I. Introduction to the CISG

II. The Doctrine of Good Faith in National Jurisdictions

III. The Doctrine of Good Faith in the CISG

IV. The Application and Enforcement of Article 7

V. Reform

VI. Conclusion

INTRODUCTION

A. The Harmonisation Movement

The last fifty years have witnessed a resurgence in the drive to harmonise international trade law. The work of many international organisations has produced a plethora of legal instruments covering a diverse range of topics. The harmonisation movement stems from the realisation that the absence of a supranational law is inimical to the growth of international trade.

Without a uniform law, any international transaction is potentially governed by a number of domestic laws. The governing law can only be determined by recourse to the forum's conflicts rules. Unless these rules have previously been unified, their content differs from forum to forum. Thus, it is perfectly possible for a plaintiff to "forum shop" for a favourable law. The inability to pinpoint the legal significance of the parties' agreement from its inception undermines the certainty and stability of the transaction.

A choice of law will not necessarily ameliorate all these difficulties. Quite apart from the fact that the forum may not necessarily recognise the parties' choice of law, at least one of the parties may be loath to commit to an unfamiliar law, especially if it is perceived to favour the other. In addition, that jurisdiction's laws may not be sufficiently attuned to the demands of international trade.[1] When a dispute erupts, litigation based on an unfamiliar law (and sometimes in unfamiliar territory) only adds to the costs of the transaction.

A unified law, however, can solve many of these problems. A unification instrument can seek to harmonise either procedural or substantive law. If properly done, a harmonisation instrument will produce one regime that is neutral, clear and comprehensible, thus adding significantly to the stability, predictability and convenience of the transaction. At the same time, a harmonisation effort offers an opportunity to make a clean break from the "awesome relics from the dead past"[2] and institute significant reforms.

B. The Thesis and Organisation of the Paper

An inept harmonisation effort, however, would only compound the problem. A harmonisation effort can be thwarted at two stages - the drafting stage and the application and enforcement stage. This paper seeks to examine these general problems through the lens of one particular problem encountered in the 1980 Vienna Convention on Contracts for the International Sale of Goods ("CISG").[3] The position of good faith in the Convention has proven to be one of the most enduring disputes encountered in the drafting, interpretation and enforcement of the Convention. The different positions that the doctrine [4] occupies in the domestic laws of the various legal families are symptomatic of the gulf in legal traditions that the CISG has had to bridge.

This paper will look at the scope and application of the doctrine of good faith in the CISG in five main parts. The first part will introduce the reader to the birth and the scope of the CISG in general. The remaining parts of the paper focus on the doctrine of good faith itself. In order to understand why the concept of good faith was such a contentious topic during the drafting of the Convention, it is essential to have some sense of the number of competing national approaches to the doctrine. To this end, the second part of the paper offers the reader a general introduction to the doctrine of good faith before turning to the different ways civil law and common law jurisdictions have approached the doctrine. The third part of the paper concentrates on the scope of the doctrine of good faith in the Convention itself. It will examine a variety of possible interpretations and argue that the role of good faith should be limited in the particular circumstances of the Convention. The fourth part of the paper focuses on the problems that have been encountered in the actual application of the doctrine in the context of the CISG. It will demonstrate that judicial and arbitral interpretation and application of the doctrine have only exacerbated problems and discuss the reasons for this phenomenon. In its fifth part, the paper will proffer some suggestions for reform.

I. INTRODUCTION TO THE CISG

A. The Genesis of the CISG

The CISG had its genesis in a suggestion in 1928 by Ernst Rabel that the International Institute for the Unification of Private Law (UNIDROIT) work on unifying the law relating to the international sale of goods. This resulted in two draft Conventions: one relating to a Uniform Law of International Sale and one relating to a Uniform Law on Formation of Contracts for the International Sale of Goods (the "Hague Conventions"). Although these Conventions were adopted at a 1964 Diplomatic Conference at the Hague, they did not meet with widespread success. They were implemented by only 9 States.[5] The instruments were perceived to be the product of continental Western Europe and not representative of the world's legal traditions. In fact, at the 1964 Conference, Latin America was represented only by Colombia, Asia by Japan and Africa by Egypt.[6]

Thus, when the United Nations Commission on International Trade Law (UNCITRAL) resumed work in the area in 1968, it was careful to ensure widespread participation and representation. It allocated permanent seats among the regions of the world and chose its drafting committee in a way that would "represent and insure the involvement, feedback, and support from the distinct legal systems of this world, including the common law, the civil law, the law of communist countries with an affinity to the civil law but with a different ideological basis, the Islamic law, Hindu law, Chinese law, and numerous systems with mixtures thereof."[7]

Ironically, its strength was also its weakness. The diverse representation multiplied the number of potential fault lines and increased the scope for disagreement. Indeed, the delegates often found themselves split according to legal tradition, economic system and stage of socio-economic development.[8] The final draft is an interesting mix of hard-won compromises.[9]

Nevertheless, the final draft of the Convention was adopted in 1980 at a Diplomatic Conference in Vienna attended by 62 countries and 8 international organisations. The Convention entered into force on 1 January 1988 upon the ratification of 11 States. Since then, the CISG has been adopted by 61 States [10] and has been triumphantly heralded as the "uniform international sales law of countries that account for over two-thirds of all world trade.account for two-thirds of all world trade".[11]

B. The Scope of the CISG

The CISG is divided into four parts. Part 1 lays down the Convention's sphere of application and general provisions. Part 2 deals with the formation of the sales contract while Part 3 contains provisions relating to the substantive obligations of both the buyer and the seller.[12] Part 4 deals with the public international law aspects of the Convention.

Significant omissions from the Convention are provisions relating to the validity of the contract,[13] the effect of the contract on the property in the goods sold,[14] and the liability of the seller for death or personal injury caused by the goods.[15]

According to Article 1, the Convention applies to contracts of sale of goods between parties whose places of business are in different States when (a) those States are Contracting States or (b) when the rules of private international law lead to the application of the law of a Contracting State.[16]

The CISG, however, does not deal with those contracts that are enumerated in Articles 2 and 3 of the Convention.

The parties are free to exclude the application of the Convention or vary or derogate from the effect of any of its provisions.[17]

C. The Interpretation of the CISG

The CISG does not lay down any specific methodology to be employed in interpreting the Convention. Guidance, however, may be derived from two main sources in the Convention- the preamble and Article 7.

The preamble lays out the purposes of the Convention: inter alia, to promote a New International Economic Order and to encourage "friendly relations among States" by developing international trade "on the basis of equality and mutual benefit". In terms of practical utility however, the precatory and aspirational terms of the preamble do not provide much concrete assistance.[18]

Article 7, on the other hand, is more helpful. Due to the central role that this provision plays in the debate over the role of good faith in the CISG, it is useful to reproduce the provision here:

This provision clearly requires arbiters and judicial officers to treat the Convention as a creature autonomous from domestic laws. The Convention sets out a hierarchy of sources for the resolution of a dispute. Regard is to be had in the first instance to the express provisions of the Convention. In the event that they do not provide a solution, the adjudicator should refer to the general principles on which the CISG is based. National laws should be used only as a last resort. Indeed, in interpreting the Convention, decision-makers must not be quick to "read in" domestic concepts.

Article 7, however, also stands at the heart of a controversy over the proper role of good faith in the CISG. Article 7 is the only place in which the concept of good faith is expressly referred to in the CISG. Unfortunately, the wording of Article 7 reveals some internal contradiction. Ostensibly, Article 7(1) of the Convention allocates only an interpretative role to the doctrine. Article 7(2) of the Convention, however, permits the use of the general principles underlying the CISG to resolve matters not expressly settled by the instrument. It is certainly arguable that the principle of good faith underlies many of the provisions in the Convention.[20] Article 7(2), therefore, could well accord the doctrine of good faith a far more substantive role in the Convention.

This structure has been variously termed as "uneasy"[21] and "strange".[22] As Eörsi put it: "it was widely thought that the rule was vague, or at least would remain vague for a long time, and, because of the laconic language of the CISG, would never become unambiguous."[23]

II. THE DOCTRINE OF GOOD FAITH IN NATIONAL JURISDICTIONS

To put it mildly then, Article 7 is awkwardly drafted. To better appreciate the cauldron in which this provision was forged, it is apposite to first examine the competing national approaches to the doctrine of good faith. The debate over the role of good faith in the CISG can be examined along several divisions. The debate over this issue raged not only between the common law and civil law delegations, but also between the socialist and capitalist representatives and even among representatives who shared a common cultural and legal background.[24] While the Western representatives argued, for example, that a substantive good faith obligation was too vague, the socialist representatives contended that it was both practical and flexible.[25]

It is proposed, however, to examine the doctrine along common law-civil law lines since the debate was mostly between these two camps. Two caveats, however, must first be entered. Firstly, this paper will only be examining the doctrine of good faith in the context of contracts for the sale of goods. The doctrine may well have a different role to play in other areas of the law.[26] Secondly, this part of the paper is merely meant to provide a brief flavour of the role that good faith plays in a number of national jurisdictions. The proper ambit of the doctrine in the national sphere is itself the subject of much debate and a reader who is interested in this area should refer to the burgeoning jurisprudence in this area.

A. A General Introduction to the Concept of Good Faith

The concept of good faith [27] has great normative appeal. It would be a rare commentator who would deny that good faith has any role to play in the development of a legal system. After all, it is the aspiration of every mature legal system to be able "to do justice and do it according to law".[28] A distinction, however, must be made between good faith as a mere ethical or moral principle that every legal system aspires to and good faith as a legal doctrine that is capable of independently generating concrete legal rights and obligations on its own. This paper focuses on whether it is viable to think of "good faith" in the latter sense.

There is no doubt that there are many advantages associated with a legal doctrine of good faith. From a substantive point of view, a doctrine of good faith is the antithesis of formalism and positivism. A doctrine of good faith could safeguard the expectations of contracting parties by respecting and promoting the spirit of their agreement instead of insisting upon the observance of the literal wording of the contract. It could also regulate self-interested dealings.

At the same time, a doctrine of good faith could reduce costs and promote economic efficiency. Parties need not assiduously contract for every contingency because the doctrine of good faith can be relied upon to fill in unforeseen gaps. From a methodological point of view, a doctrine of good faith is a far more rational approach to the resolution of issues of bad faith than a piecemeal approach. A doctrine of good faith would provide a sound theoretical basis to unite and undergird what would otherwise appear to be merely a series of disparate rights and obligations.

The above hypothesis, however, is based on the assumption that the doctrine of good faith is coherent and well developed. The danger of a doctrine of good faith is that it can lapse into generality and vagueness. It can threaten to become so unpredictable that it increases the costs of transacting and undermines the legitimate expectations of contracting parties.[29] As Professor Goode puts it, "one may acknowledge the power and attraction of a general idea but the idea may be so general that it is of no practical utility to the merchant".[30]

In addition, the adoption of such a doctrine represents a significant departure from the classical model of contract and the idea of freedom of contract. Courts and arbiters are now required to take on a more activist role and impose substantive obligations that may, at times, even contradict the express wording of the contract.[31] In an extreme case, judges may even be tempted to impose their own moral conceptions on the parties.[32]

Unfortunately, there is no definite way to resolve this tension between justice and certainty. Broadly speaking, problems lie with two aspects of the doctrine - its definition and its form. A coherent definition is first necessary to form a stable base from which adjudicators can elucidate a series of good faith rights and obligations. Even then, however, a definition would not necessarily dictate the form that the doctrine must eventually take. There are multiple directions that can be taken in the process of translating the general to the concrete.

Unfortunately, there is no single global definition of good faith. The doctrine of good faith in domestic sales law is a slippery concept with multiple connotations and multiple meanings. At most, we can say that the definition of "good faith" can be framed either positively or negatively. In other words, the content of "good faith" can be elucidated either by reference to what it is or by reference to what it is not.

