under Article 92, i.e. the Convention is not directly applicable under Article 1(1)(a), but it may apply under Article 1(1)(b). Australia, Canada, Denmark and New Zealand have made reservations pursuant to this provision. For a more extensive analysis, see e.g. Herber, in Schlechtriem, Article 93, paras. 1 et seq. Reservations under Article 96 of the Vienna Convention, i.e. against the principle of consensualism, is discussed infra, section 6.5.3.

228. Evans, in Bianca & Bonell, p. 643; Ferrari, para. III.1; Bernstein, p. 139; and Herber, in Schlechtriem, Article 92, para. 3.

229. Bernstein, 139.

230. Evans, in Bianca & Bonell, p. 652; and Herber in Schlechtriem, Article 95, paras. 2 et seq. Article 94(2) will in this respect have the same effect as a reservation under Article 95 against the application Article 1(1)(b), but to a geographically limited area and with the difference that it should be upheld by any court in any country, see infra.

231. Articles 92 and 93 both state that a declaring State shall be regarded as a non-Contracting State for the purpose of the subject matter of the reservation, so that is clearly settled within the Convention. This is not the case with neither of Articles 94 and 95. However, although these Articles use different wordings (`the Conven-tion is not to apply' and `[the declaring State] will not be bound', respectively), they are not distinguishable and a reservation under any of the four Articles should have universal application in the sense that they should be respected and upheld by courts of other Contracting States. For further analysis of Article 95, see infra.

232. For further support of this view, see Herber, in Schlechtriem, Article 94, para. 9, where he refers to `practical considerations', such as the parties' intentions and expectations, and to deter from forum shopping between Contracting States, which "militate in favour of [this] view".

233. Reczei, pp. 518 et seq.; Evans, in Bianca & Bonell, p. 653; and Herber, in Schlechtriem, Article 94, para. 9.

234. E.g. the Hague and Rome Conventions. Infra, sections 5.2 - 5.3.

235. Bernstein, p. 141; For critic due to the legislative changes within this (no longer) homogenous group, see f.ns. 32 et seq.

236. Bernstein, p. 142; and Herber, in Schlechtriem, Article 95, paras. 1 et seq.

237. The former is the view of Winship, see Winship, p. 535. For a mixed approach, see Ferrari, para. III.3, which seems to be based on a misconception of what really constitutes the substantive part of the applicable law as identified by the conflict rules of the lex fori.

238. Article 1(1)(b) is discussed supra, sections 2.1; 2.2; and 2.3.2. Article 90 is discussed supra, section 2.4.3.

239. Flechtner, II.A.2; and Herber, in Schlechtriem, Article 1, para. 44.

240. JT 1991/92 p.1, pp. 6 - 7.

241. UN Depository Notification C.N. 365.1989, Treaties -3, dated March 16, 1990.

242. Schlechtriem, Int. UN-Kaufrecht Rd.Nr. 18, Bernstein, p. 142 including footnote 37. For criticism of this declaration and the German legislation implementing it, see Ferrari, para. III.3.B.

243. The rules of the Vienna Convention will by virtue of the implementation by a Contracting State form part of its national law governing international sales, i.e. it will be, at least, a part of the proper law of the contract.

244. E.g. Articles 78 and 84(1) concerning interest, a matter which in some jurisdictions seems to be regarded as repugnant.

245. Plender, p. 87. See also Nygh, pp. 297 et seq.

246. The Report, p. 15.

247. Gihl, pp. 194 et seq.

248. See for example the U.S. Restatement, Second, Conflict of Laws §§ 187 - 188, (1971).

249. Prop. 1964:149, pp. 19 et seq.; Bogdan, pp. 233 et seq.; and Philip DIPP, pp.330 et seq.

250. Supra, sections 2.1; and 2.3.2. See also Plender, p. 54; and Nygh, pp. 307 et seq.

251. This is yet another aspect of the dual character of the Vienna Convention, see supra, section 2.1. The Vienna Convention is both anational and national in character, since it at the same time is an autonomous body of law and forms part of the national substantive law of its Contracting States.

252. See also supra, sections 2.3.2; 4.2.2; and 4.2.4; and infra, section 5.2.3.

253. Ibid.

254. Prop. 1964:149, p. 17.

255. Philip DIPP, p. 332.

256. Prop. 1964:149, pp. 17 and 20.

257. Philip DIPP, p. 333.

258. The Report, p. 15.

259. Articles 3(3), 5, 6 and 7 of the Rome Convention, infra Appendix IV.

260. Plender, pp. 90 - 91; and Philip EU-IP, pp. 136 - 137.

261. The Report, p. 17; Plender, pp. 92 - 93; and Philip EU-IP, p. 138.

262. The Report, p. 17; and Philip EU-IP, p. 137.

263. Plender, p. 95; and discussed infra, section 7.2.2.

264. The Report, p. 17; Plender, p. 96; and Philip EU-IP, p.138.

265. The Report, p. 18; Plender, pp. 98 - 99; and Philip EU-IP, p. 140. For further discussions see Plender, pp. 97 et seq. and North, Varying the Proper Law in Essays in Private International Law.

