Published by Manz, Vienna: 1986. Reproduced with their permission.

	page number of Manz text
Preface	. . . . . . . . . . . . . . .       5
Abbreviations	. . . . . . . . . . . . . . .       9
Bibliographic Notes	. . . . . . . . . . . . . . .      11
I. Preliminary Remarks	. . . . . . . . . . . . . . .      17
A. Early History	. . . . . . . . . . . . . . .      17
B. The UNCITRAL Drafts and the Vienna Conference on the International Sales	. . . . . . . . . . . . . . .      18
C. Background Materials and Documents	. . . . . . . . . . . . . . .      20
II. The Structure and the Main Features of the 1980 Convention (CISG)	. . . . . . . . . . . . . . .      22
III. Sphere of Application (Articles 1-6)	. . . . . . . . . . . . . . .      24
A. Initial Questions (Article 1(1))	. . . . . . . . . . . . . . .      24
B. Sufficiency of Foreign Contacts	. . . . . . . . . . . . . . .      27
C. Application of the Convention Independent of the Parties' Commercial Character or
Nationality (Article 1(3))	. . . . . . . . . . . . . . .      27
D. Exceptions (Article 2)	. . . . . . . . . . . . . . .      28
1. Consumer Contracts	. . . . . . . . . . . . . . .      28
2. Auctions; Stocks, Securities. Negotiable Instruments and Money; Ships and Aircraft;
Electricity	. . . . . . . . . . . . . . .      29
E. Contracts for the Sale of Made-to-Order Goods and for the Sale of Services	. . . . . . . . . . . . . . .      31
F. Contract Validity and the Transfer of Title (Article 4)	. . . . . . . . . . . . . . .      32
G. Products Liability (Article 5)	. . . . . . . . . . . . . . .      34
H. Party Autonomy (Article 6)	. . . . . . . . . . . . . . .      35
IV. General Rules	. . . . . . . . . . . . . . .      37
A. Interpretation and Gap-Filling (Article 7)	. . . . . . . . . . . . . . .      37
B. Interpretation of Statements and Conduct (Article 8)	. . . . . . . . . . . . . . .      39
C. Usages (Article 9)	. . . . . . . . . . . . . . .      40
D. Place of Business (Article 10)	. . . . . . . . . . . . . . .      43
E. Form (Articles 11, 12, 13, 29 (2) and 96)	. . . . . . . . . . . . . . .      44
V. Formation of the Contract	. . . . . . . . . . . . . . .      48
A. Basic Principles and General Provisions	. . . . . . . . . . . . . . .      48
B. The Offer (Articles 14-17)	. . . . . . . . . . . . . . .      50
C. Acceptance of an Offer (Articles 18-22)	. . . . . . . . . . . . . . .      54
D. Open Questions	. . . . . . . . . . . . . . .      56
1. Battle of the Forms	. . . . . . . . . . . . . . .      56
2. Letters of Confirmation	. . . . . . . . . . . . . . .      56
3. Requirements of Official Permits	. . . . . . . . . . . . . . .      57
4. Culpa in contrahendo	. . . . . . . . . . . . . . .      57
VI. Substantive Sales Law	. . . . . . . . . . . . . . .      58
A. General Provisions	. . . . . . . . . . . . . . .      58
1. Fundamental Breach (Article 25)	. . . . . . . . . . . . . . .      58
2. Avoidance of the Contract (Article 26)	. . . . . . . . . . . . . . .      61
3. "Dispatch" Principle (Article 27)	. . . . . . . . . . . . . . .      61
4. Specific Performance (Article 28)	. . . . . . . . . . . . . . .      62
5. Modification and Termination of the Contract (Article 29)	. . . . . . . . . . . . . . .      63
B. Obligation and Responsibilities of the Seller	. . . . . . . . . . . . . . .      63
1. Place of Delivery (Article 31)	. . . . . . . . . . . . . . .      64
2. Obligations in Connection with Carriage (Article 32)	. . . . . . . . . . . . . . .      65
3. Delivery Date (Article 33)	. . . . . . . . . . . . . . .      66
4. The Transfer of Documents (Articles 34)	. . . . . . . . . . . . . . .      66
5. Conformity of the Goods and the Absence of Third-Party Claims (Articles 35-44)	. . . . . . . . . . . . . . .      66
a) Defects in Quality and Quantity (Articles 35-37)	. . . . . . . . . . . . . . .      67
b) Examination and Notice by the Buyer (Articles 38-40, 44)	. . . . . . . . . . . . . . .      69
c) Third-Party Claims to the Goods and Intellectual Property Rights of Third
Persons	. . . . . . . . . . . . . . .      72
(1) Third-Party Claims	. . . . . . . . . . . . . . .      72
(2) Industrial and Other Intellectual Property Rights of Third Persons	. . . . . . . . . . . . . . .      73
6. Buyer's Remedies for the Breach of Contract by the Seller (Articles 45-52)	. . . . . . . . . . . . . . .      75
a) Claims for Performance (Articles 46 and 47)	. . . . . . . . . . . . . . .      76
b) The Seller's Right to Cure (Article 48) ("Second Tendering")	. . . . . . . . . . . . . . .      77
c) Avoidance of the Contract (Article 49)	. . . . . . . . . . . . . . .      78
d) Reduction of the Price (Article 50)	. . . . . . . . . . . . . . .      79
e) Remedies for Partial Non-Performance or Partial Lack of Conformity (Article 51)	. . . . . . . . . . . . . . .      79
f) Early Delivery or the Delivery of Excess Goods (Article 52)	. . . . . . . . . . . . . . .      80
C. The Buyer's Obligations (Articles 53-65)	. . . . . . . . . . . . . . .      80
1. The Obligation to Pay the Price (Articles 54-59)	. . . . . . . . . . . . . . .      80
2. Buyer's Obligation to Take Delivery (Article 60)	. . . . . . . . . . . . . . .      83
3. The Seller's Remedies for Breach by the Buyer (Articles 61-65)	. . . . . . . . . . . . . . .      84
D. The Passing of Risk (Articles 66-70)	. . . . . . . . . . . . . . .      86
1. Sales Involving Carriage (Article 67)	. . . . . . . . . . . . . . .      87
2. The Sale of Goods During Transit (Article 68)	. . . . . . . . . . . . . . .      89
3. Local Purchase (Article 69(1))	. . . . . . . . . . . . . . .      90
4. Other Places of Delivery (Article 69(2))	. . . . . . . . . . . . . . .      91
E. Provisions Common to Both the Seller's and the Buyer's Obligations (Chapter V)	. . . . . . . . . . . . . . .      92
1. Suspension of Performance Due to Deterioration in the Other Party's Situation
(Article 71)	. . . . . . . . . . . . . . .      92
2. Avoidance Based on Anticipatory Breach (Article 72)	. . . . . . . . . . . . . . .      95
3. Instalment Contracts (Article 73)	. . . . . . . . . . . . . . .      96
F. Damages (Articles 74-77)	. . . . . . . . . . . . . . .      97
1. Extent and Measure of Damages (Articles 74-76)	. . . . . . . . . . . . . . .      97
2. The Duty to Mitigate Damages (Article 77)	. . . . . . . . . . . . . . .      99
G. Interest (Article 78)	. . . . . . . . . . . . . . .      99
H. Exemptions (Article 79)	. . . . . . . . . . . . . . .      101
I. Failure of Performance Caused by the Other Party (Article 80)	. . . . . . . . . . . . . . .      105
J. Effects of Avoidance (Articles 81-84)	. . . . . . . . . . . . . . .      106
1. Prerequisites	. . . . . . . . . . . . . . .      106
2. Obligations After Avoidance	. . . . . . . . . . . . . . .      107
3. Restitution of the Benefits Received	. . . . . . . . . . . . . . .      107
4. Gaps	. . . . . . . . . . . . . . .      108
K. The Obligation to Preserve the Goods and the Right to a Self-Help Sale
(Articles 85-88)	. . . . . . . . . . . . . . .      108
1. The Obligation to Preserve the Goods (Articles 85 and 86)	. . . . . . . . . . . . . . .      108
2. The Self-Help Sale	. . . . . . . . . . . . . . .      109
VII. Final-Provisions (Articles 89-101)	. . . . . . . . . . . . . . .      111
A. In General	. . . . . . . . . . . . . . .      111
B. Reservations	. . . . . . . . . . . . . . .      111
VIII. Limitation Period	. . . . . . . . . . . . . . .     114
Final Remarks	. . . . . . . . . . . . . . .     115
Index	. . . . . . . . . . . . . . .     117

Preface

The short report presented here is a translation of my book Einheitliches UN-Kaufrecht, published in 1981 by J. C. B. Mohr (Paul Siebeck) Publishing House in Tübingen, West Germany. It was originally intended as a source of information for German jurists, but foreign colleagues and friends suggested that I have it translated into English in order to make it accessible to jurists of all nations interested in uniform sales law. I decided to follow their advice because I believe that uniformity in the interpretation of the Convention can be promoted if legal scholars throughout the world recognize, discuss, and -- if possible -- clarify the potential problems before the Convention is applied by the courts. In this process of forming an international consensus, scholars may wish to have access to an interpretation of the Convention from the perspective of German law, a law which has influenced the development of the Convention. In agreeing to have the book translated, I am aware that a scholarly contribution in a language that is foreign to the author can never be formulated quite as convincingly as it can be in his native language.

In the translation I have tried to take into consideration the enormous amount of literature on the 1980 Convention that has appeared since the first publication of the book. I did not strive for completeness, but, nevertheless, I have examined everything to which I had access and have listed what I consulted in the bibliography. Often I have found that the comments of my colleagues reassured me as to my own views, but frequently they forced me to reconsider statements I made in the book. I am greatly indebted to those authors for the insights which enabled me to correct my interpretation. The experiences of the German courts with the predecessor of the Convention, the 1964 Hague ULIS and ULF, are included in the footnotes whenever this appeared to me to be of some benefit to the reader.

This book would not have been possible without the dedication and help of my assistants. I owe special thanks to Ms. Joelen Gates, Mr. Gerhard Dannemann, Ms. Stegemann, Mr. Lührs and Mr. Bond for translating, for checking the footnotes, and for reading the proofs. Mr. Fischer organized the administrative side of the translating and editing of this book; Mrs. Denzlinger patiently typed and retyped the various drafts.

But I am particularly indebted to my dear friend and colleague, Richard Hyland, for his invaluable advice and the tremendous sacrifices he made in a thorough revision of the text, and to the law firm Covington & Burling in Washington, D.C., for their understanding and generous assistance in providing him with secretaries, word-processors, material and working hours for the completion of this work. I can only hope that the efforts that went into the translation are merited by the contents of this book.

Last, but certainly not least, I have to thank my esteemed colleague, Professor Dr. Peter Doralt of the Wirtschaftsuniversität Wien, and Kommerzialrat Dr. Helmut Haschek for editing this little book in their "Schriftenreihe Recht, Wirtschaft und Außenhandel" and the patient care of the publishing house of Manz, Wien.[page 5]

Peter Schlechtriem

Freiburg, 1986

Abbreviations

Bibliographic Notes

I. Preliminary Remarks

A. Early History

Ernst Rabel not only initiated the drafting of an international uniform sales law,[1] but also laid the foundations for the ensuing process in his comprehensive comparative study on sales law, written together with his collaborators at the former Kaiser Wilhelm Institute in Berlin, and published in two volumes as Recht des Warenkaufs (Law on the Sale of Goods). The participants at the Vienna Conference were constantly aware of Rabel's initial contribution.[2]

It is not necessary here to trace the details of the progression from the International Institute for the Unification of Private Law (UNIDROIT) in Rome under the auspices of the League of Nations to the first successful intermediate stage, the Hague Conference on Uniform Law for International Sales.[3] The Hague Conventions - the Uniform Law for the International Sale of Goods (ULIS) and the Uniform Law on the Formation of Contracts for the International Sale of Goods (ULF) [4] - did not fulfill the high expectations which accompanied the signing of the 1964 Hague Convention on Sales.[page 17] Indeed, both ULIS and ULF have been in effect in the Federal Republic of Germany since April 4, 1974.[5] They have been important in daily practice as evidenced by the considerable number of judicial decisions applying their provisions,[5a] even though the number of nations which have ratified the Hague Conventions has remained small, and its use is generally restricted to transactions between parties from these member states.[6] It was especially disappointing that the Hague Conventions were not ratified by some of the signatory states - such as France and the United States - which had exercised considerable influence on the formulation of their rules. Various reasons have been given for this failure.[7] Presumably each individual state had its own reasons for not ratifying and, in each case, more than one aspect determined the rejection of the uniform sales law.[8] Frequently mentioned is the negative evaluation of the sales law by developing countries - the belief that it favored the sellers of manufactured goods in the industrialized nations - together with the fact that these countries were not represented in the drafting process at the Hague Conference.[9]

In any case, without the participation of the developing and socialist countries, the hope that the Hague Conventions would become the lex mercatoria of world trade could not be fulfilled.

B. The UNCITRAL Drafts and the Vienna Conference on International Sales

The efforts to achieve a worldwide unification of international sales law did not stop, however, with the failure of the Hague Conventions. The first sign of continuity was that UNCITRAL [10] took up the cause of drafting a uniform [page 18] international law of sales and that a working group was appointed for this purpose.[11] It can be said that the efforts represented a continuation because the working group did not begin with a clean slate; rather it worked from the basis of the Hague Conventions and the research of Ernst Rabel with the intention of creating an international sales law acceptable to as many countries as possible.[12]

The UNCITRAL Working Group finished the first draft (the Draft Convention on Sales) [13] in January 1976, which was ratified after a few changes at the tenth UNCITRAL Conference in Vienna in May and June of 1977 (the 1977 Draft Convention).[14] The Draft Convention on Formation, proposed by the Working Group, was deliberated at the eleventh session of UNCITRAL in 1978 in New York and incorporated in the substantive sales law (1978 Draft Convention).[15] The Secretary-General then circulated this 1978 Draft Convention among the governments of UN member states for their opinions and comments. It formed the basis for the work of the Vienna Conference.

Sixty-two nations participated in the Vienna Conference.[16] It took place at the Neue Hofburg. A representative of the UN Secretary-General, Mr. Erik Suy, opened the Conference on March 10 at 11 a.m. and the Austrian Foreign Minister Pahr gave an opening address. The Chairman of the Hungarian delegation, Prof. Eörsi, was elected president of the Conference. The delegates chose Prof. Roland Loewe (Austria) to be the chairman of the First Committee, in which the substantive provisions of the international law of sales were deliberated and worked out. Prof. Roberto Luis Mantilla-Molino (Mexico) was elected chairman of the Second Committee, which was responsible for the Final Provisions and the Protocol [page 19] Amending the Convention on the Limitations Period. The Drafting Committee was headed by Mr. Warren Khoo Leang Huat from Singapore, and the Credentials Committee was chaired by Mr. Peter K. Mathanjuke of Kenya. The Steering Committee of the Conference was composed of the president, the chairmen of the First and Second Committees, and the 22 vice presidents of the Conference.

The actual deliberations took place in the sessions of the above-mentioned First (Sales Law) and Second Committees (Final Provisions and Protocol Amending the Convention on the Limitation Period) from March 10 to April 5, 1980. In accordance with the rules of procedure adopted in the first plenary session, decisions were reached in these working committees by a simple majority vote. The Drafting Committee began its work on March 21 and continued until the end of the Conference, parallel with the working committees and the Plenary. In the last week of the Conference - April 7 to 11 - the drafts from the First and Second Committees were discussed in Plenary and, in accordance with the Conference procedure, passed by a two-thirds majority. In the final vote, 42 countries voted for the Convention, while 10 abstained.[17] On April 11, the Final Act of the Conference was signed in a festive ceremony. The Convention has been signed by 20 countries; 3 countries have to date acceded after the last day for signatures, Sept. 30, 1981, had passed.[18] It was written and certified in the following official languages: Arabic, Chinese, English, French, Russian and Spanish. The discussions were all conducted in one of these languages and then translated simultaneously into the other five. German was not an official language of the Conference. The Federal Republic of Germany, the German Democratic Republic, Austria and Switzerland formulated an official German version in 1983.

As already reported by Herber,[19] the Conference's deliberations were for the most part free from political influence. The main concern behind the proposals and amendments was almost always to achieve the best objective solution and not simply to perpetuate the regulations of one country's domestic law. There was also rarely a firm block position on individual issues, although, during the deliberations, the developing countries did seek to protect the interests of buyers of manufactured goods and coordinated their position in the "Group of 77". The socialist states also held joint sessions, while the western industrialized nations and Japan deliberately tried to avoid acting as a group and, therefore, kept their coordinating contacts to a minimum.

C. Background Materials and Documents

The basis for discussions of the substantive sales law was the above-mentioned 1970 Draft Convention, for which the UN Secretariat had prepared a commentary (hereinafter the Secretariat Commentary)[20] which, by comparative references,[page 20] clarified the extent to which the Hague Convention had served as a source for the Draft Convention. The Conference also relied on the comments and proposals of the following governments and international organizations: Canada, the Federal Republic of Germany, Norway, the United States, [21] Australia, Byelorussian SSR, Israel, Sweden,[22] Finland, Switzerland,[23] the Netherlands, Portugal, the United Kingdom, Yugoslavia,[24] Austria, Czechoslovakia, France, Ireland,[25] the Central Office for International Railroad Transport in Bern, [26] the WIPO (World Intellectual Property Organization),[27] the International Chamber of Commerce,[28] the Asian African Legal Consultative Committee,[29] and the Council for Mutual Economic Assistance (COMECON),[30] along with an analysis of these comments and suggestions by the UN Secretariat.[31] These comments concerning the substantive sales provisions were supplemented by reports by the Secretary-General on the relationship between the Draft Convention and the Limitations Convention,[32] and a draft of the Final Provisions (the public international law provisions).[33] In addition to the above, for their internal discussions, the German delegation made profitable use of Huber's commentary on the 1978 Draft Convention,[34] as well as the (unpublished) minutes of the German Council on Private International Law which had examined the UNCITRAL Draft in several of its sessions. Finally, the comparative studies on the Hague Convention and the UNCITRAL Draft made by Kahn [35] and Hartley [36] at the request of the EC Commission were also taken into consideration.[page 21]

II. The Structure and the Main Features of the 1980 Convention (CISG)

Annex I to the Final Act contains in its first three Parts (Articles 1-88) the Sales law, while Part IV (Articles 89-101) contains in the Final Provisions the obligations of the Contracting States.[37]

Part I outlines the Convention's sphere of application and its general provisions, Part II governs the formation of the contract, and Part III contains the substantive rules for the sales contract itself. Due to a request made by the Scandinavian countries, a state need not adopt all three parts but rather may adopt either Part II or Part III in conjunction with Part I. This possibility is reflected in Article 92 as well as in the text of the substantive sales provisions themselves.

Huber [38] has already pointed out that the the reduction in the number of provisions contained in the UNCITRAL Draft compared to the Hague Convention was achieved not only by combining the law of contract formation with the sales law but, above all, by greatly simplifying the rules for breach of contract. In general, the remedies are no longer differentiated according to the various forms of breach, and additional and special remedies are available only as exceptions to the rule.[39] The Convention distinguishes only between claims based on breach by the seller (Articles 45-52) and those based on breach by the buyer (Articles 6l-65), as supplemented by provisions - equally applicable to both parties - on suspension of performance and anticipatory breach (Articles 71-72), damages and exemptions (Articles 74-77, 79 and 80) and avoidance of the contract (Articles 81-84).

The tendency to avoid inflexible and irrevocable legal remedies, which was already visible in the 1978 Draft Convention, [40] influenced the formulation of the remedy provisions in the 1980 Convention. The need for greater judicial discretion in particular cases also became clear, such as in the requirement that a measure or waiting period be "reasonable" .[41] The new provisions on time limitations for giving notice of non-conformity and the consequences of failing to give the notice in a timely manner (Articles 39 and 44) show especially clearly the strongly felt need for flexible rules to accommodate the buyer's difficulties.[page 22]

Several points in the UNCITRAL Draft which had been criticized in the legal literature were improved in Vienna, for example, the description of a "fundamental breach of contract", the apportionment of the risk for sending legally relevant communications, and the interpretation and gap-filling provisions of Article 7.

Of course, some suggestions were not adopted,[41a] but it should be regarded as a success that, in many cases, the content and, to some extent, the formulations of the UNCITRAL Draft survived in the final text.[page 23]

III. The Sphere of Application (Articles 1-6)

A. Initial Questions (Article 1(1))

As Article 1 indicates, the Convention applies to contracts of sale (for the exceptions, see Articles 2-5); barter contracts are not governed by the Convention.[41b] The Convention combines applicability on the basis of "autonomous" requirements [42] with the lex fori's rules of private international law. First, under the "autonomous" requirements, the Uniform Law for International Sales is applicable, under Article 1(1)(a), when the parties to the contract have their places of business - or alternatively, their habitual residence (Article 10(b)) - in different Contracting States. The Convention, however, does not eliminate party autonomy, since, according to Article 6, parties may opt out of the Convention completely, either by choosing a particular domestic law or by allowing the forum's rules of private international law to determine the appropriate law. Second, private international law may direct the application of the Convention when, even though the parties have their places of business in different states, the requirement that these are Contracting States is not met. It would then be sufficient that the forum's conflict-of-law rules point to the law of a Contracting State. It is clear that the Convention applies in those cases where both parties have their places of business in different Contracting States but find themselves in a court of a non-Contracting State whose rules of private international law point to the law of a Contracting State.[43] Article 1(1)(b) also leads to the application of the Convention in cases when the private international law rules of the forum state,[44] whether or not it is a Contracting State, would apply the law of a Contracting State, as long as the basic requirement of Article 1(1) is met, namely, that the parties' places of business are in different states.[45] Of course, Article 1(1)(b) considerably enlarges [page 24] the sphere of application of the Convention.[46] Views on the solution differ. The rule was very controversial in Vienna [47], and the opposition to it finally led to the reservation clause in Article 95.

The pros and cons of this provision must be judged from several standpoints. First, it is advantageous for Contracting States to apply the Uniform Law for International Sales in international transactions not only when their own law is applicable by virtue of Article 1(1)(a), but also when it applies by virtue of private international law, since decisions based on the modern law of the Convention, developed under the auspices of the United Nations and tailored to the intricacies of international sales transactions, often will be far more acceptable to both parties than one party's domestic law that often is entirely alien to the other.[48] Application of the Convention is even more desirable when the private international law of a non-Contracting State invokes the law of a Contracting State. Then, in effect, the court would refer to the Convention rather than to domestic law. It would certainly be easier for the courts of non-Contracting States to understand and apply the Convention than it would be for them to apply the domestic sales law of a foreign country.[48a] Finally, the fact that Contracting States are bound to apply the Convention, even in relation to non-Contracting States which are not bound to do the same, should not influence the appraisal of these provisions.[49] The fact that Contracting States give more than they take cannot give rise to serious apprehensions that this will dissuade states from signing the Convention.

More understandable are the fears that Article 1(1)(b) could make the Convention more difficult to apply.[49a] For example, domestic rules of private [page 25] international law could apply one law to the formation of the contract and a different law to the substantive sales law. In such a case, only parts of the uniform sales law would be applicable.[50] However, a partial application, limited to the rights and obligations arising from the contract already formed, should not present insurmountable obstacles because the Convention was drafted in such a way that Part III (the substantive sales provisions), at least, is compatible with domestic formation-of-contract provisions.[51] The uncertainty which may arise from the parties' choice of law should also not be overestimated. If the parties have chosen the law of a Contracting State, then it is a matter of interpretation whether they meant the Convention or that state's local sales law. Moreover, not only Article 1(1)(b) gives rise to this question. Numerous German court decisions have had to decide the meaning of standard references to "German" law in cases where the requirements for the application of ULIS are met.[52]

Some delegations indicated that laws in their countries already make special provision for the regulation of foreign trade.[53] Despite this serious concern, the majority of delegations voted for the version of Article 1(1)(b) [54] as formulated, but the Plenary accepted the Czechoslovakian proposal [55] to include as a reservation clause - Article 95 - the option for Contracting States not to enact Article 1(1)(b).[56] A reservation under Article 95 restricts the meaning of "Contracting" in [page 26] the phrase "Contracting State" (Article 1(l)(b)). If the forum's conflicts law invokes the law of a Contracting State that has made the reservation, the forum must apply the domestic law of the reservation state and not the Convention.[56a]

B. Sufficiency of Foreign Contacts

In order for ULIS, the Hague Sales Law, to apply, it is necessary that borders be crossed, either in the formation or in the execution of the contract, or that formation and execution each take place in different countries. These requirements were not retained in the 1980 Convention. The application of the Uniform Law for International Sales requires only that the parties' places or business be located in different states, even when formation and execution both take place in a single state, and even though that state is not a Contracting State. Since the sole criterion for the Convention's applicability is that the parties' places of business be in different states, there is some risk that the Convention - instead of domestic sales law - would be invoked in a case where the transaction's foreign contacts are not recognizable to one of the parties. For example, a party who has his place of business in a Contracting State may buy in that state and the goods may be delivered and payment made there. For the Convention to apply, the fact that the other party's place of business is in a different state must be recognizable no later than the time of the formation of the contract. This is reflected in Article 1(2), which further specifies that the fact that the parties have their places of business in different states must be apparent either on the face of the contract, from the dealings between them, or from the information disclosed by them.[57]

C. Application of the Convention Independent of the Parties' Commercial Character or Nationality (Article 1(3))

Like Article 7 of ULIS, Article 1(3) of the 1980 Convention also provides that the application of the Convention does not depend on whether the parties are considered "civil" or "commercial". The Convention thereby avoids the intricate problem of defining a "commercial party". It is also irrelevant whether the sales contract is commercial or private in character.[58] Finally, the nationality of the parties is insignificant. Thus, in certain circumstances, a contract between two Germans would be controlled by the Convention, such as if one of the parties has his place of business - or, alternatively, his habitual residence - in France and this fact was known to the other party.[59] [page 27]

D. Exceptions (Article 2)

The extension of the Uniform Law for International Sales to non-commercial purchases is restricted by Article 2(a). The Convention does not apply to transactions concerning goods bought for personal, family or household use, if they are recognizable as such. This rule takes into account the fact that "international" consumer purchases are infrequent, and concern mostly tourists and mail-order businesses. Moreover, this exclusion intends to ensure that domestic consumer-protection laws are not affected by the Uniform Law for International Sales;[60] Article 2(a) thereby fulfills the same function as Article 5(2) of ULIS. The exception for sellers who "neither knew nor ought to have known" that the goods were for private use is deliberately formulated in the negative in order to place the burden of proof firmly on those who claim the exception to the consumer-contracts exclusion and assert that the Convention should apply.[61] The claim will succeed when the contents of the order or the company address of the buyer suggests that the sale is of a commercial character.

Article 2(a) bears the same inadequacy as Article 5(2) of ULIS, namely that the attempt to delimit the sphere reserved for domestic consumer-protection laws did not fully succeed and, therefore, overlapping areas remain in which the Uniform Law for International Sales as well as domestic consumer-protection regulations will apply.[62] The exception to the exclusion of Article 2(a) - where the seller cannot recognize the character of the purchase - can lead to overlapping when domestic consumer-protection law does not use such a criterion.[63] Above all, domestic consumer-protection laws sometimes intervene when the goods purchased are intended for occupational or even commercial use. For example, the German "Abzahlungsgesetz" (instalment-purchase law) can apply to the purchase of an office machine by a lawyer,[64] or building materials by a contractor, or a beer delivery to a restaurant owner, if the latter two are not registered commercial parties. Where domestic consumer-protection laws void certain contract provisions, the application of the two laws can be reconciled, since, according to Article 4(a), the Convention is not concerned with the validity of the contract or with that of any of its provisions. On the other hand, the question is more difficult where certain forms are required or special legal remedies are available under domestic consumer-protection laws that favor the buyer.[65] The law of the [page 28] Contracting State must decide the priority between the Uniform Law for International Sales, which the state has adopted, on the one hand, and its domestic consumer-protection law, which the state has left in force unchanged beside CISG.[66] If domestic law allows the conflicting consumer-protection provisions to remain in force and take precedence over the application of the Uniform Law for International Sales, this must be accepted, even if it means that the state thereby violates one of the obligations it made by ratifying the Convention. In my opinion, the Uniform Law for International Sales would take precedence in the Federal Republic of Germany because it is the more recently ratified and enacted law, and it is more specialized than the domestic consumer-protection law. This conclusion can be justified, since an instalment purchaser whose place of business is in Germany, and who makes a purchase abroad without any express agreement, cannot be certain that the German instalment-purchase law will protect him.

The preconditions for the exclusion concerning "personal, family and household use" are not defined. However, this does not necessitate recourse to domestic law. Interpretation according to Article 7 of the Convention is both mandatory and possible; the purpose of Article 2(a) is to allow a broad description, based on sociological evidence, of those persons who are regarded as included in the family or household. Thus, a purchase made for a god-child or the acquisition of a car for the housekeeper would be covered.[67] A domestic law's definitional provisions on family membership should not apply.

The exclusion in Article 2(b) and (c) shows consideration for the special domestic laws governing these transactions. Since auction sales customarily are concluded immediately at the auction location, an exception in deference to any easily determined domestic law does not significantly impair the unification of law.[68] The exception for auction sales can also be justified by the fact that most jurisdictions accept the domestic law of the auction site as controlling.[69] The [page 29] exception for forced or judicial sales in Article 2(c) corresponds to Article 6(1)(d) of ULIS.

The exception for shares, investment securities, negotiable instruments, and money (Article 2(d)) can also be found in ULIS Article 5(1)(a), and takes into consideration that international securities and currency transactions are governed by their own rules and laws which are often compulsory.[70] Sales contracts which name a document as the subject of sale, because the document controls the delivery of goods, are considered to be within the sphere of application of the Uniform Law for International Sales, even though some domestic regulations would characterize these as negotiable instrument transactions.[71]

The exception for ships and aircraft in Article 2(e) of the Convention and Article 5(1)(b) in ULIS was retained, although forceful arguments for its elimination were again raised in Vienna.[72]

In ULIS the exception is restricted to registered ships or to ships that are required by law to be registered, but that restriction was dropped in the Convention because domestic registration requirements differ greatly from country to country. In the ULIS version, uncertainty about the application of the uniform sales law can also arise, such as, for example, when it has not been determined which domestic law controls the duty to register.[73] Some legal systems characterize the sale of a ship as a real-estate transaction and establish special rules not only for the transfer of title but also for the effective formation of the contract (formal requirement).[74] With the elimination of the registration criterion, it has, however, become uncertain whether and to what extent smaller boats - row boats, canoes, dinghies and yachts - belong to the subject matter excluded from the application of the Convention. The function and reason for the exception - recognition of special rules for transactions involving ships - suggest that the exception should not be extended to boats (although no distinction is feasible in regard to aircraft).[74a] Delimiting the application of this exception will of course be difficult, for example, with small fishing boats or high sea yachts. In such cases, one will consult domestic law to learn whether such boats come under the special rules applicable to ships. If they do, the sense and purpose of Article 2(e) is that the exception should then apply. In many cases, the duty to register will therefore remain an important criterion. As a whole, the rule is probably only acceptable because it increases the willingness of states to join the Convention.

At the request of India, hovercraft were included in the list of exceptions.[75] On the basis of the argument advanced by the Indian delegation that such craft are treated in Indian law the same as ships or aircraft, one may conclude that this [page 30] exception includes only hovercraft that can be used as boats and not other kinds of vehicles or vessels that operate on the principle of the pneumatic cushion.

Finally, by tradition, sales contracts concerning the supply of electricity are excluded from the Convention's sphere of application in Article 2(f) and of that ULIS in Article 5(1)(c). The exclusion seems to conflict with the need for consistency. However, the electricity-producing industries, which should be the only ones affected by it, elaborate their transnational agreements in such detail, that there is seldom any need to consult the applicable law.

In sum, the exceptions listed in ULIS were maintained in the Convention. Attempts to exclude other goods from the Convention's sphere of application were averted by the use of the argument that the parties always have the right to exclude the goods if they wish by choosing a different applicable law.[76]

E. Contracts for the Sale of Made-to-Order Goods and for the Sale of Services

Contracts "for the supply of goods to be manufactured or produced" fall within the sphere of application of the Convention (Article 3(1)). As with ULIS Article 6, contracts in which the party who orders the goods also supplies a substantial part of the materials are excluded from the scope of the Convention. Insignificant amounts of materials supplied by the manufacturer are not sufficient to bring the contract under the Convention. As under ULIS, the distinction between contracts for the supply of goods to be manufactured or produced, which are subject to the Convention, and contracts for labor or services, which are governed by domestic law, depends on whether the materials supplied by the party ordering the goods are "substantial" or not. Under ULIS, the party asserting the exception has the burden of proof. He must prove that the party who placed the order supplied, or was supposed to supply, a substantial amount of the materials. This presumably would be the case under the Convention as well.[77]

Article 3(2) further excludes contracts which may require the delivery of goods, but which are primarily contracts for labor or services, such as construction contracts.[78] This section attempts to regulate a question that proved to be difficult in ULIS, namely whether a contract for both the delivery and the installation of goods is covered by the Uniform Law for International Sales. This provision is likely to prove difficult to interpret and to apply. Therefore, the parties should attempt to reach a clear agreement in their contract. The term "preponderant part" should in most cases be understandable and practicable if considered in terms of relative values.[78a] The sale price of the goods to be delivered must be [page 31] compared with the fee for labor and services, as if two separate contracts have been made. A United Kingdom proposal [79] to use the term "major part in value" was withdrawn for lack of support, but the United States's countervailing example of a painter who is commissioned to cover a ceiling with gold paint will hardly have any practical impact. "Preponderant" in this sense should be considerably more than 50% of the price. It is more difficult, in such cases, to decide whether there are, in fact, two separate contracts, and, for example, whether the delivery is subject to the Uniform Law for International Sales while the installation contract is governed by domestic law. Domestic law should decide whether these two contracts can and must be distinguished.[80] It must be remembered, though, that the intent of the parties [81] to treat the delivery contract separately must be respected, even if domestic law generally regards such combinations as a single contract. Furthermore, Article 6 also permits the parties to modify Article 3(2) in such a way that, though the obligation to install is the "preponderant part," the whole contract is subject to the Uniform Law for International Sales.