A "negative" definition of good faith is probably the easiest to describe. As Professor Summers explains, "in cases of doubt, a lawyer will determine more accurately what the judge means by using the term 'good faith' if he does not ask what good faith itself means, but rather asks: What…does the judge intend to rule out by his use of this phrase?"[33] In other words, one "homes in" to a definition of good faith by eliminating what would be considered clear instances of bad faith rather than by attempting to determine what would be considered instances of good faith. The drawback of this approach, however, "is that it seems tantamount to saying that the good faith duty is breached whenever a judge decides it has been breached…[which] hardly advances the cause of intellectual inquiry and…provides absolutely no guide to the disposition of future cases, except to the extent that they may be on all fours with a decided case".[34]

In so far as positive definitions are concerned, there are many. "Good faith" has been variously defined as "fairness",[35] "fair conduct",[36] "reasonableness",[37] "reasonable standards of fair dealing",[38] "good faith and fair dealing",[39] "community standards of decency, fairness or reasonableness",[40] "honesty in fact",[41] "decent behaviour",[42] "a common ethical sense"[43] and as "a spirit of solidarity".[44]

At best, these definitions merely replace the concept of good faith with equally vague and nebulous terms. They fail to pinpoint its meaning. Worse, many commentators use the terms interchangeably, insensible to the subtle nuances between one term and the next.[45] Take the concepts of "honesty", "fair dealing" and "reasonableness". It is true that all three seek to moderate unethical conduct. However, they actually refer to very different things. "Honesty", for example, refers to a subjective state of mind[46] while "fair dealing" refers to an objective state of affairs. Furthermore, one can conceivably act unreasonably without being dishonest.

At the end of the day, the meaning of "good faith" seems to be predicated on one's intuitive sense of justice. The danger of this approach, however, is that it may encourage a tendency to equate everything that appears to promote justice with good faith. The meaning of "good faith" becomes so general and abstract that it is meaningless. This is hardly a strong foundation for a "global" doctrine of good faith in an international sales convention.

Matters are further complicated by questions concerning the issue of form. Issues that would have to be resolved include:

B. The Competing National Approaches

Let us now turn to look more specifically at the doctrine as it has developed in individual jurisdictions. The principal jurisdictions that will be examined are the common law jurisdictions of the United States of America, United Kingdom, Australia and Canada and the civil law jurisdictions of Germany and France.[50] The differences in these jurisdictions' approach to good faith can be divided into three categories: differences between legal families, differences among legal systems within the same legal family and differences within a single legal system. These categories will be examined in turn.

1. Differences between legal families- the Civil Law vs. Common Law

The doctrine of good faith has a much older lineage in the civil law than in the common law. This probably stems from "the influence of Canon law on the Civil law and of commercial practice on the Common law. A consequence of this commercial orientation of the Common law is that if a choice has to be made between certainty and justice in the individual case, it is likely to be made in favour of certainty."[51] The civil law, on the other hand, is "primarily concerned, not with the economic exchange between the parties, but with the exchange of consents and with the moral evaluation of the behaviour of the parties."[52]

In the civil law, the doctrine of good faith typically takes the form of a general codal provision.[53] One of the most famous examples is § 242 of the German Civil Code ("BGB") which provides that the obligor is bound to perform the contract in good faith (Treu und Glauben mit Rücksicht auf die Verkehrssitte), having regard to common usage.[54] Broadly speaking, the German doctrine of good faith has three basic functions: "it serves as the legal basis of interstitial law-making by the judiciary, it forms the basis of defences in private law suits, and it provides a statutory basis for reallocating risks in private contracts".[55]

To a common law lawyer, the scope of § 242 is overwhelming. § 242 of the BGB is the progenitor of such an elaborate structure of rules that over 500 pages of the 13th edition of the Staudinger commentary is devoted to it.[56] The requirement of good faith has been applied in such a wide variety of situations that the term "good faith" is not susceptible to a single definition. There appears to be no single principle that unifies the entire range of cases in which the provision has been used. Thus, commentators are generally forced to take a piecemeal approach and explain § 242 by reference to the various categories of situations in which it has been applied.[57]

Two examples will illustrate the scope § 242 has provided for judicial creativity.[58]

According to the strict letter of the BGB, a creditor can claim damages for what in common law parlance would be a "breach of contract" in only three categories: if performance has become impossible for the debtor (Umnoglichkeit), if the debtor's fault has caused a delay in performance (Schuldnerverzug) or if the seller fraudulently concealed the defect in defective goods or warranted a promised performance (Gewashrleistung).[59] The German courts have thus turned to § 242 of the BGB for help in creating a residual cause of action for breaches not falling within these three categories.[60]

Judicial creativity has also been essential in the creation of the doctrines of frustration and impracticability.[61] For example, "[w]hen the German currency collapsed following the First World War and the mark plummeted to less than a billionth of its value at the time of the armistice, it was the obligation of good faith that was used as the principal basis of revaluation of debts in terms of the real purchasing power of the mark in spite of specific statutory provision that the mark was legal tender."[62]

In comparison, with the exception of the United States, common law jurisdictions generally do not have a doctrine of good faith.[63] Instead, common law jurisdictions adopt "piecemeal solutions in response to demonstrated problems of unfairness".[64] If we construe the concept of good faith broadly as simply a mechanism which is used to moderate the effects of unethical behaviour or ensure justice and fairness by requiring contracting parties to observe certain behavioural norms, we can say that the idea manifests itself in specific doctrines, such as duress, undue influence, mistake and misrepresentation; or in specific statutes such as the English Sale of Goods Act [65] and the Unfair Contract Terms Act. Outside such doctrines, parties are free to pursue their strict legal rights regardless of their motive.[66]

While the doctrine of good faith in the civil law does bear a certain affinity to the common law doctrine of implied terms, it is generally much harder to imply a term in the common law than it is to find a good faith obligation under a general doctrine. In English law, for example, a term is generally implied only on the basis of a "business efficacy"[67] or "officious bystander"[68] test. A term will not be implied simply on the basis that it is reasonable or fair to do so.[69]

While the common law may often reach the same result as the civil law does through the judicial development of general principles,[70] the fact remains that the existence of a general doctrine provides decision-makers with a more malleable and flexible standard. A general doctrine stands at the ready to meet any unforeseen contingencies. As was alluded to above, § 242 of the German Civil Code has been used to deal with legislative oversights or omissions in the Code, clarify concepts, create and implement new obligations on the parties and as a basis for new remedies.[71]

While case technique in the common law does operate on the identification of the general principles underlying specific fact situations, it has yet to progress so far as to identify principles that overarch entire areas of the law.[72] The general principle, if any, that is extracted from the cases remains unique to the specific doctrine. For example, at the risk of over-simplification, the common law may find a general principle, based on a series of cases, that a defendant is guilty of fraudulent misrepresentation if he makes a false statement of fact knowingly, without any belief in its truth, or recklessly.[73] The common law may find another principle based on another series of cases that a contract is void on the basis of mistaken identity when the plaintiff intended to contract with and only with, the person the defendant misrepresented himself to be.[74] The common law, however, will not go one step further and derive a general principle based on these cases that parties have a general obligation in contract law to perform and enforce their rights in good faith.

The other major difference between common law jurisdictions and civil law jurisdictions lies in their treatment of pre-contractual acts of bad faith. The civil law generally has a well-developed doctrine of pre-contractual liability.[75] The German doctrine of culpa in contrahendo, for example, holds a defendant liable for damages when he "awakes in the other confidence in the imminent coming into existence of a contract- subsequently not concluded- and thus causes the latter party to incur expenses".[76]

Most common law jurisdictions do not have a regime of pre-contractual liability of bad faith.[77] The common law generally takes an aleatory view of contractual negotiations and accords parties the freedom to break off negotiations with impunity.[78] This is true even of the United States, which has the most well-developed general doctrine of good faith among the common law jurisdictions. The United States is forced to arrive at the same results through the use of specific doctrines such as unjust enrichment, misrepresentation and specific promise.[79] Unlike the civil law, however, the United States would not impose liability on a party who refuses to contract without an appropriate ground even when he has "conducted himself in such a fashion that the other party could, and did justifiably count on a contract with the negotiated content coming into existence".[80]

2. Differences among legal systems in the same legal family

a. Differences among common law jurisdictions - the United Kingdom (no general doctrine of good faith) vs. Australia and Canada (emerging) vs. the United States (developed)

The above sub-section has perhaps over-simplified the issue by understating the differences among legal systems in the same legal family and painting the debate as a battle between polar opposites. The next two sub-sections attempt to redress this imbalance by focusing on the differences among and within legal systems in the same legal family.

The doctrine of good faith is in varying states of growth in common law jurisdictions. The United Kingdom and the United States stand at opposite ends of the spectrum. A general doctrine of good faith is non-existent in the United Kingdom. Instead, it has developed piecemeal solutions in response to specific problems of unfairness. As the English Court of Appeal put it, "in the case of commercial contracts, broad concepts of honesty and fair dealing, however laudable, are a somewhat uncertain guide when determining the existence or otherwise of an obligation which may arise even in the absence of any dishonest or unfair intent."[81]

One reason for what some may consider an uncompromising approach is the country's emphasis on promoting certainty and predictability in the world's leading financial centre. As Professor Goode puts it:

It must be acknowledged, however, that there has been an upsurge in interest in the doctrine among English commentators in recent years.[83] This has been especially fuelled by the introduction of the 1993 EC Directive on Unfair Terms in Consumer Contracts, which makes several references to the concept of good faith.[84] There is little sign, however, of any judicial development of a general doctrine of good faith.[85]

On the other hand, we have the United States, which does have a developed doctrine of good faith. The doctrine has been used to proscribe, inter alia, attempts to evade the spirit of the deal, wilfully render an imperfect performance, abuse a discretion conferred by a contract, interfere with the other party's performance or refuse co-operation.[86]

The doctrine of good faith has been recognised in two major places - the Uniform Commercial Code ("the UCC") and the Restatement (Second) of Contracts. § 1-203 of the UCC specifically requires the observance of good faith in the performance or enforcement of every contract or duty within the Act.[87] "Good faith" is defined in § 1-201(19) as "honesty in fact in the conduct or transaction concerned", unless the context otherwise requires. "Good faith" in the case of a merchant, however, is defined by § 2-103(1)(b) to mean "honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade".

On the other hand, while § 205 of the Restatement also imposes upon each contracting party a duty of good faith and fair dealing in the performance and enforcement of the agreement, it does not adopt a positive definition. Rather, the Restatement chooses to define the concept of "good faith and fair dealing" by vague reference to its purposes and admits that "good faith" can only be recognised by what it is not:

In other words, this definition adopts what Professor Summers call the "excluder analysis"- the concept of "good faith" is defined by reference to what it is not, rather than what it is.[90]

Compared to the United States, Australia and Canada occupy intermediate positions. Due to historical reasons, these legal systems bear close affinity to the English system. Since these jurisdictions abolished the right to appeal to the English Privy Council, however, they have been free to develop their legal systems in an autochthonous manner.

The doctrine of good faith is still in its infancy in Australia. Judicial sentiment appears divided over the question of the viability of a general doctrine of good faith.[91] Chief Justice Sir Anthony Mason [92] and Judge Priestley [93] have come out in favour of the doctrine in both judicial and academic writings. Justice Gummow, however, has expressed scepticism about the ability of the doctrine to provide any more guidance than established principles of contract law already do.[94]

In Canada, on the other hand, the debate is not so much over whether to adopt a general doctrine of good faith, but which standard to adopt.[95]

b. Differences among civil law jurisdictions

Even though the doctrine of good faith is commonly associated with the civil law, not all civil law jurisdictions have embraced it as enthusiastically as Germany. France is a significant example of restraint. Like Germany, France too has a general codal provision that mandates the observance of good faith (Article 1134 of the French Civil Code).[96] Unlike Germany, however, this provision has been used purely in an ancillary fashion. As Professor Bridge puts it, "[g]ood faith is enshrined in art. 1134 of the French civil code but its practical impact can be described as shallow: it has done nothing to disallow penalty clauses, it has not expanded the narrow categories of lesion and it has not been employed to give relief in what we would now call cases of commercial impossibility".[97] It is thought that French judges are perhaps as concerned as their English brethren are on the impact that a wide-ranging doctrine of good faith would have on the certainty of legal relations.[98]

3. Controversy within a legal system

The controversy over the appropriate scope and application of good faith does not cease at national borders. The meaning of good faith has proven to be so malleable and elusive that there is disagreement over the ambit of the doctrine even within those jurisdictions that have adopted it or that are favourably inclined towards it. This appears to be more true of common law jurisdictions than civilian ones. The two common law examples that will be used here are the United States and Canada.