266. The different types of mandatory rules will be discussed infra, section 7.2.2.

267. Prop. 1997/98:14, p. 40; and Philip EU-IP, p. 142.

268. Compare Plender, pp. 101 - 102 and Philip EU-IP, pp. 142 - 143.

269. Plender, p. 97.

270. However, this should not be undertaken in relation to States parties to the Hague Convention but not the Rome Convention, supra, section 2.4.4.

271. Philip, EU-IP, p. 137.

272. Supra, sections 2.1; and 2.3.2. See also Plender, p. 54; and Nygh, pp. 307 et seq.

273. This is yet another aspect of the dual character of the Vienna Convention, see supra, section 2.1. The Vienna Convention is both anational and national in character, since it at the same time is an autonomous body of law and forms part of the national substantive law of its Contracting States.

274. See also supra, sections 2.3.2; 4.2.2; 4.2.4; and 5.2.1.

275. Bogdan, p. 234; and Philip DIPP, p. 333.

276. Bogdan, p. 234; and Prop. 1964:149, p. 23.

277. Prop. 1964:149, p. 22; and Philip DIPP, p. 335.

278. Prop. 1964:149, p. 23.

279. Prop. 1964:149, p.23; Bogdan, p.234; and Philip DIPP, p. 335.

280. The following examples are taken from Bogdan, p. 235, f.n. 7. They have been slightly altered ,since the countries originally used in the examples now have become Contracting States to the Vienna Convention.

281. However, in order to make a valid choice of law, i.e. at the latest before any of the parties have begun fulfilling their obligations under the contract, it is quite possible that the auctioneer or the stockbroker must announce the choice of law clause before the actual sale. Consequently, as a matter of commercial convenience, the lex loci contractus will normally govern these sales.

282. Prop. 1964:149, p. 23; and Philip DIPP, p. 335.

283. Prop. 1964:149, p. 25; and Philip DIPP, pp. 336 - 337.

284. Ibid.

285. Prop. 1964:149, p. 25.

286. The Report, p. 20.

287. Plender, pp. 105 - 106.

288. The Report, p. 23 Plender, pp. 106 - 107; and Philip, pp. 148 - 149.

289. Philip, p. 149. For a different point of view, see Plender, p. 107.

290. The Report, pp 20 - 21; Plender, pp. 108 et seq.; and Philip EU-IP, pp. 144 et seq.

291. Appendix III. Since these types of contract are only within the scope of the Rome Convention, they will not be dealt with any further in this paper.

292. The Report, p. 22.

293. Philip EU-IP, p. 148.

294. However, this should not be undertaken in relation to States parties to the Hague Convention but not to the Rome Convention, supra, section 2.4.4.

295. Supra, section 2.1.

296. The effect of the parties' choice of law in relation to the Vienna Convention is discussed supra, section 2.2; and infra, section 5.4.

297. Supra, section 3.1.3.

298. The Vienna Convention is both anational and national in character, since it at the same time is an autonomous body of law and forms part of the national substantive law of its Contracting States, supra, section 2.1.

299. Supra, Chapter 4.

300. Nygh, pp. 302 et seq., in particular pp. 303 - 304.

301. Supra, section 4.3.3.

302. Bonell, in Bianca & Bonell, pp. 54 - 55; and Herber, in Schlechtriem, Art. 6, paras. 12 - 13.

303. Oberlandsgericht Düsseldorf, January 8, 1993, n. 17 U 82/92: Oberlandsgericht Koblenz, September 17, 1993, n. 2 U 1230/91; Oberlandsgericht Köln, February 22, 1994, n. 22 U 202/93; Bonell, in Bianca & Bonell, pp. 56 et seq.; Ferrari, para. VI.2; Winship, p. 538; Herber, in Schlechtriem, Art. 6, paras. 12 et seq.

304. Bernstein, pp. 18 - 19.

305. Bonell, in Bianca & Bonell, pp. 58 et seq.; Ferrari, para. VI.3 - 4; Herber, in Schlechtriem, Art. 6, paras. 9 - 10, 14 and 26. For a different view on whether contracting out is achieved in this situation, see Herber, ibid. para. 14.

306. Articles 1(1)(a) and 6 of the Vienna Convention; and supra, section 5.4.

307. Articles 2(1) - (2); 3(1) - (2); and 1(1)(b) and 6 of the Hague, Rome and Vienna Conventions, respectively.

308. Articles 3 and 4; 4(1) - (2) and (5); and 1(1)(b) of the Hague, Rome and Vienna Conventions, respectively.

309. Supra, section 4.4.3.

310. Unless the law chosen is that of a Contracting State taken a reservation under Article 95 of the Vienna Convention; supra, section 2.2. For a different opinion, see Ferrari, para. VI.2.