During the deliberations on Article 3, a United Kingdom proposal [82] addressed the problem of whether the transfer of know-how should be covered and regulated by the Convention. The United Kingdom's proposal aimed at excluding contracts for goods to be manufactured or produced if the party ordering the goods provides the information or expertise necessary for such manufacture or production. This proposal failed because the characterization of such sales contracts was perceived as uncertain, because it is probably without parallel in domestic laws, and because quite a number of contracts would thereby be removed from the sphere of the Convention.[83]

F. Contract Validity and the Transfer of Title (Article 4)

Article 4, like ULIS Article 8, limits the Convention's sphere of application to the rules on formation of contract and the rights and obligations of the seller and the buyer arising from it (Article 4 sentence 1). This leaves to domestic law - the examples are expressly stated - both the effect of the contract on the transfer of title to the goods sold (Article 4(b) [83a]) and the validity of the contract and any of its provisions (Article 4(a)), so long as the Convention's rules on the formation of the contract do not expressly apply. Therefore, domestic law still regulates such matters as the capacity to contract and the consequences of mistake, gross unfairness, unconscionability and fraud.[page 32]

Contracts are also considered invalid if the underlying sale is immoral or illegal and therefore void according to domestic law.[83b] Economic regulations such as export or import controls or consumer-protection laws which prohibit certain formulations may void contracts falling under the Convention. Thus, the buyer's right to revoke an instalment contract under German law can probably be "saved" where the Convention covers an instalment sale, provided German law otherwise applies. The applicability of domestic law does not depend upon whether the invalidity occurs by operation of law, such as by judicial decision or government intervention, or by an act of a party, such as a declaration of avoidance. The courts can also adjust the content of a contract where domestic law voids only part of the contract and the court is permitted to fill the gap. This deference to domestic provisions regarding validity is only binding, however, as long as the Convention does not include express provisions to the contrary. "Expressly provided in Article 4" should not be taken to mean only those of the Convention's provisions that expressly indicate a deviation from domestic law or the validity of an obligation despite the domestic prohibition. For example, despite the similar formulation in ULIS Article 8, the general view was that if the subject of the sale was non-existent at the time the contract was formed, the breach-of-contract provisions of the Uniform Law for International Sales would apply, and not domestic provisions which would nullify the contract, such as BGB § 306.[84] In my view, therefore, domestic laws which accord legal recourse in situations where a party errs about the goods to be delivered [84a] or the solvency of the other party would not apply under the Convention because these problems are specifically and conclusively regulated by the Convention's provisions on conformity of goods and anticipatory breach.[85]

Finally, domestic law still controls the validity of usages. The controversy over the binding effect of usages [86] loses much of its practical importance by virtue of Article 4(a) which permits states to prohibit the recognition of international usages which conflict with domestic law. As in ULIS, a state and its courts can also refuse to recognize a usage on the grounds that the usage is contrary to its public policy.[87] It also follows from Article 4 sentence 1, that duties and liabilities which arise outside of the contract are not covered by the Convention.

Article 5 expressly states this principle for products liability questions concerning personal injuries from defective goods.[88] But one may also assume, from [page 33] the limitation by Article 4 sentence 1, that claims for damages caused intentionally or by fraud - regardless of whether they sound in contract or tort - are to be judged strictly according to domestic law, even though there is no provision corresponding to ULIS Article 89.

G. Products Liability (Article 5)

A proposal sponsored by Finland, France, and the United States [89] to exclude from the Convention claims based on death or personal injury caused by the goods was accepted in Vienna and embodied in Article 5.

The basic idea is simple: the Convention does not govern products liability. Domestic law, therefore, remains in force. To the extent products liability is characterized as non-contractual under domestic law, Article 5 merely states the obvious. This was understood to be the interpretation in ULIS as well, even though it was never written as a rule. However, since some legal systems resolve problems of product liability in contract,[90] this Article was needed to ensure that these domestic rules would still apply when the Convention is enacted. Therefore the contractual remedies of "positive Vertragsverletzung" or § 463 BGB under German law or the responsibility of the "vendeur professionel" under Articles 1645 and 1646 of the French Civil Code are applicable in case of death or personal injury. A buyer's claims based on death or personal injury are not limited to the injuries suffered by the buyer himself, but also include the buyer's own liability for damages due to the death or personal injuries of his customers. This result is required by the fact that Article 5 leaves untouched liability claims which sound in contract, including the typical claims which permit recovery against the original producer by following the chain of sale back to its origin.[91]

Liability for death or personal injury is only one - although probably the most important - field of products liability. Liability for damage caused to property is not excluded by Article 5. The Conference considered whether a broader term, such as "claims based on product liability,"[92] could be used, but no agreement could be reached as to the extent to which the Convention should apply to property damage caused by defective goods which are used as foreseen by the contract. Semi-finished products ruined by a defective machine and raw materials wasted because they were combined with unsuitable materials are typical cases where the buyer's contract expectations are frustrated and which therefore belong [page 34] to the core of the matter to be regulated by sales law. In my opinion, damages in those circumstances should be governed by the Convention and compensated in conformity to the provisions set forth in Article 74.[92a] The question of whether a concurrent action in tort would lie must be decided by domestic law.

H. Party Autonomy (Article 6)

Article 6 guarantees party autonomy over both the conflict rules and the substantive law. On the basis of proposals from Anglo-Saxon countries,[93] a fundamental issue much debated in UNCITRAL reappeared, namely whether the parties must affirmatively choose CISG in order for it to apply (the so-called "opting-in" solution) or whether the Convention would automatically apply, unless the parties agreed to apply a different law (the "opting-out" solution).[94] In the end, the "opting-in" proposal, which would have turned the Convention into a set of standard contract terms, was rejected, as was the demand to include a reservation clause in the Final Provisions, as had been done in ULIS.[95]

Also rejected was a Canadian proposal to exclude certain principles, such as the standard of good faith, from the domain of the party autonomy.[96]

The Convention can be excluded by choice of law if the parties choose to apply a different local domestic law. It is also possible simply to reject CISG without choosing an applicable law. Substantively, any rule of the Convention can be altered or rejected by the parties, even by standard contract terms,[97] as long as the requirements for their validity in domestic law are fulfilled.

In contrast to Article 3 sentence 2 of ULIS, the Convention does not mention the possibility of an "implied" exclusion, but this does not mean that a tacit exclusion is impossible. The intent of deleting the word "implied" was to prevent the courts from being too quick to impute exclusion of the Convention.[98] Therefore, the fact that the parties have agreed on an arbitral tribunal in a specified country or on standard contract terms enacted before the Convention takes effect and based on the background of a particular domestic substantive law does not by itself imply that the parties wished to exclude the application of the Convention.[99] [page 35]

Just because the parties choose a domestic law does not necessarily mean that country's local sales law applies. The delegates rejected proposals by Canada and Belgium [100] which would have mandated the application of a state's domestic sales law whenever a national law was chosen.[101] The French delegate argued that, in case of doubt, the parties' choice of a national law means that the Convention applies if that state has adopted the Convention, unless, of course, the parties have explicitly chosen the local sales law of that country. This corresponds to the interpretation generally accepted in Germany with regard to ULIS.[102]

Not only can the parties agree to reject the application of the Convention, but they can also agree to apply the Convention when the preconditions for application have not been met, e.g., in the case of the sale of a ship. A proposal by the German Democratic Republic to this effect,[103] however, encountered resistance partly because it was thought to be superfluous and partly because it was considered dangerous. It is domestic law that grants the parties the autonomy to choose the Convention, and therefore, the limitations of that law must be observed.[103a] For example, an agreement to apply the Convention in an instalment purchase of goods for personal use cannot override the mandatory regulations of German instalment-purchase law where German law is applicable.[104] In other words, CISG does not incorporate in the principle of party autonomy the parties' ability to bypass the limits on party autonomy in domestic law. The only alternative would have been an article that corresponds to ULIS Article 4,[105] but this would simply have restated the obvious. [page 36]

IV. General Rules

A. Interpretation and Gap-Filling (Article 7)

ULIS Article 17 attempts to base interpretation and gap-filling on the general principles underlying the rules of ULIS. This provision is designed to safeguard unification of the law and to avoid a mixture of uniform law with domestic sales law, which otherwise would have resulted from interpretation and gap-filling. It is well known, however, that this provision has been extraordinarily controversial. Above all, many critics were not optimistic that jurists would be able to develop and apply general principles of a uniform sales law.

UNCITRAL, on the other hand, had accepted the goal of preserving and furthering uniformity and used the indication about the international character of the Convention as a floodgate against an all too broad recourse to domestic law. Furthermore, the requirements of good faith in international trade could also prevent an all too hasty resort to domestic regulations and legal custom. Therefore, because recourse to domestic law was believed to be more or less inappropriate for interpretation and gap-filling, within the area of sales law - the definition of which is, of course, a decisive preliminary question - the only remaining legal source was the substantive rules of the 1978 Draft Convention as interpreted, developed and supplemented on its own terms. Interpretation and gap-filling would therefore draw upon the basic underlying principles of the uniform law, as well as - in certain cases - upon special rules by way of extension or of analogy. The remark that Article 6 of the 1978 Draft Convention did not change the substance of the rules in Article 17 of ULIS is therefore probably accurate.[106]

During the discussion of Article 7 at the Vienna Conference, such remarks increased the opposition and resistance of those delegations which considered the interpretation and extension of CISG by reference to domestic rules to be a less serious alternative and, therefore, wanted to provide for recourse to domestic law in all cases of doubt, whether it be the law of the seller's place of business [107] or the law applicable by virtue of the rules of private international law.[108] The great majority of the delegates, on the other hand, perceived the possibility of recourse [page 37] to domestic law in such cases as undesirable. Some even proposed a return to (and an extension of) the formulation in Article 17 of ULIS.[109] Thanks to the German Democratic Republic's mediating proposal, the compromise formulated in Article 7(2) was passed.

The maxim laid down in this provision - to promote uniformity in the application [110] of the Convention when interpreting it - must also apply to the important preliminary question to paragraph (2), namely whether a certain matter falls within the scope of the Convention. Because the seller's responsibility to provide goods of the quality agreed upon in the contract is a matter within the realm of the Convention, domestic remedies, such as avoidance based on mistake about the quality of the goods, should not be available to the buyer, even though mistake is not expressly mentioned in the Convention.

In interpretation and gap-filling, Article 7 should thereby allow about the same possibilities as ULIS Article 17.[110a] The authoritative principles can be inferred from the individual rules themselves and their systematic context.[111] The last part of Article 7(2), though, closes off the path, which was sometimes considered for ULIS, of using a survey of comparative law to develop general principles that cannot be derived from the law itself and to use them to interpret the Convention.[112] Practically, though, this limitation serves only as a clarification, because, in the application of a uniform sales law, it is rarely possible to determine autonomous, fundamental principles on the basis of comparative analysis.

The reference to the observance "of good faith in international trade" in Article 7(1) indicates one of the general principles that must be regarded in interpreting and extending the uniform law. Whether or not effective international standards of good faith can actually be determined must be left to studies in comparative law. The principle has affected the formulation of a number of [page 38] provisions in CISG [113] and the leading commentary on CISG cites Articles 21(2) and 19(2) as likely "candidates" for an interpretation based on the principles of good faith.[113a]

There is naturally some cause for uncertainty when the principle of good faith, as embodied in the Convention, concerns only the interpretation of the Convention and not the conduct of the parties in the formation and performance of the contract or the interpretation of their intentions.[114] The UNCITRAL Working Group had discussed whether the principle should be generalized to include the conduct of the parties - an area where the principle has gained concrete recognition in ULIS Article 5(2). In Vienna, there was corresponding sentiment in connection with the treatment of Article 7. [115] Certain concerns which had already been expressed in the UNCITRAL Working Group, that such broadly formulated principles could be interpreted and applied in different ways, that domestic views about their content varied, and that sanctions were lacking, finally led to the withdrawal of these proposals. Nevertheless, even those who had previously opposed them indicated again and again that it would be desirable to observe the good faith principle.

The German jurist may regret this rejection of a "good faith rule" corresponding to § 242 of the German Civil Code in its present day meaning. However, the function of such a general clause can probably be fulfilled by the rule that the parties must conduct themselves according to the standard of the "reasonable person," which is expressly described in a number of provisions and, therefore, according to Article 7(2), must be regarded as a general principle of the Convention.[115a]

B. Interpretation of Statements and Conduct (Article 8)[115b]

As already established in the 1978 Draft Convention, the meaning of the statements or other legally relevant conduct of the parties is to be determined by their actual intent (Article 8(1)). Of course, this intent must have been known by or, in any case, recognizable to the addressee. If this intent is neither known nor recognizable, then the understanding of a reasonable person in the situation of the addressee is the controlling standard (Article 8(2)). The intent of a party or the understanding of a reasonable person depends on all of the facts and circumstances including those specially listed in the Convention, namely, negotiations, established practices between the parties, usages, and any subsequent conduct of [page 39] the parties (Article 8(3)). As Huber has already pointed out, the German jurist is here on the familiar ground of §§ 133 and 157 of the German Civil Code.[116]

The Convention does not regulate the consequences of a discrepancy between the actual but unrecognizable intent of a party on the one hand, and, on the other, either the objective meaning of that party's statement in the sense of Article 8(2) or the other party's response to the first statement where the intent of the parties does not coincide. The regulation of such discrepancies is a question for domestic law. It appears, however, that Article 8(1) and (2) prevents a party's purely subjective intent from being decisive (secret reservations!) and prescribes the solution found in § 117 of the German Civil Code for a sham statement.[116a] As far as these deficiencies in intent are concerned, domestic law is replaced by the Convention.

The usages to be considered when discovering the intended and/or objective meaning of a statement presumably include, in contrast to those mentioned in Article 9(2), usages which are only local, national, or followed by a particular group of business people. It is important to note that the function of Article 8(3) is different from that of Article 9(2): It does not address gap-filling of the contract, but rather the interpretation of a party's statements. For the latter, according to Article 8(3), the particular circumstances are important, including usages that are possibly significant only to a party making the statements or to a reasonable person in the rule of the addressee. For example, a German who remains silent after having received a letter of confirmation can be understood to have expressed approval, regardless of whether Article 9(2) includes the German customs pertaining to letters of confirmation.

C. Usages (Article 9)

Article 9(1) binds the parties to any usages to which they have agreed - either through their negotiations or by their course of dealing.[116b] This provision corresponds to ULIS Article 9(1) and confirms the parties' autonomy over the contents and formation of the contract. Of course, Article 4(a) still mandates respect for domestic laws that prohibit certain trade practices and void contracts concluded by such means. The so-called "normative" usages were extremely controversial. According to the German understanding, their validity is not based on the parties' agreement. The Convention adopts in Article 9(2), as in Article [page 40] 8(2) of the 1978 Draft Convention, the legal construction - which in certain cases may be accurate - that a usage is binding due to an implied silent agreement between the parties.[117] A usage is binding only where the parties knew or ought to have known of the particular usage. This provision probably produces the same results as the restrictions of ULIS Article 9(2) sentence 1 and ULF Article 13(1).[118]

The last part of Article 9(2) restricts the kind of usages which must be observed.[119] The formulation reflects the concerns that some delegations had regarding respect for trade usages.[120] The requirement that the usage must be widely known in international trade, if taken literally, would mean that trade usages would generally have little effect. But Article 9(2) specifies that usages are defined with reference to the particular branch of the trade involved and to the parties who form contracts like the one concerned in a particular case. This is especially important when defining "international," "widely known" and "regularly observed." This means respect for usages existing, for example, in the international grain trade and followed by the parties who buy and sell grain on the international market. It is irrelevant, on the other hand, whether the practice is known "internationally" outside grain-trade circles.

Basically, Article 9(2) is an "internationalized" version of the requirements in German law for development and recognition of a binding trade usage: actual use, the consent of those who deal in the relevant trade transactions, and a certain duration,[121] factors which are basic in other legal systems as well.[122] In comparison to ULIS Article 9(2) and ULF Article 13(1), however, Article 9(2) restricts the recognition of national, regional or local usages which were developed for domestic sales and are not regularly followed in international transactions. These [page 41] usages cannot be "internationalized" simply because a foreign party knew or should have known of the custom.[123] The Chinese proposal that only reasonable usages should be recognized,[124] which would have given domestic courts control over the contents of usages, was rejected;[125] however, domestic prohibitions of certain trade customs which have the effect of voiding the contract remain operative (Article 4(a)).

There was no support for the view expressed by the Czechoslovakian delegation that the rules of the Convention should have priority over trade usages. The fact that the legal relevance of usages is based on a tacit agreement made it easier to accept them as a consequence of the priority of party autonomy over the Convention's rules.[126] The Conference also rejected a Pakistani proposal that would have permitted one party's conduct to prevent a finding that the parties had agreed on a usage.[127] Accordingly, it can be assumed that a party can show that a usage does not apply only by proving that it rejected it.

According to the version formulated in Vienna, usages explicitly apply to the formation of the contract as well. Nevertheless, it remains unclear whether usages such as those developed in Germany concerning the "commercial letter of confirmation" will be respected. The United States delegation, in presenting arguments for its proposal to include as usages those concerning contract formation, mentioned cases in which silence operates as the acceptance of an offer.[128] Therefore, it seems possible, in principle, to recognize usages in which silence means approval, if they meet the requirements of Article 9(2).

However, the requirements for according legal consequence to the silence of a party receiving a letter of confirmation would be considerably narrower in international commercial transactions than for internal dealings. But even according to the wording of ULFIS Article 13(1), which itself permits the "internationalization" of German usages, due consideration had to be given to whether the other side was informed or could have been informed. The substantive requirements for an effective letter of confirmation, i.e., that silence may be regarded as consent, would not be met if the foreign party were uninformed.[129] The wording of Article 9(2), which corresponds to the rules recognized in Germany, permits a letter of confirmation to be effective only if it is used in that particular branch of business in several countries and if the practice is acknowledged to have the legal consequence that silence means consent.

Finally, there was no support for the Egyptian proposal to include in the Convention ULIS Article 9(3).[130] As a result, guidelines for a uniform interpretation [page 42] of Incoterms, for example, are lacking. On the other hand, in practice, Article 8(2) should, in general, be able to fulfill the function of ULIS Article 9(3) in these cases.[130a]

D. Place of Business (Article 10)

Even though the concept of "place of business" plays a central role in the Convention,[131] the Convention does not define the term.[132] As in German law, it can be assumed that a "place of business" is an establishment of some duration and with certain authorized powers. On the other hand, commercial management of the enterprise is not necessary, since the Convention does not require the place of business to be the main office. For the problems that can arise when a major enterprise has multiple places of business, Article 10(a) should provide an appropriate solution.[132a] Granted, it is not always easy to attach the contract to one of several places of business solely on the basis of the criterion of the "closest relationship to the contract and its performance". A good example is when the contract is negotiated and is to be performed by one place of business, but the formation of the contract is concluded in another place, such as in a multinational's headquarters in a different country. The provision that the circumstances as known to or contemplated by the parties must be taken into account defies further normative description.[133]

The difficulties that, in connection with the determination of the place of business, arise with the term "party" when a state is a contracting party should be clarified with the help of the interpretation proposed by the Finnish delegation, that the party would be the governmental authority that is dealing with the business involved.

The use of the "habitual residence" of a party as an alternative to "place of business" will rarely be applied to legal transactions governed by the Convention. It certainly does not apply merely because a party does some act outside of its place of business. [page 43]

E. Form (Articles 11, 12, 13, 29(2) and 96)

From the very beginning, one of the most controversial issues of UNCITRAL's work was whether or not ULIS Article 15 concerning freedom of form should be followed. It was pointed out even by countries not in favour of form requirements that the bureaucratic needs especially of large-scale entities (business enterprises, states, or governmental organizations, etc.) to control their transactions require written evidence and the respect of form requirements.[134] Therefore, the Draft Convention already offered a compromise whereby freedom of form was the basic rule, but a reservation clause would enable states preferring a formal writing to decide, by application of the domestic law invoked by conflict rules, the form issue for contracts concluded by parties with a place of business in one of these states.[135] This solution was maintained at the Vienna Conference.

A Dutch proposal to limit this possibility to certain types of contracts [136] was not accepted, both because it could have made it more difficult to decide whether a formal writing is required,[137] and, above all, because it might have encouraged the use of the reservation clause. Similar proposals had previously been rejected by UNCITRAL because a list of the contract types with form requirements would have had to accompany the reservation and would have made application of the Convention very difficult.[138] [page 44]

According to Article 11 sentence 1, the lack of form requirements means that "consideration" is not required. Otherwise there could be difficulties in contract modifications which favour one side.[139] Sentence 2 also overrides domestic rules of procedure which exclude parole evidence and thereby indirectly pressure the parties into using a written form. This rule applies to all legally relevant statements and communications which are or will be required for the formation of a sales contract, its modification or termination.

Even when Contracting States make use of the reservation in Article 96, domestic requirements on form are only to be regarded, despite the broad wording in Articles 12 and 96 ("or other indication of intention"), as far as they relate to the formation of the contract, its modification or consensual termination. In particular, the more precise formulation, "its modification or termination by agreement" makes it clear that a one-sided declaration to terminate a contract does not fall within the scope of the reservation and the corresponding domestic regulations on form,[140] nor does a declaration to reduce the price according to Article 50 sentence 1. In my opinion, notification of defects, the fixing of time limits, and other communications are, therefore, not subject to form requirements, even when, on the basis of the Article 96 reservation, the contract, in principle, is subject to domestic form regulations which require that such communications adhere to formal writing requirements. The Conference also passed a proposal by the Federal Republic of Germany, whereby the Article 96 reservation may also be invoked after signing the Convention. Thus, the Convention can be signed even if, at the time of the signing, it is not clear whether there are any applicable domestic requirements on form. Later withdrawal of that reservation is possible (Article 97(4) sentence 1).[141]

When the reservation is made and one party's place of business is in a reservation state, the court must determine the law applicable to form according to its private international law. If the law of a Contracting State which did not invoke the reservation provision is applicable, freedom of form according to Articles 1(l)(b) and 11 prevails. On the other hand, if the conflict rules point to a reservation state, then the domestic regulations of that state control.[142] [page 45]

Compliance with writing requirements, especially for contract modifications which often necessitate quick decision, as in construction contracts, was made easier by the acceptance of the Federal Republic of Germany's proposal [143] that a "writing" include communication by telegram or telex (Article 13). This does not mean merely that the Article 96 reservation in connection with Article 12 permits the use of telegram or telex when that use is permitted by domestic law; it means rather that domestic form requirements are always satisfied by the use of telegrams and telexes.[144] The German proposal was not meant only as a definition of the term "writing" as used in Articles 21(2) and 29(2), although the formulation of Article 13 might lead to that conclusion. Article 13 was meant to achieve a uniform objective standard for form requirements, so that parties need not comply with domestic form requirements which perhaps impose higher standards and about which it may be difficult to obtain information.[145] However, because of the awkward wording of Article 13, this interpretation is open to to criticism.

The principle of freedom of form does not prevent the parties from agreeing to a writing requirement. This follows from the basic principle of party autonomy, which applies as well to the prerequisites for the existence or termination of the obligation and is also reaffirmed in Article 29(2) sentence 1. This latter provision further makes it clear that a formal writing requirement agreed upon by the parties can only be changed or suspended by a written agreement, including telex or telegram (Article 13). The formula occasionally used by the West German courts - that a formal writing requirement agreed upon by the parties can be removed without a writing [146] - seems not to be recognized in the sphere of application of CISG.[147] On the other hand, Article 29(2) sentence 2 deals with the case where a party has relied on an oral agreement abandoning the writing requirement by [page 46] precluding the other party from asserting the requirement in such as case. In the end, the result obtained in the Federal Republic of Germany by means of "oral modifications of the writing requirement", such as when the buyer has relied on the oral promise of an authorized sales agent and is later confronted with the objection that the agreement was not in writing, will therefore be satisfactorily resolvable under CISG as well.

The parties' freedom of contract with regard to the form of their statements is, of course, subject to one limitation, namely the form requirements imposed by the domestic law invoked by conflicts rules whenever the Article 96 reservation clause is applicable (Article 12 sentence 2). In a contract with a party whose place of business is in the Soviet Union, for example, for which the form requirements of Soviet law are applicable, the parties cannot effectively agree to dispense with the form requirement if the Soviet Union claims the Article 96 reservation. [page 47]

V. Formation of the Contract

A. Basic Principles and General Provisions

The rules for the formation of the contract [147a] which were already successfully incorporated into the 1978 Draft Convention were retained at the Vienna Conference. In comparison to the Hague Conventions, the combination of the rules on formation of the contract with those concerning the contents of the contract into one body of law is, without doubt, to be regarded as an improvement, particularly since the integration helps to avoid parallel rules [148] and solves the problem, in matters of interpretation and gap-filling,[149] of determining to what extent one law refers to the other. On the other hand, at the request of the Scandinavian countries, Parts II and III were written so that they may function independently, and states have the option to adopt, or bind themselves to adopt, the Convention either without Part II or without Part III (Article 92).

In its outlines, the 1980 Convention follows ULF, the Hague Uniform Law on the Formation of Contracts for the International Sale of Goods.[149a] It uses two consecutive constitutive manifestations of assent - offer and acceptance - as building blocks for the formation of the contract. The premise is that these manifestation of assent can be identified in the long process of negotiations in which the parties approach each other, step by step, until they have reached an agreement.

There has been no lack of criticism of this traditional concept of contract formation and its retention in the Uniform Law for International Sales.[150] The main criticism is that reliance on the external process of establishing a consensus cannot adequately cover situations where there is no doubt about the parties' agreement, even though the agreement did not result from an identifiable offer followed by a concurring acceptance.[151] However, in the majority of contracts [page 48] involving international transactions, it should be possible to identify an offer and an acceptance, particularly since it is possible to "cure" uncertainties or incongruities in the parties' oral expression by taking into account their conduct and its objective meaning (see Article 8(1) and (2) and, for the acceptance, Article 18(1)). In questions of external consensus, preference should, in any case, be given to the gap-filling rules in Article 7 rather than to an all too hasty retreat to domestic law and its rules on mistake, since the issues obviously belong within the sphere regulated by the Convention. The Convention also provides conclusive standards as far as the consensus that constitutes a contract is concerned. Articles 14 and following are not merely "fragmentary" regulations to be supplemented by applicable domestic laws that recognize other forms of consensus.[152]

By using the acceptance to determine the moment when a contract is formed (Article 23), the Convention has increased its importance in the process of contract formation. But, as in ULF, which deliberately does not fix the time when a contract is formed,[153] it may be assumed that the parties can agree to prolong the formation of the contract even after the moment fixed in Article 23, for example, by a condition precedent. In my opinion, for those provisions which make the determination of the moment of the contract's perfection legally relevant, the choice between the time set forth in Article 23 or a later time must be made by evaluating the respective provision and its legal purpose, the meaning of a condition precedent, and the circumstances of the postponement.[154]

As in the Hague Convention, the "offer" and the "acceptance" as well as the withdrawal of such declarations and the rejection of an offer are only effective if they reach the other party.[155] Article 24, like ULF Article 12(1) and the German Civil Code, provides that a "materialized" expression of intent has reached the addressee when it reaches his sphere of control - or, in more concrete terms, when it is delivered to him. Delivery should occur preferably in person, alternatively to the place of business or mailing address,[156] and finally to the habitual residence. Even though the Convention, unlike ULF Article 12(2), does not specify that the declaration must have been "intelligible" for the delivery to be effective, the requirement presumably applies to the Convention as well.[157] [page 49]

For oral declarations, however, the theory of cognizance should apply under Article 24, i.e., the declaration must have been perceived by the addressee. Whether or not an intent expressed orally or in writing to an intermediary may constitute effective delivery depends on that person's authority, a question which is determined by domestic law.[158]

B. The Offer (Articles 14-17)

Under Article 14(1) sentence 1 (which corresponds to ULF Article 4(1)) an offer is a proposal that is "sufficiently definite" and indicates the "intention of the offeror to be bound in case of acceptance". Article 14(2) is more precise than ULF in that it generally considers proposals to indefinite groups of people to be mere invitations to make offers, unless the offeror has made it clear that the contrary is intended, i.e., that the proposal is truly a public offer.[159]

In contrast to ULF Article 4(2), sufficient certainty is not assured by means of supplemental reference to the preliminary negotiations, established practices between the parties, usages, and the applicable legal rules for sales contracts.[160] Rather, the Convention establishes concrete requirements. According to Article 14(1) sentence 2, the offer must indicate the goods to be sold, determine or make provision for determining the quantity, and fix the price or provide a means for its determination. Also, in German law it is essential for a sales contract that the goods be specified. The goods might be considered "determinable" where, as in German law, one of the parties or a third person is granted the authority to determine them.[161]

Both in the UNCITRAL deliberations and the Vienna Conference, the further requirement that the price be determined or determinable was hotly debated. Proposals to eliminate the requirement of a fixed or determinable price failed as a result of the opposition by the Soviet Union, a number of developing countries, France and other states.[162]

The retention of the definite price requirement for a valid offer and, in many [page 50] cases, for contract formation is regrettable.[162a] In special circumstances, such as urgency or trust in the seller's sincerity, when the parties have waived price negotiations, the definite price requirement can endanger the validity of a contract and provide a pretext for escaping a disadvantageous agreement.[163] The Article also poses an unsatisfactory contradiction to Article 55, which presupposes the possibility of forming a contract without a fixed or determinable price.[163a] It can only be explained by the desire of the Scandinavian countries to introduce the Uniform Law for International Sales without Part III, and to have a provision in Part II in case the price has not been determined.[164] On the other hand, the position of those who wished to require a definite price is also understandable. Large organizations can be so limited by the comprehensive planning that the price they have agreed upon is an indispensable factor for the planning of the entire organization. Above all, the developing countries are also understandably concerned about using the shorthand of the seller's standard price or even allowing the seller discretion to set the price within the bounds of equity, as in §§ 316 and 315(1) of the German Civil Code. The more flexible system can be practicable or at least tolerable in countries or economic systems with comparatively homogeneous and well-known market structures. But in world trade, price transparency is a given at most for raw materials, i.e., for the products of the developing countries, but not for the industrial goods imported by these countries.[165] Finally, the French position can perhaps be explained on the basis of the French experience with Article 1591 of the French Civil Code, which, since the beginning of the 1970's, has experienced a renaissance as an instrument of control for contracts that exploit the weaker party, such as contracts between a gas-station owner and his supplier.[166]

The practicality of Article 14(1) sentence 2 probably cannot be determined until there is experience with its application. Unfortunately, there are likely to be divergent results. In particular, it is possible that domestic courts will make only limited use of the tacit price agreement or an implied reference to circumstances which make a determination of price possible. They may even employ Article 14(1) sentence 2 as an additional instrument to control validity in pursuing certain legal-political purposes. The wording of the law, however, permits - indeed encourages - a broader application. Where the "price generally charged" exists at [page 51] the time the contract is concluded and can be determined by the other party, an order that does not name a price must frequently be understood as an implied reference to these sales prices (list prices, catalogue prices, etc.). A price can also be determined expressly or implicitly by reference to a particular market at delivery or at some other time.[167] Reference to price lists or catalogues which reserve the right to change prices can also be understood as a reference to the price valid at the time of delivery. In any case, the parties may generally exclude the application of Article 14(1) sentence 2 [168] and agree to allow one side to set the price - as long as there are no domestic prohibitions applicable under Article 4(a).[169]

Articles 9 and 8(3) indicate that due consideration must be given to trade usages, and above all to the intent of the parties, the negotiations, established practices between the parties, and usages, as well as to the parties' later conduct, whenever a tacit agreement on price, an agreement on price determinability, or even the implicit exclusion of Article 14(1) sentence 2 is in question. Finally, a statement which is intended as an offer but lacks a definite price will be treated as an invitation to make an offer, while the addressee's reply may contain sufficient indication of the price or of its determination to be an offer; the addressee's conduct, such as the acceptance of delivered goods, can then be considered as an indication of assent in the sense of Article 18(1) sentence 1. On the whole, the Germans will, in practice, be able to live with Article 14(1) sentence 2, although it is advisable that offers and acceptances indicate as definitely as possible a price or a mechanism for fixing the price.

As for the revocation of an offer, the Convention distinguishes, on the one hand, between the revocation of an offer that already has reached the addressee and is therefore fully effective (Article 16), and, on the other hand, the withdrawal of an offer that has not yet reached the addressee (Article 15(2)). The possibility of withdrawing an offer until, or in any case simultaneously with, its arrival coincides with ULF Article 5(1) and § 130(1) sentence 2 of the German Civil Code.[170] The antagonism between legal systems that permit the revocation of offers for a fixed period or that have been declared irrevocable and those legal systems that prefer to bind the offeror to his offer already dominated the Hague [page 52] Conference. It erupted once again in Vienna.[171] The result was the same as the compromise already worked out by UNCITRAL, but the discussions made it clear that the various viewpoints will be reflected in divergent interpretations of the offeror's intent to be bound. In particular, a fixed time, which was understood by some delegates to be an irrebuttable presumption of an intent to be bound,[172] may be subject to different interpretations depending on the legal system in which the offeror lives.[172a]

Of course an offer can no longer be revoked once the contract has been concluded by an effective acceptance. In addition, Article 16(1), like ULF Article 5(4), makes the offer irrevocably binding from the moment the acceptance is sent. The offeror can also declare the offer to be irrevocable. He does not need to do this expressly, but rather his intent to be bound can be deduced from the circumstances relevant to the interpretation of the offer and particularly from his setting a fixed period during which the offer is open (Article 16(2)(a)).[173] Finally, the offer is binding if the offeree could reasonably rely on the irrevocability of the offer and has in fact relied on it (Article 16(2)(b)). The provision is designed to cover those cases in which not just the offer itself but rather other conduct by the offeror or the special circumstances and exigencies of the proposed transaction enable and necessitate the offeree's presumption that the offer would be valid for a certain length of time, such as when calculations or cover transactions had to be and actually were made. This rule essentially covers those situations for which ULF Article 5(2) is applicable.[174]

Rejection of an offer terminates it (Article 17; cf. § 146 sentence 1 of the German Civil Code). It is regrettable that no regulation corresponding to ULF Article 11 (death or incapacity of a party after dispatching a communication) was adopted. In my opinion, the question of capacity to contract cannot be removed from domestic law, even though parallels are frequently drawn here between termination by death and contractual incapacity, on the one hand, and revocability on the other. At most, a fundamental rule can be derived from the Uniform Law for International Sales that offers which have become irrevocable, such as after an acceptance has been sent, cannot be affected by the death or contractual incapacity of the offeror.[174a] [page 53]

C. Acceptance of an Offer (Articles 18-22)

The acceptance of an offer can be communicated verbally or by conduct indicating assent (Article 18(1) sentence 1). Whether conduct should be interpreted as acceptance is determined by Article 8. According to Article 18(1) sentence 2, silence or inactivity as a reaction to the offer does not indicate acceptance. This rule, an extension of the idea behind ULF Article 2 sentence 2,[175] is intended to prevent the offeree from being taken by surprise (such as when a shipment of unordered goods is sent with an offer stating that by not returning the goods the offeree accepts the offer). The wording "in itself" makes it clear, however, that silence in connection with other circumstances can be considered as acceptance, particularly on the basis of Article 8(3).[175a] In addition, silence can, as an exception to the rule, have the effect of acceptance on the basis of usages which are legally relevant under Article 9.[176]

Ordinarily an acceptance is not effective until it reaches the offeror (Article 18(2) sentence 2). It can be withdrawn if the withdrawal reaches the offeror before or at least at the same time as the notice of acceptance (Article 22). As an exception to the rule, conduct by the offeree may indicate assent and thereby be considered an effective acceptance (Article 18(3)) if the offer himself waives a verbal statement or if his conduct is assumed to have this meaning by practices established between the parties or usages. Examples of such acts - which are considered equivalent to acceptance and thus mean that a contract is concluded - are the shipment of goods or payment of the price. Notification to the offeror is then not necessary.[177] This provision essentially conforms to the German Civil Code (§151) and ULF (Article 6).

According to Article 18(2) sentence 2 and (3), a contract is generally not formed if the notice of acceptance or conduct equivalent to acceptance is late, i.e., occurs after the offer has expired. If a time limit neither is set by the offeror nor is apparent from the circumstances, an oral offer must be accepted immediately (Article 18(2) sentence 3), whereas other offers must be accepted within a reasonable time (Article 18(2) sentence 2). The length of this reasonable time depends on the circumstances of the transaction, including the offeror's chosen means of communication. CISG thereby corresponds to the Hague Convention (ULF Article 8(1)) and presumably the definition of an oral expression of acceptance should be interpreted in the same way: Communications by telephone as well as by other technical and electronic means which make oral messages immediately intelligible and allow a direct reply by the same means are governed [page 54] by the same rule;[178] on the other hand, telex or tape-recorded messages sent by mail, for example, are not considered oral.