Although an obligation of good faith has been legislatively imposed in the United States by the Uniform Commercial Code, there are difficulties at both a theoretical and a practical level.[99] At the theoretical level, dissatisfaction exists over the appropriate scope and application of the concept of good faith. At least three main lines of thought have developed.

Professor Farnsworth is of the view that the significance of the doctrine is in "implying terms in the contract".[100] Professor Summers is of the opinion that no clear meaning can be ascribed to the doctrine of "good faith". At best, it is used to rule out or exclude specific instances of bad faith (the "excluder analysis").[101] Professor Burton, agrees that "neither courts nor commentators have articulated an operational standard that distinguishes good faith performance from bad faith performance."[102] He points out, however, that a contract will normally confer on another discretion over some aspect of contractual performance, such as price, output, quantity, or time of performance. He argues that the concept of good faith "limits the exercise of discretion in performance conferred on one party by the contract."[103] It is bad faith to use one's discretion "to recapture opportunities forgone in contracting"[104] as determined by the other party's reasonable expectations. The judiciary has come out in support of all three standards, sometimes without even recognising the differences between them.[105]

To make matters worse, it is not entirely clear how the academic debate in this area squares with the competing definitions in the UCC and the Restatement (Second) of Contracts. On one theory, each commentator is merely interpreting the prevailing standards of good faith. On another, he is in fact proposing an independent version.

Even if the debate over the definition of "good faith" could be resolved, there is still controversy over whether the concept of good faith should be measured against an objective or subjective standard.[106]

At a more specific level, there is some doubt as to as to the practical utility of the doctrine. Some commentators are of the view that the doctrine does not achieve any more than what established principles of contract law already accomplish. As Professor Farnsworth admits, "many of the uses to which the new concept of good faith is put today do not go beyond those to which the traditional techniques of interpretation and gap filling were traditionally put".[107]

In addition, even where cases are ostensibly decided under the good faith provisions of the UCC, the results are not necessarily consonant with the definition of good faith in the Act. In fact, Professor Burton is of the opinion that the analysis of the courts is ultimately more consonant with the "foregone opportunities" mode of analysis rather than the standards of "honesty" and "reasonable commercial standards of fair dealing" that have been expressly provided for.[108]

In Canada, there is a similar debate over the appropriate standard to adopt:

Cases can be found that support either standard. The significance of the distinction lies in the fact that the "reasonableness standard" can be used to override the express terms of the contract, while the "interpretative standard" would only impose obligations of good faith which are consistent with the parties' contractual expectations.

Two cases illustrate the contrasting results that these two approaches produce. In Watchfield Developments Inc v Oxford Elgin Developments Ltd,[110] the court used the reasonableness standard in a way that negated the utility of clauses that provide that "time is of the essence". It held that the purchaser could rely on such a clause only if he could show that he would have completed but for the vendor's delay. This could be proved only if the purchaser had "agreed to a short extension of time for closing".[111] In Khangura v. Triple R. Construction Ltd,[112] on the other hand, the purchaser was entitled to rely on a "time is of the essence" clause to sue for the return of a deposit. The court applied the "interpretative standard" and saw no reason why the purchaser could not rely on what it had expressly bargained for. The risks could have been foreseen and it was up to each party to protect its own position.

Needless to say, the debate over the appropriate standard to adopt within United States and Canada inhibits the development of a clear and coherent doctrine.

III. THE DOCTRINE OF GOOD FAITH IN THE CISG

With all this doctrinal untidiness among and within the legal families, the drafting committee and the working groups of the CISG certainly had their work cut out for them. The task was further complicated by the fact that even if it were the case that the meaning of good faith was settled in the domestic context, the demands of good faith in the international context were different. The warning sounded by the UNIDROIT Principles of International Commercial Contracts is equally applicable here:

The paper will now examine the appropriate role of good faith in the Convention. A brief word, however, must first be said on the appropriate technique to be used in interpreting an international convention. Recourse must be had, of course, in the first instance, to the wording of the provision and its context. Assistance, however, may also be sought from the travaux préparatoires. In so far as the CISG is concerned, the travaux préparatoires of the Convention are remarkably accessible.[114]

According to Article 32 of the Vienna Convention on the Law of Treaties, the preparatory work of the Convention and the circumstances of its conclusion may be used to confirm or determine the meaning of a provision.[115] A number of major jurisdictions observe this practice.[116] Indeed, Article 32 can be said to codify a practice of customary international law.[117]

Of course, one must exercise caution when utilising the travaux préparatoires. The delegates may not necessarily have dealt with the problem at hand; or if they did, the indications may be so conflicting that the negotiating history of the Convention is of no help at all. Moreover, "[o]nce adopted, the Convention, like any other law, has a life of its own, and its meaning can change with time so that the intention of the parties is only one of the elements to be taken into account for the purpose of its interpretation".[118] However, the travaux préparatoires cannot be ignored when they clearly demonstrate that one interpretation was intended.

It is thus appropriate to make a brief excursion into the history of Article 7. An examination of the legislative history reveals that every effort to introduce a substantive obligation of good faith and fair dealing was repelled.

A. The Drafting History of Article 7

1. The first foray into the field of good faith [119]

The introduction of good faith into the Convention was first suggested by a representative of Spain in 1972.[120] It was not until 1978, however, that the topic of good faith was revived and subjected to sustained debate. At the eighth session [121] of the Working Group, the following provision was tabled for discussion:

In so far as the first paragraph was concerned, "the general concept that the draft Convention should contain provisions relating to good faith and fair dealing was supported by a majority of the representatives".[123] It was felt that similar principles had been useful in many jurisdictions and that they had the potential to serve equally well in the international context. Although uniformity in interpretation may be difficult to achieve initially, this problem would not be any worse than the situation that first existed in national jurisdictions after they adopted general provisions requiring the observance of good faith.

However, there was already some concern over the specifics of the provision at this time. The first major concern was that the provision was too vague and imprecise, with the danger that its meaning would depend on subjective value judgements. The second concern was that the provision would not be useful until it had been subjected to a sustained period of judicial interpretation.

The remaining two paragraphs failed to garner much support, in part because of their vagueness. It was also felt that the issue of exemption clauses was not appropriate in a convention dealing with transactions between merchants, "where exclusions of liability for the seller were frequently compensated by a lower price for the buyer".[124]

The Working Group thus decided to abandon the last two paragraphs of the provision and adopt an amended version of the first (which was later renumbered Article 5):

2. Good faith in retreat [126]

This provision, however, was the subject of a fierce counterattack at the eleventh session of the Commission in 1978. A considerable number favoured the deletion of the provision on the grounds that an international concept of good faith was too vague to be of any practical utility. Decision-makers would necessarily have to fall back on domestic notions of good faith, with the result that different interpretations would be given to the provision in different countries. The resulting uncertainty would be detrimental to international trade. Another view was that it was unnecessary to include a requirement of good faith because it was already implicit in all laws regulating business activity.[127]

The provision was also attacked on the basis that it did not specify any sanctions for its breach. It was considered ironical that the UNIDROIT draft text on validity [128] found it necessary to closely regulate the consequences of clear breaches of good faith while it was assumed that the consequences for less serious breaches of good faith would be obvious to adjudicators interpreting the Convention.[129] It ignored the fact that adjudicators would seek assistance from their domestic training at the cost of uniformity. Thus, it was considered that the most appropriate place for a provision on good faith and fair dealing was in a Convention which dealt with the validity of contracts.

There was, however, also a considerable number who supported the retention of the article. It was felt that the concept of good faith was universally recognised. Although the concept of good faith was not necessarily the same in every jurisdiction, its content would be elucidated incrementally through judicial decisions. Although the provision did not specify any sanctions for its breach, this could be determined by domestic courts in a flexible manner in response to the individual facts of the case. Moreover, "even without sanctions the existence of the provision would draw the attention of the parties and the court to the fact that high standards of behaviour were expected in international trade transactions".[130] Further, it was hoped that the adoption of the provision would promote some of the aspirations of the proposed "new international economic order" and lessen discriminatory or undesirable trade practices. It was feared that the deletion of the provision would expose the Commission to the charge that it believed that good faith was unnecessary in international trade.

A number of those who otherwise supported the article, however, took exception to the specific formulation of the article. Many of the developing countries feared that "fair dealing" would be taken to refer to current standards of international business practices, when these standards were not necessarily "fair" to developing countries. Consequently, they preferred to have the reference to fair dealing deleted than risk the elevation of these practices into rules of law. A proposal that the concept of "fair dealing" be replaced by one of "international co-operation" only compounded the problem. The term was so vague and nebulous that its precise scope and effect could not be determined.

As a way out of the impasse, a Working Group was established to seek a compromise. It considered a number of compromise solutions. The first suggestion that the concept of good faith be incorporated into the preamble was rejected on the basis that it would render it devoid of any effect. Another suggestion was to incorporate the concept into the provision on the interpretation of the statements and conduct of the parties. This too was rejected on the basis that the purpose of Article 5 was not to determine the intent of the parties but to impose a standard of behaviour.

The most widely supported compromise was a newly worded Article 6 (now Article 7(1) which read:

"In the interpretation and application of this Convention regard is to be had to its international character and to the need to promote uniformity and the observance of good faith in international trade."[131]

3. The death of good faith

a. Death of the attempts to include a more pointed reference to good faith [132]

At the 1980 Vienna Conference, repeated attempts to resurrect the concept of good faith failed. Norway and Italy objected to the confinement of the concept of good faith to the interpretation of the Convention. Norway suggested that the reference to good faith in Article 6 be deleted and be transferred to Article 7 (now Article 8) to "make it clear that the principle of good faith was relevant to the interpretation of the contract of sale, but not to the interpretation of the future convention as such".[133] Italy's suggestion was more extensive. Its proposal entailed the deletion of the reference to good faith in Article 6 and the adoption of a new article that would make good faith relevant to the formation, interpretation and performance of the contract.[134] This proposal was overwhelmingly rejected in favour of Article 7(1) as presently worded.[135] The general sentiment was that the provision as presently worded was already the result of a hard-won compromise and there was little reason to re-open the issue again.

b. Death of the attempts to prohibit the parties from departing from the obligation of good faith and to provide for pre-contractual liability

At the 1980 Conference, two other proposals involving the concept of good faith were made. The first was a proposal by Canada that parties be prohibited from excluding the obligations of good faith, diligence and reasonable care unless they wholly excluded the Convention.[136] The second was a proposal by the German Democratic Republic that the Convention provide for pre-contractual liability.[137] These proposals were rejected for a variety of reasons, not all of which had to do with objections against the concept of good faith. One of the objections to these proposals, however, was that they represented an attempt to sneak an obligation of good faith through the back door.[138]

B. The Role of Good Faith in the Convention

1. The Competing Interpretations of the Role of Good Faith in the Convention

In summary, then, all the attempts to introduce substantive obligations of good faith (or substantive obligations related to the concept of good faith) were rejected. Despite the clarity of this point, an overwhelming number of commentators are of the opinion that the Convention imposes a substantive obligation of good faith on contracting parties.[139]

The remainder of this part of the paper will examine the viability of this view. I will first identify and explain the number of competing answers to the issue before identifying the most appropriate one for the Convention. In examining the meaning of good faith in the CISG, six different positions can be identified:

a. An obligation of good faith established by the practices of parties or by international trade usages.

The debate over the place of good faith normally centres on the appropriate scope of Article 7. However, during the debates on good faith, some of the delegates had argued that it was unnecessary to include an explicit reference to the concept because it was already an implicit requirement of all business activity. The basis of their argument could have been Article 9 of the CISG. Article 9 states:

Article 9 identifies two sources of rights and obligations: usages and practices.

It is conceivable that parties may establish a practice of good faith or fair dealing among themselves in their course of dealing.

A usage may also build up in the trade requiring the observance of good faith. Even if no trade usage exists which positively requires the observance of good faith, usages may still help to indicate what conduct would be considered unacceptable. The latter argument bears some resemblance to Professor Summer's thesis that while it may not be possible to define with certainty what "good faith" means, it is at least possible to determine what it is not. However, as pointed out above, there are serious problems associated with defining the concept of good faith negatively.

b. The doctrine of good faith as an interpretative guide.