311. Discussed supra, sections 4.2.2; 4.2.4; 5.2.1; and 5.2.3.

312. Ferrari, para. VI.5; Winship, p. 539; and Herber, in Schlechtriem, Art.6, para.31.

313. The Report, p. 23.

314. Plender, p. 127; and Philip EU-IP, p. 152.

315. The Report, p.23; Prop. 1997/98:14, p. 44; Plender, pp. 128 et seq.; and Philip, p. 150.

316. Article 9(5) of the Rome Convention, Appendix IV.

317. Plender, p. 124; and Philip EU-IP, p. 152.

318. Supra section 2.4.4; and Prop. 1997/98:14, pp. 23 - 24.

319. Arguably, this Ruritanian rule could still be applicable even where Ruritania is a Contracting State to the Vienna Convention. In that case, by virtue of Article 9(2), provided this Ruritanian rule constitutes such a usage as referred to in that provision. However, the existence of such an, in international trade widely known and regularly observed, usage is quite unlikely. In addition, it would probably be contrary to the good faith provision in Article 7 and the mandatory rule in Article 18 which states that "[s]ilence or inactivity does not in itself amount to acceptance". Finally, a court could always refrain from applying such a usage under the doctrine of ordre public. For further discussion, see e.g. Bout, Trade Usages: Article 9 of the Convention on Contracts for the International Sale of Goods, Pace essay submission (1998), www.cisg.law.pace.edu/cisg/biblio/bout.html; and Esser, 18 Georgia Journal of International and Comparative Law (1988) 427.

320. NJA 1987 p. 885 (Sweden); The strict wording of the provision might suggest that it is not, but the provision is to be read in conjunction with Article 5 subparagraph 2 interpreted e contrario, Prop. 1964:149, pp. 15 and 20; SvJT 1955 p. 81, p. 87; Gihl, p. 175; and Bogdan, p. 226.

321. NJA 1987 p. 885, p. 906, translation by the author.

322. Prop. 1964:149, p. 20.

323. Bogdan, p. 233; and supra, section 5.2.

324. Supra, section 5.2.1.

325. At p. 28.

326. Giardina, Contract Conflicts, pp. 239 - 240.

327. Ibid., p. 239.

328. Supra, section 4.2.2; and Plender, p. 162 and pp. 49 et seq.

329. The Report, p. 30.

330. Lagarde, Contract Conflicts, p. 50.

331. The Report, p. 28.

332. Plender, p. 163.

333. The Report, p. 28.

334. Prop. 1997/98:14, p. 47.

335. Cheshire & North, p. 507.

336. Lagarde, Contract Conflicts, p. 51.

337. Von Hoffmann, Contract Conflicts, p. 228.

338. Ibid., p. 229.

339. Plender, p. 164.

340. The Report, p. 28.

341. Supra, section 2.4.4.

342. May 23, 1969, 1155 UNTS 331, SÖ 1975:1, Prop. 1974:158.

343. `Material validity´ consists of three parts: (i) `substantive validity´, i.e. validity of the substantive contents of a contract and its terms; (ii) `validity of consent´, i.e. defects of consent and defences to enforcement of a contract and its terms; and (iii) `existence of consent´, i.e. the mechanics of consent that must be fulfilled in order to create a [prima facie] valid contract, which may be invalidated by rules under either (i) or (ii), or both. Where `material validity´ is referred to as `validity and formation´, the former consists of (i) and (ii), and the latter of (iii).

344. Naturally, the extent of this statement will depend on what issues are classified as issues of validity under the [domestic] lex fori in comparison with their classification under the Vienna Convention.

345. Roder v. Rosedown, Federal Court, South Australia District Adelaide, April 28, 1995, 57 FCR (1995) 216 (whether retention of title clause actually agreed upon was within the scope of the Convention, its effects were not); Handelsgericht St. Gallen, August 24, 1995, n. HG48/1994 (defects in consent); Bonell, in Bianca & Bonell, pp. 59 - 60; Honnold, §§ 64, et seq.; JT 1991/92 p. 1, pp. 11 - 12; Bonell & Liguori, paras. 2.2(a) - (b); Bernstein, p. 46; and Herber, in Schlechtriem, Art. 4, para. 13.

346. Honnold, § 64. See also, supra, section 4.1; and infra, section 7.1.

347. Date-Bah, in Bianca & Bonell, pp. 241 - 242; Honnold, §§ 204.1 et seq.; and supra, section 4.3.3.

348. In the context of interpretating the parties' statements and conduct, [part of] the concept of mistake may be relevant under Article 8, but that is a different matter in this context of validity and formation. Honnold, § 108, including f.n. 16.