Article 20 gives more precise rules than ULF Article 8(2) for the beginning of the period of time available for acceptance, which depends on the means of communication. Legal holidays or non-business days generally have no influence on the calculation of the deadline (Article 20(2) sentence 1). Parties in international trade cannot be expected to adjust to the various national, regional, or local holidays.[179] For the offeree's reply, however, when the acceptance could not be delivered to the offeror because of a holiday, sentence 2 allows an extension of the deadline for acceptance until the first following business day. This should not make the offeror uncertain because he must reasonably take into account the possibility that the other party would not know of a holiday which prevents delivery and, therefore, would take advantage of the entire period.

According to Article 21, a contract can be formed despite a late acceptance. As in the German Civil Code (§§ 150(1), 149) and ULF (Article 9(1) and (2)), there is a difference between an acceptance sent late and one sent on time but which arrives late because of an unforeseen delay in the transmission. In the first case (late dispatch), the offeror can conclude the contract by so informing the offeree. This notice, however, does not constitute the acceptance of a counter-offer; the date of the contract depends on when the acceptance was received, even though it was received late.[180] In the second case (late arrival), the acceptance becomes effective on arrival and thus concludes the contract, unless the offeror protests orally or in writing (Article 21(2) = ULF Article 9(2)).

Article 19, the regulation concerning a discrepancy between the offer and the acceptance, also caused problems in Vienna. First of all, sentence 1, like 150(2) of the German Civil Code and Article 7(1) of ULF, provides that an acceptance with additions, limitations or other modifications is considered a rejection of the offer and serves as a counter-offer. However, Article 19(3), like ULF Article 7(2), facilitates the formation of a contract if there are modifications which do not materially alter the conditions of the offer. The contract is then effective on the terms stated in the offer, modified by the immaterial changes in the acceptance (Article 19(2) sentence 2), unless the offeror protests these additions orally or immediately dispatches a notice to that effect (Article 19(2) sentence 2). Article 19(3) attempts to alleviate the difficulties in distinguishing between material and immaterial modifications by listing the contractual provisions to which any modifications are presumed to be material.[181] [page 55]

The questions discussed in connection with ULF Article 7(2) are not resolved by Article 19. This Article simply clarifies that the offeror's notice of protest must merely be dispatched (Article 19(2) sentence 1).[182] Unfortunately, the proposals to strike paragraphs (2) and (3) entirely, which would have led to the solution of § 150(2) of the German Civil Code, were not passed.[183] The Dutch also withdrew their proposal,[184] which would have allowed the offeree to save the contract by withdrawing any of the modifications objected to by the offeror.[185]

D. Open Questions

At the Vienna Conference, Belgium suggested that the issues involved in the battle of the forms also be resolved.[186] Unfortunately, the proposal did not arouse much interest. Even those who recognized the importance of the practical problem believed that the issue was not ripe for resolution, both because UNCITRAL had not discussed the problem and because there was still uncertainty about the proper solution in domestic law.[187] An argument from the German discussions was raised, namely that one could not force the parties to accept the provisions of a law which both had rejected in their standard contract terms. In my opinion, the reluctance is regrettable, and the assertion that the problem could not be resolved because of the uncertainties in domestic law is not convincing. Since the Convention does not address the problem of conflicting standard contract terms, the solution will depend on whether the deviations in the terms are material or immaterial, according to Article 19(2), which corresponds to the proposals submitted in connection with Article 7 of ULF.

The fact that certain provisions are proposed only in standard contract terms or fine print is not enough to characterize them in every case as immaterial. Since standard contract terms normally (also) affect the points mentioned in Article 19(3), where they do, they must be considered material modifications. Most of the time the party who last made reference to his conditions will prevail if the other party indicates assent - or is supposed to - under Article 18(3).[188]

It is not certain, whether and to what extent commercial letters of confirmation will have effect under the Convention. The issue was addressed several times,[189] but unlike the Hague Conference, it was not possible, during the discussions on the recognition of trade usages, to reach an agreement on whether [page 56] the German rules on commercial letters of confirmation were applicable as usages. On the contrary, from the wording of Article 9, it must be assumed that the letter of confirmation will be effective only if the relevant business customs exist between the parties of that particular branch of trade in international transactions. On the other hand, it cannot be assumed [190] that the Uniform Law for International Sales, by limiting the formation of contracts to those created by an offer followed by an acceptance, has left other possibilities, such as the German laws on letters of confirmation, to the discretion of domestic laws applicable by virtue of conflict rules.[191] Otherwise other domestic formation provisions, unrelated to offer and acceptance would also be applicable, and the desired unification and legal certainty would be endangered. In my opinion, Article 7(1) forbids such a "fragmentation" of the law governing the formation of the contract. The entire process of contract formation is governed by CISG.

A Belgian proposal [192] concerning requirements of official permits did not win the necessary support. As far as governmental or judicial approval is required for the validity of a contract or of particular obligations - e.g., an export license, etc. - it is a question governed by domestic law on the basis of Article 4(a). This also applies to the time the contract takes effect, in the event that the required approval is not retroactive.[193]

Finally, the Conference rejected a proposal by the German Democratic Republic which would have introduced a general culpa in contrahendo (= precontractual) liability.[194] The proposal was especially intended to cover those cases in which contract negotiations have already progressed so far that one side, relying on the belief that a contract would materialize, has made considerable expenditures. Because of its general wording, however, the proposed rule could not have been limited to such cases. First, it would have affected a number of problems which arise outside the Uniform Law for International Sales, for example the liability for the invalidity of the contract caused by neglect of form requirements, the liability of an agent without authority and damages in case of avoidance for mistake. For some individual matters governed by the Convention, it would have raised the difficult question of the relation between this liability and the remedies and rules of CISG, e.g., for lack of conformity and for revocation of an offer. Hence, the motion by the German Democratic Republic failed. Damages caused by one party to the other in the course of contract negotiations, therefore, remain subject to regulation by the domestic law applicable according to conflict rules. In this field, domestic laws offer quite different legal bases [194a] for liability.[195] [page 57]

VI. Substantive Sales Law

A. General Provisions

The concept of a "fundamental breach" plays a central role in the CISG, as it did in ULIS. It is the prerequisite for the avoidance of a contract in certain cases,[196] and also for the right to demand substitute goods if the goods delivered do not conform to the contract.[197] "Fundamental breach" is also important for the transfer of risk.[198] Because the 1980 Convention considerably limits avoidance of contract by fixing an additional period of time (thereby clarifying whether or not a violation of the contract is fundamental), the importance of a "fundamental breach" is greater than in ULIS. Its definition caused substantial difficulties.[198a] ULIS Article 10 was heavily criticized in UNCITRAL publications and working committees.[199] From the very beginning, the "test" in ULIS Article 10 was considered too "subjective".[200] Thus, the UNCITRAL Working Group proposed [page 58] as early as 1975 [201] an "objective" test based on substantial detriment suffered by the injured party. This proposal was adopted as Article 23 of the 1978 Draft Convention and formed the basis for the discussions at the Vienna Conference, where it remained controversial until the plenary deliberations at the end of the conference.[202] Leaving aside the comments based on a misunderstanding of the provision's function, the differences can be traced to two basic viewpoints. One group of states wanted the extent of objective detriment to the injured party to be the determining factor, and therefore wished to keep the UNCITRAL formulation in order to establish an unmistakable criterion. The breaching party was to be protected from unforeseeable consequences by the second part of the provision, because the substantial detriment would have to be foreseeable.[203] A second group of states wanted to place more emphasis on the injured party's interest in the fulfillment of the obligation in question, independent of objectively measurable (and provable) damages. The Federal Republic of Germany also advocated that the criterion should be the injured party's expectations as reflected in the circumstances of the particular contract in question.[204] A working group [205] finally arrived at a compromise, which incorporates the German proposal: It provides that a breach of contract is fundamental if it leads to a detriment that substantially deprives the other party of what it is entitled to expect under the contract, i.e., under the actual individual obligations of the seller or buyer.[206]

This proposal was accepted. The Drafting Committee drafted the final version as Article 25.[207] As a result, the Convention adopts a solution similar to the one laid down in the German law in § 286(2) and § 326(2) of the German Civil Code (for the special case of delay) and in § 325(1) sentence 2, and has further been developed by courts for other cases of breach of contract: There is a fundamental breach of contract, which justifies avoidance or the demand for substitute goods, if the injured party has no further interest in the performance of the contract after the particular breach. However, the determination of this interest depends entirely on the individual terms of the contract. The question of whether damages caused by a delay in delivery amount to a breach of contract does not depend on the amount of the damages, but rather on the terms in the contract concerning the time of delivery. Non-conforming goods only give rise to a right of avoidance if the contract expressly states that non-conformity is of special [page 59] interest to the buyer - such as in the case of an express warranty - or if the terms of the contract make this clear.[208] The late delivery of goods with a quoted market price is normally considered a fundamental breach.[209] The question of whether goods which were not packaged according to the agreement presents a fundamental breach depends not only on whether the goods were damaged or at least endangered because of the packaging, but also on whether the packaging explicitly demanded by the buyer was necessary for further shipment or resale. Neglecting to insure the goods during transport, if the seller was obligated to do so by contract, can be a fundamental breach of contract even if the goods were not damaged, if the lack of insurance deprives the buyer of the possibility of reselling the goods in transit.[210]

The foreseeability mentioned in the second part of the provision was also the subject of lengthy debates. The formulation that the detrimental result must have been foreseeable by a reasonable person of the same kind and in the same circumstances as the party in the breach was supposed to avoid the problem of proof which arises from the formulation of ULIS Article 10, in which only the party in breach, his knowledge, and his possibilities of knowledge are taken into account.

Article 25 does not expressly state the time when the party in breach had to foresee or should have foreseen the detrimental consequences to the other side. Because of the withdrawal of a United Kingdom proposal,[211] that would have made the conclusion of the contract the determining point in time, it might be claimed that information received by the breaching party about the other party's special expectations must be taken into consideration whether it is received before or after the conclusion of the contract.[212] However, the opposing viewpoints in the discussion were still based on the objective version of the 1978 Draft Convention, in which the extent of the detriment was the only determining factor. In my opinion, the present version, in which the decisive factor is the interest of the party concerned as fixed by the terms of the contract also fixes the conclusion of the contract as the relevant time for knowledge or foreseeability: a contract in which the delivery time is not binding cannot be turned into a transaction where time is of the essence merely because the seller later learns that the buyer has obligated himself to sell the goods at a particular time.[213] [page 60]

After the UNCITRAL Working Group had decided to abandon the concept of ipso facto avoidance, the formulation that a declaration of avoidance must be communicated by a "notice to the other party" was increasingly used in the individual provisions on avoidance. In 1976, the draft proposed by the Working Group contained for the first time a general provision with the same formula for all cases of avoidance.[214] The same provision from the 1978 Draft Convention was adopted in Vienna without further discussion. The fact that a party can avoid a contract by a declaration of avoidance that has immediate effect is familiar to the German jurist. However, in contrast to German law, this declaration does not have to reach the other party in order to be effective (Article 26, in conjunction with Article 27)[215]. In order to be effective, though, the notice must be sent by a means of communication appropriate to the circumstances (Article 27).

All that is required to make effective any notice, request or other communication mentioned in Part II is for the notice to be sent by a means appropriate to the circumstances. Receipt is not necessary unless the law expressly provides otherwise.[216] The provision therefore contains two qualifications for the operative effect of communications. First is the appropriateness of the means of communication. The provision corresponds to Article 14 of ULIS and to Article 12(2) of ULF, but the substitution of "appropriate" for "usual" allows the communicator greater flexibility in the choice of the means of communication.[217] The (second) provision that dispatch is generally sufficient, and that the burden for the delay or loss of the notice during its transmission falls upon the addressee comes as a surprise to the German jurist who is used to the principle of receipt. One advantage of the rule is that at least a clear and unequivocal solution has been found for the question which was generally left open by ULF and ULIS.[218] Since Article 27 is optional, the parties are also at liberty to set other requirements, such as receipt for communications to be effective. Even absent explicit agreement, usages or practices established between the parties can modify the principle stated in Article 27. The idea underlying the principle and the exceptions in Article 27 is that the risk for transmitting a message should be carried by the one who, as a result of his deviation from normal performance, caused the statement to be sent.[219] This is persuasive, for example, in the case of a notice of defects, since the [page 61] seller is responsible for ensuring that the quality of goods conforms to the contract. On the other hand, an avoidance does not always have to be motivated by a disruption in performance for which the other side is responsible. It can also be caused by force majeure, which cannot be attributed to either party. In such cases the basic idea behind Article 27 cannot convincingly support apportioning the risk of transmission to the addressee.

Unfortunately, Article 27 does not include a rule for oral declarations. The wording - "transmission of the communication" and "failure to arrive" - makes it clear, however, that the Article refers only to messages transmitted by means similar to correspondence. On the basis of Article 7, it can be assumed that an oral declaration must be intelligible to those present or on the telephone; a statement that is not intelligible or not perceptible to the addressee has not been communicated by appropriate means.[220]

Similar to ULIS Article 16 (in conjunction with Article VII of the Hague Convention),[221] Article 28 provides a procedural exception primarily tailored to suit the peculiarities of Anglo-American law, which does not generally provide the remedy of specific performance in the context of most sales contracts.[222] Although legal systems differ in the enforcement of claims for specific performance, even after the elimination of ULIS Article 25, this regulation will not have much impact in actual practice, since parties in international trade normally shun such time-consuming procedures as judicial enforcement of specific performance and, therefore, promptly liquidate their unsuccessful transactions.[222a] On the other hand, where the goods are unique, such as art objects or specially made machines and installations, the remedy of specific performance should be enforceable in Anglo-American courts as well.[223] In Vienna, the word "could" was replaced by "would" at the request of the United Kingdom, thus restricting the possibilities of a judgment compelling specific performance.[224] Article 28 thereby corresponds more closely to ULIS Article 16 in conjunction with Article VIII of the respective Convention.[225] In my opinion, Article 28 may also have significance for German courts: Even where absolute obstacles in performance would release a party from [page 62] its obligations under domestic law, the remedy of specific performance remains intact under the Convention.[226] Nevertheless, a court may not compel an impossible performance; Article 28 allows consideration to be given to the more extensive release that domestic law provides. But this interpretation should not open the road to domestic law whenever CISG gives a remedy unknown to the local law of the forum, such as the claim for repair in Article 46(3).

"Its own law", however, does not refer to the conflict rules of the forum, which would invoke perhaps a foreign law allowing enforcement of specific performance.[226a] A contrary interpretation would be contrary to the purpose of Article 28.

Article 29(1) concerns the parties' ability to modify or terminate a contract by agreement. For contracts where one or more of the parties has its place of business in a state with formal writing requirements under Article 96, a writing is, of course, required for any modification or termination by agreement (Article 12 sentence 1). If the writing requirement is based on agreement, it can be modified only through a formal writing. Conduct, however, can preclude reliance on this form requirement.[227]

The decision to facilitate modifications, which underlies Article 29, means that even changes which favor only one side, such as the waiver of payment of an outstanding debt, are valid, even though consideration has been neither agreed upon nor given.[228] Recourse to Article 4(a) is unavailable.

B. Obligations and Responsibilities of the Seller

The 1978 Draft Convention had already departed decisively from ULIS on two points concerning contractual obligations and the remedies for their breach: First, ULIS' distinction between several types of breach and its corresponding division of remedies was relinquished in favor of two basic contractual violations with largely uniform remedies: breach of contract by the seller and breach of contract by the buyer.[229] Second, the concept of delivery, which was central to the discussion of performance and the transfer of risk in the Hague Conventions, was abandoned. The issues which the Hague Conventions tended to determine in terms of "delivery" are governed both in the 1978 Draft Convention and in the 1980 Draft Convention, by a descriptive definition of the seller's obligations for performance and the prerequisites for the transfer of risk.[230] [page 63]

In particular, after an introductory provision concerning the seller's obligations (Article 30), Part III Chapter II Section I of the Convention regulates the details of the time and place of delivery (Articles 31-34). Section II concerns the duty to deliver conforming goods which are free from rights or claims of third parties. Finally, Section III prescribes the buyer's remedies in the event that the seller fails to perform the obligations described in the preceding sections (Articles 45-52). In addition, Chapter V Section VI deals with the obligations of the parties concerning the preservation of goods, and Chapter V Section 1 with remedies available to both parties in the event of a "deterioration" of the other party's position: anticipatory breach or interruptions in an instalment contract.

The seller's duties are determined primarily from the terms of the contract. Article 30 states, furthermore, that the seller must deliver and transfer title to the goods and deliver the pertinent documents. The transfer of title is governed by the domestic law chosen by conflict-of-law rules (Article 4(b)).

The provision concerning the place of delivery differentiates between sales involving carriage and other sales. Unless the contract states otherwise, the sale involving carriage is performed by handing the goods over to the first carrier for transmission to the buyer [231] (Article 31). Article 67(1) sentence 1 is the corresponding provision for the transfer of risk in such sales.[232]

The delivery obligation for all other sales contracts - unless otherwise agreed - is fulfilled when the seller places the goods "at the buyer's disposal," [233] which is, for contracts concerning specific goods or those drawn from a specific stock, the place where the goods are located when the contract is formed and, in the case of manufactured goods, the place where they are manufactured or produced (Article 31(b)). Goods afloat are also generally governed by Article 31(b).[234] In other cases, the goods must be available to the buyer at the seller's place of business when the contract is concluded; if the seller has more than one place of business, reference must be made to Article 10. Article 69 is the corresponding provision on the passing of risk.[235]

Alternative provisions about the place of performance are found mostly in Incoterms and similar standard clauses.[236] Proposals to provide directives for interpretation for these clauses found insufficient support at the Conference because the unification of these clauses, which would have necessitated a special UNCITRAL project, was perceived in Vienna as too difficult a task.[237] Any [page 64] difficulties in interpretation in any particular case, however, can be settled on the basis of Article 8.

Placing the goods "at the buyer's disposal" means to make the goods available so that the buyer need do no more than take possession. This includes specification or at least precise identification of the goods, and, in some circumstances, preparation of the goods as required, such as packaging and notification to the buyer. For goods in warehouses, if the claim or directive for delivery is not already embodied in documents, a special order of release from the seller may be necessary.

It is implicit in Article 31 that, for the delivery to be effective, the goods must conform to the contract. ULIS Article 19(1) requires for "delivery" the "handing over of goods which conform with the contract." Deviations from the contract description - where, for example, the goods are inferior or different - are "cured," however, if the buyer fails to notify the seller of defects.[238] This conclusion should apply to CISG as well. The Secretariat's Commentary concerning Article 31 (= Article 29 of the 1978 Draft Convention) [239] differentiates between the delivery of inferior and the delivery of different goods. This interpretation would produce unfortunate consequences for the passing of risk and the failure to notify of defects known in German law and should therefore be rejected.[240] Independent of the extent and kind of non-conformity, a delivery is valid under Article 31 if the buyer does not make timely objection.

In a sale involving carriage, the seller must make arrangements for carriage of the goods and conclude transportation contracts appropriate to the circumstances and in accord with the usual terms of such transportation (Article 32(2)). Whether the seller must insure the goods depends on the sales contract; in any case, he must, at the buyer's request,[241] provide all available information so that the buyer may insure the goods himself (Article 32(3)). In the event that, when handed over to the carrier,[242] the goods are not clearly identified and allocated to the contract by the shipping documents, stamps, or other markings on the goods or the packing material or otherwise, the seller must notify the buyer of the allocation by a precise description of the goods (Article 32(1)). A breach of this obligation prevents the passing of risk (Article 67(2)) and may also trigger all remedies for breach of contract.[243] [page 65]

This provision, adopted in Vienna without further discussion, distinguishes the following three situations: first, there is an agreement on a fixed or determinable date for delivery; second, there is an agreement on a period of time during which delivery can be made, including contracts where the buyer can choose the date for delivery,[244] and third, there is no express provision regarding the date for delivery, in which case delivery must be made within a reasonable time after the conclusion of the contract.

The buyer need not accept delivery before it is scheduled (Article 52), but if he accepts, the seller has fulfilled his obligation to deliver.

Article 34 sentence 1 provides that documents relating to the purchased goods must be handed over at the time and place and in the form required by the contract. Usages are to be respected.[245] If the documents are handed over before they are due, the seller may cure non-conformities in the documents until the due date, unless he would thereby cause the buyer unreasonable inconvenience or expense (Article 34 sentence 2). Nevertheless, the buyer retains his right to damages resulting from the seller's exercise of the right to cure non-conformities in the documents (Article 34 sentence 3).[246] The right to correct documents whose contents do not conform to legal standards or to the contract can also be derived from Article 48. Since a breach of the duty to transfer suitable documents is treated exactly the same as the delivery of non-conforming goods, the seller must be given the opportunity to cure the defects at least until the date agreed for delivery.[247]

Section II details the requirements for conformity of the goods and the liability of the seller in the event these requirements are not met. As reflected in the heading of the next section of this book, not only defects but also deficiencies in quantity are normally considered non-conforming characteristics (see Article 35(1)). The obligation to deliver goods free from third-party claims of competing [page 66] title or other rights to the goods (Article 41) or from industrial or other intellectual property rights (Article 42) is specially defined. The distinction in German law - which is of historical origin and found in most legal systems between defects in the quality and legal defects, is, therefore, also not fully eliminated in the Convention.[248]

a) Defects in Quality and Quantity (Articles 35-37)

The decisive factor for determining whether the goods conform to the contract is the contractual description of the goods. The characteristics are therefore not based on objective standards of quality but rather on the denomination and description of the required quality in the contract.[249] The same applies to packaging (Article 35(1)). ULIS Article 33(l)(b) expressly treated alike the delivery of different goods and the delivery of defective goods. Through Article 35 of CISG unfortunately does not, the delivery of different goods must be considered a lack of conformity no matter how extreme the deviation.[250] This change was not intended to exclude the delivery of different goods from the rules on lack of conformity.[251] Rather, it is clear that the case of delivery of entirely different goods should still be considered as a deviation from the "description" of the goods in the contract.

In subparagraphs (a) through (d), Article 35(2) defines conformity to the extent the parties do not expressly specify the qualities and packaging of the goods.[251a] First, the goods must be fit for the usual purpose for which goods of the same description would be used (subparagraph (a)). They must also be fit for the buyer's particular purpose, if the buyer expressly or impliedly informed the seller of the particular purpose when the contract was concluded. An exception is made for the case that the buyer did not, or it would have been unreasonable for him to, rely on the seller's skill and judgment concerning the qualities required for the particular use (Article 35(2)(b)).[252] As a result, a buyer generally can expect the quality necessary for a particular purpose only if it is expressly described in the [page 67] contract (Article 35(1)) or he relied on a specialist or expert for the production or supply of goods of this quality.[253] Finally, the quality of goods may be determined by the samples or models provided to the buyer by the seller (subparagraph (c)). The packaging must be in the manner usual for such goods, or, subsidiarily, [254] in a manner adequate to preserve and protect the goods (subparagraph (d)).

The Conference rejected an Australian proposal corresponding to ULIS Article 33(2), to treat minor irregularities in quality and quantity as irrelevant.[255]

The buyer's remedies are not available if the buyer knew or could not have been unaware of the lack of conformity.[256]

The determination of whether the goods conform with the contract in the sense of Article 35 is made at the moment the risk passes to the buyer (Article 36(1)).[257]) There was a vigorous dispute concerning whether the seller should be responsible for the duration of a quality for a certain period of time. While the 1978 Draft Convention required "express guarantees" for a "specific" time, a Pakistani proposal [258] suggested that the Conference adopt "implied warranties" of suitability for ordinary purposes for a "reasonable period as the case may be."[259] Even though the Pakistani proposal failed, the word "express" (guarantees) was, in the end, deleted. Thus, the possibility remains that an implied warranty concerning the suitability for ordinary purposes will extend beyond the time the goods are accepted. Whether the replacement of "specific period" by "a period of time" should mean that the court determines the life of the warranty (naturally with due consideration to all of the circumstances), or whether some provision must be made in the contract - whereby, of course, Article 8 may be consulted - has not been clearly decided. Hence, Article 36(2) may be applied in different fashions. But presumably the majority opinion was that "a period of time" meant a time fixed by the contract.[260] [page 68]

For any delivery made prior to the delivery date, Article 37 gives the seller the right to cure any non-conformity in the goods until the due date. This right to make supplementary shipments or improvements affects neither the buyer's right to claim damages or reimbursement for expenses that result from the early delivery nor his remedies for damages that may have been caused by the curing of the non-conformity. (Only) if the remedying of the defect causes the buyer unreasonable inconvenience or expense may the buyer instead refuse to accept the cure and assert his remedies for breach of contract caused by the lack of conformity.[261] After the due date for delivery, however, the seller can only cure non-conformities as permitted by Article 48.

b) Examination and Notice by the Buyer (Articles 38-40, 44)

As a prefatory [262] provision, Article 38 controls the time when the goods must be examined.[262a] It is uncertain whether, in cases of early delivery, the "short period" in paragraph (1) begins from actual delivery or from the date when performance was due under the contract.[263]

If the goods must be transported, Article 38(2) postpones the time for examination until the goods have arrived at their destination. Difficulties arose - even in Vienna - concerning goods which are redirected in transit or redispatched by the buyer after resale. The version finally adopted in Article 38(3) should make clear that, in the case of reshipment due to resale, examination may be deferred until the goods arrive at their new destination. Thus the packaging, for example, need not be opened beforehand.[264] In order to postpone the examination, it is also necessary that the seller knew or ought to have known that a redirection or redispatch was possible, so that the seller does not assume prematurely - in regard to the time of arrival at the buyer's - that the examination took place and produced no objections.

Unfortunately, unlike under ULIS Article 38(4), the law and usages of the place of examination are irrelevant with regard to the procedures for examination.[265] Yet the international usages mentioned in the Secretariat's Commentary are often of little help. On the other hand, it may frequently be possible to find an implied agreement under Article 9(1), or habitual practices between the parties, in order to allow for application of local examination customs.[page 69]

If the buyer discovers or ought to have discovered a lack of conformity, then he must notify the seller of defects within a "reasonable" time. Notification must also be given if entirely different goods are delivered.[266] As in ULIS and the German Commercial Code, the notice is effective upon dispatch (Article 27), but it must be sent by a means of communication appropriate to the circumstances and generally designed to reach the addressee. The notice must specify the nature of the lack of conformity in the delivered goods (Article 39(1)). It is irrelevant whether the non-conformity is discovered or ought to have been discovered during the required examination or does not appear until later as a "hidden" defect. In any case, notice must be given when the defect becomes known or recognizable.

The seller cannot object to the failure to examine and notify of defects if the defects are based on circumstances of which he knew or ought to have known and which he did not disclose to the buyer (Article 40). The provision concerns not only the seller's deceit (as in § 377(5) of the German Commercial Code) but also his gross negligence. The circumstances which must be disclosed include not only the qualities of the goods themselves but also facts which could influence or alter the goods once they have left the seller's control. CISG does not retain the provision of ULIS Article 39(2) that the seller is obligated to invite examination by the buyer.

One of the Conference's most difficult problems concerned the consequences of failing to give timely notice of non-conformity. The preliminary drafts had already adopted a more flexible formulation of the notice requirement by substituting "a reasonable time" for the "short period" of ULIS Article 39(1) sentence 1. Two elements of the 1978 Draft Convention's provision were controversial in Vienna: the buyer's loss of all rights for his failure to notify and the absolute exclusion of all claims after two years, whether or not the defects were discoverable during that time. While the industrialized countries were, in the end, able to uphold the two-year limitation,[267] the developing countries were successful in maintaining the remedies of price reduction and compensatory damages (except for lost profits)[268] for the buyer who can offer a reasonable excuse for his failure to give timely notice (Article 44).

This inroad into the protection of the seller's interest in regarding the transaction as fully completed may put a considerable burden on the seller, particularly because "reasonable excuse for his failure to give the required notice" is indefinite and open to an interpretation favorable to the buyer.[268a] Certainly there is some danger that buyers may assert non-conformity for two years and, on [page 70] the basis of Article 44, withhold remaining payments or take recourse against securities (suretyships or guarantees). On the other hand, the improvement in the position of the buyer who has failed to inspect the goods and to send notice of objections was for quite a number of countries an absolute precondition for approving CISG.[269]

It is not certain whether Article 44 is the final word or whether other, more general rules can override this provision. For example, even if the buyer has a "reasonable excuse" for not sending timely notice, it must still be determined whether his claim for damages may be reduced under Article 77 or whether his demand for a price reduction could be countered on the basis of Article 80. The seller might argue, for example, that he would have had an opportunity to cure the lack of conformity if he had been notified in a timely manner. Though notice cannot be regarded as a measure "reasonable in the circumstances" under Article 77, even in cases where the buyer has a "reasonable excuse" in the sense of Article 44, the failure to examine the goods (which is not excusable on the basis of Article 44) might be the cause of increased damages.[270] And the seller, on the basis of Article 80, could maintain that timely examination and notice would have permitted him to cure the defects completely. Finally, the seller might claim damages for the buyer's violation of his obligations of inspection and timely notification.[271]

It would be contrary to the sense and purpose of a uniform law to apply remedies for defects under domestic law which are either more extensive than those provided in the Convention or unaffected by the failure to notify, such as avoidance for mistake or claims in tort for the decrease in value of the goods.[272]

The time limit for the notification of defects is determined by the actual handing-over of goods to the buyer. The rule is uncertain in the case of resale and direct shipment to the ultimate purchaser. It was generally assumed that, in such a [page 71] case, the time limit would begin to run from the moment the goods are handed over to the third person.[273]

The provisions of Articles 38, 39 and 44 are optional. Article 39(2) permits prolongation of the two-year time limit by virtue of a contractual guarantee period. But the contract may also contain special provisions for the examination and notice of defects as, for example, when the contract provides for a test run in the presence of the seller or when both sides sign a report concerning the machine's conformity to the contract.

The Convention does not contain a statute of limitations. Domestic law remains applicable.[274] However, at the Vienna Conference, the UNCITRAL Convention on the Limitation Period in the International Sale of Goods [275] was adjusted to the sphere of application of CISG by a Protocol Amending the Convention on the Limitation Period, which is attached as Annex II to the Convention. Ratification and application of the Limitation Convention would complete the unification of international sales law.

c) Third-Party Claims to the Goods and Intellectual Property Rights of Third Persons (Articles 41-43)

The delivery of goods that are subject to any right or claim by a third party is a breach of the seller's obligation, unless the buyer agreed to take such goods (Article 41). In contrast to the laws governing lack of conformity, the buyer's mere knowledge of the third-party claim does not relieve the seller of his obligation. Consent is needed, be it express or implied.[276]

As under ULIS Article 52, the seller breaches his duty whenever a third person makes a claim.[277] The defense against such claims and the necessary expenses of litigation are the seller's responsibility. The legal nature of the claim is irrelevant; not only claims based on better title to the goods, but also contractual claims can fall under Article 41. Following the basic idea behind the seller's [page 72] obligation, the decisive factor is whether the buyer's use of the goods is infringed or disrupted by the third-party claims.[278] The applicable domestic law determines whether claims by third persons exist. On the other hand, public law restrictions on the use of the goods, such as domestic laws protecting workers, consumers, or the environment, are governed not by Article 41 but by Article 35.[279] Seizure by act of state before delivery is to be regarded as a breach of the obligation to deliver under Article 30.

The sale of goods belonging to another is also governed by Article 41. The contract is valid. Although, unlike ULIS Article 53, the Convention does not explicitly so provide, the claims and remedies available in domestic legal systems are not applicable under the Convention in such a case.[280] In particular, domestic rules on nullity, such as Article 1599 of the French Civil Code, cannot be applied by virtue of Article 4(a). As for non-conformity of the goods, the buyer must notify the seller of any right or claim of a third party within a reasonable period after these defects are discovered or ought to have been discovered and specify the nature of those rights or claims (Article 43(1)). There is no time-limit for notifying the seller of any defects in title, as there is for lack of physical conformity of the goods prescribed in Article 39(2), so that the seller must take into account that claims based on defective legal title may be asserted for the duration of the applicable statute of limitations.[280a] In addition, when the buyer has a "reasonable excuse" for not notifying the seller, the exception in Article 44 applies here as it would for notice of non-conformity, though in this case, it only assures compensation for damages.[281] Finally, if the seller had knowledge of the right or claim of the third party and the nature of it (Article 43(2)), he cannot defend himself on the basis of the buyer's failure to notify.[282]

Article 42 specially regulates industrial and other intellectual property rights of third persons, a subject which is treated by the German Civil Code and ULIS simply as defects in title infringing upon the use of purchased goods. With regard to notice requirements and the buyer's loss of rights for failure to notify, this provision is similar to the one on liability for defects in title (Article 43(1)). The exceptions - the seller's knowledge (Article 43(2)) and the "reasonable excuse" for the lack of notice (Article 44) - are also similar. Nevertheless, it is apparent that this case is [page 73] regarded as a special category of breach of contract, closer to a lack of conformity than to a defect in title.[283]

Similar to the seller's obligation with regard to the quality of the goods sold, the seller's obligation in this case depends on where and how the goods are to be used according to the contract. The seller is not obligated to assure freedom from claims of industrial or other intellectual property rights everywhere in the world, but rather only in those countries where, according to the contract, the goods are to be used. In the absence of a special intended use, this would mean the country in which the buyer has his place of business (Article 42(1)(b)), because there patent claims, for example, can just as effectively hinder the use of a machine as can a functional defect. However, in the event the goods are to be resold and used in a state other than the one where the buyer has his place of business - provided this use in one or more other states was contemplated by the parties at the time the contract was concluded - the seller breaches his obligation where claims are raised based on the laws of these states (Article 42(l)(a)). Therefore, the seller's liability extends only to industrial or other intellectual property rights existing in those countries where the goods are to be employed according to the terms of the contract, (i.e., resold or used), and which were contemplated by the parties in concluding the contract. If such use in a third country was not considered, the seller must, in the alternative, consider the country where the buyer has his place of business.

Furthermore, the seller is only liable if he knew or could not have been unaware of these rights at the time the contract was concluded. In other words, he must inform himself about the possible industrial or other intellectual property rights of third persons with regard to the goods sold,[284] but only for particular countries.

The seller is not subject to the obligation described above if the buyer knew or ought to have known of the right or the claim in question (Article 42(2)(a)), or if the seller followed technical drawings, designs, formulae, or other specifications supplied by the buyer himself (Article 42(2)(b)).

Finally, the buyer loses his right to assert a claim based on such infringements if he does not notify the seller within a reasonable time after he learns or should have learned of the third-party rights or claims,[285] Again, as in the case of [page 74] defective title, there is no time-limit for asserting a claim. The seller is not entitled to rely on the lack of notice from the buyer if he knew of the property right in question and its nature (Article 43(2)).[286] Lastly, the buyer retains his right to assert a damage claim (except for lost profits) if he has a "reasonable excuse" for his failure to give the required notice (Article 44).

Article 45 offers an overview of the remedies available to the buyer in the event of a breach - specific performance, avoidance, compensatory damages, and price reduction.[287] These relate to all of the seller's obligations and include particularly those regarding documents.[288] The cumulation of damage claims with other remedies is explicitly contemplated in Article 45(2).