This interpretation takes Article 7 of the CISG on its literal wording. The concept of good faith is expressly mentioned only in Article 7(1) of CISG and this provision accords the concept of good faith merely an interpretative role. Thus, the doctrine of good faith should only be used to interpret the Convention.

c. The doctrine of good faith as a prerequisite to the exercise of the rights and remedies provided in the Convention.[141]

This interpretation is based on Article 7(2) of the CISG whereby "good faith" is one of the "general principles" on which the CISG is based. Under this interpretation, the obligation of good faith only qualifies that which has been expressly provided for in the Convention. In other words, the buyer or the seller must act in good faith before he can exercise any of the rights or remedies that have been expressly provided for by the CISG.

For example, a party may not be allowed to compel specific performance under articles 46 (for the buyer) or 62 (for the seller) or avoid the contract under Articles 49 (for the buyer) or 64 (for the seller) after a market change if these remedies would allow him to speculate at the other's expense.[142]

d. The doctrine of good faith as a substantive principle in the resolution of matters not expressly governed by the Convention.

This interpretation is also based on Article 7(2) of the Convention. This interpretation, however, goes one step further and accords the concept of good faith an even more substantive role. The concept of good faith now does not merely qualify what has been expressly provided for in the CISG but also serves as an independent general principle to resolve questions concerning matters governed by the Convention but which are not expressly settled in it.

e. The doctrine of good faith as a source of rights and obligations which may contradict or extend those in the Convention.

This is clearly an inappropriate use of the doctrine but it is mentioned here for the sake of completeness.

The problem often arises when concurrent remedies are available in domestic law. The issue then is whether it is permissible to take advantage of these remedies as well as those provided by the CISG. In so far as the CISG does not provide expressly or implicitly for any rights or obligations, the buyer or seller may take advantage of these remedies. Otherwise, the general rule is that:

In other words, the principle of good faith must not be used to contradict or extend what already has been provided for in the Convention. Due to the obvious inappropriateness of this interpretation, its viability will not be discussed any further.

f. The doctrine of good faith merely serves as an interpretative guide. In cases not expressly governed by the Convention, general principles may be derived which are, at best, particular manifestations of good faith. A general doctrine of good faith, however, does not exist to serve as a fount of additional rights and obligations.

Under this interpretation, Article 7(2) does not give rise to a general principle of good faith in a form that is able to generate answers to matters governed by the CISG but which are not expressly settled in it. The provision, however, may give rise to certain general principles that can be described as particular manifestations of a general idea of good faith.

In this context, "good faith" is interpreted broadly to refer to anything that would require contracting parties to behave in a manner that would promote justice, fairness or ethical behaviour. Thus, principles such as the rule against undue influence, mistake and misrepresentation would be considered specific embodiments of this idea of good faith. However, they would not together form the basis for a substantive doctrine of good faith that could independently generate legal rights and duties. At most, the term "good faith" would simply serve as a convenient compendious term for more particular principles or as a label for a moral aspiration.

The only place where good faith could play a role in a legal rather than an ethical sense would be in the interpretation of the Convention. This point is susceptible to at least two variations. One would be that good faith in the legal sense would not have a role to play even in the interpretation of the Convention. Instead, the term "good faith" in Article 7(1) would simply be read to refer to only those principles in the Convention that attempt to achieve justice and ensure ethical behaviour by requiring contracting parties to observe certain behaviour. The other is that the term "good faith" in Article 7(1) would be read to refer to anything that can colloquially be said to promote justice and ethical behaviour, whether it be embodied in the CISG or otherwise. The second variation, however, is impractical as it is too expansive. Its feasibility will thus not be discussed any further.

2. The Appropriate Role of Good Faith in the CISG

Simplifying matters, there are basically four possible roles for the doctrine of good faith in the CISG: as a practice of the parties, as a trade usage, as a substantive general principle or as an interpretative tool.

The appropriateness of each role will be discussed in turn. In determining the most appropriate role for good faith within the Convention, one should be careful not to be beguiled by the normative appeal of the concept of good faith. Although there is no doubt that it would be desirable for the Convention to promote the cause of good faith to the widest extent possible, it should perform this function only if the doctrine of good faith is proved to be a coherent one.

a. Good faith as a practice of the parties

It is submitted that one should not conclude that a general doctrine of good faith exists in the Convention from the fact that some contractual parties may establish 'good faith' practices among themselves. As the word 'practice' connotes, the existence and content of any 'good faith' practice would be dependent on a number of factors, such as the type and importance of the contract, the length and nature of the relationship, and the parties' relative bargaining power. It would be not be advisable to infer that a general regime of good faith rights and obligations exists from a collection of disparate practices.

b. Good faith as a trade usage

To reiterate, Article 9(2) of the CISG requires that the usage, if any, must be one that "the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned".

The strongest argument that can be used here is that an obligation of good faith can be derived from the new lex mercatoria.[145] The lex mercatoria has been defined as an autonomous system of transnational commercial law that is "capable of being applied by decisionmakers (judges or arbitrators) as a source of legal rules, in order to give content to decisions, in much the same way that these decisionmakers would apply a real legal system such as the lex fori or the lex loci arbitri".[146]

Many commentators are of the opinion that "good faith" is a component of the lex mercatoria.[147] The obligation of good faith supposedly implies at least three other duties: "the duty to inform the other party of circumstances which might threaten the performance of the contract; the duty to renegotiate the contract in order to salvage the commercial relationship if circumstances permit; and the duty to mitigate damages in the event of a breach".[148]

Some commentators object to the lex mercatoria on the basis that it is impossible for an anational legal system to exist.[149] They argue that a legal system can derive binding force only from the recognition of a sovereign nation. Putting this objection aside, there are still many problems associated with the argument that good faith is a valid trade usage.

Firstly, the lex mercatoria is comprised not just of uncodified custom or usage but also public international law, uniform laws, the general principles of law, the rules of international organisations, codifications of customs and usages by international organisations, standard-form contracts and reported arbitral awards.[150] Article 9(2), however, only speaks of usages and practices. Unfortunately, when commentators or arbitral awards refer to good faith as a component of the lex mercatoria, it is often not clear how that conclusion was arrived at or which one of the sources were used. The conclusion could well have been based on a source other than trade usage.

The Norosolor case is a fairly typical example of this problem. This arbitral case held that:

The arbitral tribunal's discussion of the existence of good faith as a component of the lex mercatoria does not go any further than this. Its analysis is vague and unhelpful. The reader is left clueless as to the precise theoretical basis for its conclusions. Moreover, its finding that the emphasis on good faith is one shared by all national laws is suspect. As was discussed above, legal families and even legal systems within the same legal family have very different ideas of what it means to act in good faith. Even if were the case that good faith were a principle common to all national laws, it is still different from a usage which requires at the very least, "a practice or pattern of behaviour…established by repetition".[152]

Even if it were the case that the lex mercatoria could be equated with trade usage, there is still added problem that the content of the good faith obligation is difficult to ascertain. Take the supposed duty to renegotiate. Carbonneau points out that:

The concept of good faith is beset with so many problems that it threatens to be merely an empty label. It is thus submitted that it would be unsafe to find an international obligation of good faith based on Article 9 of the CISG. The issue of trade usages sharply divided the developing countries from the developed ones during the negotiations on the CISG.[154] There was a perception that many of the prevailing trade usages were created and influenced by the developed countries. It was felt that such trade usages were not necessarily fair to the developing countries. The developing countries would thus surely be alarmed if a general obligation of good faith were to be found based on problematic evidence of international practice. If an international trade usage of good faith were to be found based on such evidence, it would undermine the confidence of the developing countries in the CISG.

Article 9, then, is a provision that should not be readily invoked. Parties should be bound by a trade usage only if they expressly agree to it. They should be taken to have agreed to it only if sufficiently consistent practice can be convincingly demonstrated from a representative slate.

At best, a usage of good faith may exist which is peculiar to a particular region or a particular trade sector. Thus, it is possible that the parties from two or more continental countries or a continental country and the United States may be required to observe a practice of good faith. There should, however, be no international usage of good faith.

This of course does not preclude the possibility that specific trade usages may exist which prohibit one from engaging in certain behaviour on the ground that it would be tantamount to conducting oneself in bad faith. However, this is still very different from a trade usage which requires the general observance of good faith.

a. Good faith as a general principle

We now turn to the main arena of the debate - Article 7. The commentators who discuss the issue of good faith can broadly be divided into two camps: those who believe that good faith is a mere interpretative tool and those who believe that the doctrine of good faith has a more substantive role to play in the CISG. It is submitted that there are two main weaknesses with the debate thus far.

The first is a problem of coverage. Those who argue for an interpretative role for good faith base their argument largely on the wording of Article 7(1) of the Convention and the travaux préparatoires. They ignore the argument that good faith may well be one of the general principles on which the Convention is based. Those who tout a more substantive role for good faith, on the other hand, tend to base their arguments solely on Article 7(2) of the CISG and ignore or downplay the fact that that the Article 7(1) and the travaux préparatoires indicate otherwise.

The second is a problem of definition. Those who argue for an interpretative role fail to identify the definition of "interpretation" that they have in mind. In fact, some who claim to support merely an interpretative role for good faith appear to have a more substantive role in mind.[155] Similarly, those who argue for a more substantive role for good faith fail to identify the version they have in mind. For example, would good faith merely qualify what is expressly stated in the Convention? Or would it independently resolve matters not expressly settled by the Convention?

More fundamentally, both camps have a tendency to treat the meaning of "good faith" as self-evident. However, as it was pointed out above, "good faith" is susceptible to a variety of meanings.

It is hoped that this paper will avoid these pitfalls. The argument that good faith is one of the general principles on which the Convention is based will be addressed in this sub-section while the argument that good faith is a mere interpretative principle will be addressed in the next.

In the CISG, a general principle within the meaning of Article 7(2) can be found in two ways.[156] Firstly, an analogy can be drawn with provisions so closely related to the situation at hand that it must be conceded that the Convention could not have intended a different result. Secondly, one can seek a single overarching principle that undergirds the Convention as a whole.

It has also been argued that contracting parties may be bound by general principles not found within the Convention if it can be proved that they are "internationally coordinated and can actually find general acceptance".[157] In this way, the lex mercatoria or certain principles of the UNIDROIT Principles of International Commercial Contracts may come to bind contracting parties.[158]

It is submitted that this argument should be dismissed as out of hand. Quite apart from the difficulty of actually ascertaining principles that are "internationally coordinated and can actually find general acceptance", the suggestion directly contradicts the express direction in Article 7(1) that the general principle must be one on which the CISG is based. To insist otherwise is to rewrite the Convention.

Coming back to the concept of good faith, the most popular argument is that the concept underlies so many provisions of the CISG that it is a general principle that supports the entire Convention. As the Secretariat Commentary to the 1978 Draft of the Convention explained:

Those commentators who support a more substantive role for good faith base their arguments on a similar analysis.[160] An alternative argument, albeit less invoked, is that the general principle of good faith is one that is expressly mentioned in Article 7(1) of the Convention.[161] Thus, it is said that good faith may be used to resolve questions that concern matters governed by the Convention, but are not expressly settled by it. It is submitted, however, that there are three main problems with this theory:

i. There is no coherent content to the concept of good faith in the Convention.

The argument that good faith is a general principle of the CISG simply because it is expressly mentioned in Article 7(1) should be dismissed immediately. A concept does not become a general principle simply because it is expressly mentioned in one of the provisions of the Convention. If that were true, the Convention would be inundated with an overwhelming number of general principles. Rather, before good faith can qualify as one of the general principle of the CISG, it must be proved that it is a concept that runs through the entire Convention.