349. Appendix VII.

350. Articles 4(2) and 8(2) of the Rome Convention in conjunction; Prop. 1997/98:14, p. 47.

351. Oberlandsgericht Koblenz, January 16, 1992, n. 5 U 534/91 (validity of retention of title clause); Cámara Nacional de Apelaciones en lo Comercial, October 14, 1993, 45.626 (validity of forum selection clause in standard form contract)(Argentina); Amtsgericht Nordhorn, June 14, 1994, n. 3 C 75/94 (validity of standard terms); Roder v. Rosedown Federal Court, South Australia District Adelaide, April 28, 1995, 57 FCR (1995) 216 (effect of retention of title clause); Prop. 1986/87:128, p. 99; Bonell, in Bianca & Bonell, pp. 59 - 60; Honnold, §§ 64 et seq.; JT 1991/92 p. 1, p. 10; Winship, pp. 532 and 536 - 537; Bonell & Liguori, para. 2.2; Bernstein, p. 46; and Herber, in Schlechtriem, Art. 4, paras. 7 and 18.

352. Supra, section 4.4.3.

353. Supra, sections 2.2 and 5.4; and supra, section 6.3.1, respectively.

354. Bonell, in Bianca & Bonell, pp. 57 - 58.

355. Bonell, in Bianca & Bonell, p. 61; and Herber, Art. 6, para. 14.

356. Bonell, in Bianca & Bonell, pp. 60 - 61. Herber agrees with the mechanics, but states that the parties' invalid choice will not render the Vienna Convention inapplicable, in Schlechtriem, Art. 6, para. 14.

357. Ibid.

358. NJA 1987 s 885 (Sweden); Prop. 1964:149, pp. 15 and 20; SvJT 1955 p. 81, p. 87; Gihl, p. 175; and Bogdan, p. 226.

359. At pp. 28 et seq.

360. The Report, p. 29.

361. Lagarde, Contract Conflicts, p.52.

362. Ibid., p. 53.

363. Plender, pp. 165 - 166.

364. Rajski, in Bianca & Bonell, pp. 121 et seq.; JT 1991/92, p.1, at p. 17; and Schlechtriem, Art. 11, paras. 3 et seq.

365. Ibid.

366. Rajski, in Bianca & Bonell, pp. 125 et seq.; and Schlechtriem, Art. 12, paras. 1 - 6.

367. Rajski, in Bianca & Bonell, pp. 127 and 658.

368. E.g. Ferrari; Reinhart; Rehbinder; Stoffel; and Medwedew / Rosenberg, cited by Schlechtriem, cited by Schlechtgriem, Art. 12, para. 2, f.n. 5. See also Honnold in his 3^rd edition.

369. Rajski, in Bianca & Bonell, pp. 127 and 658; Flechtner, para. II.A.2; and Schlechtriem, Art. 12, para. 2

370. Ziegel, Article 12, para. 2.

371. Rajski, in Bianca & Bonell, pp. 127 and 659; Flechtner, para. II.A.2; Herber, in Schlechtriem, Art.96, paras. 1 et seq.; and Schlechtriem, Art. 12, paras. 1 et seq. See also supra, section 4.4.3.

372. Fovárosi Biróság [Metropolitan Court] Budapest, March 24, 1992, 12.G.41.471/1991/21.

373. Schlechtriem, Art. 12, para. 3.

374. Supra, section 4.4.3.

375. Supra, section 6.5.2.

376. Where the lex fori is the law of a non-Contracting State to the Vienna Convention, it is quite possible that its conflict rules may require e.g. a cumulative compliance with formal requirements of both the lex contractus and the lex loci actus.

377. Supra, section 6.5.3.

378. For instance, prior to the English Foreign Limitation Periods Act 1984, which provides that all limitation periods are to be classified as substantive, most limitation periods were classified by the English courts as procedural and thus limitation periods were governed by English law as the lex fori. In Sweden, on the other hand, together with many other countries, this issue has been considered one of substance and thus governed by the lex contractus. Accordingly, whether an action regarding a contract governed by French law should be dismissed on the ground that a limitation period has expired, would prior to the English Act, before an English court be decided under English law, whereas a Swedish court would apply the French limitation rule.

379. For instance, the Vienna Convention contains rules governing the time period during which the buyer has to notify non-conformity of the goods to the seller, i.e. limitation period rules (Articles 39 - 44). Consequently, where "gap-filling" of these rules is necessary, the corresponding rules of the governing [domestic] law will be applied, regardless of their "classification" under that law. Naturally, their traditional "classification" under the domestic part of the lex fori will also be disregarded in this context.