Domestic laws that permit the courts or arbitral tribunals to grant a seller in breach extra time to perform are expressly excluded by Article 45(3), both because such grace periods are inappropriate for international trade and because judicial discretion in their application could favor the party at home in the forum.[289] Domestic rules favorable to the buyer, such as additional remedies, are also excluded. A Dutch proposal [290] was rejected which would have excluded domestic remedies, such as avoidance for mistake, when the required notice of defects is not given. However, only one of the opposing votes was based on the belief that, because questions of contract validity are excluded from its sphere of application, the Convention should avoid them.[291] Others approached the question from exactly the opposite direction, namely that domestic law is not applicable at all in these cases.[292] The rejection of the Dutch proposal, therefore, should not be understood to mean that domestic laws permitting a contract to be voided on the basis of lack of conformity or rescinded for mistake are still generally applicable through Article 4(a). If they were, the goal of uniformity in the prerequisites and consequences of breach of contract involving the delivery of non-conforming goods would be greatly endangered.[page 75]

a) Claims for Performance (Articles 46 and 47)

The buyer can request specific performance as long as he has not chosen a remedy which is inconsistent with it (Article 46(1)) or forfeited his right to it by his failure to give the required notice. Specific performance is inconsistent with the buyer's avoidance of the contract and also with his reduction of the price where he could have demanded the repair of non-conforming goods or additional deliveries. However, the remedy of specific performance may be unenforceable due to Article 28.[293] Where the goods are deficient in quality or quantity, the buyer can require that the seller cure (by repairs or additional deliveries) as long as such a request is not "unreasonable" - in light of all the circumstances (Article 46(3) sentence 1).[294] When repairs in a particular case would be "unreasonable" presumably where it would be disproportionately expensive for the seller - the buyer is left only with a claim for damages or price reduction.[295] The demand for repairs also requires notice, which must be given either in conjunction with the notice of defects or within a reasonable time thereafter (Article 46(3) sentence 2).

The right to require delivery of substitute goods when the delivered goods do not conform to the contract is subject to the condition that the non-conformity must represent a "fundamental breach of contract" (Article 46(2)).[296] This contrasts both with § 480 of the German Civil Code and ULIS Article 42(1) (c). Where the non-conformity does not amount to a fundamental breach and where repairs are not feasible under Article 46(3) - which is frequently the case with raw materials and other fungible commodities - the buyer must keep the nonconforming goods and recoup his losses through a damage action or a reduction in price. The Federal Republic of Germany's proposal to facilitate claims for substitute goods was unsuccessful.[297] The decisive consideration was probably that the delivery of substitute goods practically always requires the return of the defective goods and, therefore, is as serious to the seller as an avoidance of the contract. [298]

The difference between a "fundamental" and a "non-fundamental" breach in connection with the delivery of non-conforming goods will thus be the decisive factor in the remedies available to the buyer. His difficulty is that he cannot, by [page 76] fixing an additional period of time for performance, clarify whether the defective performance is actually a fundamental breach.[299] On the basis of Article 25, the buyer's expectations as fixed in the contract control not only the general question, under Article 35, of whether a lack of conformity exists at all, but also the issue of how much weight should be accorded to it. The decisive factor is not only the objective damages which the buyer suffers or could suffer as a result of the nonconformity, but, above all, whether the risk of this particular non-conformity was considered so serious by the parties that its existence would eliminate the buyer's interest in the performance of the contract concerning these goods. For example, if the buyer has unmistakably insisted on, but not received, chips suitable for the tropics, then the breach is fundamental and the buyer retains the right to demand substitute goods, even if the buyer can otherwise use the non-conforming transistors without great loss.

The buyer can always fix an additional period of time for performance, and thereby offer the seller an opportunity to cure any lack of conformity (Article 47(1)). Such an extension, however, usually means only that the buyer's remedies are restricted during the additional time period, unless the seller has already declared that he will not (correctly) perform his obligations by the new deadline (Article 47(2)). The only right available to the buyer in any case is his right to claim damages caused by the delay of performance (Article 47(2) sentence 2). As in § 326(1) sentence 1 of the German Civil Code, the extension of time for performance is of additional consequence only if the seller does not deliver at all. After the additional (and reasonable) period of time has expired, or if the seller has already refused to perform, the buyer can avoid the contract (Article 49(l)(b)).[300] Of course, delay by the seller during the additional time period can turn his default into a fundamental breach, but this is the result of the passing of time and not of the fixing of an additional period.[301]

b) The Seller's Right to Cure (Article 48) ("Second Tendering")

Until the buyer has effectively avoided the contract - even after the deadline for delivery has passed - the seller can generally still "cure," that is, deliver the goods, make repairs, or replace parts or goods. However, he may not take an "unreasonable" (disproportionately long) time to do so or cause the buyer unreasonable inconvenience or uncertainty about the reimbursement of expenses advanced by the buyer (Article 48(1)).[301a] The buyer retains his right to claim damages caused by the delay, even if, as a result of his cure, the seller fully performs his obligations (Article 48(1) sentence 2). In addition to the right to cure under Article 48(1) sentence 1, which theoretically could be cancelled by the buyer's avoidance of the contract, Article 48(2) permits the seller, by sending a request (which is effective upon receipt) together with an indication of the date by which he intends to fulfill [page 77] his obligations, to ask for clarification as to whether he the buyer will accept the cure. If the buyer does not respond to this request, he may not resort to any remedies inconsistent with performance by the seller before this deadline (Article 48(2) and (3)).

Article 48 was the subject of controversy in Vienna. The Federal Republic of Germany criticized the provision above all because the buyer's right to avoid the contract endangers the seller's right to cure. The West German delegation believed that the seller's right to a "second tender" should be ensured under the Convention.[302] As a rule, however, the present version will not affect the seller's right to a "second tender". Where the failure to meet a deadline in itself does not constitute a fundamental breach - in other words, when time is not of the essence - the seller's cure within a reasonable time after the due date will normally prevent the delay from constituting a "fundamental breach of contract" such as to permit the buyer to avoid the contract.[303]

c) Avoidance of the Contract (Article 49) [304]

As a rule, the contract may be avoided only when the failure to perform amounts to a "fundamental breach of contract" under Article 25. The option provided by ULIS to the buyer to extend the date for performance and thereby to clarify whether a breach is fundamental [305] has been retained only for the case where there is no delivery at all.[305a] (Article 49(l)).[306] By analogy, the provision also applies to the failure to transfer documents of title.[307] The basis for this provision was both the general tendency to curtail the remedy of avoidance of contracts, and, above all, the fear that the procedure of extending the deadline for performance could be used to "upgrade" an unimportant violation of the contract into a fundamental breach.[308]

Further, the buyer's right to avoid the contract is also lost, according to Article 49(2), where the rule is set forth in detail, if the buyer waits too long after delivery to declare his intent to avoid.[page 78]

d) Reduction of the Price (Article 50)

Where the goods do not conform with the contract, Article 50, like ULIS Article 46, grants the buyer the right to reduce the price. In order to invoke the reduction, the buyer need only dispatch notice thereof. Of course, a price reduction is unavailable if the seller completely performs his obligation by curing or if the buyer unjustifiably declines to accept the cure (Article 50 sentence 2).

It became clear in the discussions that many representatives believed that price reduction constitutes a kind of damages but is merely based on a lesser showing.[309] Thus the Norwegian proposal [310] to calculate the reduction with reference to the (lower) value of the goods at the time delivery was favorably received.[311] Article 50 thereby differs both from the German Civil Code and from ULIS Article 46. Consequently. the buyer loses the advantages of a profitable purchase if, between the conclusion of the contract and the date of delivery, the price of the delivered but non-conforming goods increases more than the price of conforming goods.[312]

According to Article 50, a reduction in price is available only when the goods do not conform to the contract. No decision was reached as to whether the price may be reduced for defects in title or third-party claims based on industrial or other intellectual property rights.[313] The general similarity of the prejudice caused by these defects with that caused by other defects justifies the availability of price reduction in these cases as well. But the formula for calculating the decrease in value due to such defects surely would have required thorough deliberations for which no time remained at the Conference.

e) Remedies for Partial Non-Performance or Partial Lack of Conformity (Article 51)

In the case of partial non-performance or of a delayed or incorrect partial performance, the buyer's remedies, as a rule, are available only with regard to that part (Article 51(1)). The buyer can demand avoidance of the entire contract only when the partial non-performance or partial non-conformity represents a fundamental breach of the entire contract (Article 51(2)).[314] [page 79]

f) Early Delivery or the Delivery of Excess Goods (Article 52)

The buyer may refuse to accept an early delivery (Article 52(1)). Nevertheless, he may be obligated to take possession of the good for the seller (Article 86(2)). However, the buyer may not be required to assume a more onerous burden, such as inspecting goods before the contractual date for delivery.[315]

The buyer may accept or reject any excess goods. If he accepts the excess, he must pay for it at the contract rate (Article 52(2)). The delivery of excess goods can, in some circumstances, constitute a fundamental breach and entitle the buyer to avoid the contract and return the entire delivery. An example is the case where the seller tenders a bill of lading covering all of the goods (including the excess goods) and specifies that the goods can be delivered only if payment is made for the excess goods as well.[316]

Expense or loss incurred by the buyer on account of the early delivery or the delivery of excess goods give rise to a damage action as long as the buyer's acceptance of the goods is not considered to be an acceptance of an offer to modify the contract.

C. The Buyer's Obligations (Articles 53-65)

Article 53 and Sections I and II, Articles 54-60, of Chapter III govern the buyer's duty to pay the price and take delivery of the goods. Section III (Articles 61-65) governs the seller's remedies for the buyer's breach. In addition, the seller's remedies, like the buyer's, are augmented by the special remedy available to both parties for cases in which the other party's situation has deteriorated (Article 71), the rules for anticipatory breach (Article 72) and the special obligations concerning the preservation of goods (Articles 86-88).

Even though the Convention explicitly lists as the buyer's obligations only payment and taking delivery (see Articles 53, 54-60), it also provides that the buyer may incur other obligations typical of sales transactions (compare Articles 61(1) and 62), such as to provide security interests, furnish information, plans, and technical drawings, deliver materials or components, follow distribution directives, and heed export and re-import prohibitions etc.[317]

The buyer must pay the price either as fixed in the contract or as determined according to contractual terms. The provision on determination of the price renewed the argument concerning the need for a definite price term, a discussion which had already arisen in conjunction with Article 14(1) sentence 2. The version finally adopted is based on a compromise proposed by a working group.[318] [page 80]

The argument in favor of wide-ranging judicial authority to fix a price where the price term is left open was accommodated by the assumption, recorded in Article 55, that, in the absence of a fixed price, the parties implicitly made reference to the "price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the trade concerned." The concern, voiced by some states, that a definite price term was needed, is reflected in the text of Article 55, which applies only in the case that a valid contract is formed, which represents, in turn, a reference to Article 14. Because a restrictive interpretation and application of the provisions on contract formation would require a definite or determinable price, a contradiction remains between the requirement of a determinate price at the conclusion of the contract on the one hand and the possibility of fixing the price after the contract is concluded on the other.[319]

Under Article 54, the buyer's obligation to pay includes all of the measures agreed upon in the contract to enable payment to be made, such as the duties to provide a letter of credit [319a] and to comply with relevant (domestic) laws, in particular currency-exchange regulations. The parties may specify the currency in which the payment is to be made.[320] If the price is to be determined on the basis of the weight of the goods, Article 56 provides that, in case of doubt, the net weight should be used.

Articles 57 and 58 govern the place and time of payment. In the absence of agreement, payment must be made at the seller's place of business (Article 57(1)(a)).[321] Where there is an agreement for immediate payment - "cash against documents" - payment is to be made at the place where the goods or the documents are transferred (Article 57(1)(b)).[322] In a sale involving carriage, if [page 81] immediate payment has not been agreed upon, the seller's place of business remains the place of payment.[323]

Under domestic rules of procedure, jurisdiction and venue for an action for the purchase price are often at the place of payment, with the result - much regretted in regard to ULIS Article 59(1) - that the place of business or habitual residence of the seller, being the place of payment, automatically fixes the forum for an action for payment of the purchase price.[324] Unfortunately, the CISG may produce the same result. Buyers are thus well advised to seek a more favorable choice-of-forum clause in the contract.[325]

As a rule, the risk and costs of a delayed or lost payment are carried by the buyer. Article 57(2) provides one exception to this rule: the seller must bear the increased cost that is caused by a subsequent change of his place of business. Furthermore, the grounds for exemption listed in Article 79(1) and (2) also apply to damage claims based on lost or delayed payment.[326]

According to Article 58, the time for payment is primarily determined by the contract, and the seller need not send any advance reminder or other formal request for payment (Article 59). Article 58 regulates the due date and the other requirements of the obligation to pay the price as well as the reciprocal relationship between delivery and payment. In principle, the seller may demand immediate payment upon delivery. Thus, as long as the contract does not obligate the seller to perform first, the seller can make payment a condition precedent to a transfer of the goods or documents controlling their disposition (Article 58(1) sentence 2 and 58(2)).[327] [page 82]

The payment-in-exchange-for-goods principle also operates to the advantage of the buyer. The buyer is not obligated to pay until the seller has delivered goods or documents in conformity with the contract, either by placing them at the buyer's disposal (Article 58(1), cf. Article 31 concerning where goods must be placed at the buyer's disposal) or by dispatching them (Article 58(2), cf. Article 31(a)).

The buyer is not obligated to pay the price, however, before he has had an opportunity to inspect the goods (Article 58(3)), unless inspection has been excluded by agreement, such as in cases where payment is to be made against documents.[328] For inspection to be excluded, the parties must agree on a means of performance which does not permit inspection. The seller's right to retain the goods or documents until payment has been made is not inconsistent with the buyer's right to inspect.

The seller must accept partial payment or payment made before the due date only if he is required to do so by contract. If there is no such agreement, he may return the payment without breaching the contract.[329] There is no express provision for the seller to withhold delivery where the buyer has failed to fulfill obligations other than payment. Acceptance of a bill of exchange or provision of a letter of credit can, however, be considered part of the contractual obligation to pay under Article 54 as qualified by the contract. It is consequently covered by the rule in Article 58.[330] In addition, it follows from Article 71 that even the buyer's failure to perform duties which do not fall directly under Article 54 must give the seller the right to withhold delivery, as long as these duties are substantial. If a party may suspend performance under Article 71 because of the danger of the non-performance of a substantial duty, then actual non-performance must also give the seller the right to withhold delivery. There is then no need to resort to domestic law to decide the question.

There are two elements to the buyer's obligation to take delivery. First, he must undertake all acts which could reasonably be expected of him in order to enable the seller to make delivery, [331] such as obtaining the necessary import [page 83] documents, making the necessary preparations for any installation to be done by the seller, and specifying and requesting delivery of the goods ordered.[332] Of course, the particulars of the obligation to take delivery depend on the mode of delivery agreed upon.[332a] The seller should not be required to request the buyer to take delivery. Otherwise, Article 59 would become obsolete in many cases. The second element is that the buyer must take charge of the goods. In the case of goods to be picked up at the seller's address, or when the goods must be "placed at the disposal" of the buyer at another location, the buyer is normally responsible for removing the goods. Although the convention is not explicit, the question of whether the buyer is allowed a "reasonable time" [333] to pick up the goods is to be resolved on the basis of Article 7(1).

As with the buyer's remedies, the seller's remedies are not categorized according to the kind of breach (cf. Article 61(1)). Article 64, however, contains special rules for the seller who wishes to avoid the contract when the buyer breaches his obligations to pay or to take delivery. In addition, for sales subject to the buyer's specifications, Article 65 provides, as a special remedy, the transfer to the seller of the right to specify the goods. The buyer's obligation to pay interest, provided for in Article 78 - one of the obligations in Chapter V which are common to both seller and buyer - is a special remedy for the seller when the buyer delays payment. The right to resell the goods, described in Article 88, is a remedy which becomes important to the seller when the buyer fails to take delivery of the goods. The seller's primary claim is for specific performance by the buyer (Article 62); however, Article 28 may limit the action.[333a] A notice extending the time to perform operates initially only as a bar to the seller's resort to other remedies for the duration of the extended time period, except for damages caused by the delay in performance (Article 63(2)), unless the buyer has refused to perform altogether (Article 63(2) sentence 1). In addition, the seller can claim damages together with specific performance or other remedies for the buyer's breach (Article 61(2)). Even if domestic law permits it, domestic courts and arbitral tribunals may not grant a grace period to the buyer - any more than they may grant one to the seller (Article 61(3)).

In principle, the seller may avoid the contract if the buyer's failure to perform his obligations constitutes a fundamental breach of contract.[334] The seller can resolve any doubt as to whether the buyer's delay in making payment or taking [page 84] delivery constitutes a fundamental breach by fixing an additional period of time for performance (Article 64(1)(b)). However, for obligations of the buyer other than those named in this provision, fixing an additional period of time for performance has only the consequences provided in Article 63(2) sentence 1.[335]

Although, in principle, the buyer's fundamental breach of contract permits the seller to avoid the contract, Article [64(2)] considerably restricts avoidance when the buyer has in fact paid. First, the buyer's delayed performance permits the seller to avoid the contract only if the seller was unaware that performance had been rendered. For breaches other than delay, the seller may not avoid the contract if he does not exercise the right within a reasonable time after the seller learns or ought to have learned of the breach (Article 64(2)(b)(i)), after any additional time period allowed for performance was expired, or after the buyer has declared that he will not perform his obligations (Article 64(2)(b)(ii)). In other words, once the price has been paid, even if the buyer has committed a fundamental breach of the contract - for example, the additional period of time for taking delivery has expired - the seller cannot wait and watch market developments before making his decision to avoid the contract.

The 1978 Draft Convention's text of Article 64(2) (Article 60(2) of the 1978 Draft Convention) was disputed in Vienna by those who wished to clarify that in the case of late payment - which, as such, already may constitute a fundamental breach and, consequently, a ground for avoidance - the seller loses the right to avoid the contract once he learns of the late payment.[336] In my opinion, late payment is covered by Article 64(2)(a) as well; hence, the right to repudiate the contract is lost as soon as the seller discovers that the payment was made.

The seller's option to specify the goods under Article 65 met with considerable misgivings in Vienna. In the end, it was maintained.[337] The provision's opponents argued that the seller was sufficiently protected by the remedies of avoidance and damages, while its proponents, arguing primarily from the restrictive conditions under which the seller must exercise his option,[338] insisted that the buyer was sufficiently protected and that the provision achieved an overall balance between the interests of the seller and those of the buyer.[339] The special rules for [page 85] the sale to the buyer's specifications means not only that the seller has an additional remedy - namely the possibility to specify without prejudice to his other remedies - (Article 65(1)) - but also that an offer to contract where the goods have not been specified may be sufficiently definite to form a valid contract.[340] The reservation of the other remedies makes it clear that the seller can also sue for damages, and, in case the failure to specify constitutes a fundamental breach, avoid the contract. The seller may also avoid the contract where the buyer fails to specify within an additional period of time fixed by the seller under Article 63(1) and the failure to specify in effect constitutes a failure to take delivery.[341]

D. The Passing of Risk (Articles 66-70)

The buyer's obligation to pay is dependent on the seller's performance of his obligations. In general, once the seller has performed, the buyer must pay even if the [goods are] thereafter destroyed or damaged. The buyer thus carries the risk of having to pay despite the loss of the goods. In ULIS, the concept of "delivery" was used to describe the closely related concepts of the seller's performance of his obligation and the passing of risk to the buyer.[342] This "very elegant legal solution" [343] was dropped by UNCITRAL [344] as too conceptual. The passing of risk is therefore no longer determined by the legal concept of "delivery" but rather by a description of the prerequisites for the passing of risk.

Article 66 states the principle: Once the risk has passed to the buyer, he must pay the full price, even if the goods have been damaged or destroyed. There is an exception for the case where the loss or damage was "due to an act or omission of the seller." The Secretariat's Commentary gives the example of goods which, after delivery, are damaged by the seller as he recovers his containers.[345] Whether the seller has thereby breached the contract is, in principle, irrelevant. Nonetheless, the seller's act which leads to the loss of the goods will almost always constitute a breach of contract. That is the case when the goods are not packaged correctly, or a defect causes further deterioration and destroys the goods after the risk has passed. However, these problems exceed the scope of the rule on the passing of risk, which is limited to the distribution of risk for accidental loss. The exception concerning loss or damage due to the seller's act may apply even where the seller is not responsible in the sense of Article 79(1) and (2). If the seller is "responsible" for the destruction of the goods, his act not only releases the buyer from his obligation to pay but also may permit the buyer to claim damages for breach of contract (or for non-contractual liability under domestic law).[346] [page 86]

If the seller's breach of contract is fundamental, the buyer may avoid the contract and is released from his obligation to pay.[347] The fact that the buyer cannot return the Articles destroyed as a result of the breach - such as where a defect caused further deterioration - does not prevent him from avoiding the contract nor does it prevent the "passing back" of the risk: the seller must return the full purchase price to the buyer, even when the goods cannot be returned (Article 82(2)(a)).[348] If the buyer neglects to notify the seller of non-conformities (including a delivery of entirely different goods) or defects in title, such as encumbering industrial property rights, the buyer remains obligated to pay the purchase price, even if the goods are lost and the contract would have been avoidable had timely notice of the lack of conformity been given.

The Convention distinguishes in particular between sales involving carriage and simple sales for which the seller's obligation to deliver is fulfilled at his place of business or a third place.[348a]

For sales involving carriage, Article 67(1) contains the traditional solution for the passing of risk, namely, that the risk passes to the buyer when the goods have been handed over to the first carrier for transmission to the buyer (Article 67(1) sentences 1 and 2) [348b]; the law does not distinguish between carriage by sea, road or air or by a combination of modes, and it does not split the risk in cases of multimodal transportation. The basic case - where the goods are handed over to the first carrier (Article 67(1) sentence 1) - is frequently modified by special [page 87] contractual provisions, such as trade terms,[349] whereby a carrier is to be given the goods at a particular place for (further) transmission; the transfer of the goods to this carrier - and not to the first - marks the passage of risk (Article 67(1) sentence 2).

The passing of risk is not affected by the fact that the seller retains the transportation documents (or has already handed them over)[350] (Article 67(1) sentence 3). Therefore, retention of the documents for example, to insure payment - and the corresponding right to control the disposition of the goods does not hinder the passage of risk to the buyer. This rule also makes it clear that the passing of risk is independent of the transfer of title.[351]

Although the question was not discussed in Vienna, only the independent carrier was considered a carrier for the purposes of Article 67. Accordingly, if the seller transports the goods with his own personnel, even though he is not obligated to do so, he maintains the risk of loss.[352] The passing of risk in sales involving carriage may therefore depend on the legal structure of the seller's business: If the goods are transported by a division of the firm that is not legally independent of the seller's enterprise, then Article 69 applies to the passage of risk. On the other hand, if the seller uses a legally independent (incorporated) entity that is a subsidiary of the seller's firm, Article 67 applies.[353] As long as Article 69(2) does not apply to the sale,[354] it is my opinion that, where the seller sends the goods using his own transportation organization, it is worth considering the Reichsgericht's solution under § 447 of the German Civil Code,[355] which, due to the difficulties in delimitation in such cases, let the risk pass to the buyer even when the seller's own personnel is employed.[356] The solution may be corrected by denying to the seller the exemptions of Article 79, because his personnel or the transportation organization run by him is not "beyond [his] control".[357] In addition, destruction or deterioration of the goods caused by the seller's employees would surely fall within the meaning of "due to an act or omission of the seller" in Article 66.[page 88]

In some sales contracts involving the carriage of bulk goods, the passing of risk in the sense of Article 67(1) presupposes that the goods lost or destroyed had been clearly identified to the contract in question. Article 67(2) therefore lists the identification of the goods as an additional requirement for the passage of risk. Compared to Article 79(2) of the 1978 Draft Convention, the rule was considerably improved in Vienna. It now contains, for example, the important case of identification to the contract on the basis of freight documents that indicate that the buyer is to receive the goods.[357a] In the case of combined shipment of several goods, the goods may be identified by placing appropriate marks on them (such as the address of the buyer) or by sending notice of dispatch to the buyer, a notice which would be effective upon dispatch. (Article 27).[358] Most importantly, identification can result from sending the buyer a shipping document so precise in its contents that it enables a particular portion of the shipment to be identified to the specific contract.[359]

The rules for the passages of risk with regard to goods sold in transit proved to be unexpectedly difficult. According to both Article 80 of the 1978 Draft Convention and ULIS Article 99,[360] the risk passes at the time the goods are handed over to the carrier.[361] In contracts such as CIF transactions, the risk that the buyer would have to pay for goods that were already damaged or lost at the time the sales contract was completed is normally covered by insurance. The proponents of this solution repeatedly pointed out that, in this kind of transaction, the parties are more concerned with the sale of the documents than with the sale of the goods themselves.[362] The Pakistani proposal [363] for the risk to pass when the contract is concluded produced a vehement discussion in the First Committee. A number of developing countries noted that the 1978 Draft Convention's solution violated the legitimate interests of the sellers [364] of bulk goods from developing countries.[365] The rejection of the original proposal was also motivated by the [page 89] argument that the parties may have been unable to obtain any insurance at all for the goods before the conclusion of the contract.[366] After the Pakistani proposal was also rejected by the Plenary,[367] the countries that had favored it blocked the adoption of the original proposal which had already been approved in the First Committee.

It was then agreed to reopen the debate, and, finally, the compromise embodied in Article 68 was reached, whereby the risk generally passes when the contract is concluded (Article 68 sentence 1), but an agreement that the buyer will assume the risk from the moment the goods are handed over to the carrier can be implied from the circumstances. According to the consensus of the delegates, the existence of transportation insurance may point to such an agreement.[368] Of course, the retroactive effect of the transfer of risk to the date of shipment operates only to the advantage of the good faith seller (Article 68 sentence 3).

The risk passes to the buyer from the moment the goods are delivered to a carrier who issues "the documents embodying the contract of carriage". This definition was changed in Vienna; it is irrelevant whether the documents are negotiable instruments.[369] The Conference did not succeed, though, in providing for the possibility that, in the future, no documents may be issued at all and that, instead, shipping contracts may be electronically recorded and transmitted.[370]

As in Article 67(2), the identification of the lost or damaged goods to the sales contract in question is a prerequisite for the passing of risk.[371]

Sales involving carriage and sales of goods in transit so predominate the scheme of the Uniform Law for International Sales that all other cases are considered only in the residual provision (Article 69). When the goods are to be picked up at the seller's place of business, the principle is that the risk generally passes to the buyer when he takes over the goods. At any event, the risk passes when the goods are placed at the disposal of a buyer who then fails to take delivery. Whether the buyer is at fault for the delay in taking delivery is irrelevant.[372] In the sale of bulk [page 90] commodities, the goods must be clearly identified to the contract in question before placing them at the buyer's disposal passes the risk to the buyer.

Article 69(1) expressly concerns only cases in which the buyer has delayed taking delivery. It should also be interpreted to include those situations in which the goods could not be delivered because of other breaches of the contract by the buyer, such as when the buyer has not obtained a required import license in a timely fashion. The Federal Republic of Germany's proposal to have the risk pass in all cases where the buyer's breach prevents normal delivery [373] found no support because it was assumed that the cases covered by the German proposal were already included.[374]

If a seller is not to deliver the goods at his place of business but rather at another place, including - as in a sale to destination - at the buyer's place of business,[375] the risk passes to the buyer at the earliest moment when the buyer could have taken delivery. Where delivery is to be made at a place which is not the buyer's place of business, such as in the case of warehoused goods, risk passes only when delivery is due and the buyer is in a position to pick up the goods [376] and aware that the goods have been placed at his disposal.[377] Where the buyer does not know - for example, from receipt of a warehouse document or a notice of release, etc. - that and where the goods are available, the risk does not pass until the buyer has been notified (Article 67(2)).[page 91]

E. Provisions Common to Both the Seller's and the Buyer's Obligations (Chapter V)

Compared to Article 62 of the 1978 Draft Convention, the remedy available in Article 71 was improved in Vienna.[378] The deliberations concerning the provision were unusually lengthy and controversial; they provide a good example of the problems and obstacles that can confront an effort to achieve a uniform law. The aim of the proposal that led to the present formulation was to permit a suspension of performance even when the circumstances that made the obligor's performance doubtful had existed before, but had not become apparent until after the conclusion of the contract. The proposal differed from § 321 of the German Civil Code but corresponded to ULIS Article 73(1). The new formulation, which was proposed only as a clarification,[379] should prevent the party experiencing difficulties from insisting on performance by the other side with the argument that his situation did not deteriorate after the conclusion of the contract but was already unsatisfactory before that date since he had previously failed to perform his obligations to third parties.

This solution was resisted on two grounds. First, under the proposed rule, parties that, because of their size or other economic factors, often operate under strained conditions would rarely be able to require advance performance from contract partners.[380] Second, certain domestic laws already make provision for cases where performance was endangered before the conclusion of the contract, and some delegates wanted the applicability of these domestic provisions to be preserved. They argued that changed circumstances should yield corrective measures only - if at all - where those changes occur after the conclusion of the contract. Whether one party's ability to perform is recognizable to the other and the extent to which that factor influenced the parties' will to conclude the contract are questions of mistake which, it was argued, lay outside the reach of the Uniform Law for International Sales.[381] [page 92]

But the proposal was meant specifically to exclude the thc diverse domestic rules on avoidance based on a mistake about the other party's ability to perform and to allow suspension of performance - and only the suspension governed by the Uniform Law for International Sales - in the event that a contracting party could establish that he had contracted under a false impression of the other side's ability to perform.

Finally, the opposition was also nourished by misunderstandings: Suspension of performance and avoidance based on an anticipated breach (Article 72) were perceived as a single remedy that was too severe, especially for parties in developing countries; moreover, the proposed rule seemed to permit too great a latitude to subjective appreciation of the other party's condition. An Egyptian proposal combining suspension of performance with anticipatory breach [382] revived the debate and led to the establishment of a working group which produced the present text of Articles 71 and 72.[383] As it now stands, Article 71 corresponds to the 1978 Draft Convention as completed by the German proposal. As described in Article 71(1)(a) and (b), a party may suspend performance even when the deterioration already existed before the conclusion of the contract but was not apparent until afterwards. The decisive factor is when the inability to perform "becomes apparent". If it was already apparent at the conclusion of the contract that one party would not be able to perform, the other party may not suspend performance. In my opinion, domestic law on avoidance due to mistake is not applicable except in the case of fraudulent deception.

"Suspension" refers not only to (advance) performance, but also to the preparation of performance: If the seller of a machine still to be constructed learns of the buyer's impending insolvency, for example, he may stop construction of the machine. Moreover, the delivery time may also be prolonged: If the buyer unexpectedly offers payment or adequate assurances of performance according to Article 71(3), the seller who cannot meet the initial delivery date because of his justified suspension is not in default. He is therefore not liable for late performance to the extent the delay corresponds to the suspension of preparations.[383a]

The expected breach of contract must concern a substantial part of the obligor's duties. As in the context of Article 25, the right to suspend depends on how important the obligation is to the party relying on them; the other party's performance of "relatively minor" (cf. 320(2) German Civil Code) obligations may not be forced by suspending one's own performance. Even though, in practice, the difference between an (expected) violation of a "substantial part of [the] obligations" (Article 71(1)) and a "fundamental breach" (see Articles 72(1) and 73(2)) will hardly be distinguishable, it must be assumed that such a differentiation is, in principle, possible: For one, the Egyptian motion [384] to make the expectation of a "fundamental breach" the prerequisite for suspending performance under Article [page 93] 71(1) was rejected. Above all the difference in remedies under Articles 71(1) and 72(2) may justify including less important breaches under Article 71(1).[385] However, as with Article 25, the importance of the jeopardized obligation to the obligee's contract expectations must be recognizable to the obligor at the conclusion of the contract: Since Article 71(1) releases the obligee from meeting deadlines, it can be the de facto equivalent of an avoidance.

Common sense suggests that "becomes apparent" means that the obligor's situation could not remain hidden to an objective participant in the branch of international trade in question. In my opinion, knowledge that family members, home banks, or internal contracting partners of the obligor had or could have had before the conclusion of the contract may not be considered. At the same time, the apparent inability to perform must not only induce subjective fears with regard to the performance of the contract but must also enable objective observers to foresee non-performance. The standard for this prognosis is again the judgement of a reasonable person. Yet it must be remembered that the cases in which it can be stated with absolute certainty that a particular "deficit" will lead to an inability to perform are very infrequent.[386] The example discussed in Vienna of a totally insolvent obligor who against all odds, obtains credit or liquid assets, will, in my opinion, not impair the practicability of the solution.

In the event the seller dispatches the goods before the buyer's inability to perform becomes evident, the seller may stop the goods in transit, even if the buyer is already the owner of the goods or the holder of documents enabling him to obtain them from carriers or warehouses (Article 71(2) sentence 1). Of course, this right operates only as against the buyer. Whether the carrier or warehouse keeper must follow the seller's order depends on the freight or warehouse contract, hence, on domestic law. As regards third parties, such as the buyer's creditors who have seized the goods, the seller may exercise his right only if domestic rules on secured transactions permit it (Article 71(2) sentence 2).

The party that has suspended performance must immediately notify the other party (the notice is effective upon dispatch (Article 71(3)). If the other party gives adequate assurance of performance, then the right to suspend performance ends (Article 71(3)). Adequate assurance includes not only a guarantee of performance (such as a commitment by a third party) but also security for damage claims in case of non-performance.[387] If the party suspending performance neglects to send notice, the other party may have the right to claim damages or avoid the contract if he can show that, had he been promptly notified, he would have produced adequate assurance. The suspension is no longer justified, from the moment the [page 94] assurance would have barred the right to suspend performance, and, from that moment, constitutes a breach of contract.

Anticipatory breach as a basis for avoiding a contract before performance is due, was, in principle, retained (Article 72(1) = Article 63 of the 1978 Draft Convention), but was restricted in accordance with the tendency to limit avoidance as a remedy of last resort. The restriction took into account the desire expressed by the developing countries to permit the party whose breach is presumed to provide assurances and thereby to prevent the avoidance (Article 72(2)).[388] The other prerequisites, under Article 72(2) for avoiding the contract on the basis of anticipatory breach are not terribly important since they have been weakened by exceptions. Notice of the intent to avoid is unnecessary in those situations - practically speaking, the most important - in which the other party has already declared that he will not perform the contract (Article 72(3)). Since this exception also covers the frequent cases in which a demand for new terms or alleged contract violations by the other side are used as a pretext for not performing one's own obligations, immediate avoidance still remains an option in most cases. However, Article 72(2) should apply primarily to situations where performance by a willing party is jeopardized by objective circumstances.[389] In those cases where there is no time to notify, where the delivery date is so near that assurances could not be procured in time, there is again no need to notify the other party. The notice requirement must also be "reasonable" in other respects as well.

Where there is little chance that the other party can still provide security - for example, where a delivery cannot be made because of war - notice will often be unnecessary.

As with Article 71, great difficulty arose in connection with the question of when a particular act or occurrence justifies the conclusion that a fundamental breach is to be expected. The debate over whether the formulation "it is clear" ("il est manifeste") means or should mean a higher degree of certainty than the formulation in Article 71(1) "it becomes apparent" ("il apparait") played a major role in the discussion. The discussion also suffered from the difficulties of translation.[390] To some extent, differences in the standards of certainty were accepted and justified on the grounds that the remedy in Article 71(1) differs in seriousness from the remedy in Article 72(1). Under Article 71(1), the suspension applies only to obligations still to be performed and leaves the contract intact,[page 95] whereas, under Article 72(1), an avoidance of the contract is possible.[391] In my opinion, the different formulations do not require different degrees of certainty - such a requirement would hardly be practicable anyway.[391a] In Article 73(2), the same wording originally used in Article 71(1) - "good grounds to conclude" - was retained for the case where a fundamental breach is anticipated with regard to instalment contracts. The decisive factor in all three provisions - Articles 71(1), 72(1) and 73(2) - is whether a reasonable person would be convinced that a breach of contract is certain to occur. Moreover, another reason for not requiring a higher degree of certainty under Article 72(1) is that otherwise, a serious refusal to perform would never be "certain" enough under Article 72(3) since an obligor can always change his intentions until the time for performance. On the other hand, the refusal of the obligor to provide "adequate assurance" following a notice under Article 71(3) should not in itself be regarded as "clear" evidence of an impending breach of contract.[391b]

Where there is a breach of a single delivery of an instalment contract, the contract may be avoided only with respect to the instalment that is defective or was not performed and to the obligation of the other party corresponding to that performance. Article 73(1) requires that the breach constitutes a fundamental breach of contract with regard to the instalment in question. A breach of one instalment may also indicate the probability of a breach of instalment obligations not yet due. In that case, the contract may be avoided with regard to the future instalments as well. According to Article 73(2), avoidance in regard to future obligations must be declared within a reasonable time so that the other party has sufficient time to consider the matter. If, due to the interdependence of the instalments, the defective or failed performance makes past or future instalments worthless, those instalments can be avoided as well. However, this is true only if the purpose of the entire contract was clear to both parties at the conclusion of the contract (Article 73(3)). The buyer's interest in receiving complete performance must, therefore, have been recognizable to the seller.[392]

This provision is concerned with successive deliveries, not instalment payments. By analogy, however, Article 73(2) can also apply to missed payments if they coincide with instalment deliveries. Otherwise, the entire contract may be avoided under Article 72. Article 73(2) is also applicable to other breaches by the buyer, such as not taking delivery of an instalment.