Unfortunately, in their eagerness to promote the idea that good faith is one of the general principles on which the Convention is based, commentators tend to latch onto whatever promotes justice or fairness in the Convention. The Secretariat Commentary was but one example. The following (sans footnotes) is another:

The problem with this approach is that it impliedly subscribes to such a general notion of good faith that it is practically useless. It is not concrete enough to generate answers to questions that have not been expressly settled by the CISG. Neither is it sufficiently nuanced to capture the subtle differences among the various rights and obligations that are said to be comprised in the concept of good faith. It has been pointed out that the provisions that are normally prayed in aid of a general principle of good faith can be parsed into at least three main so-called good faith duties: the duty to engage in good faith communication, the duty to refrain from conduct knowingly calculated to frustrate the contract and the duty to engage in good faith efforts to save the contract or mitigate damage resulting from breach.[163] Each duty has been created to meet different exigencies and therefore naturally generates different requirements. The danger of collapsing all these duties under the umbrella term of "good faith" is that it tends to erase the differences between them and makes them less sensitive to the context. While the CISG does permit the use of general principles to resolve matters not expressly settled by the Convention, one should be wary of inferring principles that are normatively pleasing but are at such a high level of abstraction that they are of limited utility.

Professor Schlechtriem is one commentator who has tried to place some coherent content to the concept of good faith in the Convention.[164] He argues that the standard of the "reasonable person" underlies so many provisions of the CISG that good faith must be one of the general principles on which the Convention is based.[165]

There are several objections, however, to his equation of "reasonableness" with "good faith". The first is that his argument is circular. Professor Schlechtriem manages to find a general principle of good faith in the CISG only because he starts out with the a priori assumption that the concept of "reasonableness" is synonymous with "good faith". Professor Schlechtriem's argument only works, however, if we can all agree that "reasonableness" is the same as "good faith".[166] Unfortunately, Professor Schlechtriem does not explain why he chooses "reasonableness" as the definition of good faith over the number of competing definitions that are available.

The second objection (and perhaps against any attempt to pin only one definition to such an elusive concept as "good faith") is that Professor Schlechtriem does not explain why "good faith" should be equated only with "reasonableness". The concept of good faith may well be capacious enough to embrace other ideas as well. Indeed, there are a number of other general principles in the Convention that also promote justice, fairness and ethical behaviour. The following are but four examples:[167]

All these general principles can be said to be manifestations or examples of a general idea of good faith and fair dealing. It is little wonder since much of the law is based on what is fair and what will achieve justice. The general principle of "reasonableness" now is thus but one particular manifestation of a still broader concept of good faith. Equating "reasonableness" with "good faith" has the unfortunate effect of implying that it is the sole means to achieve equity and threatens to overshadow all the other principles that work in tandem to achieve a satisfactory resolution of a case.

It is often not necessary, however, to think of these specific principles in terms of good faith since their applicability to a specific problem depends more on whether the factual matrix satisfies the requirements of the rule rather than whether the parties have satisfied some general idea of good faith. This approach is very similar to the piecemeal approach of the English common law. For that matter, it is also rather similar to the German approach. As we saw above, there is no one overarching definition of "good faith" in the German context. Instead, it is a label for a collection of specific rights and duties.

The irony of this objection is that a comprehensive substantive doctrine of good faith now becomes unnecessary and perhaps even undesirable. Any definition of good faith that strives to be comprehensive is likely to be too general. Any definition that attempts to be concrete is likely to be too narrow. It is thus far better to craft sensitive responses to particular problems through a piecemeal approach rather than resort to an amorphous doctrine of good faith with questionable content. One should thus treat good faith as a moral aspiration, but not as a substantive legal doctrine. At most, the term "good faith" serves as a useful catchall term for more particular principles.[168]

To reiterate, it is submitted that there is nothing wrong with subscribing to the very general notion that "good faith" is synonymous with anything that requires contracting parties to behave in a manner that ensures justice and fairness. The merit of this approach is that we do not omit anything that can assist us in circumscribing unethical behaviour. This idea, however, is not concrete enough to form the basis of a workable legal doctrine. Thus, we should concentrate on developing those principles in the CISG that manifest this general idea more specifically. Examples of such principles would be the general principle requiring the observance of reasonableness or the general principle requiring the mitigation of damage flowing from a breach of contract. The more general notion of good faith remains in the background as a moral aspiration or as a unifying thread to these more specific ideas. However, as discussed earlier, it is not absolutely crucial to think of these principles in terms of good faith.

ii. The imposition of substantive obligations of good faith on contracting parties would undermine the objective of the CISG to promote certainty and predictability in international trade.

Given the lack of coherence in the concept of good faith in the CISG, it would be foolhardy to promote it as one of the general principles of the CISG. It is significant that throughout the debate on the appropriateness of inserting an obligation of good faith in the Convention, none of the delegates actually explained precisely what an obligation of good faith in the international context would entail.

It is too optimistic to expect national courts to be able to explicate on the content of an obligation of good faith in international transactions when domestic jurisdictions are still wrestling with the appropriate meaning of good faith in the domestic context. Decision-makers would inevitably draw on their varied experience with the doctrine in the domestic context, thereby producing multiple contradictory answers. While some semblance of an international doctrine may finally emerge, this would be an extremely long time in coming and would undermine the certainty, predictability and stability of international transactions in the meantime.

Since the objectives of certainty, predictability and uniformity are paramount in the CISG, it is best to use the concept of good faith in a way that will do the least damage. While the absence of a general principle of good faith may mean that decision-makers would have to turn to the rules of private international law to resolve an issue in so far as some other general principle in the CISG cannot be found to assist, this would still be preferable since it is likely that the domestic law would already have developed a response to the problem. In this way, domestic notions of good faith may be used to resolve a problem. Although this may produce different solutions, it is far better than having to contend with the "wild-card" of an uncertain general principle of good faith.

While it is recognised that it would be highly desirable to promote good faith and fair dealing in international trade, the adoption of a "loose cannon" is not the best way to achieve it. It is best not to force the issue before the doctrine of good faith is fully developed (if ever) in international trade law.

iii. The negotiating history of the CISG reveals that Article 7 is a clear compromise between those who wanted the Convention to impose a substantive obligation of good faith on contracting parties and those who were against a reference to good faith.

The third and final problem is that the thesis that good faith is one of the general principles of the CISG blatantly contradicts the negotiating history of Article 7. As Professor Farnsworth puts it, Article 7(1) is a "statesmanlike compromise".[169] It skilfully strikes a middle ground between the civilian and common law traditions. Imposing a full-blown doctrine of substantive good faith obligations would have been too much and too novel for many common law jurisdictions. On the other hand, representatives from civilian jurisdictions would not have been appeased without some reference to good faith in the Convention.[170]

It would pervert the compromise to now use Article 7(2) to impose substantive obligations of good faith and fair dealing on the parties.[171]

If the drafting committee really did intend to impose substantive obligations on the parties, it could well have adopted the much more straightforward wording of Article 1.7 of the UNIDROIT Principles of International Commercial Contracts which reads:

The reason why the UNIDROIT Principles could go where the CISG could not was because:

Of course, this is not to say that all the choices UNIDROIT ultimately made were necessarily the most appropriate for international trade. However, at the very least, UNIDROIT's determinations were not obfuscated by the "confounding language of diplomatic squabbling".[173]

b. Good faith as an interpretative tool

The only role that good faith as a legal doctrine could now possibly play in the CISG would be as an aid to interpretation. This would be consistent with the literal wording of Article 7(1), the negotiating history of the Convention and most importantly of all, would avoid all the problems associated with a more substantive version of good faith.

Before the feasibility of this interpretation is further discussed, one contrary argument must first be addressed. Some commentators who support the imposition of a substantive good faith obligation have managed to enlist even the wording of Article 7(1) in support. Their argument is that the terms of the contract impose a general obligation of good faith because there can be no distinction between the interpretation of the CISG and the interpretation of the contract itself.[174]

While it is true that the interpretation of the CISG does impose obligations and confer rights on contracting parties just as a contract does and that the contract itself derives its binding force from the Convention, there is still no reason to ignore the distinction between the two. It is still one thing to determine the meaning of the CISG by interpreting its provisions and yet another to determine the meaning of the contract by interpreting its terms. It is the CISG's provisions as interpreted that impose obligations and confer rights on parties. While the provisions of the CISG may sometimes aid in the interpretation of the contract, it is nevertheless its provisions as interpreted that assist. If the argument of these commentators is accepted, it would lead to the surprising result that there is a general obligation of good faith in all possible cases - a result that was expressly rejected during the negotiations on the CISG.[175]

With this argument out of the way, it must still be determined what the words "interpret" and "good faith" in the context of Article 7(1) mean. In particular, it must be determined if it is even possible for "good faith" to have any coherent meaning here when it had been so difficult to define it for more substantive purposes.

It is submitted that the most natural and ordinary meaning of "interpret" should be adopted i.e. "to explain or tell the meaning of" or "to make understandable".[176] Thus, regard should be had to the need to promote the observance of good faith in international trade in order to resolve cases of textual ambiguity. The meaning of a provision can be ambiguous either because it naturally bears a number of multiple meanings or because it must be applied to a previously unforeseen situation.

Honnold is one commentator who formally accepts that the role of good faith is restricted to one of interpretation.[177] He argues, however, that the concept of good faith should be used, inter alia, to deny either the buyer or the seller the remedies of specific performance or avoidance when either party seeks to use these remedies to speculate at the other's expense.[178] In other words, good faith is a prerequisite to the exercise of any of the rights or remedies in the CISG. It is submitted that this crosses the line of legitimate interpretation to the imposition of substantive obligations of good faith on the parties. This method of "interpretation" does not merely seek to pin down one meaning among the multiple interpretations that the express wording of the provision can fairly bear. It is tantamount to "gap-filling" or implying qualifications into the CISG which the instrument has not expressly provided for.

We now turn to the more thorny question of what "good faith" in the context of Article 7(1) means. We already saw how impossible and perhaps even undesirable it was to define the concept in the context of Article 7(2) of the CISG. Perhaps in that light, the CISG should not have made any reference to the concept of good faith at all. While Article 7(1) may have been an adroit compromise in political terms, its merit in substantive legal terms is dubious.

Nevertheless, the term "good faith" is used in the context of Article 7(1). If the concept is to prove to be of any assistance in the interpretation of the Convention, some coherent meaning must somehow be found. It is submitted that it is not contradictory to attempt to prescribe a meaning of good faith for the purposes of Article 7(1) while refusing to do so for Article 7(2). There were good reasons to resist doing so for the purposes of Article 7(2) because both policy reasons and the Convention's negotiating history were against it. Good faith in the form of an interpretative principle, on the other hand, is far less threatening to the objectives of the CISG. Moreover, the Convention has given its imprimatur to the task by specifically referring to the concept in Article 7(1).

Unfortunately, the travaux préparatoires do not provide any guidance beyond the fact that the concept is not intended to play a robust substantive role. The academic literature on the CISG is also unhelpful on this point since it generally either assumes that the definition of good faith is self-evident or that the concept will somehow magically be elucidated by case law.[179]

There are, however, several guidelines that may be observed in the attempt to ascribe some meaning to the term.

• Firstly, we have more flexibility in defining "good faith" in the context of Article 7(1) than we had in Article 7(2). This is because in so far as Article 7(2) of the CISG was concerned, good faith would qualify as one of the general principles of the Convention only in so far as it could be shown that it pervaded the entire Convention. It followed, therefore, that the meaning of the principle, if it existed, had to be derived from the Convention itself. No external sources could be used. Any definition had to be expansive enough to encompass all the concepts or principles within the Convention that were manifestations of a more general idea of good faith. However, as discussed above, no coherent meaning of good faith could be derived from the Convention itself. There were so many principles affiliated to the concept of good faith in the CISG that one could not achieve a comprehensive definition which still retained concrete content.

  Where good faith in the context of Article 7(1) is concerned, however, we are not similarly constrained. The meaning of good faith need not come from within the Convention but can also be found externally. Therefore, the most appropriate meaning can be chosen from the competing definitions that are available.

• Secondly, we can afford not to be overly ambitious in choosing a definition. If one has to choose between a comprehensive but general definition and a narrow but concrete one, the choice should be in favour of the latter. It is best to choose a limited definition that everyone, at a minimum, would agree on. While this may lay the definition open to a charge of under-inclusiveness, it would minimise the disruption that an uncertain concept of good faith could wreak on the structure of the CISG and promote the cause of predictability and stability. If one had to define good faith for the purposes of Article 7(2), on the other hand, one would have to engage in over-abstraction due to the number of concepts that were affiliated to the idea of good faith.