380. Articles 4 and 5 of the Hague Convention, infra Appendix II.

381. Prop. 1964:149, p. 20; and SvJT 1955 p. 81, p. 86.

382. The Report, p. 32; Prop. 1997/98:14, p. 48; and Philip EU-IP, p. 166.

383. Plender, pp. 171 - 172.

384. The Report, p. 32.

385. The Report, pp. 32 - 33; and Plender, p. 173.

386. The Report, p. 33; and Prop. 1997/98:14, p. 49.

387. At p. 33.

388. Ibid.

389. In English law, the obligation to restore the benefit of an enrichment at another's expense is governed by the proper law of the obligation. This proper law will very often coincide with that of any contract in connection of which the obligation arises, but not always.

390. Cheshire & North, p. 513.

391. The Report, pp. 36 - 37; Prop. 1997/98:14, pp. 51 - 52; Plender, pp. 166; and Philip, EU-IP, pp. 175 - 176.

392. Plender, p. 167.

393. Prop. 1997/98:14, p. 52.

394. Prop. 1997/98:14, p. 46; and Plender, p. 154.

395. Philip EU-IP, p. 181.

396.

³⁹⁶ Supra, section 2.3.

397. The Report, p. 27; Prop. 1997/98:14, p. 46; Plender, p. 155; and Philip EU-IP, p. 181.

398. The Report, p. 28; and Prop. 1997/98:14, p. 46.

399. Plender, p. 157.

400. The Report, p. 28; and Prop.1997/98:14, pp. 16 - 17. It is interesting to note that in the English case Regazzoni v. Sethia [1958] A.C. 301, the court held that a contract was invalid since it was in violation of the law of a friendly foreign country [India], even though this law was neither the governing law nor the lex fori. However, this rule is now considered an internationally mandatory rule of English [contract] law and thus applicable under Article 7(2).

401. For analyses of these rules, see e.g. Bianca & Bonell; JT 1991/92 p. 1; Ferrari; Winship; Bonell & Liguori; Bernstein; Honnold; Ramberg; and Schlechtriem.

402. Supra, section 3.1.3.

403. Plender, p. 169.

404. Philip EU-IP p. 167.

405. For a more comprehensive analysis, see supra, Chapters 1 - 7.

406. Supra, sections 2.2; 5.2; and 5.4.

407. Supra, sections 2.3.2; 4.2.2; 4.2.4; 5.2.1; and 5.2.3.

408. Ibid. and supra, sections 3.1.3; and 5.3.

409. Supra, sections 4.4; 6.5.3; and 6.5.4.

410. Supra, sections 6.2; and in particular 6.3.

Table of Cases

Argentina	Articles 12 and 96, when a party has her place of business in Argentina.
Australia	Convention apply to all Australian States and Continental Territories and all Extra-Continental Territories apart from Christmas Island, Cocos- (Keeling-)Islands and Ashmore- and Cartier-Islands.
Austria
Belarus	Articles 12 and 96, when a party has her place of business in Belarus.
Belgium
Bosnia-Herzegovina
Bulgaria
Burundi
Canada	Article 93: Convention apply to Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland, Nova Scotia, Ontario, Prince Edward Island, Quebec, Saskatchewan, Nortwest Territories and Yukon Territory.
Chile	Articles 12 and 96, when a party has her place of business in Chile.
China	Article 1(1)(b) and Article 11 including its contents as regards other Convention rules.
Croatia
Cuba
Czech Republic	Article 95 regarding Article 1(1)(b).
Denmark	Article 92 regarding Part II. Convention will not apply to Farø Islands and Greenland. Article 94, when one party has her place of business in Denmark, Finland, Norway and Sweden and the other party has her place of business in another of the mentioned States or Iceland.
Ecuador
Egypt
Estonia	Articles 12 and 96, when a party has her place of business in Estonia.
Federal Republic of Germany	Declaration that Contracting States taken a declaration under Article 95 will not be regarded as Contracting States as regards Article 1(1)(b).
Federal Republic of Yugoslavia (Serbia-Montenegro)
Finland	Article 92 regarding Part II. Article 94, when one party has her place of business in Denmark, Finland, Norway and Sweden and the other party has her place of business in another of the mentioned States or Iceland.
France
Georgia
Guinea
Hungary	GCD CMEA, 1968/1975 is subject to Article 90. Articles 12 and 96, when a party has her place of business in Hungary.
Iraq
Italy
Latvia
Lesotho
Lithuania	Articles 12 and 96, when a party has her place of business in Lithuania.
Luxembourg
Mauritania	Mexico
Moldavia
Mongolia
The Netherlands .	Convention apply to The Netherlands with Aruba
New Zealand
Norway	Article 92 regarding Part II. Article 94, when one party has her place of business in Denmark, Finland, Norway and Sweden and the other party has her place of business in another of the mentioned States or Iceland.
Peru
Poland
Romania
The Russian Federation	Articles 12 and 96, when a party has her place of business in Russian Federation.
Singapore	Article 95 regarding Article 1(1)(b).
Slovakia	Article 95 regarding Article 1(1)(b).
Slovenia
Spain
Sweden	Article 92 regarding Part II. Article 94, when one party has her place of business in Denmark, Finland, Norway and Sweden and the other party has her place of business in another of the mentioned States or Iceland.
Switzerland
Syrian Arab Republic
Uganda
Ukraine	Articles 12 and 96, when a party has her place of business in Estonia.
United States of America	Article 95 regarding Article 1(1)(b).
Uruguay
Uzbekistan
Venezuela
Zambia