F. Damages (Articles 74-77)

The Convention's provisions on the kind and extent of damages correspond in general to Section IV of ULIS; the principles established in the 1978 Draft Convention were no longer disputed in Vienna. The fundamental rule in Article 74 makes three basic decisions. First, damages are always monetary compensation (Article 74 sentence 1). Second, the loss to the party affected must have been caused by the other party's breach, whether this was a result of a late or non-conforming performance or of no performance at all, or because the goods are directly or partly unusable because they are burdened with third-party claims (Article 74 sentence 1).[393] Finally, the only damages that must be compensated are those which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract. The historical roots and development of and the basic idea behind this rule on the limitation of damages have been the subject of many commentaries.[394] The underlying idea is that the parties, at the conclusion of the contract, should be able to calculate the risks and potential liability they assume by their agreement.[395] Judicial discretion in the assessment of damages can be reduced by standardizing the damages in question, but exceptions must remain for individual cases where a typically unforeseeable risk of damage has been assumed by the party in breach. The assessment of the possible types of damages - which makes it possible to describe concretely the risk each party can be said to have assumed [396] - will be especially difficult with respect to consequential damages caused by defective goods to the person or property of the buyer. In most domestic legal systems, such violations belong to the domain of non-contractual liability, including products liability for injuries caused by defective goods. Article 5 entirely removes personal injuries from the sphere of application of the Convention. But a broader formulation - which would have excluded product liability even for property damage - could not be agreed upon in Vienna.[397] Therefore, in the event such damages were foreseeable to the seller, they can be awarded under CISG. In assessing this forseeability, the usual or intended use by the buyer should be the decisive factor. Even in cases where there is contractual liability under the Convention, domestic provisions for liability in tort should not be displaced.[398] [page 97]

When the contract is avoided, damages generally amount to the difference between the contract price and the costs of a cover transaction, together with any further damages (Article 75);[398a] the cover transaction must, of course, be undertaken within a reasonable time after avoidance.[399] This coincides with the duty to mitigate damages in Article 77.

Where the goods have a market price, the injured party can also measure his damages "abstractly", i.e., independently from any cover transaction, Article 76. This method of measuring damages - the so-called market-price rule - presupposes that a cover transaction has not been undertaken with regard to the contract breached.[400] To meet the requirement, it is enough that the injured party is constantly dealing in "market transactions" and that it is therefore difficult or impossible to determine which particular transaction should be considered the cover for the breached contract.[401]

As the reference point for the measure of damages, the 1978 Draft Convention (Article 72(1)) looked to the time when the injured party first could have declared avoidance. This was designed to prevent the injured party from speculating at the other's expense. The rule was found to be objectionable in Vienna, however, because it was too uncertain and gave too much discretion to the courts,[402] especially in cases of anticipatory breach. These objections finally [403] led to choosing the "declaration of avoidance" [404] or the "taking over" of the goods as the reference point for calculating damages, the earlier of the two being decisive. Where the "declaration of avoidance" controls, there will be little change in the result: If a party delays in declaring avoidance and the difference between the market and the contract price increases, he may be held to have violated his duty to mitigate damages. The difficulty of determining the "proper" time to declare an avoidance remains therefore. It is more difficult to justify the second reference point - the "taking over" of the goods (Article 76(1) sentence 2). In the event of a delayed or non-conforming performance, the buyer who can neither undertake nor prove a definite cover transaction under Article 75 uses the reasonable time period permitted by Article 49(2) at his own risk. In the case of Article 49(2)(b)(i), the reference point actually precedes the moment when the buyer could avoid the contract because the buyer, at that time, still did not know of the breach. The solution is thus difficult to understand.[page 98]

Article 77 sentence 1 requires a party wishing to assert claims based on breach of contract to take reasonable measures to mitigate damages. A violation of this duty leads to a corresponding reduction in damages under Article 77 sentence 2. Article 77 corresponds to domestic provisions such as § 254(2) sentence 1 of the German Civil Code.[405]

The United States delegation proposed to supplement the duty to mitigate damages by permitting other remedies available to the injured party to be adapted or modified in the event losses were not mitigated.[406] The suggestion concerned cases where the seller produces the machine ordered despite an - unjustified - cancellation of the order and then demands full payment from the buyer.[407] However, the weakness in the interesting proposal was that the courts would have been given exceptional discretionary powers to modify specific performance or avoidance of the contract.[407a] It did not receive a majority.[408]

G. Interest (Article 78)

The interest question provoked extraordinary difficulties at the Conference. The 1978 Draft Convention's sole provision concerning the payment of interest related to the seller's duty to refund the price after avoidance of the sales contract in Article 69.[409] The proposals at the Conference [410] reflected differing beliefs and divergent theoretical approaches to the duty to pay interest as well as to the conflicting practical needs. Interest payments were opposed in part for religious reasons.[411] Others believed that a special provision on interest was unnecessary because the lost use of the capital could be recovered as damages.[412] The goal of the delegations that believed that a special interest provision was necessary was [page 99] precisely to prevent interest from being considered as damages and thereby to maintain the obligation to pay interest in case of exemptions under Article 79. Likewise, all attempts to find the "proper" rate of interest proved fruitless. Opposition to the use of the official discount rate in the creditor's country, as adopted in ULIS Article 83, was based partly on the fact that it is not an internationally valid indicator of the capital costs in individual countries. Above all, no agreement could be reached on whether the cost of credit should be based on the interest rate prevailing in the debtor's or in the creditor's country. In connection with Article 84(1), the debtor's ability to use capital owed to the creditor was perceived as an unjust enrichment, so that the rate of interest in the debtor's country should be determinative. In reality, some of the socialist countries, with regard to interest owed to them on outstanding debts, were principally interested in basing the interest rate not on their low internal interest rates but rather on interest rates in the countries of their debtors, since, when asking for credit in these countries, they have to pay the there prevailing interest rates.[413]

The present version of Article 78 is the result of a compromise reached at the Plenary session and based upon a proposal submitted by a working group. It conceives the obligation to pay interest as a general rule, so that a debtor still remains liable for interest payments even if his default is due to an impediment beyond his control and he is, therefore, not liable for damages under Article 79. On the other hand, the details of the obligation to pay interest - in particular, the amount - are governed by the applicable domestic law chosen by conflicts rules.[414] Damage claims under CISG remain unaffected even if they exceed the relevant interest rate.[415]

The Convention's interest provision will probably have practical impact only in the exceptional cases where the debtor can claim an exemption under Article 79 for his default, such as when some impediment - for example, unforeseeable currency restrictions in the country of the debtor - temporarily relieves the debtor of his duty to pay under Article 79(1) and (3). Otherwise, it will generally be easier and more promising for the creditor - at least in countries with a free capital market - to claim the lost use of capital as damages in the amount of his own costs of credit according to Article 74 rather than to expose himself to uncertainties as to the applicable law and its interest provision.

Article 84(1) contains a provision corresponding to Article 78 for the case of the seller's obligation to refund the purchase price after avoidance of the contract. Although it is not explicitly stated, the creditor should also - on the basis of Article 7 in conjunction with Article 78 - be able to claim damages for a violation of the duty to refund the price and measure his damages from the time the refund was due and in the amount of his own credit costs.[416] [page 100]

H. Exemptions (Article 79)

Despite non-performance, late performance or lack of conformity, a party is not liable in damages when he is not responsible for his failure to perform.[416a] The Convention's provision corresponds to ULIS Article 74(l),[416b] but specifies more clearly the risks which an obligor assumes. It was decided early on not to let exemptions turn on the question of fault.[417] Instead, according to Article 79(1), an exemption is permitted only when the impediment to performance is beyond the obligor's control. The obligor is always responsible for impediments when he could have prevented them but, despite his control over preparation, organization, and execution, failed to do so.[417a] In this sense, the obligor "guarantees" his ability to perform. If he wishes to restrict his liability, he must specify the particular impediments for which he will not be liable. Furthermore, the obligor is liable even for impediments beyond his control, as long as they were either reasonably foreseeable or known to him at the conclusion of the contract. Where the impediments are foreseeable, he must generally accept responsibility if he has not disclaimed liability.[418] In the case of unforeseeable impediments whose origins are not within his control - which, therefore, means that they should be considered to be unavoidable - he must take reasonable measures to avoid or overcome the impediment or its consequences in order to claim an exemption.

The terms of the contract will often describe the extent to which the obligor is expected to prevent impediments to performance which lie outside his own area of control. Guarantees can increase the scope of his liability; disclaimers and limitation can diminish it. In the absence of express terms, the parties' promises to perform are to be interpreted on the basis of Article 8: The standard, as in Article 74(1) of ULIS, is based on the expectations and intentions of reasonable parties.[419] For example, whether a party supplying goods has assumed the risk of fluctuating markets or risk of war must, in the end, be decided with reference to the actual case and the particular contract.[420] Though the circumstances permitting exemption cannot generally be equated simply with "force majeure", efforts were made to define them narrowly.[420a] On the other hand, it is irrelevant whether the impediment existed before the conclusion of the contract - the "pre-existing impossibility" or "pre-existing inability" of German law - or whether it did not arise until later.[421][page 101]

One of the controversial points in the preliminary UNCITRAL discussions was whether economic difficulties - "unaffordability" - constitute a ground for exemption.[422] In the end, the general view was probably that both physical and economic impossibility could exempt an obligor. It cannot be concluded, therefore, on the basis of the change in terminology from "circumstances" in ULIS Article 74(1) to "impediments" that an impediment in the sense of Article 79(1) of the Convention is only an occurrence that absolutely bars performance, but - under very narrow conditions - impediment also includes "unaffordability".[422a] As a rule, however, since the obligor generally guarantees his financial capability to procure and produce the promised goods, increased procurement and production costs do not constitute exempting impediments.[423]

In Vienna, the rule on exemption produced primarily two controversial issues: The first involved the scope of the rule; the second the scope of liability for acts of employees, subcontractors and other "third persons." Regarding the first, the Federal Republic of Germany proposed the clarification that despite Article 79(5) (restriction of the effects of exemption on damage claims) the existence of grounds for exemption should extinguish the obligor's obligation to perform.[424] Comparable Norwegian proposals,[425] corresponding to ULIS Article 74(2), provided for the release of the obligor's duty to perform in the event of temporary but lengthy impediments if the circumstances had fundamentally changed in the meantime. There were several reasons for the rejection of these proposals, the foremost being the fear that a release from the obligation to perform could also extinguish collateral rights and secondary claims such as interest.[426] There was [page 102] special apprehension that the Norwegian proposal to Article 79(3) intended to introduce the "theorie de l'imprevision" into the Convention).[427] Finally, there was the fact that, in cases where obligations are physically impossible to fulfill, domestic legal doctrine -- "impossibilium nulla est obligatio" would generally prevent a demand for performance anyway.[428] The rejection of the German and Norwegian proposals [429] can be interpreted to mean that an impossible obligation remains intact and is actionable, as long as the obligee does not declare an avoidance on the basis of a fundamental breach.[429a] Especially in the case of incurable defects for which the seller may not be responsible [430] under Article 79(1), there is a danger the domestic courts will set fines or penalties based on their rules of procedure for failure to follow an order for specific performance. In the end, such fines or penalties could be the equivalent of granting damages and could even surpass them in amount. In my opinion, a German court could, however, on the basis of Article 28, dismiss a complaint asking for specific performance in such a case. Moreover, recognition of a foreign judgment that ordered specific performance of an impossible act would conflict with German public policy (328(1) No. 4 Code of Civil Procedure; Article 27 No. 1 of the European Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters). Above all, it may be hoped that the general belief expressed in Vienna that a judgment for a physically impossible performance would be neither sought nor obtained should lead to a reasonable limitation or Article 79(5).

Article 79(2)'s rule on responsibility for "third persons" was even more controversial.[431] Practically speaking, the discussion revolved around the liability for secondary suppliers and subcontractors.[431a] The developing countries, and, even more, the Scandinavian states wanted the seller in such cases to guarantee performance unconditionally. The delegation from the Federal Republic of Germany did not support such an unconditional guarantee because it believed that exceptions were needed for cases in which the seller did not choose the secondary supplier and could not exert influence on him, such as when the supplier had a monopoly or had been chosen by the buyer. In other cases, the seller's responsibility for his suppliers in Article 79(1) appeared sufficient and appropriate. In the end, the possibility for exemption [432] remained the same as provided in Article [page 103] 65(2) of the 1978 Draft Convention, but is presented in a more detailed manner in Article 79(2).[433]

In the application of Article 79, three situations must be distinguished. First, the obligor is always responsible for his own personnel, as long as he organizes and controls their work. Deficiencies and poor performance caused by individual workers, therefore, do not exempt the seller from liability. On the other hand, whether a strike is "beyond his control" or must be regarded as the employer's responsibility depends on the circumstances and the extent of the strike as well as the labor laws of the particular country.

Second, where third persons are involved, the seller's liability depends on whether he engaged these persons in fulfillment of his contractual obligations to the other party. If he did so -- a situation which corresponds to § 278 sentence 1 of the German Civil Code -- the obligor can only be exempted where the failure was, for the obligor himself, unforeseeable and beyond his control (Article 79(2)(a) in conjunction with paragraph (1)) and the third party personally meets the requirements for exemption from Article 79(1) (Article 79(2)(b)). Article 79(2) therefore increases the obligor's liability for third persons who fulfill contractual obligations directly to the obligee, for example, subcontractors who are engaged by the seller to perform directly to the buyer. Finally, Article 79(1) remains the controlling provision in cases where the third party's performance is a mere precondition for the fulfillment of the obligor's obligations, i.e., where a third party does not directly fulfill the obligor's duty to the obligee. In particular, the seller is therefore not liable for secondary suppliers when they are beyond his control and their failure could neither be contemplated nor cured. This exemption will apply only in those very few cases when the seller could neither choose nor control his auxiliary suppliers and it was not possible to procure, produce or repair the goods in any other manner.[433a] Nevertheless, explicit limitations on such liability should probably be written into the contract.

A temporary impediment constitutes grounds for exemption only for the length of its duration (Article 79(3)). The importance of this provision is reduced by the fact that the obligor's duty to perform remains unchanged in the event of exempting impediments. Practically speaking, Article 79(3) will mainly concern [page 104] damages caused by delay,[434] but, of course, other grounds for exemption can arise during the existence of the original impediment, which will then finally discharge the obligor under Article 79(1). Whether the exemption should require a change in circumstances so that - as stated in ULIS Article 74(2) - "performance would be so radically changed as to amount to the performance of an obligation quite different from that contemplated by the contract", was discussed in Vienna on the basis of a Norwegian proposal [435] and finally rejected. One can assume, though, that "unaffordability", that, under Article 79(1), constitutes a ground for exemption, also discharges the obligor from his liability for damages, even where it first appears at a moment when performance is postponed due to another temporary impediment.[436]

The party who is unable to fulfill his obligations must, according to Article 79(4), give notice of the impediment and its effects on his ability to perform. The notice is effective upon receipt (Article 79(4) sentence 2).[437] If a party fails to notify, he must compensate for damages caused by the lack of notice, even if he would otherwise be exempt.

Whether an exemption from liability under Article 79 also constitutes an exemption from contractual penalties and liquidated damages provisions depends on the contractual prerequisites for such secondary claims and the applicable domestic law. The German Democratic Republic's proposal [438] to exempt from contractual penalties and liquidated damages parties whose liability for damages is exempted under Article 79 was therefore rejected.[439]

I. Failure of Performance Caused by the Other Party (Article 80)

Article 80 releases a party from his obligations where the other party has impaired his performance. This provision is based on a proposal by the German Democratic Republic [440] which, in its aim, resembles ULIS Article 74(3). In such cases, an obligor will generally be excused from liability on the basis of Article 79(1). But Article 80 reaches much further.[441] Since Article 80 exempts all claims against the obligor, it gained importance when a proposal was rejected which would have extinguished the right to demand specific performance in a case where Article 79 exempts a party for liability for damages. If the buyer frustrated performance, such as by not providing drawings required for production or by not procuring an import permit, he can neither demand specific performance nor declare an avoidance. He also may not reduce the price for defects caused by [page 105] mistakes in the drawings he provided. Of course, the obligor is excused only to the extent of the hindrance caused by the obligee. The obligee need not be responsible -- in the sense of Article 79 -- for the impairment he caused.[442]

J. Effects of Avoidance (Articles 81-84)

Loss or damage to the goods does not in all cases eliminate the right to avoid the contract or to demand substitute goods. First, according to Article 82(1), insubstantial damage is irrelevant. Second, a buyer may avoid the contract or demand substitute goods if the damage is not due to the buyer's act or omission. Therefore, where defects have caused the damage or loss, the buyer's right to demand substitute goods or to avoid the contract is not affected. Additionally, the fact that a defect causes further deterioration of an item, thus leading to its (further) impairment or complete destruction is not attributable to the buyer's behavior as long as he could not have recognized and prevented it.[443] In any case, under Article 82(2)(a), the buyer is presumably responsible for the acts or omissions of his personnel.[444] On the other hand, in my opinion, the acts of third persons can only be attributed to the buyer if his act or -- especially -- his omission has made it possible for the third persons to affect the goods. These questions do not turn on whether the buyer was at fault. On the other hand, more than mere physical causation is probably required before the buyer's remedies are lost. Otherwise, destruction caused by an accident or force majeure could be attributed to the buyer -- e.g., his taking possession unless the goods would have been destroyed while under the seller's control as well. The words "due to", however, permit the restrictive interpretation that the buyer must not merely have provided the opportunity for third persons or force majeure to affect the goods but also have increased this chance by his act or omission.[445]

A further exception involves deterioration or consumption of the goods resulting from the mandatory examination of the goods by the buyer as required in [page 106] Article 38 (Article 82(2)(b)). Finally the buyer retains his right to avoid or demand substitute goods if he sold the goods in the normal course of business or has consumed or transformed the goods in the course of normal use before he discovered, or ought to have discovered, the lack of conformity (Article 82 (2)(c)).[446]

Restitution is to be made concurrently (Article 81(2) sentence 2). However the rule of concurrent performance does not apply to restitution by the buyer who only demands substitute goods (instead of declaring an avoidance). The Conference rejected a Norwegian proposal which, contrary to trade practices, would have permitted the buyer to keep defective goods until the seller delivers substitute goods.[447] The question of whether the buyer's restitution obligations to the seller can prevail over claims of his other creditors are matters to be decided by domestic law.[448] Domestic law also governs the details of the transfer in restitution. Its special restrictions are not displaced by Article 81(2).

Article 84 obligates the parties to return all benefits of possession (profits and advantages of use). If the seller is obligated to refund the price, he must also pay interest -- in an amount to be determined by domestic law -- from the date on which the price was paid.[449]

In contrast to the seller who is bound to pay interest on the refundable price, the buyer is only obligated to return benefits that he actually derived from using the goods. In addition, Article 84(2) restricts the duty to return benefits in subparagraphs (a) and (b) to those cases in which the buyer either must return part or all of the goods or the buyer derived benefits before the goods were destroyed, and (complete) restitution therefore has become impossible.[page 107]

Like ULIS, the Convention does not completely regulate the effects of an avoidance or justified demand for substitute goods. One matter left open is the buyer's responsibility when the goods to be returned are destroyed after the effective date of a declaration of avoidance or demand for substitute goods.[450] There is also no provision concerning where restitution must be made.[451] Similarly, the Convention does not answer the question of whether the buyer who is bound to make restitution is liable for benefits he could have derived from the goods but did not. In my opinion, the gap-filling rules of Article 7(2) should be preferred to a hasty retreat to domestic law. Articles 82 and 84(2)(b) make it clear that the impossibility or inability to make restitution are matters governed by the Uniform Law for International Sales. If the item to be returned is substantially damaged or destroyed, the seller's remedies should correspond to those available to the buyer when the duty to deliver is not fulfilled.[452] Damage claims and the right to a reduction in price are of especial practical interest. If a refund is delayed, a damage claim for lost use of capital should be available in addition to or instead of interest payable under Article 84(1).[453] The place of performance for transactions following avoidance of the contract should be determined according to the provisions governing the performance of contract obligations.[454] On the other hand, the Convention contains no provisions that could serve as a basis for the duty to derive benefits from possession of the goods and that would support claims for the failure to do so. Article 84(2) shows that the Convention does address this subject. Thus, since there is no gap, recourse may not be made to domestic law. In my opinion, claims based on failure to derive benefits should therefore be denied.

K. The Obligation to Preserve the Goods and the Right to a Self-Help Sale (Articles 85-88)

If the buyer delays in taking delivery or, in cases where the seller is obligated to hand over the goods only in exchange for payment, in making payment, the seller in possession must take appropriate measures -- such steps as are possible and reasonable -- to protect the goods against loss or damage (Article 85 sentence 1).[page 108][455] The seller's duty to preserve the goods applies especially to those cases in which, even though the seller still has control over the disposition of the goods, the risk of loss has already passed to the buyer (cf. Article 69(1)). The seller has the right to retain the goods until he has been reimbursed for his expenses (Article 85 sentence 2).

A comparable situation can arise when the buyer has received the goods but intends to return them.[456] Even though the buyer will generally protect the goods because he otherwise loses the right to avoid the contract or to demand substitute goods if he causes the goods to be lost or damaged (cf. Article 82(1)), Article 86(1) sentence 1 also requires him to protect the goods from insubstantial deterioration. The buyer, too, is entitled to retain the goods until he is reimbursed for the expenses incurred (Article 86(1) sentence 2). Furthermore, if the particular prerequisites of Article 86(2) sentence 1 are met, if the goods have been sent to the buyer or to another location and placed there at the buyer's disposal, and if neither the seller nor someone authorized on his behalf is present at the destination, the buyer must, even when he has not taken possession of the goods, take them into custody and preserve them (Article 86(2) sentence 2).[457] Article 87 permits the goods to be stored at the cost of the other party.

Article 88(1) gives the party who is bound to preserve the goods the option of selling them. If the goods spoil easily or if the preservation cost would be unreasonably high, the party has not only an option of selling the goods but also a duty to take reasonable measures to do so. The danger of deterioration, in the meaning of this provision, applies only to physical deterioration and not to the threat of a drop in the market price.[458]

In contrast to § 373(2) of the German Commercial Code, the party who is entitled to sell the goods is basically free to sell the goods in any way he chooses. The qualification "by any appropriate means" allows, however, for differences in the execution of self-help sales in various countries on the basis of domestic rules or customs, so that, indirectly, domestic law may exert an influence. The party who is entitled or bound to sell the goods must, however, notify the other party of his intentions. After lengthy debates in Vienna, the word "reasonable" was inserted in paragraph (1) to qualify the notice, with the goal of making it clear that [page 109] the notice should afford the other side the time and opportunity to avoid the self-help sale.[459] Presumably, however, a notice giving a date for the self-help sale can be sent before expiration of the "unreasonable delay" which is a basic prerequisite for such a sale ("an unreasonable delay . . . in taking possession of the goods or in taking them back or in paying the price or the cost of preservation").[460] On the other hand, when a party has a duty to sell perishable goods, as described in paragraph (2), he need only inform the other party to the extent notice is possible (Article 88(2) sentence 2).

The party entitled or obligated to sell the goods can retain the reasonable cost of preserving and selling the goods from the proceeds of the sale (Article 88(3)). If he stores and sells the goods himself, then, by analogy, he must be allowed to charge an appropriate compensation for these services.[461] [page 110]

VII. Final Provisions (Articles 89-101)

A. In General

Part IV contains the public international law framework of the Convention in Articles 89-101. The Convention was open for signature until September 30, 1981 at the Headquarters of the United Nations in New York (Article 91(1)). The commitment which results from signing the Convention is, of course, subject to ratification, acceptance or approval by the national legal authorities empowered to do so.[462] The instruments of ratification, acceptance, or approval are to be deposited with the Secretary-General of the United Nations (Article 91(4)), who is designated as the depositary for the Convention (Article 89).

At least ten instruments of ratification, acceptance, approval, or accession must be deposited in order for the Convention to enter into force, Article 99(1). The Convention enters into force on the first day of the month following the expiration of twelve months after the date of the deposit of the tenth instrument.[463] Article 100 provides the necessary transition rule for contracts which are formed during the period when the Convention comes into force in the individual Contracting State. A right to denounce, which is usual for this kind of convention, is contained in Article 101.

For parties to the Hague Conventions of 1964, who must denounce the Hague Conventions either before or simultaneously with their acceptance of the Uniform Law for International Sales (Article 99(3)-(5)), Article 99(6) provides that their ratification, acceptance, approval or accession does not become effective until their denunciation of the Hague Conventions. Finally, Article 90 establishes the priority of international agreements which have already been or may be entered into and which cover matters regulated by the Convention.

B. Reservations

Article 98 states the basic principle that reservations are not permitted when signing, ratifying, accepting, approving, or acceding to the Convention, except when the Final Provisions explicitly provide for them. A reservation, as well as any other change or restriction of the text of the Convention, would violate the state's [page 111] public international law obligation under Article 98 to which a state commits itself by signing the Convention.

Again at the Vienna Conference, several common law countries proposed to include a reservation clause, comparable to Article V of the Hague Conventions relating to a Uniform Law on the International Sale of Goods, which would make the Convention applicable in a reservation state only at the parties' option (the so-called "opting-in" solution).[464] Regarding the experience of the Hague Conventions in the United Kingdom, a reservation state, where ULIS apparently was never applied in actual practice, it is fortunate that these proposals were not successful.[465]

Under Article 92, the Convention may be adopted either without Part II or without Part III. This provision takes into account the request of the Scandinavian countries that do not wish to adopt the provisions in Part II on formation of contract.

Article 93 (the so-called "Federal-State Clause") takes into consideration the peculiarities of federal states in which the individual member states have legislative power over the matters covered by the Convention.[466] The provision is designed to enable federal legislatures to request the legislative bodies of the individual member states (or other territorial entities that have authority to regulate matters governed by the Convention) to agree to the terms of the Convention, and to limit the effect of the signing, ratification, acceptance, approval or accession to those member states or territorial entities that are willing to accept the Uniform Law for International Sales.

Article 94 makes it possible to exclude the applicability of the Convention to contracts between parties from states which have the same or closely related sales laws. This reservation, which corresponds in its function to Article II of the "Convention Relating to a Uniform Law on the International Sale of Goods" of 1964, gives regional uniform laws precedence over the Convention, an important factor for the Benelux countries and apparently for Australia and New Zealand as well.[467] Article 94(2) and (3) addresses the same problem where the legal system of a Contracting State is the same or closely related to that of a non-Contracting State.

Article 95 provide the option, discussed above in Chapter III A, of a reservation with regard to the application of Article 1(1)(b).

The reservation permitted by Article 96 making inapplicable the Convention's provisions on the freedom of contractual form to contracts concluded by a party whose place of business is in the reservation state is, as noted above, the result of a compromise with the states for which the continued validity of their [page 112] domestic statute of frauds was an absolute precondition to their adoption of the Convention.[468]

Reservations are to be made at the time of signature, ratification, acceptance, approval or accession. However, in order to take into account later developments, the reservations available in Articles 94 and 96 can be made at any time, even after adoption of the Convention.[469] The form of the reservation and the time when it becomes effective are governed by Article 97(2) and (3). A reservation may be withdrawn at any time (Article 94(4) and (5)).[page 113]

VIII. Limitation Period

As discussed above, the 1974 Convention on the Limitation Period was re-drafted by the Second Committee in Vienna and adapted to the Uniform Law for International Sales.[470] The Protocol containing the adaptation was added to the Convention as Annex II. The Convention's sphere of application had to be altered in order to make the prerequisites for applying the 1980 Convention and the Convention on the Limitation Period congruent (see Articles I and II of the Protocol and Articles 3 and 4 of the Convention on the Limitation Period). The Final Provisions of the Convention on the Limitation Period were also altered to fit the corresponding provisions in the Uniform Law for International Sales (see Articles III-VI of the Protocol).

The details of the Convention on the Limitation Period are not within the scope of this book. The heart of the regulation is the uniform limitation period of four years (Article 8). The limitation period also applies to claims based on lack of conformity.[471] In light of this rather generous limitation period, the exclusion of warranty claims based on a failure to give timely notice under Article 39 becomes much more important.[page 114]

Final Remarks

The fact that the provisions of the Convention were formulated not only by representatives from the industrialized countries but also by delegations from third-world countries should pave the way for the Convention. Indeed, it even suggests that parties should agree on its application to international sales contracts.[472] However, the time has probably not yet come to advise exporters and importers to adapt their standard contract terms to the CISG.[page 116]

FOOTNOTES

* The author of this book participated at the Conference as a member of the delegation from the Federal Republic of Germany. The views expressed here are personal to the author and do not necessarily represent the position of the F.R.G. or its delegation.

1. With respect to this first initiative, see Dölle introduction at XXXI. (Complete bibliographic information for works frequently cited appears in the Bibliographic Notes.)

2. Rabel's work was often praised. For example, Prof. Farnsworth, the U.S. delegate, spoke of Berlin as the "cradle of the unification of the law of sales".

3. See Dölle introduction at XXXI et seq.; see also the information in 3 RabelsZ 405 et seq. (1929); the information in 5 RabelsZ 207 (1931); the reports by Rabel in 9 RabelsZ 1 et seq. (1935), 17 RabelsZ 212 et seq., 339 et seq.(1952); Riese, Der Entwurf at 16 et seq.; Riese, Die Haager Konferenz at 1 et seq.; von Caemmerer, Haager Konferenz at 101 et seq.; Winship, Scope; Farnsworth, History.

4. For the history and reasons behind the division into two conventions, see von Caemmerer, Haager Konferenz at 101 et seq. (1965).

5. 1974 BGBI. Teil II 146, 148.

5a. See Reinhart 1 et seq. (for German judicial opinions). The telex from the German Federation of Industries (Bundesverband der Deutschen Industrie), which was attached to the written statement of Mr. Frank A. Orban and submitted to the Committee on Foreign Relations of the U.S. Senate, see Hearing at 44, ignores the existence of about 180 European decisions concerning ULIS. They show the increasing practical importance of this uniform sales law.

6. The Conventions have been ratified by Belgium, the F.R.G., Israel, Italy, Luxembourg, the Netherlands, San Marino, the U.K. and Gambia. The last two nations adopted the reservation which makes the law applicable only if chosen by the parties. See Convention Relating to a ULIS, Article V.

7. cf. Von Caemmerer, Probleme at 122; Herber, UN-Übereinkommen at 601.

8. See von Caemmerer at id. (on the non-participation of the U.S.). For U.S. criticism of the Hague Conventions, see 1 UNCITRAL Y.B. 162 et seq. (1968-1970). Maskow (G.D.R.) criticizes ULIS and ULF on the merits for being "more of a common denominator of different national legal systems than a regulation which first and foremost takes into account the requirements of contracts for the international sale of goods". Maskow at 45. I would agree with Réczei, on the other hand, that ULIS is the product of creative work rather than of compromise. See Réczei, Acta Juridica at 159.

9. See Date-Bah, at 43-44.

10. United Nations Commission on International Trade Law, a permanent commission instituted by the UN General Assembly on a motion by Hungary. See G.A. Res. 2205 (XXI) (Dec. 17, 1966), in 1 UNICITRAL Y.B. 65 et seq. (1968-1970).

11. cf. Honnold, Commentary at 49 et seq.; Winship, Scope at 1-13; see also Herber, Die Arbeiten des Ausschusses der Vereinten Nationen für Internationales Handelsrecht (UNCITRAL); 1974 AWD/RIW 577 et seq., 579; Herber, 1976 RIW/AWD 125-26; 1977 RIW/AWD 314 et seq., 317. For details of the Working Group and the proceedings of UNCITRAL and the appointed working group, see 1 UNCITRAL Y.B. 78 et seq. (1968-1970); Secretariat's Commentary at 7 et seq.

12. cf. Herber, 1974 AWD/RIW 578-79.

13. 7 UNCITRAL Y.B. 89 et seq. (1976); see also Herber, supra note 11, at 317 et seq. (commenting on the Draft Convention on Sales).

14. 8 UNCITRAL Y.B. 15 et seq. (1977).

15. Printed in 43 RabelsZ 528 et seq. (1979) and discussed in depth in Huber at 413 et seq. For the merger of the law of sales and the law on the formation of contracts, see Eörsi, Problems at 311 et seq.

16. Argentina, Australia, Austria, Belgium, Bolivia, Brazil, Bulgaria, Burma, Byelo-Russian Soviet Socialist Republic, Canada, Chile, China, Colombia, Costa Rica, Cyprus, Czechoslovakia, Denmark, Ecuador, Egypt, Finland, France, German Democratic Republic, Germany, Federal Republic of, Ghana, Greece, Hungary, India, Iran, Iraq, Ireland, Israel, Italy, Japan, Kenya, Lybian Arab Jamahiriya, Luxembourg, Mexico, Netherlands, Nigeria, Norway, Pakistan, Panama, Peru, Philippines, Poland, Portugal, Republic of Korea, Rumania, Singapore, Spain, Sweden, Switzerland, Thailand, Tunesia, Turkey, Ukranian Soviet Socialist Republic, Union of Soviet Socialist Republics, United Kingdom of Great Britain and Northern Ireland, United States of America, Uruguay, Yugoslavia and Zaire. Venezuela was represented by an observer, as were the following international organizations: The World Bank, Central Office of International Railway Transport, Council of Europe, European Communities, The Hague Conference on Private International Law, International Institute for the Unification of Private Law (UNIDROIT), Bank for International Settlements and the International Chamber of Commerce.

17. Burma, China, Colombia, Iran, Kenya, Panama, Peru, Thailand, Turkey, and Zaire. For the reasons for their abstention, see Herber at 602.

18. Signatures: Austria, Chile, China, Czechoslovakia, Denmark, F.R.G., G.D.R., Finland, Ghana, Italy, Jugoslavia, Lesotho, Netherlands, Norway, Poland, Sweden, Singapore, Hungary, USA, Venezuela; Accesions (until 1985): Argentina, Egypt, Syria.

19. Herber at 602.

20. A/Conf. 97/5 (= O.R. 5 et seq.).

21. A/Conf. 97/8.

22. A/Conf. 97/8/Add.1.

23. A/Conf. 97/8/Add.2.

24. A/Conf. 97/8/Add.3.

25. A/Conf. 97/8/Add.4.

26. A/Conf. 97/8.

27. A/Conf. 97/8/Add.2.

28. A/Conf. 97/8/Add.2.

29. A/Conf. 97/8/Add.5.

30. A/Conf. 97/8/Add.6.

31. A/Conf. 97/9 (= O.R. 71 et seq.).

32. A/Conf. 97/7.

33. A/Conf. 97/6.

34. Huber at 413 et seq. The positions of the other delegations also showed that they were familiar with this work. cf. infra at IV A.