• Thirdly, to state the obvious, the definition of good faith must be one that would aid in the interpretation of the Convention. It would be useless to choose a standard that would be helpful in generating substantive obligations but not in resolving interpretative problems.

Unfortunately, these guidelines do not advance the inquiry very much. The definition of "good faith" remains as elusive as ever. We still face many of the same problems that we encountered in trying to define "good faith" for the purposes of Article 7(2). There are still so many competing definitions to contend with that it is difficult to achieve a comprehensive definition that is capable of practical guidance. The problem is exacerbated by the fact that we now have to contend not only with the specific principles of good faith in the Convention, but also with a number of definitions that are externally derived as well. Thus, the danger is that any definition would "either spiral into the Charybdis of vacuous generality or collide with the Scylla of restrictive specificity".[180] It would not be appropriate to simply choose one definition over another since that would mean sacrificing nuances captured by one term but not another.

Neither is it possible to ascertain some "minimum agreed standard" of good faith. As discussed above, almost every jurisdiction has a very different conception of what it means to act in good faith. It would be too much to hope that they would be able to agree on a minimum standard for the purposes of international trade.

Ironically, perhaps, we are thus forced to fall back on the very same conception of good faith that we used for the purposes of Article 7(2). To repeat, the conclusion there was that the CISG does not embody a general principle of good faith, at least not in a form that it is capable of independently generating concrete rights and obligations. It was argued, however, that the Convention does contain several principles that can be said to be particular manifestations of a broad idea of good faith. Examples of such principles were the principles of reasonableness, estoppel and favor contractus.[181]

It is submitted that this conception of good faith can also be utilised for the purposes of Article 7(1). The term "good faith" in Article 7(1) should not be read to refer to some general doctrine of good faith, for no coherent one can be formulated. Instead, it should be read as a compendious term referring to the collection of more specific good faith principles in the Convention. Thus, when a question of interpretation arises, the tribunal should first decide which of these principles are implicated and resolve the problem in a way that upholds that principle.[182] Thus, the definition of "good faith" for the purposes of Article 7(1) is one that is derived from the CISG itself. It is true that there are a number of other good faith definitions that can be externally derived, either from national jurisprudence or academic literature on the subject. It is submitted, however, that these definitions are not as strong as one that is internally derived from the CISG. This is because there is no guarantee that any of these "external" definitions will meet with the approval of those countries that have adopted (or will adopt) the Convention. At a minimum, however, they must accept those principles embodying the idea of good faith because they are contained in the Convention itself.

The upshot of all this is that the one reference that the CISG does make to the concept of good faith should not be understood as sanctioning the adoption of a legal doctrine of good faith, even if it is only for interpretative purposes.

The following example will illustrate how the above points would apply. A provision that has taken on an especially ambiguous meaning in this technological age is Article 18(2) which provides: "An acceptance of an offer becomes effective at the moment the indication of assent reaches the offeror [emphasis added]."

In so far as an acceptance by electronic mail is concerned, an acceptance may be deemed to have "reached" the offeror at any one of three points- when it is stored in the computer, when it is read or when it is reproduced in a tangible form.[183] The matter is further complicated if the offeror fails to check his electronic mail diligently and only discovers the message after the date for acceptance has passed or intentionally waits until the time has passed for acceptance before reading his e-mail.

The concept of good faith as explained above can be used here to identify the appropriate definition of "reaches". The specific good faith principle that is implicated here is the one that requires the observance of reasonable behaviour in the absence of any other specific regulation. The message should thus not be deemed to have "reached" the offeror when the message first arrives and is stored on the computer's hard disk. It would be unreasonable for the offeree to expect that that the offeror has knowledge of the acceptance even before he has had a chance to read it. It is only fair that the offeror should be given a reasonable opportunity to read the message. Thus, the acceptance should be considered to have "reached" the offeror only after he has had a reasonable opportunity to read the message. What qualifies as a "reasonable opportunity" would depend on factors such as the offeror's known access to an e-mail server and whether the offeree sent the message outside office hours.[184] It would constitute bad faith,[185] however, for the offeror to insist that an acceptance "reaches" him only after he has printed it because he is, by then, already cognisant of the acceptance. If it were otherwise, the offeror would be free to act in bad faith and print the message only after the time for acceptance has passed, thus thwarting the reasonable expectations of the offeree.

To summarise the conclusions of this part of the paper, a general doctrine of good faith in a form that is capable of generating independent legal rights and obligations for either substantive or interpretative purposes does not exist in the CISG. At best, general principles may be derived which are particular manifestations of a very general idea of good faith. Where possible, these general principles can be used to resolve matters not expressly settled by the Convention. These same principles can also be used to resolve issues of textual ambiguity.

It is acknowledged that some may object to the equation of "good faith" with anything that promotes justice and fairness or moderates unethical behaviour on the ground that it merely replaces one vague and nebulous term with equally vague and nebulous synonyms.

It is submitted, however, that the problem is not as grave as it seems. This is because it is not the thesis of the paper that the concepts of "justice", "fairness" and "ethics" should be left to generate rights and obligations on their own. They are merely convenient labels for some of the general principles that are embodied within the Convention. It is actually these principles that should be used to resolve issues, not the concepts themselves. Thus it does not really matter even if we were to disagree over whether a principle does indeed promote justice and fairness or moderates unethical behaviour. It remains a fact that it nevertheless is still one of the general principles on which the CISG is based. Thus, regardless of the nomenclature used, it still can be used to resolve matters governed by the Convention but not expressly settled in it.

The only area where a disagreement could conceivably make a difference is when we seek to use these same principles to resolve issues of textual ambiguity. In this context, nomenclature does matter. This is because Article 7(1) refers specifically to the concept of good faith. Thus, one can only make use of those principles that manifest the idea of good faith to interpret the Convention. However, decision-makers may well use different principles to resolve issues of textual ambiguity if their ideas of justice, fairness and ethics are different.

While this is indeed a problem, its magnitude should not be exaggerated. As long as the reference to good faith in the Convention remains, the problem of uncertainty and vagueness can never be completely eliminated. The only thing we can do is to minimise the problem. Restricting the definition of "good faith" in Article 7(1) to encompass only those principles in the CISG that constrain the behaviour of contracting parties in order to promote justice, fairness and ethical behaviour achieves this in three ways.

Firstly, it severely circumscribes the scope of decision-makers' discretion by limiting the menu of options they can choose from. Instead of giving them the option to resort to a free-ranging principle of good faith, decision-makers now are limited to those general principles of the CISG that manifest this idea of good faith. This is far better than leaving a loose cannon in their hands. In order to ensure that this version of good faith actually does operate as a significant constraint, decision-makers should be expected to demonstrate that the principle that they seek to use is indeed one on which the CISG is based and to articulate precisely how that principle promotes justice and fairness, or moderates unethical behaviour.

Secondly, even if decision-makers were to use a general principle that does not promote the cause of good faith to resolve an issue of interpretation, the damage done is not acute. This is because the role of good faith is restricted to issues of textual interpretation only. Thus its impact cannot be as severe as a substantive, wide-ranging principle.

Thirdly, even if the principle used does not embody some specific idea of good faith, we can at least seek solace from the fact that the errant decision-maker must be promoting some other value of the Convention since he is employing one of the principles on which the CISG is based.

IV. THE APPLICATION AND ENFORCEMENT OF ARTICLE 7

A. A Confusion of Judicial and Arbitral Determinations

This part of the paper now turns to examine whether judicial and abritral tribunals have managed to capture the correct definition of good faith in their rulings.

A survey of the field,[186] however, reveals that judicial and arbitral determinations have only exacerbated the confusion over the proper role of good faith in the Convention. It is possible to find a decision that supports almost every possible interpretation of the role of good faith in the CISG. At times, these courts or tribunals issue their decisions without any recognition of the debate surrounding the concept of good faith in the Convention and without an examination of the ramifications of its findings on the role of good faith in the CISG.

To illustrate this point, I will follow the six-way division I adopted in Part III (B)(1) ("The Competing Interpretations of the Role of Good Faith in the Convention") of this paper and highlight a decision that best exemplifies each interpretation.

1. An obligation of good faith established by the practices of parties or by international trade usage.

No cases were found that support this interpretation.

2. The doctrine of good faith as an interpretative guide.

The ICC arbitration case of W v. R [187] involved a German seller and a Spanish buyer who had concluded an agreement for the buyer to be the exclusive distributor in Spain of industrial equipment produced in Germany. Several individual sales contracts were concluded pursuant to this agreement. Four years later, the German seller terminated the exclusive distribution agreement due to insufficient sales. The arbitration involved several claims but the one that is relevant for our purposes is the buyer's counterclaim for damages arising from the seller's failure to deliver spare parts. It was held that the CISG was not applicable to the exclusive distribution agreement but to the individual sales agreements.

The arbitrator recognised that the seller would have had an obligation to deliver spare parts if the case were based on German law. Under Article 433 of the BGB, the producer of series-produced automobiles, machines and technical equipment has a collateral obligation to have replacement parts ready for delivery for a certain period of time, even if there has been no special agreement. This same result could also be arrived at through § 242 of the BGB or Article 26(2) of the Law Governing Competition Limitation.

The arbitrator acknowledged that there was a debate over the role of good faith in the Convention. He maintained, however, that a collateral obligation similar to that imposed by Germany could not be inferred from Article 7(1) of the CISG because it was relevant only to the interpretation of the Convention. Unfortunately, for our purposes, the arbitrator did not go on to elaborate on the definition of good faith he would use to interpret the Convention nor the version of interpretation that he had in mind.

It must nevertheless be noted that the absence of a substantive good faith obligation in the CISG did not prevent the arbitrator from arriving at an equitable result. He found that "a prompt delivery of replacement spare parts had become normal practice as defined by Article 9(1) of the CISG".[188] In accordance with Article 33(c) read with Article 7(2) of the CISG, the seller was obliged to deliver the spare parts within a reasonable time.

3. The doctrine of good faith as a prerequisite to the exercise of the rights and remedies provided in the Convention.

A 1995 case heard before the OLG München supports this interpretation.[189] In this case, the plaintiff buyer had concluded a contract with the defendant seller for eleven cars. Five of these cars were ready for delivery in August and the remaining six in October. The buyer, however, was unable to take delivery of the cars due to extreme currency fluctuations and asked the seller to defer their delivery until the situation returned to normal.

The issue that is relevant for our purposes is the buyer's claim two and a half years later for damages for non-delivery. This claim was based on Articles 45(1)(b), 45(2), 49(1)(a) and 25 of the CISG. The buyer's argument was that the seller's failure to deliver the cars when it wished constituted a fundamental breach of contract. The court held, however, that as the parties had not agreed on a precise date of delivery, the seller's readiness to deliver in August and October meant that it was not guilty of non-delivery.

In any case, allowing the buyer to avoid the contract now, two and a half years after the event, would violate the principle of good faith in Article 7(1) of the CISG.[190]

Unfortunately, the court did not elaborate further on its interpretation of the CISG. One commentator speculates that "the court may have interpreted the provisions relating to avoidance, particularly article 49 which gives the parties the power to avoid, and article 26 which provides that avoidance is only effective if notice is given, with a view to promoting good faith in international trade as directed in article 7(1)".[191] One should note, however, that nowhere in Article 49 and Article 26 is there a requirement that the buyer must make his claim in a timely fashion before he can avoid the contract in cases where the seller has not delivered the goods. The court's holding, therefore, must have been predicated on an unspoken assumption that all parties had to observe good faith before they could invoke the rights and remedies of the Convention. This amounts to the imposition of substantive obligations of good faith on the party and contradicts the express wording of Article 7(1).

It is a pity that the court felt that it had to resort to the "blunt cleaver" of a good faith obligation when it could have availed itself of more specific principles that would have been more sensitive to the context. It should have noted that in cases where the seller has delivered the goods, Article 49(2) deprives the buyer of his right to avoid the contract if he fails to do so within a reasonable time and in any event, after he knew or ought to have known of the breach. In cases where the seller has delivered non-conforming goods or goods that are subject to third party claims, Article 39 and 43 require the buyer to exercise his remedies a reasonable time after he knew or ought to have been aware of the breach. Evidently, the CISG places a clear premium on the timely exercise of one's rights and remedies. The court could have drawn an analogy between these provisions and the present case and concluded that the CISG could not have intended a different result in cases involving other varieties of breach.