APPENDIX II

Convention sur la loi applicable aux ventes à caractère international d'objets mobiliers corporels

APPENDIX VII

United Nations Convention on Contracts for the International Sale of Goods

[Part III Omitted]

The States Parties to this Convention,

Bearing in mind the broad objectives in the resolutions adopted by the sixth special session of the General Assembly of the United Nations on the establishment of a New International Economic Order,

Considering that the development of international trade on the basis of equality and mutual benefit is an important element in promoting friendly relations among States,

Being of the opinion that the adoption of uniform rules which govern contracts for the international sale of goods and take into account the different social, economic and legal systems would contribute to the removal of legal barriers in international trade and promote the development of international trade,

Have agreed as follows:

PART I. SPHERE OF APPLICATION AND GENERAL PROVISIONS

CHAPTER I. SPHERE OF APPLICATION

Article 1

(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 private international law lead to the application of the law of a Contracting State.

(2) The fact that the parties have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract.

(3) Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration in determining the application of this Convention.

Article 2

This Convention does not apply to sales:

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

(b) by auction;

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

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

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

(f) of electricity.

Article 3

(1) Contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production.

(2) This Convention does not apply to contracts in which the preponderant part of the obligations of the party who furnishes the goods consists in the supply of labour or other services.

Article 4

This Convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. In particular, except as otherwise expressly provided in this Convention, it is not concerned with:

(a) the validity of the contract or of any of its provisions or of any usage;

(b) The effect which the contract may have on the property in the goods sold.

Article 5

This Convention does not apply to the liability of the seller for death or personal injury caused by the goods to any person.

Article 6

The parties may exclude the application of this Convention or, subject to article 12, derogate from or vary the effect of any of its provisions.

C HAPTER II. GENERAL PROVISIONS

Article 7

(1) In the interpretation of this Convention, regard is 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.

(2) 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.

Article 8

(1) For the purpose of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.

(2) If the preceding paragraph is not applicable, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.

(3) In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and subsequent conduct of the parties.

Article 9

(1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves.

(2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.

Article 10

For the purposes of this Convention:

(a) if a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion of the contract;

(b) if a party does not have a place of business, reference is to be made to his habitual residence.

Article 11

A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirements as to form. It may be proved by any means, including witnesses.

Article 12

Any provision of article 11, article 29, or Part II of this Convention that allows a contract of sale or its modification or termination by agreement or any offer, acceptance or other indication of intention to be made in any form other than writing does not apply where any party has his place of business in a Contracting State which has made a declaration under article 96 of this Convention. The parties may not derogate from or vary the effect of this article.

Article 13

For the purpose of this Convention "writing" includes telegram and telex.

PART II. FORMATION OF THE CONTRACT

Article 14

(1) A proposal for concluding a contract addressed to one or more specific perons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in the case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provisions for determining the quantity and the price.

(2) A proposal other than one addressed to one or more specific persons is to be considered merely as an invitation to make offers, unless the contrary is clearly indicated by the person making the proposal.

Article 15

(1) An offer becomes effective when it reaches the offeree.

(2) An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer.

Article 16

(1) Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance.

(2) However, an offer cannot be revoked:

(a) if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or

(b) if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer.

Article 17

An offer, even if it is irrevocable, is terminated when a rejection reaches the offeror.

Article 18

(1) A statement made by or other conduct of the offeree indicating assent to an offer is an acceptance. Silence or inactivity does not in itself amount to acceptance.

(2) An acceptance of an offer becomes effective at the moment of indication of assent reaches the offeror. An acceptance is not effective if the indication of assent does not reach the offeror within the time he has fixed or, if no time is fixed, within reasonable time, due account being taken to the circumstances of the transaction, including the rapidity of the means of communication employed by the offeror. An oral offer must be accepted immediatly unless the circumstances indicate otherwise.

(3) However, if by virtue of the offeror or as a result of practices which the parties has established between themselves or of usage, the offeree may indicate assent by performing an act, such as one relating to the dispatch of the goods or payment of the price, without notice to the offeror, the acceptance is effective at the moment the act is performed, provided that the act is performed within the period of time laid down in the preceding para-graph.

Article 19

(1) A reply to an offer which purports to be an acceptance but contains additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer.