35. Kahn, Etudes Comparées des Conventions de la Haye du 1er Juillet 1964 sur la Vente Internationale des Objets Mobiliers Corporels et la Formation du Contrat de Ventes et Projet du Convention sur les Contrats de Ventes Internationales de Marchandises preparées par la Commission des Nations-Unies pour le Droit Commercial International (Oct. 1979).

36. Hartley, A Study of the Uniform Law of the International Sale of Goods including the Uniform Law on the Formation of Contracts for the International Sale of Goods (The Hague Conventions 1964) and the Draft Convention on Contracts for the International Sale of Goods prepared by the United Nations Commission on International Trade Law (Oct. 1979; 2 vols.).

37. Articles cited without further designation refer to CISG.

38. Huber at 416.

39. For examples of such special regulations, see Articles 49(1)(b) (fixing an additional period of time only for a failure to deliver); Article 50 (reducing the price only for lack of conformity); Article 65 (sale to specifications).

40. See Huber at 417 (reasons for abandoning ipso facto avoidance); but see Hellner, Ipso Factor Avoidance at 85 et seq.

41. cf., e.g., Articles 46(3) sentences 1 and 2, 49(2), 63(1), 65(2), 72(1), 73(2), 75, 77, 79(1), 85 sentence 1, 86(1) sentence 1, 86(2) sentence 1, 87, 88(1), 88(2) and 88(3). It should be noted that the term "reasonable" was often a compromise between the need for "hard and fast rules," on the one hand, and "soft" debtor-friendly regulations on the other.

41a. But see Hellner, Outsider's View at 71 et seq. (a critical view regarding the details).

41b. UNCITRAL'S interest in barter and barter-like transactions indicates that they are regarded as outside the scope of the Convention. See Winship, Scope at 1-24; infra note 49a.

42. The question that was much debated in connection with ULIS, namely whether that and the supplementary provision, ULIS Article 2, "excluding" the application of private international law, really displace it, or whether it simply leads to a "hidden application" of private law rules in regard to the application of the uniform law, seems to be theoretical and fruitless. cf. P. Schlechtriem, Einheitliches Kaufrecht -Wissenschaftliches Modell oder praxisnahe Regelung? 14 et seq. (1978). See also Löwe, Anwendungsgebiet at 13.

43. In such a case the Hague Conventions are only invoked on the basis of domestic conflicts rules. Presumably the Convention would already be applicable on the basis of article 1(1)(a).

44. The Hague Convention on the Law Applicable to International Sale of Movable Goods of 1955 can thus also lead to application of the Convention. See A/Conf. 1979/C.2/SR.2 at 5 §§ 32-33 (= O.R. 440) (position of the observer from the Hague Conference for Private International Law).

45. In cases where both parties do not have their places of business in Contracting States, Article 1(1)(b) leads to the application of CISG not only by the courts of Contracting States but also by courts of non-Contracting States, provided the private international law of the non-Contracting States makes applicable the sales law of a Contracting State which applies Article 1(1)(b). Of course, this revives the specters which were raised in conjunction with the Hague Conventions: If two parties with places of business in different non-Contracting States form a contract in a Contracting State, and if disputes then arise in a third non-Contracting State whose conflicts rules make applicable the law of the state where the contract was formed, the court must apply the Convention, which is alien both to the court and to the parties. But the domestic sales law of the Contracting State would be even more alien. It is not CISG that is the stumbling-block but rather the weakness of the contact which determines the controlling law. The same difficulties may arise with the Hague Conventions and on the basis of Article 1(1)(a), even though to a considerably lesser extent. See supra note 43; contra Winship, Scope, at 1-28, 29 with references to the Secretariat's Commentary. Compare also Volken, Lausanner Kolloquium at 28.

46. Compare Huber at 424 (approval) with Herber at 603 ("a regrettable expansion"). cf. also Löwe, Lausanner Kolloquium at 15.

47. For the details of the discussion, see the summary reports of the Conference.

48. See also Herber at 603 ("As a rule it is expedient for a state that has ratified the Convention to apply it to all international sales contracts" (translation); but cf. Honnold, Commentary § 47 (some domestic laws are well-suited to international sales transactions).

48a. Naón fears that Article 1(1)(b) will lead to forum shopping. This is unlikely. Forum shopping is favored by conflict-of-law rules that give the plaintiff the choice between several domestic laws. This choice would now include the Convention instead of the domestic law of the Contracting State. The "unforeseeability" of the applicable law (and of the applicability of the Convention) results rather from the uncertainty of national conflict-of-law rules.

49. See Herber at 603; see also Herber, 1977 RIW/AWD 317.

49a. See Winship, Scope, Appendix. Winship examines 54 permutations under Article 1(1)(b) but concludes that "there are only two questions which raise difficulties".

50. This reservation - and others - motivated the F.R.G.'s motion to reject the proposal. See A/Conf. 97/8, S. 6 and A/Conf. 97/C.1/SR.1 at 3 (= O.R. 237). According to Huber at 423, Article 1(1)(b) modifies internal conflicts rules and would yield the abandonment of special conflicts rules for contract formation. This result was not intended and would have been difficult to include in the Conference's mandate.

51. In an alternative motion (A/Conf. 97/9) (= O.R. 71 et seq.), the F.R.G. tried to clarify that Article 1(1)(b) should refer to conflict-of-law norms that concern the rights and obligations arising from an already formed contract. The motion was rejected. In my view, the Convention's provisions on the formation of contract are probably compatible with the substantive provisions of domestic sales law, so that reference by the conflicts rules only to the Convention's provisions on formation of contract should not raise any insurmountable difficulties.

52. See Judgment of Dec. 4, 1985, 1986 RIW 214; Huber at 462 note 30 (further references); Reinhart at 1-5. See also Lausanner Kolloquium at 36 (Farnsworth).

53. See A/Conf. 97/C.1/SR.1 at 3 (= O.R. 237) (statement by Kopác (Czechoslovakia)); A/Conf. 97/C.1/SR.1 at 5 (= O.R. 237 et seq.) (statement by Wagner (G.D.R.)). In the G.D.R.'s International Commercial Contracts Act § 1(2), however, there is a reservation in favor of international conventions. Such states, when they become Contracting States, do not apply their special foreign trade laws where the parties to a sales contract have their places of business in a Contracting State. Moreover, if the G.D.R. and Czechoslovakia adopt the Convention, then it will apply to sales contracts between parties that have their places of business in these states on the basis of Article 1(1)(a).

54. In the first Committee, the vote was 25 in favor, 7 against, and 10 abstentions. In the Plenary there were 42 yes votes, 0 no votes and 1 abstention. A/Conf. 97/SR.6 (= O.R. 199 et seq.).

55. Attempts by Czechoslovakia in the Second Committee to restrict the application of the Convention to contracts between parties in Contracting States were unsuccessful. See A/Conf. 97/C.2/L.7 and L.27 (= O.R. 145 and 152); A/Conf. 97/C.2/SR.2 at 2 et seq. (= O.R. 439).

56. Despite the reservations expressed by the F.R.G. with regard to Article 1(1)(b), I would welcome the decision by the F.R.G. not to make this reservation. For a convincing analysis, see Winship, Scope at 28, Löwe, Lausanner Kolloquium at 15.

56a. Convincing Winship, Scope, at 1-27, 28.

57. As an example of the inapplicability of the Convention when the other party's foreign contacts are not recognizable, the Secretariat's Commentary mentions the case of a party who is an agent of an undisclosed principal whose place of business is in a different state. See also Honnold, Commentary § 41. Under German law, the inapplicability of the Convention would follow because only the agent would actually be a party to the contract.

58. But see infra at III. D.1. (discussion of Article 2(a)).

59. In UNCITRAL the question was raised whether nationality should be introduced as an (additional) prerequisite for the application of the Convention. However, this thought was not pursued because of the difficulty in determining the "nationality" of legal persons. See 8 UNCITRAL Y.B. 26 § 14 et seq. (1977).

60. See Secretariat's Commentary at 39 § 3; Honnold at 227.

61. cf. A/Conf. 97/C.1/SR.1 at 6 et seq. (= O.R. 237).

62. It is probably not possible to find criteria for excluding the Convention that fully correspond to various cases where consumer-protection laws apply. See A/Conf. 97/C.1/SR.1 at 8 (= O.R. 239) (Finland's argument).

63. See also A/Conf. 97/C.1/SR.1 at 8 (= O.R. 239) (justified criticism expressed by Vischer (Switzerland) in Vienna). But see also Löwe, Lausanner Kolloquium at 17.

64. Judgment of May 11, 1977, BGH, 1977 NJW 1632.

65. cf. Abzahlungsgesetz §§ 1a, 1b. A Norwegian proposal would have excluded questions of avoidance in instalment sales from the sphere of application of the Convention on the grounds that special domestic laws govern this area. The opposition to the proposal was based on the fact that parties have the right to exclude the Convention. Norway withdrew its motion on the basis of an alleged understanding that an instalment contract would be interpreted as an exclusion of the Convention. See A/Conf. 97/C.1/L.14 (= O.R. 85); A/Conf. 97/8 at 15 (Norwegian motion and reasoning); A/Conf. 97/C.1/SR.3 at 6 (= O.R. 246 et seq.). In my opinion, the problem is still not resolved because the alleged understanding would open the possibility of imputing exclusion of the Convention in all cases in which the parties' agreement is based on types and terms of domestic contracts that are familiar to them.

66. As to similar conflicts in the application of ULIS arising when mandatory laws regulating the economy contradict the Convention, compare Dölle (Herber) Article 5 § 19, Article 18 § 6 with Dölle (Stoll) Article 74 § 148 et seq. The problem was recognized by UNCITRAL. See 2 UNCITRAL Y.B. 44-45, 55 (1971).

67. See also Huber at 422 ("family" and "household" serve only as examples of personal use.)

68. cf. 3 E. Rabel, Conflict of Laws 53 note 12 (1950) (regarding the application of the lex fori to "sales executed and fulfilled at once in one place").

69. See also Huber at 422 (explaining that auctions are local transactions with no significant foreign contacts.).

70. Secretariat's Commentary at 40 § 7.

71. Id. at 40 § 8.

72. See A/Conf. 97/C.1/SR.2 at 2-3 (= O.R. 240 et seq.).

73. Cf. A/Conf. 97/5 at 40 (= O.R. 36 et seq.).

74. Many opposed the provision on the grounds that special domestic rules concern only the transfer of title. See Huber at 419; Dölle (Herber) Article 5 § 9 (on ULIS); see also A/Conf.97/C.1/SR.2 at 2-3 (= O.R. 240 et seq.) (discussion).

74a. Contra Honnold, Commentary § 54 (suggesting that, since no distinctions are feasible with respect to different types of aircraft, pleasure boats should also be included).

75. See A/Conf.97/C.1/SR.2 at 3 (= O.R. 241).

76. Iraq had proposed to exclude oil contracts from the sphere of operation of the Convention because OPEC had established special contracts for the sale of oil. See A/Conf. 97/SR.6 (= O.R. 199 et seq.).

77. Cf. Riese, 29 RabelsZ 18 (1965) (on ULIS).

78. Cf. Secretariat's Commentary at 41 § 2.

78a. Honnold, Commentary § 59; see also Kahn 955 (presumption that CISG is applicable to contracts with a clearly preponderant "service" component as well as to "turn-key" contracts).

79. See A/Conf. 97/C.1/L.26 (= O.R. 84).

80. cf. Secretariat's Commentary at 41-42 § 3; contra Honnold, Commentary § 60 (arguing that the Convention should apply to the entire agreement).

81. Respect for party autonomy belongs to the basic principles of the Convention. See Article 6.

82. A/Conf. 97/C.1/L.26. (= O.R. 84).

83. See A/Conf. 97/C.1/SR.2 at 9-10 (= O.R. 243) (for the positions taken). The Conference thus also avoided the politically sensitive question of rules and guidelines relating to the transfer of technology.

83a. A reservation of title does not, however, exclude the application of the Convention to the sales contract. See Winship, Scope at 1-24.

83b. If, however, domestic provisions use "indefinite concepts" such as "unconscionable" or "treuwidrig", the contractual clause should be measured by CISG and not by domestic law. For example, a clause limiting recoverable damages to foreseeable losses is in accordance with the principle underlying Articles 74-76 and therefore valid, even if the standards under domestic law are stricter. See also Ziegel, Remedial Provisions at 9-38; Gonzales at 82.

84. See von Caemmerer, Probleme at 121 et seq. 127; Dölle (Stoll) ULIS Article 74 §§ 51-52 (with references to comparable domestic rules on validability). As to the 1978 Draft Convention, see Secretariat's Commentary at 179 § 4 (seller's liability for goods already destroyed at the conclusion of the contract).

84a. Accord Honnold, Commentary § 240.

85. See infra at VI.B.5, Vi.e.1.

86. See infra at IV.C.

87. See Dölle (Herber) Article 8 § 8 (with additional references).

88. Discussed infra at III.G.

89. A/Conf. 9/C.1/L.4 at 20, 21, 51 (= O.R. 85).

90. See A/Conf. 97/8/Add. 4 at 6-7 (reasons for the French proposal). Practically speaking, the concern was not only for the preservation of a doctrinal structure but also for the system that follows the chain of sales back to its origin. If damages from defective products fall strictly under CISG, then the buyer's or re-seller's claims for damages, based on liability to his customer would, in some cases, not arise or be known until the period for making claims against a foreign seller had already passed. See Article 39(2); cf. A/Conf. 97/8/Add. 4 at 6.

91. See also supra note 90.

92. See A/Conf. 97/C.1/SR.3 at 3 et seq. (= O.R. 245 et seq.) (discussion in the First Committee).

92a. Accord Honnold, Commentary § 73.

93. Canada (A/Conf. 97/C.1/L.10 = O.R. 86); Australia (A/Conf. 97/C.2/L.3= O.R. 144 et seq.).

94. See A/Conf. 97/C.1/SR.3 at 6 et seq. (= O.R. 247) (discussion); A/Conf. 97/C.2/SR.1 at 7 et seq. (= O.R. 437); id. SR. 2 at 2 (= O.R. 439) (debates in the Second Committee).

95. See infra at VII.B.

96. Cf. A/Conf. 97/C.1/SR.3 at 8 (= O.R. 247).

97. Cf. Huber at 427.

98. See Secretariat's Commentary at 44. Another attempt by the U.K. to insert the word "implied" at the Vienna Conference was unsuccessful. Thus was avoided the possibility that an exclusion of the Convention could be "implied by law." The commentators favor implied exclusion. See Winship, Scope at 1-35 ("an express exclusion should not be required"); Honnold, Commentary § 76 ("normal rules of construction of the contract would apply . . . ").

99. Cf. Huber at 426; Magnus at 150 (both with references to the discussion with respect to ULIS).

100. A/Conf. 97/C.1/L.10; id. L.41 (= O.R. 86).

101. A/Conf. 97/C.1/SR.4 at 6 et seq. (= O.R. 250).

102. Cf. Judgment of April 14, 1978, OLG Karlsruhe, 1978 RIW/AWD 544; Judgment of November 11, 1975. Schiedsgericht der Hamburger freundschaftlichen Arbitrage, 1978 RIW/AWD 337; Judgment of Dec. 4, 1985, BGH, supra note 52.

103. A/Conf. 97/C.1/L.32 (= O.R. 86).

103a. Cf. Naón § 2.6 at 8.

104. See A/Conf. 97/C.1/SR.4 at 8 et seq. (= O.R. 251 et seq.) (discussion).

105. See A/Conf. 97/C.1/SR.4 at 9 (= O.R. 252) (statement by Bonell (Italy)).

106. Huber at 432; but see Bonell, Reflections at 5-9.

107. Bulgaria's proposal. See A/Conf. 97/C.1/L.16 (= O.R. 87). A unification of conflicts law was thereby proposed which, for some states, would have represented a violation of the Hague Convention on Private International Law for the Law Applicable to Sales Contracts of 1955. See A/Conf. 97/C.1/SR.5 at 6 § 30 (= O.R. 257) (discussion by the Swedish delegate).

108. This was argued by Czechoslovakia. See A/Conf. 97/C.1/L.15 (= O.R. 87).

109. See A/Conf. 97/C.1/L.59 (= O.R. 87) (Italian proposal); A/Conf. 97/C.1/SR.5 at 4 (= O.R. 255) (statements by Bonell (Italy) in the First Committee).

110. In the 1978 Draft Convention, the wording was still "to promote uniformity." In Vienna, "in its application" was removed from the phrase "In the interpretation of this Convention (and its application . . . )" on the basis of proposals by the U.S. (A/Conf. 97/C.1/L.5= O.R. 87) and France (A/Conf. 97/C.1/L.22= O.R. 87) and then inserted behind "uniformity" as an editorial correction. The change was not intended to imply a limitation.

110a. Feltham at 349; but see Bergsten/Miller at 5 ("The change in emphasis . . . is obvious").

111. Honnold, Commentary §§ 100, 101 (analogies should be possible); contra Réczei, Field of Application at 185. The preamble to the Convention, on the other hand, refers to the public international law obligations and goals of the signatory states and may not be used for the interpretation and gap-filling of the substantive legal provisions. But see Naon § 1.5 at 2.

112. But see Dölle (Wahl) Article 17 § 51 (concerning ULIS Article 17): "The reference to the general principles is to be understood to include all creative sources." See also id. § 75: "The judge can seek to fill gaps by examining the legal systems of the most important Contracting States to see if the case has been dealt with and decided" (translation). See Eörsi, General Provisions at 2-72 (discussing the danger of prompt recourse to domestic law when a general principle cannot be found).

113. See Secretariat's Commentary at 45 § 3 (catalogue).

113a. See Eörsi, General Provisions 2-7 ("an honourable burial").

114. As to this question and the opposition from the U.S. delegate, see Farnsworth, Problems at 18-19; see also Eörsi at 313.

115. Cf. A/Conf. 97/C.1/SR.5 at 8 et seq. (= O.R. 258).

115a. See also Eörsi, General Provisions at 2-9 (arguing that interpretation of the contract and of the Convention cannot be separated "since the Convention is also necessarily interpreted by the parties").

115b. See generally Eörsi, General Provisions at 2-13 for an illuminating analysis; see also Réczei, Fields of Application at 182-187.

116. Huber at 429-430. Due to the acceptance of a proposal by the Egyptian delegation (A/Conf. 97/C.1/L.43= O.R. 88), the formulation of Article 8(2) corresponds more than did the Draft to the standpoint of the objective addressee from German law: the person "standing in the shoes of the addressee." See A/Conf. 97/C.1/SR.6 at 4-5 (= O.R. 260) (discussion in the First Committee).

116a. A sham agreement is void, while the contract really intended by the parties and hidden "under" the sham statement may be valid.

116b. Eörsi argues that, under Article 9(1), usages must be made explicitly applicable, while Article 9(2) allows an implicit agreement. Eörsi, General Principles at 9; see also Réczei, Fields of Application at 179-182; Bydlinski at 75; contra Bonell, 107 östJBL 385 (1985).

117. In contrast to normative grounds, contractual intent as the ground for the applicability of usages means that capacity to contract and defects of will can gain importance as questions of "validity" under Article 4(a). As to the Hague Convention, see Dölle (Schlechtriem) ULF Article 13 § 4. The contrary view of Bonell, östJBL 385, seems to be desirable, but can hardly be based on the history of art. 9 and will lead to diverging interpretations; see Bergsten, Basic Concepts of the UN Convention on the International Sale of Goods, 20, 21. See also Bydlinski at 76 for an important advantage of the contractual approach: There can be no doubt that usages prevail over the rules of the Convention.

118. For ULF Article 13(1), see Dölle (Schlechtriem) Article 13 §§ 7 et seq. at 11.

119. Cf. Réczei, Rules of Application at 82 et seq.; Eörsi, General Provisions at 2-23.

120. See Enderlein at 33 ("Unification of law must not sanction customs developed by capitalistic monopolies vis-à-vis weaker parties, especially in developing countries. On the other hand, unification of sales law can take into account, as its cornerstone, such international usages and customs which can rightly be considered as democratic and equitable"). But see Maskow § 2.4 at 58 ("quite happy with the present formula . . . while other socialist countries may feel some hesitations"). See also A/Conf. 97/C.1/SR.6 (= O.R. 263) at 9 § 71 (position of the Yugoslavian delegate); A/Conf. 97/C.1/SR.7 (= O.R. 266) at 4 § 19 (remark by the Soviet delegate that the version represents a compromise on one of the most controversial issues debated in UNCITRAL). Eörsi is very informative on the reasons behind the Socialist countries' position on usages. See Eörsi, General Provisions, Appendix. As for the reservations of the developing countries, see Date-Bah at 46-47.

121. See Judgment of Oct. 27, 1951, BGH, 1952 NJW 257.

122. Cf. Dölle (Junge) Article 9 § 3; Sonnenberger, Verkehrssitten im Schuldvertrag 61 et seq. (1970).

123. But, as to the Hague Conventions, see Dölle (Schlechtriem) ULF Article 13 § 7 at 11-12.

124. A/Conf. 97/C.1/L.24 (= O.R. 89).

125. See also A/Conf. 97/C.1/SR.6 at 8-9 (= O.R. at 262 et seq.) (discussion).

126. See A/Conf. 97/C.1/SR.6 at 10-11 (= O.R. 263).

127. See A/Conf. 97/C.1/L.64 (= O.R. 89) (motion); A/Conf. 97/C.1/.SR.7 at 4-5 (= O.R. 266 et seq.) (discussion). Acceptance of the proposal would have meant that a party could have invalidated part of a usage by neglecting to follow the behavior prescribed by it.

128. Cf. A/Conf. 97/C.1/SR.6 at 11 § 88 (= O.R. 264).

129. Cf. O. Sandrock, Handbuch der Internationalen Vertragsgestaltung 263 et seq. (1980); Dölle (Schlechtriem) ULF Article 13 § 10.

130. Cf. A/Conf. 97/C.1/SR.7 at 5-6 (= O.R. 267).

130a. See Honnold, Commentary § 120 (suggesting that contract provisions could be construed in light of the applicable usage).

131. See Article 1(1) (prerequisites for application); see also Articles 31(c), 42(1)(b), 57(1)(a), 57(2), 90, 93(3), 94, 96.

132. See A/Conf. 97/C.1/SR.7 at §66 (= O.R. 269) (complaints by Dabin (Belgium)). See also A/Conf. 97/L.3 (= O.R. 203) (motion); A/Conf. 97/SR.6 (= O.R. 199 et seq.) (discussion in the Plenary).

132a. The German Federal Court has used CISG Article 10(a) in the interpretation of "place of business" in ULIS Article 1. Judgment of June 2, 1982, BGH, 82 WM 846 = 83 IPRax 212.

133. Even if final approval must be given by company headquarters, the location of the headquarters is not considered a "place of business" if the other party need not have taken account of it. See Secretariat's Commentary at 50 §§ 6, 8. For "unforeseeable" delivery from or to a certain place of business, see id.

134. See Farnsworth at 11.

135. See A/Conf. 97/C.1/SR.8 at 7-8 §§ 43 and 47 (= O.R. 273 et seq.) (statements by Farnsworth (U.S.A.) and Date-Bah (Ghana)). It is clear that the right to declare a reservation was granted as a concession to the U.S.S.R.

136. See A/Conf. 97/C.1/L.71, 76 (= O.R. 91).

137. See A/Conf. 97/C.1/SR.8 at 4 et seq. (= O.R. 271 et seq.) (discussion).

138. See 2 UNCITRAL Y.B. 21 (1971); 3 UNCITRAL Y.B. 75 (1972). Nevertheless, the outcome is unfortunate because it would have made the decision as to whether or not to make the reservation easier for many states, such as the F.R.G., which only recognize form requirements for certain kinds of contracts. In my opinion, it is not necessary for the F.R.G. to make the reservation, since only a few types of business transactions are affected. First are the exceptional cases of international instalment transactions, see supra at III.D.1. for which a written form would be required according to the German Instalment Law (Abzahlungsgesetz) § 1(a). But in international sales contracts, the German buyer cannot count on the protection of the German instalment law anyway. A second group are the form requirements prescribed in state laws governing municipalities, etc. See Baden-Württembergische Gemeindeordnung § 54. The reasons for ensuring that these requirements are upheld are probably along the same lines as those the Soviet Union uses to defend its form requirements. Nevertheless, the F.R.G. should commit itself to adopting the Convention without the reservation. Of course, this would mean that municipalities could contravene local law by entering into valid but unwritten international sales contracts, but the municipal authority responsible for forming the contract would still be subject to internal sanctions for violating official duties since these sanctions cannot be disturbed by the Convention. Cf. Secretariat's Commentary at 51. The practical effect would probably be that in such cases, form requirements would be agreed upon and, in any case, followed. Finally there remain the cases, mentioned by Huber, of sales contracts with marketing commitments and similar agreements, which are subject to form requirements under anti-trust laws such as German Gesetz gegen Wettbewerbsbeschränkungen (GWB) § 34. See Huber at 434. The reservation clause is only available, however, as far as the domestic law contains form requirements for sales contracts. The compromise found in Articles 12 and 96 considers form requirements based on domestic law to be exceptions. See A/Conf. 97/C.1/SR.8 at 7 § 43 (= O.R. 273). In my opinion, CISG does not cover such agreements anyway, so that domestic provisions on form requirements remain undisturbed. Whether an unwritten sales contract containing marketing or licensing commitments is totally void depends on the domestic rules governing partial nullity. If those rules indicate that the sales part of an integrated contract is void as well, then it is void under Article 4(a). In German law, the basis for the judgment is, therefore, German Civil Code § 139.

139. See Eörsi at 316.

140. See A/Conf. 97/C.1/SR.8 at 5 et seq., especially §§ 26, 32, 36, and 38 (= O.R. 272 et seq.) (discussion). A proposal by the U.S.S.R. to include the avoidance of contract by one party in the reservation was unsuccessful. See A/Conf.97/C.1/L.35 (= O.R. 91) (motion); A/Conf. 97/C.1/SR.8 at 5 et seq. (= O.R. 272 et seq.) (discussion).

141. Since Article 565 of the Civil Code of the U.S.S.R. mandates application of U.S.S.R. law on form requirements in all foreign-trade transactions, it can be assumed that Russian courts, on the basis of U.S.S.R. law, will always require contracts to be written.

142. Since Article 565 of the Civil Code of the U.S.S.R. mandates application of U.S.S.R. law on form requirements in all foreign trade transactions, it can be assumed that Russian courts will always require contracts to be in writing.

143. A/Conf. 97/C.1/L.17 (= O.R. 83).

144. See A/Conf. 97/8 at 7 (position of the government of the F.R.G.). Accord Stoffel in Lausanner Kolloquium at 60. Honnold's interpretation would make Article 13 almost meaningless. See Honnold, Commentary § 130; infra, note 145. Eörsi believes that Article 13 does not require comment. See Eörsi, General Provisions at 2-34.

145. The motion to allow the telegram or telex to fulfill the writing requirement was probably accepted in Vienna without further debate because it was drafted on the model of a provision with the same wording in the UNCITRAL Convention on the Limitation Period of 1974 (Article 1(3)(g)). The Convention on the Limitation Period itself contains requirements on form, for example, in Article 20(1) (the interruption of the limitations period by a written acknowledgment) so that the provision on written form contained in the Limitations Convention only had an internal effect. CISG itself only mentions "writing" in two provisions and only requires it in Article 29(2) for modifications. The representatives from the Soviet Union agreed to the West German motion presumably because, according to an applicable Soviet law which makes a writing mandatory for foreign trade transactions, telegrams and telexes fulfill the requirement. See A/Conf. 97/C.1/SR.7 at 10 § 73 (= O.R. 269).

146. Cf. Judgment of June 2, 1976, BGH, 66 BGHZ 378.

147. An Italian proposal, corresponding to West German judicial practice, would have permitted an oral suspension of such an agreement on form. See A/Conf. 97/C.1/L.68 (= O.R. 101). A/Conf. 97/C.1/SR.13 at 8 § 56 (= O.R. 305). It was not adopted primarily because a reference to written-form clauses in standard contract terms conflicted with the unwillingness, which became apparent in connection with the "battle of the forms," to deal with problems involving standard contract terms.

147a. See generally Farnsworth, Formation §§ 3-3, 3-4 (for the histocial development).

148. E.g., with respect to the sphere of application and usages.

149. Examples with regard to the Hague Conventions were the applicability of ULIS Article 17 to ULF and the question of whether notices under ULIS are effective only upon receipt.

149a. See also Dilger at 190 et seq.

150. See Huber at 445; Dölle (Schlechtriem) ULF Article 4 § 2 (for ULF).

151. Examples include the negotiations, discussed above, in which an agreement is eventually reached, but where it is not possible to determine afterwards at what point both parties legally agreed to be bound and the cases where offer and acceptance cross in the mail. See Eörsi in Lausanner Kolloquium at 44. cf. also Dölle (Schlechtriem) ULF Article 6 §§ 18-22 (concerning the Hague Conventions). One has also to consider the contract which is performed even though, because of the lack of coincident declarations of intent, it was never effectively formed. See UCC § 2-207(3).

152. This conclusively eliminates the option of saving a contract by recourse to domestic [law] where its formation does not conform to an explicit general principle of the Convention. For example, agreement evidenced by the parties' conduct but which leaves the price term open does not form a contract under CISG. In that case, the existence of a clear general principle demonstrates that there is no gap in the Convention which might be filled by a domestic law. But see Huber at 447.

153. See von Caemmerere, 29 RabelsZ 136 et seq. (1965).

154. Accord Honnold, Commentary § 178. Examples of provisions for which the time of contract formation is important are: Articles 33(c), 35(2)(b), 35(3), 42(1), 42(2), 57(2), 68 sentences 1 and 3, 71(1), 73(3), and 74 sentence 2.

155. See Articles 15(1) (offer), 15(2) (withdrawal of the offer), 16(1) (rejection of the offer), 18(2) sentence 1 (acceptance), 22 (withdrawal of the acceptance).

156. "Mailing address" means the place where mail is received, such as a mail box, but not an address that has been changed - such as by a move - and not yet corrected.

157. The means of communication which must be "appropriate in the circumstances" must also be intelligible, but Article 27 concerns only the declarations under Part III that are effective upon dispatch.

158. Cf. Secretariat's Commentary at 72 § 6.

159. For examples, see Huber at 437-438; Dölle (Schlechtriem) ULF Article 4 §§ 24-25.

160. Although the Convention contains no provision corresponding to ULF Article 4(2), a contract can be supplemented by usages if they are directly applicable under Article 9 or made applicable by virtue of the parties' intent on the basis of Article 8(3). They can also be applicable by virtue of the supplementary and optional provisions of the Convention on the contents of sales contracts. See Secretariat's Commentary at 56 § 9.

161. See Huber at 437. Offers for requirement and output contracts whereby the quantity to be delivered is based on the future demand of the buyer or the quantity which the seller can produce, would, therefore, also be covered. In my opinion, the mere fact that Article 65(1) presupposes that, in a sale subject to the buyer's specifications, the buyer has the right to determine the form, size, or other characteristics of the goods, does not justify the contrary conclusion that, when a party has the right to determine the quantity, the offer lacks a definite term and no contract can be concluded by its acceptance.

162. With regard to the motions and the discussion, see A/Conf.97/C.1/SR.8 at 10 et seq. (= O.R. 270). As to the firmness of the Soviet position, see id. § 87; A/Conf. 97/C.1/L.37 (= O.R. 92) (an even more restrictive Soviet proposal which also was not passed). Even the proposals by a working group, which attempted to find a compromise between the irreconcilable differences (A/Conf. 97/C.1/L.103) (= O.R. 92), did not progress any further. See A/Conf. 97/C.1/SR.11 at 6 et seq. (= O.R. 290) (discussion).

162a. Farnsworth, Formation at 3-9. For additional critical views, see id. at note 6.

163. But cf. Dölle (von Caemmerer) (regarding ULIS Article 57) (includes a comprehensive analysis of comparative law). As to the controversy in German law and a critical comparison to the 1978 Draft Convention, see Huber at 438-439.

163a. See also infra note 319.

164. See infra at VI.C.1.

165. See Date-Bah at 51.

166. See Judgment of April 27, 1971 Cass. com., J.C.P. 16975; Judgment of June 21, 1976, Cass. com. D. 1976 I.R. 264. In the deliberations on Article 55, the French position was more flexible. See A/Conf. 97/C.1/L.205 (= O.R. 121) (French compromise proposal); see also Tallon, Buyer's Obligations at 7-11.

167. See Secretariat's Commentary at 57 § 14 et seq.

168. E.g., AGBG § 11 Nr. 1.

169. Contrary to the necessity of written form in the reservation states, see Article 12 sentence 2, Article 14(1) sentence 2 has not been excluded from the autonomy of the parties. See Stoffel in Lausanner Kolloquium at 63, 64. However, if domestic law, prohibits a single party from determining the price - e.g., under consumer-protection laws - Article 4(a) would control. See Tallon, Buyer's Obligationss at 7-12.

170. Unfortunately, a British proposal (A/Conf. 97/C.1/L.48) (= O.R. 94) concerning the withdrawal of a public offer found no support because of the misunderstanding that there is no such thing as a real public offer. See A/Conf. 97/C.1/SR.9 at 3 (= O.R. 278). In the end, though, one will probably have to decide the same way as suggested in that proposal: The public offer can be revoked if the revocation reaches the interested party before he has dispatched his acceptance. For a less restrictive view, see Dölle (Schlechtriem) ULF Articles 5 § 3 19 (revocation is effective if made in the same manner in which the offer was made, so long as the offer has not been accepted or the acceptance has not been dispatched).

171. See A/Conf. 97/C.1/L.48 (= O.R. 94) (British proposal); A/Conf. 97/C.1/SR.9 at 3 § 14 (= O.R. 277 et seq.) (discussion).

172. Compare A/Conf. 97/C.1/SR.9 at 3 § 15 (= O.R. 278) (Japan); id. § 35 (The Netherlands) and id. § 37 (= O.R. 279) (United Kingdom). Farnsworth confirms the danger of divergent interpretations. See Farnsworth, Formation at 3-11.

172a. See Feltham at 352.

173. In contrast to ULF Article 5(2), an offer open for a fixed period of time is not always irrevocable during that period. Instead, the fixed period serves merely as one indication of the offeror's intention.

174. Accord, Huber at 440. To some extent, this should resolve the cases which motivated the proposal by the GDR for precontractual liability (see infra at V.D.4.): Where the offeree has justifiably incurred expenses in reliance on an offer, the offer will usually be considered irrevocable. Other cases of damage caused by withdrawal from negotiations should be governed by domestic law, which may provide various remedies (e.g., precontractual liability and tort).

174a. Accord, Naón § 2.8 at 9.

175. The words "or inactivity" were inserted on the basis of a British motion (A/Conf. 97/C.1/L.56) (= O.R. 95). They were intended to indicate that totally passive behaviour is to be treated the same as silence.

175a. Accord Honnold, Commentary § 160.

176. See supra at IV.C.; A/Conf. 97/C.1/SR.6 at 11 § 88 (= O.R. 264) (position of the U.S. delegate); see also Secretariat's Commentary at 62 § 4.

177. A corresponding U.S. proposal (A/Conf. 97/C.1/L.57= O.R. 95) found no support and was therefore withdrawn. See A/Conf. 97/C.1/SR.9 at 10 (= O.R. 281). See also Honnold, Commentary § 164 (proposing that assent may be indicated by arrival of the goods or by notice that a requested act has been performed).