This case illustrates how quick recourse to the concept of good faith can obfuscate more sensitive ways of resolving the situation. As Wightman puts it, the "jump to the very high level of generality of good faith can leave behind 'middle range' arguments which capture better the reason for intervention by the court."[192]

4. The doctrine of good faith as a substantive principle in the resolution of matters not expressly governed by the Convention.

Despite the number of problems associated with a substantive principle of good faith, there are nevertheless a surprising number of judicial and arbitral cases that specifically support the proposition that good faith is one of the general principles of the CISG.[193]

One example is the Dutch case of CME Cooperative Maritime Etaploise S.A.C.V. v. Bos Fishproducts Urk BV.[194] In this case, a French seller delivered fish to a Dutch buyer who transformed it into fish filets for sale. Following complaints over the quality of the product, the buyer refused to pay part of the price and claimed a set-off for damages. The seller sued for the price.

The court held that the buyer lost its right to rely on the lack of conformity because it had failed to give notice to the seller within a reasonable time after it ought to have discovered the defects (Article 39 CISG). In the present case, the buyer should have discovered the defects by examining the goods as soon as practicable (Article 38 CISG). Under the circumstances, this would have been either at the time of delivery or shortly afterwards.

The court gave the buyer such a short period of examination for several reasons. Firstly, in conformity with a usage in the fish market (Article 9(2)), the seller's standard terms had provided for short terms for notice of defects in frozen products. Secondly, the need for a timely examination was especially urgent given the fact that the goods were perishable and were about to be transformed into another product. It would be impossible for the seller to confirm that the goods were defective after they were transformed into another product. Thirdly, the buyer had a duty to examine all of the fish instead of a mere sample because it had the opportunity to do so at least by the time it started processing the fish into fish filets. The buyer could hardly complain that this duty was too onerous when it had managed to detect a defect in another batch of fish delivered by the seller.

The court opined that its conclusions were reinforced by the principle of good faith and fair dealing. It observed that unlike the French doctrine of good faith which was generally subjective, the CISG went much further and imposed an objective duty of good faith. It was thus an additional reason why the buyer should have examined the goods before selling its products to its customers.

It is unfortunate that the court felt a need to bolster its conclusions by reference to such an amorphous principle as good faith when it already had such strong support for its conclusions. The supposed duty of good faith is far too uncertain and is unable to be as sensitive to the context as specific principles are.

5. The doctrine of good faith as a source of rights and obligations which may contradict or extend those in the Convention.

Given the obvious inappropriateness of this interpretation, it is somewhat surprising to be able to find support in the form of the French case of S.A.R.L. Bri Production "Bonaventure" v. Société Pan Africa Export.[195] This case involved a contract between a French seller and an American buyer for jeans. It was specified that the jeans were to be sent to South America and Africa.

During the negotiations and performance of the contract, the seller repeatedly insisted on knowing the destination of the goods as it had an interest in preventing parallel imports into Spain. It transpired, however, that the second delivery of jeans had been sent to Spain. The seller's subsequent termination of the contract triggered the proceedings.

The buyer's failure to respect the wishes of the seller was found to be a fundamental breach of the contract because it must have known from the contractual negotiations how important it was to the seller that the goods not be sent to Spain (Article 8 read with Articles 25 and 73(2)). The seller was thus entitled to avoid the contract.

What is most important for our purposes is the court's award of 10 000 francs to the seller for "abusive and unjustified actions". It found that the conduct of the buyer, "contrary to the principle of good faith in international trade laid down in article 7 CISG, aggravated by the adoption of a judicial stand as plaintiff in the proceedings, constituted abuse of process".[196] It thus seems that that the court was of the opinion that the CISG imposed an obligation of good faith not to institute judicial proceedings when one was clearly at fault.

It is submitted that the court's findings are unfortunate. This case once again illustrates the potential for the concept of good faith to blind its adherents to important distinctions. In the context of S.A.R.L. Bri Production "Bonaventure", the court failed to observe the distinction between civil procedure and substantive contractual law. The CISG governs portions of the latter. It definitely does not regulate matters of civil procedure. Issues involving abuse of the court process lie in the realm of civil procedure, not substantive contractual law. In failing to maintain the distinction between the two, the court inadvertently expanded the scope of the CISG to a staggering degree.

In addition, the court failed to observe the distinction between compensatory and punitive damages. Article 74 of the CISG, which governs the award of damages for breach of contract, only envisages damages for compensatory purposes. In awarding damages for abuse of process, however, the court in effect awarded punitive damages.

This is not to say, however, that the court could not have awarded damages for abuse of process. It is just that it should have done so under the rubric of domestic civil procedure, not the CISG.[197]

6. The doctrine of good faith serves as an interpretative guide in cases of textual ambiguity. In cases not expressly governed by the Convention, general principles may be derived which are, at best, particular manifestations of good faith. A general doctrine of good faith, however, does not serve as a fount of additional rights and obligations.

The Viennese arbitral award SCH-4318 [198] is an excellent example of this. This case involved a contract for the sale of rolled metal sheets between an Austrian seller and a German buyer. The buyer commenced arbitral proceedings to recover damages for defects in the goods. The problem was that the buyer had not adhered to the contractual stipulations regarding the examination of the goods and the notice of non-conformity. The buyer had sent the notice to the seller only six months after delivery when he was contractually bound to do so immediately after delivery (or at the latest within two months from delivery).

The buyer's argument that the seller had waived its right to rely on its defence that notice had not been timely given was rejected on the basis of insufficient evidence.

Its argument that the seller was estopped ("venire contra factum proprium") from raising the defence, however, was more favourably received. The arbitral tribunal recognised that the issue of estoppel was not expressly settled by the CISG and that the issue was closely related to the wider problem of the significance of the reference to good faith in Article 7(1) of the Convention. The tribunal nevertheless managed to cleverly side step the issue. It expressly refused to get embroiled in the debate over the proper role of good faith in the CISG. It held that whatever the outcome was to that controversy, it remained a fact that the principle of estoppel or the prohibition of venire contra factum proprium was one of the general principles envisaged by the Convention (Articles 16(2)(b) and 29(2) read with Article 7(2)).

Once again, the tribunal demonstrated that it is possible to arrive at equitable solutions without having to resort to a wider doctrine of good faith. The principle of estoppel, after all, is but one of the general principles of the Convention that is closely associated with the notion of good faith. In this context, the term "good faith" is used merely as a moral aspiration, not a legal doctrine. At most, it used as a term to describe the value that the doctrine of estoppel tries to promote.

It remains the case, however, that the majority of cases (and for that matter, commentators) are in favour of a more substantive role for good faith. The question thus arises whether we should simply capitulate and accept the majority position. After all, Article 7(1) of the CISG exhorts us to have regard to the "need to promote uniformity in its application" when interpreting the Convention. It is submitted, however, this is not a mandate for blind adherence to prior precedent or doctrine. Prior opinion should of course always be consulted for guidance. It should be followed, however, only if it also gels with what our sense of what the most appropriate interpretation of the CISG is.

Thus, where the issue of good faith is concerned, it is submitted that it is not advisable to follow the trend and adopt it as a substantive principle to resolve matters not expressly settled by the CISG. This would merely purchase short-term uniformity at the price of long-term chaos.

B. Reasons for the Difficulties of Interpretation

We now turn to examine the reasons why the CISG has generated such a diverse range of answers to the same question. After all, one would have expected that the scope for disagreement would be much narrower given that all decision-makers have the same basic text to work with. It has become clear, however, that although "the language of the CISG may superficially seem to suggest that the convention embodies a significant advance toward the unification of international law, this appearance masks a fundamental disunity in the way nations are likely to understand the various provisions".[199]

A caveat should be entered at this point. The problem over good faith is in fact symptomatic of a larger problem with the interpretation, application and enforcement of the Convention as a whole. That topic is itself worthy of a separate discussion and has been written on extensively by other commentators.[200] This part of the paper does not purport to give an exhaustive treatment of the reasons for the problems involved in the application and enforcement of the Convention. It will only focus on the reasons for the difficulties encountered in the application of good faith in the CISG.[201]

It is submitted that there are two main factors why the role of good faith in the CISG has remained such an enduring problem- there are internal weaknesses in the Convention itself and the decision-makers themselves are beset by attitudinal and resource problems.

1. Flaws Inherent Within the Convention Itself

a. Awkward compromises and mental reservations

The CISG contains a significant number of political compromises. As Carbonneau and Firestone caustically put it, "[i]t is a matter of politics and parochial conflicts resolution rather than a vision of a transcending legal order specifically established to promote effective commercial relations."[202]

Eörsi has identified four types of compromise within the CISG, classified according to their nature:

Article 7 falls within category two and perhaps, even category three. As pointed out above, Article 7 is awkwardly drafted, making it possible to adopt two divergent approaches to the role of good faith in the Convention. To repeat, Article 7(1) assigns a purely interpretative role to the doctrine of good faith while Article 7(2) makes it possible to bestow an even more ambitious role upon it. As those privy to the debates on the article are aware, the provision was meant to placate those who wanted the CISG to impose substantive good faith obligations on the one hand, and those who wanted to excise any reference to good faith in the Convention on the other.

The CISG, however, failed to follow through and reject a substantive doctrine of good faith outright. The CISG's failure to "bite the bullet", so to speak, has allowed die-hard adherents of good faith to cling to the hope that the Convention still somehow imposes good faith obligations and has perpetuated confusion among commentators and decision-makers alike. In fact, even during the Vienna Conference itself, several delegates still persisted in their belief that the CISG imposed good faith obligations. This would explain, for example, why Canada could still push for a proposal that would prohibit parties from excluding their obligations of good faith, diligence and reasonable care despite the fact that the negotiating history already indicated that a substantive role for good faith had been rejected. We may infer, therefore, that some delegates may have agreed to the compromise text without fully appreciating its implications.

b. The absence of supporting infrastructure

To exacerbate matters, the CISG does not provide its users with the basic infrastructure to resolve interpretative problems. The CISG does not even provide a basic definitional section, much less the institutions to co-ordinate the resolution of the problems involved in interpreting, applying and enforcing the Convention. The most assistance that the CISG is able to provide is Article 7(1), which instructs decision-makers to resolve problems of interpretation by reference to the Convention's "international character" and "to the need to promote uniformity in its application and the observance of good faith in international trade".

This article, however, is short on practical utility. It merely provides a list of considerations not a specific methodology. Moreover, two of the three factors - the Convention's international character and the need to promote uniformity- are so obvious that they do not add much to what is already understood about interpreting an international convention. The provision fails to address the more pressing question of how exactly that uniformity is to be achieved. Neither does it elaborate on the content of that delphic term, "good faith". Instead, it leaves the resolution of these problems to a decentralised network of judicial bodies and arbitral tribunals scattered all over the world.

The need for a co-ordinated response, however, is especially urgent in the case of the CISG. Its international nature multiplies and heightens the interpretative, application and enforcement difficulties that are already normally encountered in the domestic context. For one thing, the cases that are encountered are likely to be more complex because of the number of transnational elements involved.[204] For another, as one would expect with an international convention that has been adopted in 61 countries, the reach of the CISG is extremely broad. Thus, unlike a domestic statute, the Convention does not have the luxury of being able to operate in an environment with a shared legal and cultural heritage.[205] The uniformity that the CISG seeks to promote will thus remain a mere pipe dream if some way is not found to bridge the differences between the legal and cultural attitudes of its users. The reasons for this are addressed in the next sub-section.

2. Attitudinal and Resource Problems

Despite the fact that the Convention may have been able to formally unify much of the law on contracts for the international sale of goods, it has been unable to address the more significant underlying problem of the gulf between the legal traditions and attitudes of its signatories. This manifests itself, for example, in different approaches toward the interpretation of Conventions and stare decisis.