(2) 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.

(3) Additional or different terms relating, among other things, to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or the settlement of disputes are considered to alter the terms of the offer materially.

Article 20

(1) A period of time for acceptance fixed by the offeror in a telegram or a letter begins to run from the moment the telegram is handed in for dispatch or from the date shown on the letter or, if no such date is shown, from the date shown on the envelope. A period of time for acceptance fixed by the offeror by telephone, telefex or other means of instantaneous communication, begins to run from the moment that the offer reaches the offeree.

(2) Official holidays or non-business days occurring during the period for acceptance are included in calculating the period. However, if a notice of acceptance cannot be delivered at the address of the offeror on the last day of the period because that day falls on an official holiday or a non-business day at the place of business of the offeror, the period is extended until the first business day which follows.

Article 21

(1) A late acceptance is nevertheless effective as an acceptance if without delay the offeror orally so informs the offeree or dispatches a notice to that effect.

(2) If a letter or other writing containing a late acceptance shows that it has been sent in such circumstances that if its transmission had been normal it would have reached the offeror in due time, the late acceptance is effective as an acceptance unless, without delay, the offeror orally informs the offeree that he considers his offer as having lapsed or dipatches a notice to that effect.

Article 22

An acceptance may be withdrawn if the withdrawal reaches the offeror before or at the same time as the acceptance would have become effective.

Article 23

A contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convention.

Article 24

For the purpose of this Part of the Convention, an offer, declaration of acceptance or any other indication of intention "reaches" the addressee when it is made orally to him or delivered by any other means to him personally, to his place of business or mailing address or, if he does not have a place of business or mailing address, to his habitual residence.

PART III. SALE OF GOODS

[Omitted]

PART IV. FINAL PROVISIONS

Article 89

The Secretary-General of the United Nations is hereby designated as the depositary for this Convention.

Article 90

This Convention does not prevail over any international agreement which has already been or may be entered into and which contains provisions concerning the matters governed by this Convention, provided that the parties have their places of business in States parties to such agreement.

Article 91

(1) This Convention is open for signature at the concluding meeting of the United Nations Conference on Contracts for the International Sale of Goods and will remain open for signature by all States at the Headquarters of the United Nations, New York until 30 September 1981.

(2) This Convention is subject to ratification, acceptance or approval by the signatory States.

(3) This Convention is open for accession by all States which are not signatory States as from the date it is open for signature.

(4) Instruments of ratification, acceptance, approval and accession are to be deposited with the Secretary-General of the United Nations.

Article 92

(1) A Contracting State may declare at the time of signature, ratification, acceptance, approval or accession that it will not be bound by Part II of this Convention or that it will not be bound by Part III of this Convention.

(2) A Contracting State which makes a declaration in accordance with the preceding paragraph in respect of Part II or Part III of this Convention is not to be considered a Contracting State within paragraph (1) of article 1 of this Convention in respect of matters governed by the Part to which the declaration applies.

Article 93

(1) If a Contracting State has two or more territorial units in which, according to its constitution, different systems of law are applicable in relation to the matters dealt with in this Convention, it may, at the time of signature, ratification, acceptance, approval or accession, declare that this Convention is to extend to all its territorial units or only to one or more of them, and may amend its declaration by submitting another declaration at any time.

(2) These declarations are to be notified to the depositary and are to state expressly the territorial units to which the Convention extends.

(3) If, by virtue of a declaration under this article, this Convention extends to one or more but not all of the territorial units of a Contracting State, and if the place of business of a party is located in that State, this place of business, for the purpose of this Convention, is considered not to be in a Contracting State, unless it is in a territorial unit to which the Convention extends.

(4) If a Contracting State makes no declaration under paragraph (1) of this article, the Convention is to extend to all territorial units of that State.

Article 94

(1) Two or more Contracting States which have the same or closely related legal rules on matters governed by this Convention may at any time declare that the Convention is not to apply to contracts of sale or to their formation where the parties have their places of business in those States. Such declarations may be made jointly or by reciprocal unilateral declarations.

(2) A Contracting State which has the same or closely related legal rules on matters governed by this Convention as one or more non-Contracting States may at any time declare that the Convention is not to apply to contracts of sale or to their formation where the parties have their places of business in those States.

(3) If a State which is the object of a declaration under the preceding paragraph subsequently becomes a Contracting State, the declaration made will, as from the date on which the Convention enters into force in respect of the new Contracting State, have the effect of a declaration made under paragraph (1), provided that the new Contracting State joins in such declaration or makes a reciprocal unilateral declaration

Article 95

Any State may declare at the time of the deposit of its instrument of ratification, acceptance, approval or accession that it will not be bound by subparagraph (1) (b) of article 1 of this Convention.