178. See Dölle (Schlechtriem) ULF Article 8 § 12.

179. See von Caemmerer, 29 RabelsZ 134 (1965) (regarding ULF).

180. But see Huber at 443-444 (criticism of the 1978 Draft Convention).

181. Unfortunately, the phrase in the 1978 Draft Convention (Article 17(3)) which, under certain conditions, would have prevented the three kinds of terms mentioned in the third paragraph of Article 19 from being considered material, was deleted. A proposal to complete the list in paragraph 3 by the words "inter alia" - which would have reduced the weight accorded to those terms - was also rejected. Cf. A/Conf. 97/C.1/SR.10 at 11 § 82 (= O.R. 288). (Ghestin). Nonetheless, it is still possible that, given the special circumstances of the case, as well as party customs, negotiations, or usages, differences between offer and acceptance, even related to these points, may be considered as immaterial. An example is where the offeree proposes a different time for delivery. See also Secretariat's Commentary at 67 § 13-14 (further examples).

182. See A/Conf. 97/C.1/SR.18 at 2-3 (= O.R. 328 et seq.).

183. See A/Conf. 97/C.1/L.61 and L.91 (= O.R. 96) (motions by the U.K. and Bulgaria); A/Conf. 97/C.1/SR.10 at 3 et seq. (= O.R. 219 et seq.) (discussion).

184. A/Conf. 97/C.1/L.98 (= O.R. 96).

185. See A/Conf. 97/C.1/SR.10 at 8 et seq. (= O.R. 219 et seq.) (discussion).

186. See A/Conf. 97/C.1/L.87 (= O.R. 96) (motion); A/Conf. 97/C.1/SR.10 at 12 et seq. (= O.R. 219 et seq.) (debate).

187. This was the argument of one of the West German delegates (not the author). See A/Conf. 97/C.1/SR.10 at 12-13 (= O.R. 225).

188. Concerning ULF Article 7, see Schlechtriem, "Die Kollision von Standardbedingungen nach BGB and Einheitlichem Kaufabschlussgesetz," 1974 BB 1310-11.

189. Cf. A/Conf. 97/C.1/SR.5 at 4 § 18 (= O.R. 256).

190. See supra at IV.C.

191. But see Huber at 449-450.

192. A/Conf. 97/C.1/L.89 (= O.R. 98).

193. The time the contract is formed under Article 23 may therefore differ from the time it takes effect.

194. A/Conf. 97/C.1/L.95 (= O.R. 295).

194a. See also Honnold, Commentary § 147.

195. Of course, domestic law is irrelevant as long as the issue is a matter regulated by CISG. For example, a party cannot be liable under domestic law for legitimately revoking an offer under Article 16; otherwise the balance between revocability and contractual commitment could be disturbed by domestic remedies.

196. See Articles 49(1)(a), 51(2), 64(1)(a), 72(1), 73(1), 73(2). As to the right to avoid a contract despite the existence of grounds for exemption, see Article 79(5).

197. Article 46(2).

198. Article 70.

198a. See Eörsi, A Propos at 336 et seq. (an ironic description of the endeavours to find the perfect formulation).

199. See 1 UNCITRAL Y.B. 47 (1970); 2 UNCITRAL Y.B. 169 (1971); 6 UNCITRAL Y.B. 53 (1975); 7 UNCITRAL Y.B. 90 (1976); Michida at 282 et seq. (contains the hypotheticals and motions which influenced the course of the UNCITRAL deliberations).

200. For the comparable discussions relating to the drafts of the Hague Convention, see Beinert at 56-57.

201. 6 UNCITRAL Y.B. 64 (1975).

202. For the development of Article 25 in the deliberations of the Vienna Conference, see Bericht der Bundesregierung 17 et seq. (not yet published). Also Eörsi supra note 198.

203. See A/Conf. 97/C.1/SR.12 (= O.R. 295 et seq.) (discussion). But even the formulation of the 1978 Draft Convention was, because of the foreseeability criterion, though by some delegates to be too subjective. See also A/Conf. 97/C.1/L.106(= O.R. 99) (Egyptian motion).

204. See A/Conf. 97/C.1/L.63 (= O.R. 99) (motion); A/Conf. 97/C.1/SR.12 at 11 § 68 (= O.R. 300) (discussion).

205. The working group consisted of representatives from Argentina, Czechoslovakia, the F.R.G., Ghana, Hungary, Norway, Pakistan, Rumania, and Spain.

206. See A/Conf. 97/C.1/SR.18 at 3 (= O.R. 328 et seq.); C.1/L.176 (= O.R. 99). See also Ziegel, Remedial Provisions at 9-15 (critical view); but see Gonzalez 86 (a more favourable analysis).

207. See A/Conf. 97/DC/L.1 at 4.

208. As long as the time for delivery is not of the essence in such cases, a non-conformity that can be cured by repair or substitute delivery can only be considered a breach of contract - as under ULIS Article 43 - if the seller cannot or will not provide this "later performance" promptly. Therefore, the seller has the right to tender a second time before the buyer can avoid, even if this right is not explicitly stated in the Convention.

209. See Huber at 464. ULIS Article 28 was dropped in the attempt to consolidate the remedies provisions. See 4 UNCITRAL Y.B. 40 § 28 (1973).

210. The consequences of a contract violation can be a decisive factor, but only in conjunction with the party's special interest in the performance of the violated duty. It is nevertheless possible to assert a fundamental breach without proving the detriment - the injured party need not expose its business arrangements. But see Beinert at 63. Of course a detriment must either have been produced or be expected to be produced. If there are no damages from the breach, there is no right of avoidance.

211. A/Conf. 97/C.1/L.104 (= O.R. 99).

212. Cf. A/Conf. 97/C.1.SR.12 at 2 (= O.R. 302).

213. See Huber at 463 (posing a hypothetical); but cf. Honnold, Commentary § 183; Feltham at 353.

214. See 7 UNCITRAL Y.B. 90 (1976), Article 10(2).

215. This provision was already present in the 1978 Draft Convention. See Secretariat's Commentary at 75 § 4; but see Huber at 464. For an analysis of this solution, see infra at VI.A.3.

216. The Convention provides that the notice is effective upon receipt in the following provisions: Articles 47(2) sentence 1, 48(2) and (3) in conjunction with 48(4), 63(2), 65(2), 79(4).

217. The unusual notification by messenger can be appropriate where there are special circumstances, such as a strike by postal or telegraph employees.

218. Cf. Noussias, Die Zugangsbedürftigkeit von Mitteilungen nach den Einheitlichen Haager Kaufgesetzen und nach dem UN-Kaufgesetz (1982).

219. See A/Conf. 97/C.1 SR.13 at 5 § 22 (= O.R. 303) (position of the Norwegian delegate).

220. Although the West German motion (A/Conf. 97/C.1/L.65= O.R. 100) to make Article 27 applicable to the formation of the contract - in order to include within its scope the offeror's objection under Article 19(2) - was rejected, a later editorial change in Article 19(2), on the basis of another West German proposal, produced the same result.

221. Unlike ULIS, CISG does not require a reservation regarding a state's right to refuse to enter decrees of specific performance.

222. See Hartley, supra note 36, at § 3.09 et seq.; but see Ziegel, Remedial Provisions at 9-10.

222a. Honnold, Commentary § 199.

223. Cf. Treitel, 7 Int'l Encyclopedia Comp. L., Vol. VII, Ch. XVI, Remedies § 31 et seq. (1976).

224. See A/Conf. 97/C.1/L.113 and L. 117 (= O.R. 100) (U.S.A.); A/Conf. 97/8 Add. 3 at 15 § 11.

225. See A/Conf. 97/C.1/SR.13 at 7 (= O.R. 302 et seq.) (British reasoning); Farnsworth at 250.

226. See infra at VI.H.

226a. But see Naón § 3.5 at 12.

227. See supra at IV.E.

228. See Eörsi at 316.

229. See Huber at 417-18 (concerning the consolidation of the rules in comparison to ULIS).

230. See generally Huber at 450-51. References to criticism of ULIS's concept of "delivery" during the course of UNCITRAL'S work are detailed in 3 UNCITRAL Y.B. 31 note 2 (1972) and in the Report of the Secretary General, id. at 32 et seq. See also Farnsworth, Widmer in Lausanner Kolloquium at 83 and 91, Schlechtriem, Seller's Obligations (details of the seller's obligations); Bucher in Lausanner Kolloquium at 212 as to the "autonomous" requirements for the passing of risk.

231. The sale of goods afloat, however, is not a sale involving carriage.

232. Cf. infra at VI.D.1.

233. Cf. ULIS Article 19(1) (obligation to hand over goods).

234. Cf. Secretariat's Commentary at 83-84 § 12.

235. See infra at VI.D.3.

236. Cf. Huber 453; Secretariat's Commentary at 82 § 5 et seq.

237. See A/Conf. 97/C.1/SR.7 at 8 § 52 (= O.R. 208) (position taken by the Soviet delegation).

238. Cf. Dölle (Huber) Article 19 § 158-59.

239. See Secretariat's Commentary at 81 § 3.

240. See Huber at 483-84; infra at VI.B.5(a) and (c), B.6(c) and VI.D. These consequences were presumably not seen or even intended by the editors of the Secretariat's Commentary.

241. In some circumstances, however, trade practice can render such a demand superfluous so that the seller must send such information even when not requested. See Secretariat's Commentary at 87 § 6.

242. See generally A/Conf. 97/C.1/L./101 (= O.R. 102) (Canadian proposal which clarifies that the contract and the Convention determine the details).

243. See Secretariat's Commentary at 86 § 3.

244. The buyer's right to determine the date of delivery can arise from the circumstances, such as when the buyer's capacity to store the goods is limited and this fact is known to the seller. Cf. Secretariat's Commentary at 88-89 § 6.

245. The Yugoslavian proposal which clarified this point was withdrawn because it was thought that the relevance of usages for this case was assured by Article 9. See A/Conf. 97/C.1/SR.14 at 3 § 19 et seq. (= O.R. 308).

246. The provision was proposed by the Candian delegation (A/Conf. 97/C.1/L.116= O.R. 106) in regard to Article 35 of the 1978 Draft Convention (now Article 37). In the Drafting Committee the provision was inserted into Article 34. Substantively, the Canadian proposal was not disputed; the discussion in Vienna mainly concerned the drafting and placement. See A/Conf. 97/C.1/SR.14 at 6 et seq. (= O.R. 309 et seq.).

247. See also Dölle (Herber) Article 51 §§ 4, 6 (concerning defective documents under ULIS, in particular the "tainted" bill of lading).

248. See Secretariat's Commentary at 106 §§ 7, 8. More extensive assimilation was considered at various times in the course of the deliberations. See 3 UNCITRAL Y.B. 90 (1972); 4 UNCITRAL Y.B. 50 (1973). Despite a Norwegian motion (A/Conf. 97/C.1/L.77= O.R. 109), equal treatment was also not achieved regarding the legal consequences. Practically speaking, this means primarily that the right to reduce the price under Article 50 is restricted to non-conforming goods.

249. See A/Conf. 97/C.1/SR.15 at 7-8 (= O.R. 315 et seq.) (discussion regarding the Soviet motion (A/Conf. 97/C.1/L.82= O.R. 104) and the question whether the importance of the contractual terms should be emphasized even more). The rejection of the West German motion concerning Article 35(1)(b) (A/Conf.97/C.1/L.73= O.R. 104), the purpose of which was to employ fitness for a particular purpose as a criterion for conformity only when the special purpose was stated in the contract, should not be perceived as a rejection of a "subjective" concept of non-conformity. See A/Conf. 97/C.1/SR.15 at 8 (= O.R. 316).

250. See Huber at 483-84; Widmer in Lausanner Kolloquium at 95, 96.

251. See 4 UNCITRAL Y.B. 64 (1973); 7 UNCITRAL Y.B. 91, 106-7 (1976) (on the development of this provision).

251a. See Honnold, Commentary § 225 ("presumed implications from the contract").

252. See generally Huber at 480 (on the origins of these rules in the British Sale of Goods Act and the UCC).

253. See also Huber at 481. A conflict can arise between Articles 35(1) and 35(2)(b), for example where the buyer orders goods with particular characteristics and the seller recognizes that such goods would be unsuitable for the buyer's special purpose. The Secretariat's Commentary assumes that the seller has a good faith duty to inform the buyer in such a case. See Secretariat's Commentary at 93 § 9.

254. I.e., when standards for usual packaging are lacking. See A/Conf.97/C.1/SR.15 at 9 et seq. (= O.R. 317).

255. See A/Conf.97/C.1/SR.15 at 11-12 (= O.R. 317 et seq.). However, this laid the ground for the most important argument against the general right to fix additional period of time for performance, namely that even in case of very minor defects a non-fundamental breach could become fundamental simply by the expiration of the extended deadline. Cf. infra at VI.B.6(c).

256. For criticism on the limitation of this exclusion from liability to the cases mentioned in Article 35(2)(a)-(d), see generally Huber at 479 note 113.

257. The question of burden of proof was not decided. The position taken by the British delegate - that the question could be left to the courts - was not contradicted. See A/Conf. 97/C.1/SR.21 at 4 § 12 (= O.R. 346).

258. A/Conf.97/C.1/L.147 (= O.R. 105).

259. See A/Conf.97/C.1/SR.15 at 2 et seq. (= O.R. 312 et seq.). This was a discussion in which countries that primarily import industrial goods formed one group and countries that export such goods formed another.

260. The discussion of the term "specific time" was also handicapped by linguistic problems. See A/Conf. 97/C.1/SR.15 at 5 et seq. (= O.R. 313 et seq.).

261. Article 34 sentences 2 and 3 establishes a comparable rule for documents. See supra at VI.B.4.

262. See Secretariat's Commentary at 99 § 2.

262a. Although Article 38 mentions only "goods", the buyer also has to examine the relevant documents. See Ziegel, Remedial Provisions at 9-7.

263. Apparently the Secretariat's Commentary assumes that it does. See id. at 97 note 2 (on Article 35). In my opinion, this view is subject to challenge, since the seller may remedy a delivery of non-conforming goods until the date scheduled for delivery. If the packaging is opened, which would be necessary for inspection, the goods would be impaired. Furthermore, the buyer cannot be expected to prepare for inspection before the scheduled time of delivery. But if the view in the Secretariat's Commentary is accepted, the scheduled date for delivery must at least be considered an important "circumstance" under Article 38 for determining the short period permitted for examination.

264. See A/Conf. 97/C.1/SR.16 at 2 et seq. (= O.R. 319) (discussion).

265. See Huber's criticism in Huber at 482.

266. See supra at VI.B.1.

267. However, the industrialized countries' position on the question of the time permitted for giving timely notice was not uniform. France and the U.K. voiced concerns about cases where there were hidden defects and where an importer's liability due to defects would, under domestic law, exist for a longer period. See A/Conf. 97/C.1/L.137 (= O.R. 108) (British motion).

268. Practically speaking, this should probably mean the reduced value of the goods and any expenditures frustrated because of the defects. Consequential damages, such as loss of working time because of machine failure and resale profits, are excluded.

268a. But see Honnold, Commentary § 261. Honnold rightly points out that Article 44 refers to Article 39, but that a buyer who discovers or ought to have discovered a defect can hardly be excused for neglecting the requirement of notice.

269. See generally Date-Bah at 47 et seq. (an informative account of the reasons behind the developing countries' rejection of the notice requirement); see also A/Conf. 97/C.1/SR.16 at et seq. (= O.R. 322) (discussion in the First Committee based on Ghana's motion (A/Conf. 97/C.1/L.124= O.R. 107); A/Conf. 97/C.1/L.204 (= O.R. 108) (proposal by a working group); A/Conf. 97/C.1/SR.21 at 2 et seq. (= O.R. 345 et seq.) (discussion thereon).

270. Cf., e.g., the hypothetical raised by the British delegate in A/Conf. 97/C.1/SR.21 at 4 § 12 (= O.R. 346), which resembles the case in the Judgment of Nov. 24, 1976 BGH, 67 BGHZ 359.

271. Since the problems of overlap were not seen or regulated by the Convention, one might ask whether the compromise agreed to in Vienna is sound and practicable, or whether the notice requirement will lose its practical meaning through an all too lenient interpretation of "reasonable excuse". If the latter were the case, the situation should be corrected in favour of the sellers by applying Articles 77 and 80. One could counter this possible interpretation by arguing that Article 44 relates back to a compromise proposal by a working group, which had expressly provided the seller's right to set-off claims against losses incurred as a result of the buyer's late notice (A/Conf. 97/C.1/L.204 = O.R. 108), and which was rejected. In the conversations after the vote, however, it became clear that some delegates, who had voted against the right to a set-off, had presumed that the seller's claims for damages, based on the buyer's breach of his obligation to inspect and send timely notice, remain unaffected. In general, the theoretical question whether examination and notice are (only) incidental responsibilities or also duties of the buyer, was not discussed in depth.

272. See infra at VI.B.6.

273. See A/Conf. 97/C.1/SR.21 at 9-10 (= O.R. 349) (also contains further discussion about the meaning of the term "handing over").

274. I have some reservation with regard to Huber's view, that § 195 and not § 477 of the German Civil Code should govern claims of the seller in case German domestic rules on limitation are applicable. ULIS Article 49(1) shows that the two-year limitation period for failure to give notice does not sufficiently protect the seller, and that, therefore there is a point in prescribing short limitation periods. Even if the buyer gives timely notice, he should not have 30 years to make up his mind. See Huber at 483.

275. See Landfermann, 39 RabelsZ 253 (1975); id. at 342 et seq. (the text of the Convention); infra at VIII. (commentary thereto).

276. See Secretariat's Commentary 104 § 2; ULIS Article 52(1) is similar in that it views as consent the taking over of the goods with positive knowledge of the third party's rights. cf. Dölle (Neumayer) Article 52 § 12. CISG presumably requires consent at the time the contract is concluded. However, one may permit an implied agreement, even afterwards, and thereby a modification of the contract, such as by an acceptance with knowledge of the defects in title, as long as there are no form requirements.

277. See Secretariat's Commentary at 105 §§ 3-4; Honnold, Commentary § 266; 1 UNCITRAL Y.B. 173 (1970) (the UNCITRAL deliberations on this point); 3 UNCITRAL Y.B. 90 (1972). Not every "frivolous" or (even) vexatious claim would be sufficient, but rather only substantiated claims. Cf. Dölle (Neumayer) Articles 52 § 17 (regarding ULIS).

278. Although the Secretariat's Commentary only mentions claims "relating to property," the term should not be translated and characterized in terms of the "dingliche Ansprüche" of German law. See Secretariat's Commentary at 105 § 5. See also Huber at 501.

279. See Secretariat's Commentary at 105 § 5; 3 UNCITRAL Y.B. 68, 90 (1972) (discussions at UNCITRAL).

280. This is clear from the Secretariat's Commentary at 105 § 5. See also 4 UNCITRAL Y.B. 44, 73 (1973) (the reasons behind the omission of ULIS Article 53).

280a. See Schlechtriem, Seller's Obligations at 6-32 (regarding the dangerous consequences for a seller).

281. Article 50 does not include reduction of the price as a remedy for defects in title. The question, however, was not expressly decided at the Vienna Conference. See A/Conf. 97/C.1/SR.23 at 9-10 (= O.R. 349). But see Welser at 122, 123.

282. The provision introduced at Vienna is based on a motion made by the F.R.G. (A/Conf. 97/C.1/L.129= O.R. 110), which was proposed on the basis of Huber's concerns. See Huber at 502.

283. At the Vienna Conference, motions to consolidate the provisions on defects in title and claimed rights to industrial or other intellectual property were therefore unsuccessful. See A/Conf. 97/c.1/SR.17 at 3 et seq. (= O.R. 243); Schlechtriem, Seller's Obligations at 6-33.

284. For a stricter interpretation, see Huber at 503. In the end, according to Huber, the seller is liable only for fraudulently maintaining silence about industrial and other intellectual property rights. This would be too narrow. The Secretariat's Commentary would hold the seller liable - because he could not have been "unaware" - whenever the property rights in question were made public. See Secretariat's Commentary at 109 § 6; see also id. § 4.

285. Unfortunately, a motion by the G.D.R. (A/Conf. 97/C.1/L.134 = O.R. 110) also to introduce here a two-year limitation period was not passed. On the basis of the subjective requirements for liability - awareness or the clear possibility of awareness - and the dispensability of the notice requirement when the seller is aware (Article 43(2)), notice will only be necessary when the seller could not have been unaware of the property rights in question. An additional limitation period for failure to give notice seemed dispensable in these cases.

286. See Articles 40 (defects in quality), 43(2) (defects in title).

287. A claim for specific performance is thus clearly seen as a sanction for not fulfilling a contractual obligation. Compare the corresponding view on claims for performance in ULIS in Dölle (Huber) Article 24 § 6 with Huber, in Festschrift für Ernst von Caemmerer 837 et seq., 847 et seq. (1978). As to details of the buyers remedies, Cf. Plantard and Tercier in Lausanner Kolloquium at 112 and 120; Welser at 116 et seq.

288. A provision like ULIS Article 51 was therefore not needed.

289. Secretariat's Commentary at 116 § 5.

290. A/Conf. 97/C.1/L.175 (= O.R. 119).

291. A/Conf. 97/C.1/SR.24 at 3 § 7 (= O.R. 367) (Ghana). But see Bydlinski at 86.

292. A/Conf. 97/C.1/SR.24 at 3 § 10 (= O.R. 367) (Greece).

293. See supra at III.F. However, Article 28 does not justify the rejection of a claim for repair merely because it is unknown as a remedy under domestic law.

294. This addition originated in a joint motion by Finland, the F.R.G., Norway, and Sweden (A/Conf. 97/C.1/L.199= O.R. 112). The claim for repair includes delivery of the necessary spare parts. The qualification that the repair must be "reasonable" under the given circumstances does not apply when additional deliveries are needed to cure deficiencies in quantity.

295. In part, however, the claim for repair was rejected only in cases in which technical difficulties would arise in the repair, but not where there would simply be a disproportionate cost. See A/Conf. 97/C.1/SR.19 at 304 (= O.R. 335 et seq.) (discussion). The final version, which permits consideration of the circumstances, however, also takes cost into account and, to this extent, corresponds to the German Civil Code § 633(2) sentence 2.

296. See 1978 Draft Convention Article 42(2). As with avoidance, the prerequisite is that the buyer must be able to return the goods. See Article 82 and the commentary thereon, infra at VI.J.1.

297. See A/Conf. 97/C.1/SR.19 at § 47 (= O.R. 337).

298. See A/Conf. 97/C.1/SR.19 at 8 § 53 (= O.R. 337) (French position). For the similarity to the avoidance of contract, see also Article 82.

299. See Article 49(1)(b) and the commentary thereon, infra at VI.B.6.(c).

300. See infra at VI.B.6.(c).

301. Accord, Naón §§ 3, 10 at 19; but cf. Beinert at 89.

301a. Cure is acceptable only if the seller's obligation is met according to the terms of the contract. But see Ziegel, Remedial Provisions at 9-23 (regrets that the Convention is silent on this question).

302. See A/Conf. 97/C.1/L.140 (= O.R. 114) (the motion); A/Conf. 97/C.1/L.160 (= O.R. 114) (Bulgarian motion to the same effect); A/Conf. 97/C.1/SR.20 at 6 et seq. (= O.R. 340 et seq.) (discussion thereon). The German motion is based on Huber's staunch criticism. See Huber at 486 et seq., 490-91.

303. See also A/Conf. 97/C.1/SR.10 at 6 § 39 (= O.R. 341) (position of the Dutch delegate who thought that the German concern could be met by an appropriate interpretation of Article 48); id. at 8 § 48 (= O.R. 342) (similar position taken by Hjerner (Sweden)); Honnold, Commentary § 184.

304. For avoidance of an instalment contract under Article 73, see infra at VI.E.3.

305. See generally Beinert at 50, 66. Beinert's position deviates in part from mine in regard to the function of extending the deadline for performance.

305a. Ziegel sees this as doubtful. See Ziegel, Remedial Provisions at 9-17.

306. Delivery of a different kind of goods (aliud), on the other hand, is a "lack of conformity" and justifies avoidance of the contract, but only if - as would normally be the case - it constitutes a fundamental breach.

307. But see Huber at 509.

308. See A/Conf. 97/C.1/SR.22 at 7 et seq. (= O.R. 253 et seq.) (discussion at the 22^nd session of the First Committee). This argument, which refers primarily to defects in quality, was difficult to refute because of the lack of a provision like ULIS Article 33(2) or German Civil Code § 459(1) sentence 2.

309. See also Bergsten/Miller at 255; 266 et seq. (for the historical development).

310. A/Conf. 97/C.1/L.167 (= O.R. 118).

311. The issue was also raised about which market should serve as a basis for determining the comparable value. The question was not decided. See A/Conf. 97/C.1/SR.23 at 6-7 (= O.R. 359). According to the sense and purpose of the price-reduction provision, the place of the seller's performance would determine the comparable market price. In a sale involving carriage, the destination would provide the appropriate basis of comparison.

312. Cf. Bergsten/Miller at 260 et seq., 274-275. German courts decide the same way in cases of price reduction in construction and similar contracts. See Judgment of Oct. 29, 1964, BGH, 42 BGHZ 232; Judgment of Feb. 24, 1972, BGH, 58 BGHZ 181; the decision referred to in 1979 Z.f.B.R.239.

313. See A/Conf. 97/C.1/SR.23 at 9-10 (= O.R. 359 et seq.) (discussion on defects in title).

314. For instalment contracts, see Article 73(2) and (3).

315. See supra at VI.B.5.(b)

316. See Secretariat's Commentary at 133 § 9.

317. In my opinion, domestic law still controls questions of the validity, the content, and the modalities of the performance of such additional duties. Therefore, the coordination with the system of remedies in Article 61 et seq. may cause problems.

318. A/Conf. 97/C.1/L.232 (= O.R. 120).

319. This method of price determination is above all important for states that will not enact Part II of the Convention. But, in the case of a contract that falls within CISG's sphere of application but, due to the lack of a sufficiently definite offer (and counter-offer by the offeree), was not effectively concluded, I am hesitant about referring to a domestic law that might permit the contract to be considered as concluded. Cf. A/Conf. 97/C.1/SR.29 at 10 § 57 (= O.R. 392) (position of the Greek delegate); Huber at 449-50. Even though it would certainly not be acceptable to all states, one might follow Honnold's interpretation that the term "validity" in Article 55 relates only to requirements of validity other than the determination of price. An offer that is indefinite with respect to the price could then be interpreted in the light of Article 55, i.e., as an implied reference to the price generally charged for such goods. See Honnold, Commentary § 137. Most writers, however, disagree. See Farnsworth, Formation at 3-9 and the references in note 6. Stoffel, Lausanner Kolloquium at 63 tries to help with an implied derogation of the requirements of Article 14 by the parties.

319a. Accord Honnold, Commentary § 354.

320. A joint proposal by Argentina, Spain, and Portugal to permit substitute payment in the party's domestic currency when it is impossible to pay in the currency agreed upon (A/Conf. 97/C.1/201= O.R. 120) found no support. An agreement between the parties or usages can, of course, provide this option.

321. If the seller has more than one place of business or none at all, reference must be made to Article 10.

322. See Huber at 510 (criticism about the lack of a subsidiary rule for the case that the place for handing over the documents has not been determined); see also Huber at 511-12 (the possible modalities of handing over goods or documents and their effect on the place of payment, when the parties have agreed upon immediate payment in exchange for goods).

323. Cf. Judgment of April 4, 1979, BGH, 72 BGHZ 137, 141-42 (regarding ULIS Article 59(1).

324. Cf. Dölle (von Caemmerer) Article 59 § 20.

325. A proposal by the F.R.G. (A/Conf. 97/C.1/L.182= O.R. 122) that would have made the place of payment irrelevant under Article 57 for determining jurisdiction found no support because it was perceived as an interference with domestic jurisdictional rules. See A/Conf. 97/C.1/SR.25 at 6 (= O.R. 368 et seq.). It is doubtful, at least on the international level, whether the desirable interpretation of domestic jurisdictional rules that refer to the place of performance can be achieved, as Huber suggested, by limiting the meaning of the term "place of performance" to the place where the acts are undertaken which are necessary for the debtor's performance.

326. See also Huber at 512.

327. The uncertaintly as to what was meant by "documents controlling [the] disposition [of the goods]" which Huber noted, see Huber at 514, was not clarified in Vienna. The expression concerns chiefly negotiable documents of title and is therefore unsuitable for its function in Article 58. The reference in the Secretariat's Commentary to Articles 30 and 34 can be of some help. See Secretariat's Commentary at 139 note 4. It is not just a matter of delivery of the goods (and the documents controlling them), but rather of performance of the seller's principal obligations. Insurance policies, certificates of origin, etc. relate to the goods and, when in doubt, their delivery must be part of the seller's performance even when they are not always necessary for the further disposition of the goods. The fact that Article 58 is designed to regulate the time of payment and to give the seller the right to withhold the goods until they are paid for justifies the view that "controlling" documents should be interpreted in the sense of Articles 30 and 34. Therefore, even if an insurance policy, for example, is not required for the disposition of the goods, nevertheless, the seller has not placed the goods at the buyer's disposal, according to Article 58(1) sentence 1, until he tenders the policy together with the goods. Moreover, under Article 58(2), the seller has the right to withhold the insurance policy until the buyer pays. For the application of Article 58(1) and (2) to the insurance policy, one need only imagine the case in which the purchased goods are destroyed after the contract has been concluded and the risk of loss has passed to the buyer. For unimportant documents that nevertheless relate to the goods, Article 58(1) and (2), interpreted in the light of Article 7(1), would permit Article 71(1) - concerning the suspension of performance where one party has failed to perform "a substantial part of his obligations" - to be used as a yardstick: If unimportant documents are missing or withheld, the buyer must pay, but he can sue for damages or specific performance. In the end, the solution should correspond to § 320(2) of the German Civil Code.

328. See ULIS Article 72(2); Secretary's Commentary at 141 § 7.

329. While a motion (A/Conf. 97/C.1/L.206= O.R. 123) to clarify this point was rejected, it was nevertheless generally assumed that the seller could decline premature or partial payments. It was believed that only the question of whether the seller must return the money at once needed negotiation. See A/Conf. 97/C./SR.25 at 9 (= O.R. 370).

330. Cf. ULIS Article 69; Secretariat's Commentary at 135 § 5.

331. In contrast to ULIS Article 65, the buyer is only obligated to take measures that could "reasonably be expected" and not all acts that could be considered "necessary".

332. See Huber at 515.

332a. But see Tallon, Buyer's Obligations at 7-15.

333. Cf. Huber at 515-16.

333a. Whether an action for the price is a form of specific performance is controversial. See Ziegel, Remedial Provisions at 9-30 (with further references). In the end, it is merely a problem of denomination, because no one doubts that the action is enforceable against the buyer.

334. In the case of strongly fluctuating foreign-exchange markets, the date agreed upon for payment can be "of the essence". As far as the obligation to take delivery is concerned, the seller's need to clear his warehouse can, under some circumstances, make this an important duty, so that the failure to take delivery can constitute a fundamental breach.

335. But see Article 64(2)(b)(ii); and the accompanying text.

336. See A/Conf. 97/C.1/L.185 (= O.R. 124) (Norwegian proposal): A/Conf. 97/C.1/L.221 (= O.R. 125) (proposal of a working group). Unfortunately, all attempts to achieve a linguistically clearer formulation were unsuccessful. It is not clear whether the proposals were rejected because they were thought to represent merely changes in style, so that late payment is also to be understood as "late performance" in the sense of Article 64(2)(a), or whether, in the case of late payment, a right to avoid is always possible. Cf. A/Conf. 97/C.1/SR.33 at 6-7 (= O.R. 412) (discussion).

337. See A/Conf. 97/C.1/SR.26 at 2 et seq. (= O.R. 372 et seq.) (discussion at the 26^th session of the First Committee).

338. This concerns the seller's duties to communicate the specifications - a communication which is effective upon receipt, to fix a reasonable period of time for the buyer to make the specifications (Article 65(2), which corresponds to the German Commercial Code § 375(2) sentence 2), and to consider the buyer's needs to the extent they are known to the seller (Article 65(1)).

339. An Iraki motion similar to German Commercial Code § 375(2), which would have granted the seller the additional right to avoid the contract when the buyer delays specification, even when the delay does not constitute a fundamental breach (A/Conf. 97/C.1/L.110= O.R. 125), did not find majority support and was therefore withdrawn.

340. See Secretariat's Commentary at 156-57 §§ 4-5.

341. See Huber at 518; Secretariat's Commentary at 157 § 8.

342. See generally Dölle (Huber) ULIS Article 19 § 12 et seq. (development of the concept of delivery).

343. Huber at 451.

344. Regarding the attempts to define "delivery" and the further developments related to the term in the Draft Conventions, see Huber at 451 notes 61, 63; Roth at 294 et seq.; Honnold, Draft Convention at 229; Sevón, Lausanner Kolloquium at 192.

345. A/Conf. 97/5 at 199 § 6 (= O.R. 5 et seq.).

346. See Neumayer, "Zur Revision des Haager Einheitlichen Kaufrechts - Gefahrtragung, Gehilfenhaftung, Fait du Vendeur und Lückenproblem", in Festschrift von Caemmerer 960 et seq. (1978). Huber's view that only a breach by the seller would fall under the exception in Article 66 contradicts both the wording and structure of the Convention as well as the intention of its authors. Nevertheless, his view should take preference as a matter of policy. Although loss or damage caused, partially or entirely, by the seller's proper behaviour (e.g., exercise of his right to stop the goods in transit, or timely and proper delivery) may be excluded from the exception in Article 66 by reasonable interpretation of "due to", Article 66 could be an extraordinary remedy for damage and loss of goods due to behaviour not "covered" by the contract even though the seller would not normally have been liable on the basis of Articles 45-52 in conjunction with Articles 30-44 for such behaviour. These unintended consequences undermine the coherence of the buyer's remedies and their underlying principles and should be avoided by a restrictive interpretation. See also the rather guarded comment by Sevón, Laussanner Kolloquium at 196, 197.

347. Whether, in such a case, the risk does not pass at all to the buyer or whether it passes back to the seller is essentially a question of terminology. See Dölle (Huber) ULIS Article 19 § 159. A motion by the U.S. delegation that would have clarified the matter in Vienna (A/Conf. 97/C.1/L.299 Rev. 1= O.R. 140) caused a lively discussion. See A/Conf. 97/C.1/SR.32 at 10-11 (= O.R. 408). In the end, it was decided that the risk passes back to the seller. Otherwise, it was feared that the risk would remain with the seller, even if he did not exercise his right to avoid the contract. See also Roth at 302 et seq.

348. For German law, see Judgment of Oct. 9, 1980, BGH, 1981 NJW 224, 226.

348a. For a very clear analysis of the basic rules see Bucher, Lausanner Kolloquium at 212 et seq.

348b. A "forwarder" should be regarded as a "carrier" if he takes over the goods in order to arrange for their further transportation or if he transports them himself. See Dölle (Huber) Article 19 § 9 regarding ULIS.

349. See also Secretariat's Commentary at 201 § 6 (CIF as an example); Honnold, Two Approaches at 161 et seq. (the interplay in detail).

350. See Huber at 454; Roth at 296; Honnold, Risk of Loss at 8-11.

351. See Secretariat's Commentary at 201 §§ 9-10. Here "documents controlling the disposition" are all papers which permit disposition over the goods on the basis of the transportation contract, not just the negotiable documents of title. See Huber at 455. Therefore, the documents concerned here are those that represent claims based on the freight contract concerning the goods. On the other hand, in my opinion, the same expression in Article 58(1) and (2) has a different meaning. See supra at VI.C.1.