Article 96

A Contracting State whose legislation requires contracts of sale to be concluded in or evidenced by writing may at any time make a declaration in accordance with article 12 that any provision of article 11, article 29, or Part II of this Convention, that allows a contract of sale or its modification or termination by agreement or any offer, acceptance, or other indication of intention to be made in any form other than in writing, does not apply where any party has his place of business in that State.

Article 97

(1) Declarations made under this Convention at the time of signature are subject to confirmation upon ratification, acceptance or approval.

(2) Declarations and confirmations of declarations are to be in writing and be formally notified to the depositary.

(3) A declaration takes effect simultaneously with the entry into force of this Convention in respect of the State concerned. However, a declaration of which the depositary receives formal notification after such entry into force takes effect on the first day of the month following the expiration of six months after the date of its receipt by the depositary. Reciprocal unilateral declarations under article 94 take effect on the first day of the month following the expiration of six months after the receipt of the latest declaration by the depositary.

(4) Any State which makes a declaration under this Convention may withdraw it at any time by a formal notification in writing addressed to the depositary. Such withdrawal is to take effect on the first day of the month following the expiration of six months after the date of the receipt of the latest declaration by the depositary.

(5) A withdrawal of a declaration made under article 94 renders inoperative, as from the date on which the withdrawal takes effect, any reciprocal declaration made by another State under that article.

Article 98

No reservations are permitted except those expressly authorized in this Convention.

Article 99

(1) This Convention enters into force, subject to the provisions of paragraph (6) of this article, on the first day of the month following the expiration of twelve months after the date of deposit of the tenth instrument of ratification, acceptance, approval or accession, including an instrument which contains a declaration made under article 92.

(2) When a State ratifies, accepts approves or accedes to this Convention after the date of deposit of the tenth instrument of ratification, acceptance, approval or accession, this Convention, with the exception of the Part excluded, enters into force in respect of that State, subject to the provisions of paragraph (6) of this article, on the first day of the month following the expiration of twelve months after the date of deposit of its instrument of ratification, acceptance, approval or accession.

(3) A State which ratifies, accepts, approves, or accedes to this Convention and is a party to either or both the Convention relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods done at The Hague on 1 July 1964 (1964 Hague Formation Convention) and the Convention relating to a Uniform Law on the International Sale of Goods done at The Hague on 1 July 1964 (1964 Hague Sales Convention) shall at the same time denounce, as the case may be, either or both the 1964 Hague Sales Convention and the 1964 Hague Formation Convention by notifying the Government of the Netherlands to that effect.

(4) A State party to the 1964 Hague Sales Convention which ratifies, accepts, approves, or accedes to the present Convention and declares or has declared under article 92 that it will not be bound by Part II of this Convention shall at the time of ratification, acceptance, approval or accession denounce the 1964 Hague Sales Convention by notifying the Government of the Netherlands to that effect.

(5) A State party to the 1964 Hague Formation Convention which ratifies, accepts, approves, or accedes to the present Convention and declares or has declared under article 92 that it will not be bound by Part III of this Convention shall at the time of ratification, acceptance, approval or accession denounce the 1964 Hague Formation Convention by notifying the Government of the Netherlands to that effect.

(6) For the purpose of this article, ratifications, acceptances. approvals and accessions in respect of this Convention by States parties to the 1964 Hague Formation Convention or ot the 1964 Hague Sales Convention shall not be effective until such denunciations as may be required on the part of those States in respect of the latter two Conventions have themselves become effective. The depositary of this Convention shall consult with the Government of the Netherlands, as the depositary of the 1964 Conventions, so as to ensure necessary co-ordination in this respect.

Article 100

(1) This Convention applies to the formation of a contract only when the proposal for concluding the contract is made on or after the date when the Convention enters into force in respect of the Contracting State referred to in subparagraph (1) (a) or the Contracting State referred to in subparagraph (1) (b) of article 1.

(2) This Convention applies only to contracts concluded on or after the date when the Convention enters into force in respect of the Contracting State referred to in subparagraph (1) (a) or the Contracting State referred to in subparagraph (1) (b) of article 1.

Article 101

(1) A Contracting State may denounce this Convention, or Part II, or Part III of the Convention, by a formal notification in writing addressed to the depositary.

(2) The denunciation takes effect on the first day of the month following the expiration of twelve months after the notification is received by the depositary. Where a longer period for the denunciation to take effect is specified in the notification, the denunciation takes effect upon the expiration of such longer period after the notification is received by the depositary.

DONE at Vienna, this day of eleventh day of April, one thousand nine hundred and eighty, in a single original, of which the Arabic, Chinese, English, French, Russian, and Spanish texts are equally authentic.

IN WITNESS WHEREOF the undersigned plenipotentiaries, being duly authorized by their respective Governments, have signed this Convention.

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Pace Law School Institute of International Commercial Law - Last updated January 19, 2000

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