352. See Huber at 454; Honnold, Commentary § 368; see also Secretariat's Commentary at 201 § 6 (with regard to the equal treatment of "carrier" and "independent carrier"); A/Conf. 97/C.1/SR.32 at 5 § 29 (= O.R. 405); Sevón, Lausanner Kolloquium at 199.

353. Similar situations can be found with regard to the state trade organizations of socialist countries.

354. See infra at 4.

355. Judgment of Sept. 19, 1919, RG, 96 RGZ 258.

356. But see G. Hager, Die Gefahrtragung beim Kauf, Chapter 3-1 § IIA. (1981) (with detailed references to literature and court decisions in the F.R.G.).

357. It is not, however, necessary for the seller to employ his personnel to perform an obligation to transport the goods, which is precisely what he did not obligate himself to do. Under Article 79(1), the seller would be responsible beyond the mere fulfillment of his duties to dispatch the goods.

357a. See Honnold, Commentary § 371.

358. With respect to the necessity of receipt or dispatch of a loading notice, see generally Judgment of Sept. 19, 1916, RG, 88 RGZ 389; Judgment of Dec. 10, 1917, OLG Hamburg, 1919 Hans. GZ 161. See also A/Conf. 97/C.1/SR.31 at 7 (= O.R. 401) (discussion).

359. See H. Haage, Das Abladegeschäft 33 (4^th ed. 1958).

360. ULIS Article 99 only regulates sales involving carriage by sea while CISG covers every mode of carriage.

361. There were practical reasons behind the solution in Article 80 of the 1978 Draft Convention. The condition of the goods is most likely to be recognizable and provable when they are handed over to the carrier, whereas it will often be difficult to establish the precise moment when the goods were damaged or destroyed during transport. Furthermore, in the cases where the goods are damaged, the buyer is usually in a better position to determine the extent of the damage and to assert claims against the carriers or insurance companies. See Secretariat's Commentary at 202-03 § 1; Roth at 298.

362. See A/Conf. 97/C.1/SR.32 at 2-3 (= O.R. 403 et seq.).

363. A/Conf. 97/C.1/L.237 (= O.R. 127).

364. Re-sellers, i.e., middlemen who were originally affected as buyers, were probably intented here.

365. See A/Conf. 97/C.1/SR.32 at 7 §§ 43-44 (= O.R. 406) (final word of the Pakistani delegate); see also A/Conf. 97/8/Add. 5 at 5 (rejection by the Asian-African Legal Consultative Committee).

366. cf. A/Conf. 97/C.1/SR.32 at 3 § 10 (= O.R. 404).

367. A/Conf. 97/L.15 (= O.R. 173). The motion was made by Argentina, Egypt, Pakistan, South Korea and Turkey.

368. See Honnold, Commentary § 372. In the end, the solution already recommended by Neumayer for ULIS was accepted. See Dölle (Neumayer) Article 99 §§ 11, 13. The change in the risk of loss in the sale of goods in transit does not mean that domestic laws are to be taken into consideration so that the sale of a non-existent or no-longer-existent good is void. Under Article 68 sentence 2, it remains possible for the sale to be valid even though the goods had already been destroyed at the time the contract was concluded. Article 68 sentence 3 expressly supposes that a valid contract may be formed in this situation. An Indian proposal to consider invalidity under a domestic law did not receive support. See A/Conf. 97/SR.32 at 6-7 § 38-41 (= O.R. 404).

369. See A/Conf. 97/C.1/SR.32 at 3 § 13 (= O.R. 404) (reasoning of the U.S. delegate).

370. See A/Conf. 97/C.1/SR.32 at 4-5 (= O.R. 404 et seq.) (discussion).

371. See A/Conf. 97/C.1/SR.32 et seq. §§ 21, 32 (= O.R. 404) (arguments of the Norwegian delegate).

372. See Article 79(5).

373. This included those cases of sales involving carriage (Article 67), where for example, the buyer neglects his responsibility to name a particular ship.

374. See A/Conf. 97/C.1/SR.32 at 8 (= O.R. 407). The discussion also concerned a similar Australian motion for the case that the seller does not tender completely because the buyer refuses to pay. The arguments for rejecting both motions contradict each other to some extent. Thus, in my opinion, it has still not been decided whether the risk really passes to the buyer where the seller neither dispatches the goods nor places them at the buyer's disposal due to the buyer's delay in payment or his failure to provide a letter of credit. My impression is that the consequences of these motions were not fully appreciated. The solution can be found on the basis of Article 7(2). A general principle can be derived from Article 67 and 69, namely that the seller no longer bears the risk once he has relinquished control over the goods in accordance with the contract or has been prevented from doing so by the buyer's acts or omissions which are not in accordance with the contract. The risk should therefore pass in this case not only when the buyer does not take delivery of the goods - the buyer's failure to take delivery would normally keep the risk from passing - but also when the buyer, in violation of the contract, fails to cooperate or fulfill the necessary delivery requirements.

375. The case is not explicitly regulated, but the solution follows from Article 67(2). Cf. Huber at 456; Hartley, supra note 36, § 8.21.

376. For the case of warehoused goods, this requires a valid claim against the warehouseman or an order that he release the goods. See Dölle (Neumayer) Article 97 § 10 (for ULIS); Honnold, Commentary § 377 (for CISG).

377. Cf. Secretariat's Commentary at 205 § 6.

378. See A/Conf. 97/C.1/L.187 (= O.R. 129) (proposal by the F.R.G.).

379. See A/Conf. 97/C.1/SR.26 at 6 § 41 (= O.R. 374).

380. Delegates from Italy and France commented that middlesized businesses deeply involved in exports often find themselves in a difficult liquidity situation; the argument by the Mexican delegate was similar. See A/Conf. 97/C.1/SR.26 at 8 § 54 (= O.R. 375). The fears expressed in conjunction with the Egyptian motion (A/Conf. 97/C.1/L.249, L.250= O.R. 129), which led to the reopening of the deliberations, were along the same lines, namely that such extensive consideration of the other party's ability to perform would be especially disadvantageous to parties in developing countries. See infra in the text.

381. See A/Conf. 97/C.1/R.26 at 9 § 61 (= O.R. 376) (French position); A/Conf. 97/C.1/SR.26 at 10 § 66 (= O.R. 376) (Mexican position); A/Conf. 97/C.1/SR.26 at 7 § 46 (= O.R. 376) (Italian position). The minutes of the Conference, which do not reproduce the discussions literally, do not sufficiently reflect the fact that many believed that domestic rules on avoidance for mistake should be applicable in such cases, but I frequently heard this argument in the unofficial discussions.

382. A/Conf. 97/C.1/L.249, L.250 (= O.R. 129).

383. Cf. A/Conf. 97/C.1/SR.35 at 2 et seq. (= O.R. 420 et seq.); id. SR. 37 at 11 et seq. (= O.R. 429); id. SR.38 at 2 (= O.R. 433). The F.R.G. was represented in this working group.

383a. I am indebted for this insight to Honnold's convincing arguments. See Honnold, Commentary § 393.

384. A/Conf. 97/C.1/L.249 (= O.R. 129).

385. See infra at VI.E. 2.

386. The formulation in the 1978 Draft Convention Article 62(1) - whereby the deterioration must give "good grounds to conclude" that the other party will not perform - was perceived as being too subjective. However, the present formulation should not indicate a restriction to only those cases in which non-performance is absolutely certain. Cf. A/Conf. 97/C.1/SR.37 at 11 § 95 (= O.R. 431). In the opinion of the Canadian delegate, there is not even an appreciable difference between the formulation "it becomes apparent" and "good grounds to conclude that the other party will not perform". See A/Conf. 97/C.1/SR.38 at 2 § 8 (= O.R. 433); see also A/Conf. 97/C.1/SR.37 at 12 § 104 (= O.R. 432) (U.S. interpretation); infra at E.3.

387. See Secretariat's Commentary at 162 §13.

388. Article 63 of the 1978 Draft Convention passed the First Committee without difficulties, but then became controversial on the basis of the Egyptian proposals to link suspension of performance with avoidance of the contract due to an anticipatory breach. See supra at VI.E.1. In the end, however the separation of the two remedies was maintained. The decisive proposal came from a working group that was appointed after the Egyptian proposal had been rejected.

389. See the examples in the Secretariat's Commentary: The seller's factory burns down; an embargo is imposed; currency exchange laws prevent payment. Secretariat's Commentary at 164 § 2.

390. See A/Conf. 97/C.1/SR.37 at 11-12 (= O.R. 431); A/Conf. 97/SR.9 at 7 et seq. (= O.R. 216) (Plenary).

391. See A/Conf. 97/C.1/SR.37 at 12 et seq. §§ 104, 105 (= O.R. 432) (U.S. and Norwegian arguments).

391a. See Ziegel, Remedial Provisions at 9-34; ("surely [a] minor verbal issue".).

391b. See Ziegel, Remedial Provisions at 9-35; contra Honnold Commentary § 394.

392. Cases in which the buyer's intended use of the goods make the instalments interdependent on each other can be found not only in cases of technical integration, such as the delivery of a machine in individual parts, but also in economic circumstances, such as when the successive delivers of raw materials must all be of the same quality in order to fulfill the buyer's intended purposes. See the example in the Secretariat's Commentary at 168 § 8.

393. Cf. infra at VI.I. (regarding Article 80).

394. Cf. D. König, "Voraussehbarkeit des Schadens als Grenze vertraglicher Haftung zu Artt. 72, 86, 87 (EKG)", in Das Haager Einheitliche Kaufgesetz und das Deutsche Schuldrecht, Kolloquium zum 65. Geb. von Ernst von Caemmerer 75 et seq. (1973); Dölle (Weitnauer) ULIS Articles 82-89 § 25 et seq.

395. Cf. Schlechtriem, supra note 42, at 48-49.

396. Cf. König, supra note 394, at 75 et seq.; see also Huber at 499; Schlechtriem, supra note 42, at 51-52.

397. See supra at III.G.

398. The seller of a defective machine that causes a fire and consequently destroys the buyer's plant cannot, therefore, use the buyer's failure to give notice under Article 39 to defeat the buyer's tort claims under domestic law. This result, however, contrasts to the majority opinion on failure to give notice in the F.R.G. in cases where the German Commercial Code § 377 applies. See supra at III.G.

398a. This includes "lost volume" losses if these were foreseeable. Ziegel, Remedial Provisions at 9-41; Honnold Commentary § 415.

399. See also ULIS Article 85; but cf. the narrower requirements in the German Commercial Code § 376(3).

400. Contra Huber at 470-71.

401. See Secretariat's Commentary at 188 note 3.

402. See A/Conf. 97/C.1/SR.30 at 4 et seq. (= O.R. 395) (discussion).

403. Whereas the First Committee had rejected a motion to this effect by Norway (A/Conf. 97/C.1/L.194= O.R. 132), a corresponding motion brought jointly by Australia, Greece, Mexico, Norway, and Turkey (A/Conf. 97/L.11 = O.R. 172) was, surprisingly, passed by the necessary two-thirds majority. See A/Conf. 97/C.1/SR.10 at 6 et seq. (= O.R. 285 et seq.) (discussion).

404. Reference to the time of avoidance corresponds to ULIS Article 84(1), but it must be remembered that, in ULIS, the contract is voided by operation of law in important cases, so that the other party cannot speculate by choosing between a claim for performance and an avoidance. Cf. ULIS Article 61(2), 25 sentence 2; Hellner, Ipso Facto Avoidance at 95 et seq.

405. But see Huber at 471 (a slightly differing view).

406. A/Conf. 97/C.1/L.228 (= O.R. 133).

407. See A/Conf. 97/C.1/SR.30 at 7-8 (= O.R. 396); see generally Honnold, Commentary § 419, which is the authoritative source for the reasons underlying this proposal.

407a. See also Ziegel, Remedial Provisions at 9-41.

408. In my opinion, the solution to the buyer's firm refusal to take delivery in the example given can be found with the help of the duty to mitigate damages in Article 77 sentence 1, which would require a timely avoidance of the contract by the seller under Article 72. This duty was breached by the seller. The obligation to pay the (full) purchase price would be the buyer's damages, recoverable for the seller's breach.

409. This corresponds to ULIS Article 81(1). However, for the more important case of delay in payment, ULIS Article 83 provided for the payment of interest as damages. The various UNCITRAL drafts also contained different rules. Cf. 1977 Draft Convention Article 58.

410. A/Conf. 97/C.1/L.216, 218, 222, 226 Rev. 1, 247 (= O.R. 137); A/Conf. 97/L.16, 18 (= O.R. 173).

411. See A/Conf. 97/C.1/SR.34 at 4 § 10 (= O.R. 416) (Egyptian proposal for a reservation clause).

412. The U.K. repeatedly submitted motions and proposals to this effect.

413. The details of the discussion cannot be repeated here at length. See A/Conf. 97/C.1/SR.29 at 2 et seq. (= O.R. 388 et seq.); id. SR.34 at 2 et seq. (= O.R. 415 et seq.); A/Conf. 97/SR.10 at 8 et seq. (= O.R. 220) (Plenary); id. SR.11 at 3 et seq. (= O.R. 226).

414. To the extent applicable domestic law prohibits interest payments, Article 78 would, of course, be unenforceable.

415. It was primarily the F.R.G. that defended this reservation of damage claims (for lost use of capital).

416. For further discussion on the gaps in the avoidance provisions, see infra at VI.J.4.

416a. This includes defects. After a thorough analysis, Nicholas, however, concluded that the word "impediment" was used to prevent application of Article 79 in the case of non-conformity. See Nicholas at 5-10. But even if a defect is regarded as an "impediment", the seller will rarely be excused. See H.C.H. Salger, Beschaffung und Beschaffenheit at 56-58 (1985).

416b. See Nicholas at 5-2 (improvements in detail and a greater internal consistency, but . . . ).

417. Cf. 5 UNCITRAL Y.B. 58 (1974). Despite Nicholas' doubts, German jurists should not, and most likely will not, read the fault principle into the text of Article 79. See Nicholas at 5-12. See for the Swiss position Vischer, Lausanner Kolloquium at 174.

417a. But see Nicholas 5-7 (skeptical about determining the respective sphere of risk).

418. Cf. Secretariat's Commentary at 169-70 §§ 5-6.

419. Accord Huber at 466; Nicholas at 5-8.

420. Cf. Secretariat's Commentary at 170 § 6.

420a. Contra Naón § 3.18 at 24.

421. See also Secretariat's Commentary at 169 § 4.

422. Cf. Nicholas, Force Majeure at 240; see also 5 UNCITRAL Y.B. 39, 66-67 (1974); 6 UNCITRAL Y.B. 84-85 (1975); 8 UNCITRAL Y.B. 57 § 459; id. at 135 § 24; id. at 160 § 14.

422a. It is imperative, in my opinion to treat radically changed circumstances as "impediments" under Article 79 in exceptional cases in order to avoid the danger that courts will find a gap in the Convention and invoke domestic laws and their widely divergent solutions. But see Vischer, Lausanner Kolloquium at 177, who considers this as unavoidable.

423. The question was not specifically discussed again in Vienna. There was considerable hesitation about giving consideration to unforeseen changes in the underlying basis of the contract. This again became clear in connection with a Norwegian proposal (A/Conf. 97/C.1/L.191/Rev. 1 = O.R. 134). The Norwegian proposal concerned the case of temporary impediments which later vanish. In that case, consideration would be given to the fact that the economic situation of the debtor might fully have changed. Though the contractual agreement should be decisive in this situation, some delegates apparently assumed that recourse to domestic law would still be possible. See A/Conf. 97/C.1/SR.27, at 9 § 58; id. at 20 § 59 (= O.R. 381). By the acceptance of the Norwegian amendment to delete the word "only" in Article 79(3), it became clear that, even if the original impediment is removed, it is still possible that a new exemption can arise for the debtor if there is a change in circumstances. In the discussion on the proposal to release a party from his duty to perform, the Norwegian interpretation - that a party could also be exempted for economic reasons - remained uncontested. See A/Conf. 97/C.1/SR.28 at 5 § 28 (= O.R. 384). But see Nicholas at 5-18 (skeptical opinion). Contra Vischer, Lausanner Kolloquium at 176.

424. A/Conf. 97/C.1/L.208 (= O.R. 134 et seq.).

425. A/Conf. 97/C.1/L.191 Rev. 1 (= O.R. 134 et seq.).

426. See A/Conf. 97/C.1/SR.26 at 5 § 25 (= O.R. 373) (position of the Swedish delegate).

427. See A/Conf. 97/C.1/SR.27 at 10 § 59 (= O.R. 381) (French position).

428. See A/Conf. 97/C.1/SR.28 at 5 § 26 (= O.R. 384) (French position).

429. Unfortunately, they were brought to a vote separately, although they were concerned with the same principle. My impression is that the result would have been different if they had been brought to a vote together.

429a. See also Nicholas at 5-18.

430. But see supra note 416a (as to the likelihood of this exception). Cf. also Vischer, Lausanner Kolloquium at 177.

431. The responsibility for one's own personnel is, however, governed by paragraph (1). See text infra.

431a. The discussions centered on sub-contractors. Nicholas interprets Article 79(2) as applying only to this class of "third persons". Nicholas at 5-22. But see judgment of March 3, 1984, BGH, 1984 NJW 2035 as to the buyer's responsibility for his lessee not taking delivery.

432. Already in the January-February 1974 sessions of the UNCITRAL Working Group, this led to considerable differences of opinion with respect to the first oil crisis. See A/Conf. 97/C.1/SR.27 at 5 § 24 (= O.R. 379) (report of the Japanese rapporteur).

433. Those proposals and motions which were designed to increase the liability of the seller for acts or omissions of third persons provided for the deletion of paragraph (2) (e.g., the Turkish motion, A/Conf. 97/C.1/L.210= O.R. 134), while others sought to reformulate it. See A/Conf. 97/C.1/L.186, L.190 (= O.R. 134) (proposals of Denmark and Finland). The reason for the proposals' divergent aims was that there was no agreement on the meaning of paragraph (2): Some saw it as an extension of responsibility and some as an extension of the grounds for exemption. See A.Conf. 97/C.1/SR.27 at 4 et seq. (= O.R. 378 et seq.) (discussion). The alternative proposals submitted by a working group (A/Conf.97/C.1/L.243= O.R. 135) again provided for either the increased liability for third persons or the deletion of paragraph (2). The majority, which favoured increased liability for third persons, again misunderstood the new formulation of paragraph (2) as an expansion of the possibilities for exemption and therefore rejected the proposal. Cf. A/Conf. 97/C.1/SR.33 at 2 et seq. (= O.R. 410 et seq.) (discussion).

433a. Accord Nicholas at 5-23.

434. See supra at VI.G. (as to interest).

435. See supra notes 423, 425.

436. See supra note 423.

437. A Norwegian proposal (A/Conf. 97/C.1/L.191 Rev. 1= O.R. 134) to make this notice subject to the dispatch principle under Article 27 was rejected. See A/Conf. 97/C.1/SR.28 at 2 et seq. (= O.R. 383).

438. A/Conf. 97/C.1/L.217 (= O.R. 134).

439. Cf. A.Conf. 97/C.1/SR.28 at 8 (= O.R. 386).

440. A.Conf. 97/C.1/L.217 (= O.R. 134).

441. See A/Conf. 97/C.1/SR.28 at 9 § 55 (= O.R. 386) (position of the Swiss delegate; see also id. at 10 § 61 (= O.R. 387) (position of the Romanian delegate).

442. Cf. A/Conf. 97/C.1/SR.30 at 2 (= O.R. 393) (discussion).

443. Cf. Huber at 494 (on ULIS Article 79(2)(a)).

444. This is clearer in ULIS Article 79(2)(d).

445. The Convention decided for a right of avoidance despite loss or damage of the goods after the passing of risk. See Article 70. This basic decision would be significantly altered by a strict interpretation of Article 82(2)(a). See generally von Caemmerer, in Festschrift für Karl Larenz 692 et seq. (1973).

446. In contrast to ULIS Article 79, therefore, the seller carries the risk if the buyer, having transferred the item to a third person before discovering the defect, cannot get the item back from the transferee. See Huber at 493-94.

447. See A/Conf. 97/C.1/SR.28 at 11-12, primarily § 72 ( = O.R. 387 et seq.). The discussion confirms, however, the buyer's duty to return the goods, which can lead to a restriction of the right to a substitute delivery when it is impossible to return the goods as provided in Article 82. See Huber at 493.

448. Cf. Secretariat's Commentary at 176-77 § 10.

449. Cf. supra at VI.G. The Secretariat's Commentary assumed that the seller would be required to pay interest at the rate that is customary where his place of business is located, since that it where he made use of the purchase price. See Secretariat's Commentary at 180 § 2. This should be the result, even if (as an exception to the rule) domestic law, invoked subsidiarily, refers to the creditor's loss to determine the nature and extent of the claim stemming from avoidance. When there is a delay in the repayment for which the seller is responsible, the damage claim should, nevertheless, still be available from the time the duty to repay arises, and the obligee should be permitted to calculate his damages based on his own credit costs. Cf. infra at J.4; supra at VI.G.

450. As a rule, circumstances for which the buyer is responsible and which have caused the loss or deterioration of the goods before an avoidance has been declared preclude the remedies of avoidance or substitute delivery under Article 82. Thus, the buyer's responsibility and duty to return the goods can become relevant only in the case of insubstantial deterioration.

451. Cf. Judgment of Oct. 22, 1980, BGH, 1981 WM 68-69 (with respect to ULIS).

452. Contra Huber at 494-95; see Dölle (Weitnauer) Article 79 § 13 (with respect to ULIS).

453. Cf. supra at VI.G.

454. Cf. Dölle (Weitnauer) Article 79 § 6 (with respect to ULIS); but cf. Judgment of Oct. 22, 1980, BGH, 1981 WM 68-69. See generally Schlechtriem, Auslegung und Lückenfüllung im Internationalen Einheitsrecht: Erfüllungsort für Rückabwicklungen im EuGVÜ und EKG, 1 IPRax 173 (1981).

455. With regard to Article 74 of the 1978 Draft Convention, it was clarified in Vienna that delay in payment, like delay in taking delivery, can be treated as a prerequisite for the duty to preserve the goods.

456. The discussion on a Chinese motion made it clear that Article 86(1) is not intended to provide an additional right to return the goods. Rather, the right to avoid the contract or demand substitute delivery is presupposed. See A/Conf. 97/C.1/SR.30 at 12-13 (= O.R. 398 et seq.).

457. On the basis of an Australian motion, it was clarified that the buyer in this case can also demand reimbursement for his expenses and retain possession of the goods until he is paid. See Article 86(2) sentence 3; A/Conf. 97/C.1/SR.31 at 2-3 (= O.R. 399 et seq.) (discussion).

458. See Secretariat's Commentary at 197 § 6, but cf. also O.R. 174, 175 for the redrafting in the Plenary.

459. See A/Conf. 97/C.1/SR.33 at 7 § 54 (= O.R. 413) (working group's reasons for the proposal).

460. Cf. A/Conf. 97/C.1/SR.31 at 4-5 (= O.R. 400 et seq.) (as to the fears that the period could be doubled).

461. Huber at 17.

462. As to the accession of states that are not signatory states, see Article 91(3).

463. For the states that accept or accede to the Convention after the deposit of the tenth instrument, see Article 99(2).

464. See A/Conf. 97/C.1/L.3 (= O.R. 144 et seq.) (Australian motion); A/Conf. 97/C.1/L.10 (= O.R. 86) (the corresponding Canadian motion in the First Committee); A/Conf. 97/C.1/SR.1 at 8 § 46 et seq. (= O.R. 437 et seq.) (U.K.'s support for these motions in the discussion).

465. As to this problem, see supra at III.H.

466. At the Vienna Conference, Australia and Canada especially emphasized the need for the special rule. See A/Conf. 97/C.1/SR.1 at 2 et seq. (= O.R. 434 et seq.).

467. Cf. A/Conf. 97/C.1/SR.1 at 2 para 34, 36 (= O.R. 436).

468. See supra at IV.E.

469. E.g., successful effects to unify the law (Article 94); introduction of provisions on form requirements in domestic law (Article 96).

470. See generally Landfermann, supra note 275 (a comprehensive report on the 1974 Convention on the Limitation Period).

471. Cf. id. At 266 et seq.

472. Cf. Stumpf, disagrees with this view. See Stumpf, Das UNCITRAL Übereinkommen über den Warenkauf und Allgemeine Geschäftsbedingungen - viel Lärm um Nichts?, 1984 RIW/AWD 352.

Index

Barter (section III.A.)
Battle of the forms (section V.D.1.)
Buyer
- breach of contract by (section II.)
- obligations of the (section VI.C.)
- protection (section I.B.; section III.D.1.; section III.F.; section III.G.)
- right to revoke an installment contract (section III.F.)
Buyer's obligation
- to take delivery (section VI.C.2.)
Buyer's remedies
- for breach of contract (section VI.B.6.)

Capacity
- legal (section III.F.)
- to contract (section III.F.)
Carriage
- obligations in connection with (section VI.B.2.)
Carrier (section VI.D.1.)
- first (section VI.D.1.)
- independent (section VI.D.1.)
Choice of an applicable law (section III.D.2.; section III.H.; section IV.A.)
Cognizance
- theory of (section V.B.)
Commercial character (section III.C.)
Communications
- means of (section VI.A.3.)
Conflict of laws (section VI.A.4.)
- application of the Convention (section III.A.; section III.H.; section IV.D.)
Conformity of the goods (section VI.B.1.)
- details of (section VI.B.5.a))
Consensus
- external (section V.A.)
Consideration (section IV.E.; section VI.A.5.)
Consumer
- protection laws (section III.D.1; section III.F.)
- purchases (section III.D.I.)
Contract
- modification and termination of (section VI.A.5.)
- perfection of the (section V.A.)
Contracting State (section III.A.)
- obligations of the Contracting States (section II.; section III.D.)
Contracts
- for delivery of goods including their installation (section IIi.e.)
- for labor or services (section IIi.e.)
Controls
- for export or import (section III.F.)
Counter-offer (section V.C.)
Culpa in contrahendo (section V.D.4.)
Customs (section IV.C.)

Damages
- compensatory (section VI.B.5.b); section VI.F.)
- extent of (section VI.F.)
- measurement of (section VI.F.)
- limitation of (section VI.F.)
- secondary (section VI.F.)
Declaration
- to terminate the contract (section VI.A.5.)
Defects
- in quality (section VI.B.5.a))
- in quantity (section VI.B.5.a))
Deficiencies
- in quantity (section VI.B.5.)
Delay
- in payment (section VI.C.3.)
Delivery
- concept of (section VI.B.; section VI.D.)
- of different goods (section VI.B.5.a))
- of substitute goods (section VI.B;.6.a); section VI.D.)
- place of (section VI.B.1.)
- time for (section VI.B.3.)
Depositary
- for the Convention (section VII.A.)
Deterioration
- danger of (section VI.K.1)
Disclaimers (section VI.H.)
Discrepancy
- in intent (section IV.B.)
- in offer and acceptance (section V.C.)
Dispatch principle (section VI.C.3)
Document(s)
- correction of (section VI.B.4.)
- handing over (section VI.B.4.)
- non-conformities (section VI.B.4)
- warehouse document (section VI.D.4)
Duty
- to mitigate damages (section VI.F.2.)

Early delivery (section VI.B.6.f))
Economic difficulties (section VI.H.)
Economic impossibility (section VI.H.)
Electricity (section III.D.2.)
Employer (section VI.H.)
Error (section III.F.)
Evidence
- written (section IV.E.)
examination of the goods
- by the buyer (section VI.B.5.b))
- postponement of (section VI.B.5.b))
- time for (section VI.B.5.b))
Excess quantity (section VI.B.6.f))
Exemptions (section VI.H.)
Expenses (section VI.K.1)
Exclusion of CISG
- express (section III.H.)
- implied (section III.H.)

Family use (section III.D.1)
Failure of performance
- caused by the other party (section VI.I.)
Failure to examine the goods (section VI.B.5.b))
Failure to give timely notice (section VI.B.5.b.))
Federal state clause (section VII.B.)
Final provisions (section VII.)
Fishing boats (section III.D.2.)
Foreseeability (section VI.A.1.; section VI.F.)
Form (section IV.E.)
- controlling law on (section IV.E.)
- freedom of (section IV.E.)
- requirements (section IV.E.)
Formation
- of contract (section V; section V.A.)
- lack of (section V.A.)
Forum
- choice of (section VI.A.4.)
Forwarder (section VI.D.1.)
Fraud (section III.F.)
Fundamental (section VI.D.)
Fundamental breach (section VI.A.1.; section VI.B.6.a); section VI.C.3.)
- to be expected (section Vi.e.2.)
- with regard to the instalment (section Vi.e.3.)
Fundamental breach of contract (section VI.A.1; section VI.B.6.c); section VI.D.)

Gap filling (section IV.A.)
Gaps (section V.J.4.)
General principles (section IV.A.)
Good faith
- in international trade (section IV.A.)
Goods
- to be manufactured or produced (section IIi.e.)
- to be picked up at the seller's place of business (section VI.D.3.)
- to be taken over at another place than the seller's place of business (section VI.D.4.)
- warehoused (section VI.D.4.)
Guarantees (section VI.H.)

Habitual residence (section IV.D.)
Hovercraft (section III.D.2.)
Household use (section III.D.1)

Identification
- of the goods (section VI.D.1.)
- requirement for passage of risk (section VI.D.1.)
- of goods to the contract (section VI.D.1.)
Impediment
- to performance (section VI.H.)
- beyond control (section VI.H.)
- unforseeable (section VI.H.)
- temporary (section VI.H.)
Incoterms (section IV.C.; section VI.B.1.; section VI.D.1.)
Industrial property rights (section VI.B.5.c)(2))
Instalment contracts (section III.D.1.; section III.F.; section Vi.e.1.)
Instalment payments (section Vi.e.1.)
Instalment purchase (section III.D.1)
Intellectual property rights (section VI.B.5.c)(2))
Intent
- declarations of (section V.A.)
Intentions
- concurrence of (section V.A.)
Interest (section VI.G.)
Internationality of the transaction (section III.C.)
Interpretation (section IV.A.)
- of party's statements (section IV.B.)
- of conduct (section IV.B.)

Know-how
- transfer of (section III.F.)

Lack of conformity
- part of the goods (section VI.B.6.c))
Late acceptance (section V.C.)
Letter of confirmation (section IV.C.; section V.D.2.)
Liability
- for death or personal injury (section III.G.)
Limitations of actions (section VI.B.5.b); section VIII)
Limitations
- on liability (section VI.H.)
Liquidated damages (section VI.F.)
Lost profits (section VI.B.5.b))
Lost volume losses (section VI.F.1.)

Main features of the Convention (section II.)
Market price rule (section VI.F.1.)
Mistake
- avoidance for (section VI.B.6; section Vi.e.1.)
Mitigation of damages
- duty of (section VI.F.2)
Modification
- of contract (section IV.E.; section VI.A.5.)
Moment
- when a contract is formed (section V.A.)
Money (section III.D.2.)

Nationality of the parties (section III.C.)
Negotiable instruments (section III.D.2.)
Non-performance
- part of the goods (section VI.B.6.e))
Notice
- of consignment (section VI.B.2.)
- by the buyer (section VI.B.5.b); section VI.B.6.a))
- of non-conformity (section VI.B.5.b); section VI.B.6.a))
- of release (section VI.D.4.; section Vi.e.1.)
- of the intent to avoid (section Vi.e.2.)
- of an impediment (section VI.H.)
Notification (section VI.B.5.b))

Offer (section V.A.)
- public (section V.B.)
- revocation of an (section V.B.)
- withdrawal of an (section V.B.)
- irrevocably binding (section V.B.)
- rejection of an (section V.B.)
Official permits (section V.D.3.)
Opting-in or -out (section III.H.; section VI.B.)

Partial non-performance (section VI.B.6.c))
Party autonomy (section VI.H.)
Payment
- place and time (section VI.C.1.)
- on delivery (section VI.C.2.)
- partial (section VI.C.2.)
- premature (section VI.C.2.)
Penalty clauses (section VI.J.2.)
Penalties (section VI.H.)
Performance
- claims for (section VI.B.6.a))
- by repairs or additional deliveries (section VI.B.6.a))
- specific (section VI.A.4; section VI.B.6.a))
Period
- additional period of time (section VI.B.6.a); section VI.C.3.)
- additional / since (section VI.B.6.a))
Period of grace (section VI.C.)
Personal injury (section III.G.)
Personal use (section III.D.1.)
Place of business (section III.B.; section IV.D.)
Preponderant part (section IIi.e.)
Price
- determined or determinable (section V.B.)
- requirement of a definite (section V.B.)
- obligation to pay (section VI.C.1.)
Price determinability (section V.B.)
Price reduction (section VI.B.6.d))
Principle
- good faith (section IV.A.)
Private international law (section III.A.)
Products liability (section III.G.; section VI.F.1)
Property damage (section III.G.; section VI.F.1.)
Public policy (section III.F.)
Purchase
- local (section VI.D.3.)
Purpose
- usual (section VI.B.5.a))
- particular (section VI.B.5.a))

Reasonable excuse
- for failure to give notice (section VI.B.5.b))
Reasonable person (section II.; section VI.B.5.b); section VI.B.5.c)(2))
- the standard of the reasonable person (section IV.B.)
- understanding of a reasonable person (section IV.B.)
Receipt
- principle of (section VI.A.3.)
Reduction of the price (section VI.B.6.d))
Request
- late performance (section VI.B.6c))
Requirements (section III.A.; section III.C.)
- registration (section III.D.2.)
Requirements of
- consumer protection law (section III.D.1.)
Reservations (section VII.B.)
Restitution
- of benefits received (section VI.J.3.)
Right
- to cure (section VI.B.5.a); section VI.B.6.b))
- to denounce 1964 Hague Conventions (section VII.A.)
- to inspect the goods (section VI.C.1.)
- to withhold delivery (section VI.C.1.)
Risk
- passing of (section VI.D.)

Sale involving carriage
- passing of risk (section VI.D.1.)
Second tendering (section VI.B.6.b))
Securities (section III.D.2.)
Self-help sale
- right to (section VI.K.2.)
Seller's remedies (section VI.C.3.)
Sphere of application (section III.)
Ships (section III.D.2.)
Silence
- acceptance (section V.C.)
Specific performance (section VI.A.4.)
Structure
- of the Convention (section II.)
Subcontractor (section VI.H.)
Supplier (section VI.H.)
Suspension
- of performance (section Vi.e.1.)
- avoidance based on anticipated breach (section Vi.e.2.)
Standard contract terms (section III.F.; section V.D)
Stocks (section III.D.2.)
Stoppage in transit
- right of (section VI.D.1.)
Structure of Convention (section II.)

Technology
- transfer of (section IIi.e.)
Termination
- by agreement (section IV.E.)
- of contract (section VI.A.5.)
Third-party claims (section VI.B.5.c)(1))
Trade usage
- according to German law (section III.C.)
Trade usages (section III.C.; section V.B.)
Transfer of title (section III.F.)
Transit
- sale of goods during (section VI.D.2.)
Transport documents
- passing of risk (section VI.D.1.)

Unconscionability (section III.F.)
Unfairness (section III.F.)
Usages (section III.F.)
- international (section III.F.; section IV.C.)
Usages (section IV.F.)
- formation of the contract (section IV.C.)
- examination of the goods (section VI.B.5.b))

Validity
- of the contract (section III.D.1.; section III.F.)
- of contract provisions (section III.D.1.; section III.F.; section IV.C.)

Warranty(ies) (section VI.B.5.a))
Writing
- as form requirement (section IV.E.)

Yachts (section III.D.2.)

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