Civilians, for example, are more inclined than common law lawyers are to find general principles in a written instrument and to use them to address problems not expressly settled by the text. Common law lawyers, on the other hand, tend to read statutory instruments strictly and rely on case law to plug omissions in the statutory text. Even then, common law lawyers generally do not extract general principles of a high degree of abstraction from case law. Applying this to the problem of good faith in the context of the CISG, this means that civilians are far more likely to use Article 7(2) of the Convention to extract a general principle of good faith than common law lawyers are.

Take another example. Common law lawyers tend to accord prior case law far more precedential weight than civilians would due to their experience with stare decisis in the domestic context. At the same time, they are less likely to attach as much significance to academic commentary in the resolution of a case as civilians are. Thus, although the CISG exhorts adjudicators to have regard to the need to maintain uniformity in the application of the Convention, it is almost certain that adjudicators from common law and civil law jurisdictions will adopt different approaches to resolving a case,[206] and produce divergent answers.

Honnold is of the opinion that these kinds of divergent approaches are the result of a "homeward trend":

"The Convention, faute de mieux, will often be applied by tribunals (judges or arbitrators) who will be intimately familiar only with their own domestic law. The tribunals, regardless of their merit, will be subject to a natural tendency to read the international rules in light of the legal ideas that have been imbedded at the core of their intellectual formation. The mind sees what the mind has means of seeing."[207]

These attitudinal problems are exacerbated by what I call, "resource problems". Even it were clear what methodological approach were to be adopted and that the parties' ethnocentric bias could be overcome,[208] the lawyers and decision-makers involved in a case would still face serious obstacles. The task of preparing a case involving the CISG is far more complex than preparing one involving purely domestic law. The amount of case law and scholarly commentary that has built up in the thirteen years since the CISG has come into force is simply overwhelming.[209] Short of unlimited time, energy, and resources, there is no way any lawyer or decision-maker could become familiar with all the jurisprudence in the area. Furthermore, there is no way that any lawyer or adjudicator could be conversant in all the languages that the jurisprudence has been written in. Thus, as a practical matter, research into any point involving the CISG is likely to be confined to the language that one is familiar in and to cases and commentaries produced in countries with similar legal systems. In this way, the "homeward trend" is perpetuated.

Applying this to the problem of good faith in the CISG, it is thus likely that the civilians will continue to push for a more substantive role for good faith while their common law counterparts resist it. It is interesting to note, for example, that many of the cases that advocate a more substantive role for good faith emanate from civil law jurisdictions.[210]

V. REFORM

Let us now turn to the various ways in which the problems that have been encountered in the interpretation, application and enforcement of good faith in the Convention can be resolved. Again, like the reasons for the difficulties involved in interpreting Article 7, the issue of the reform of the Convention is one of general interest and is not confined to the problem of good faith. This part of the paper, however, will only focus on those reforms that could help to resolve the problems involved in the interpretation, application and enforcement of the concept of good faith in the CISG. However, many, if not all of the proposals would also advance the cause of the Convention as a whole.

The problems that are encountered in the interpretation and application of good faith in the CISG can be ameliorated in three main ways: through structural reform, through the collection and dissemination of decisions involving the CISG and through informal checks. However, as we shall soon see, many of the reforms that hold the most promise will never be implemented.

A. Structural Reform

The solution that is likely to have the most impact would be structural reform. Structural reform of the CISG can take at least four forms:

1. Amending the CISG

The first and probably the most obvious would involve an amendment of the CISG itself. Assuming that it would not be politically possible to delete the reference to good faith in the Convention, the CISG should at least be amended to make clear three things.

Firstly, it should dismiss once and for all the notion that the Convention contains a substantive doctrine of good faith that is capable of independently generating answers to questions concerning matters governed by the Convention but not expressly settled in it. At most, it refers to the collection of principles in the CISG that are particular manifestations of a very general idea of good faith. These principles could be enumerated either in the CISG itself or in an official commentary. Alternatively, the Convention could leave them to be identified and developed ad hoc by judicial determinations.

Secondly, it should make clear that the term "good faith" in Article 7(1) refers to nothing more than the collection of these specific "good faith" principles.

Thirdly, it should state that the licence Article 7(1) grants to use these principles to interpret the Convention is only good with respect to issues of textual ambiguity.

Unfortunately, the Convention does not contain any mechanism by which it can be revised. Even if there were such a mechanism, it is unlikely that any significant change could be achieved. After all, despite the fact that the travaux préparatoires clearly reject a more substantive role for good faith, a substantial number still cling to the notion that Article 7(2) of the CISG imposes substantive good faith obligations upon the parties. It is thus unlikely that delegates to a revision conference would be able to arrive at any consensus on this issue. As Rosett pessimistically puts it, a revision conference would "produce only changes that create no controversy or that no party deems a suitable trading point. In view of the inertia that would have to be overcome to convene a diplomatic conference in the first place, the class of changes that could succeed would appear to be virtually nil."[211]

2. Official Commentary

If the CISG cannot be amended, the next best solution would be to reflect the points in an official commentary. Unfortunately, despite the fact that several delegates urged the adoption of an official commentary on the CISG,[212] the Vienna Conference did not authorise the preparation of a commentary, official or semi-official, that would explain and clarify the provisions of the CISG. There is no reason why it should have refused to do so when precedents for this had already been set by previous conventions. For example, the 1964 Hague Conventions were accompanied by a commentary that was written by Professor Andre Tunc Wroner and the 1974 Limitations Convention was accompanied by a commentary that was written by Professor Kazuaki Sono.[213]

In light of the fact that there is no recorded debate on the issue, one can only speculate on the reasons why the Vienna Conference did not sanction the publication of a commentary on the final text of the Convention. Professor Winship suggests that the reason may have been that "there was fear that the text of the convention would be ignored in favour of a more easily read…commentary."[214]

In these circumstances, the closest we have to an official commentary is the Secretariat Commentary to the 1978 Draft of the CISG. However, there are several problems with the Secretariat Commentary. The first is that the commentary is not on the final text of the Convention. Thus, it does not reflect the changes that were made between 1978 and 1980. Secondly, the commentary may not reflect the most appropriate interpretation of the Convention. The commentary on Article 7 of the CISG, [215] for example, does not make clear that good faith should be used only to resolve issues of textual ambiguity. Neither does it pinpoint the definition of good faith that should be used in the Convention. In fact, the way that the commentary is written only serves to encourage the predilections of those who are minded to read Article 7(2) as imposing substantive good faith obligations on parties. Thirdly, even if there were no substantive problems with the commentary, it still has not been sanctioned officially. Thus there is nothing to compel decision-makers to refer to it when making their determinations.

One can only hope that if an official commentary is ever adopted, it will reflect the correct position on the role of good faith in the Convention. However, it is difficult to imagine a group of scholarly commentators succeeding where a group of international delegates have failed, especially when so many of them are of the view that Article 7(2) of the Convention imposes substantive good faith obligations.[216] It is little wonder then, that Professor Winship (one of the few who advocate purely an interpretative role for good faith)[217] has said with an air of resignation that he is "convinced by the persistence of the critics who seek to expand the operation of a good faith concept that over time a general obligation on contracting parties to act in good faith will be accepted".[218] As pointed out above, this tendency should be firmly resisted.

3. International Commercial Court

The next alternative would be to set up the institutions necessary to establish and maintain a uniform jurisprudence on the CISG. For example, UNCITRAL could consider establishing an international commercial court.[219] Thus, if against all better judgement, a substantive version of good faith were adopted, the existence of such a body would help to minimise the likelihood of incoherence and multiple contradictory determinations. Such a court could have several competencies.

The most obvious would be to give it the power (exclusive or otherwise) to adjudicate upon cases involving the CISG.[220] Alternatively, it could exercise a sort of supervisory jurisdiction by calling up cases involving glaring errors and revising them. It could even be a forum for judicial review, where cases involving glaring errors could be quashed and returned to the original tribunal for re-determination. Finally, it could be a source of preliminary rulings on questions involving the interpretation of the CISG, much like the European Court of Justice.[221] A tribunal would be required to suspend its determination pending a ruling from the international court and to decide the case in accordance with it.

It is of course near impossible that any of these suggestions will ever be implemented. In fact, UNCITRAL itself has implicitly rejected a suggestion that such an international tribunal be created.[222] One need only look at the opposition to and the criticism of the International Court of Justice and the proposed International Criminal Court to realise that an International Commercial Court will never be established. Bonell explains the underlying concern well:

Moreover, it is likely that the merchant community itself would not welcome the establishment of an international commercial court. Merchants often prefer to submit questions involving the CISG to private arbitration in order to preserve confidentiality, lower costs and ensure adjudicatory despatch. All these objectives would be threatened if they were required to submit any aspect of their case to an international commercial court.

The purpose of the court would be undermined, however, if it did not have some form of compulsory jurisdiction. In the absence of compulsion, merchants would almost certainly favour the present decentralised system of enforcement, thereby making it difficult for the tribunal to achieve and maintain any semblance of uniformity.

4. Advisory Board

If as extensive a proposal as an international commercial court cannot be adopted, UNCITRAL could consider establishing an Advisory Board "with the limited task of rendering advisory opinions concerning the proper interpretation to be given to the Convention".[225] The Board could render its opinion in the context of a concrete dispute upon the request of the decision-maker or the litigants or for purely informational purposes upon the request of parties to a commercial transaction or national authorities.

Precedents for such procedures may be found in the practice of the International Monetary Fund and the Commission on Banking Technique and Practice of the International Chamber of Commerce (ICC). The Articles of Agreement of the International Monetary Fund require that questions concerning the interpretation of the agreement as between Fund members or between a member and the Fund be submitted to the Executive Directors of the Fund for their decision. The Commission on Banking Technique and Practice, on the other hand, issues interpretations of the Uniform Customs and Practice for Documentary Credits in response to abstract questions of principle submitted by banks and other interested entities or persons.[226]

These avenues, however, have previously been explored by the Secretariat and rejected as unfeasible.[227] This is because the Commission cannot arrogate such a role for itself in the absence of consent from the States that have adopted the CISG. If the Commission were to render advisory opinions in such circumstances, it would be tantamount to intervening in the interpretation of national legislation. This is because despite the fact that the CISG is an international convention, it does not become law for a country until it has acceded to it.

The need for State consent makes the establishment of an official advisory board unlikely. States would be loath to surrender any sovereignty to an international body, even to one that is not binding.

Fortunately, the Pace Institute of International Commercial Law and the Centre for Commercial Law Studies of Queen Mary College have stepped into the breach by establishing the Vienna Sales Convention Advisory Council (CISG-AC) in June 2001 for the purpose of issuing interpretive opinions. Although its members [228] are drawn from different nation-states, they are not political representatives. The Charter of the Council calls for the endorsement of each interpretive opinion [229] by all members of the Council. Where that is not feasible, reasoned concurring or dissenting opinions by Council members are to written. Since the CISG-AC is a private initiative, its opinions would not carry the imprimatur of UNICITRAL. However, given the stature of its members, they are likely to be of some weight.

B. A Systematic Collection and Dissemination of Case Reports

Given that more ambitious reforms are unrealistic, the next best alternative is to implement procedures to ensure the systematic collection and dissemination of cases involving the CISG. Uniformity in application can only be achieved if decision-makers are fully aware of developments in other States and use these to build a common understanding of the CISG.

In so far as the debate over the role of good faith is concerned, publicising the case law on the area would at least expose decision-makers to the contours of the controversy and introduce them to the different ways in which the question can be approached.

Fortunately, significant work has already been done in this area. There are presently three major collections of case law:

1. CLOUT

"CLOUT" or "Case Law on UNCITRAL texts" represents a system that UNCITRAL established in 1988 for the collection and dissemination of court decisions and arbitral awards relating to the CISG and other uniform laws prepared by the Commission.[230] Although the following description of CLOUT focuses on the CISG, the procedure is the same for the other uniform laws included in the system.

CLOUT relies on a network of national correspondents appointed by States that are parties to the CISG. Each national correspondent is responsible for collecting and transmitting to the Secretariat those decisions made in their respective States that are relevant to the interpretation or application of the Convention. The Secretariat makes these decisions available to interested persons upon the payment of a fee.

Each national correspondent is also responsible for preparing abstracts of the decisions in one of the official languages of the United Nations (i.e. Arabic, Chinese, English, French, Russian or Spanish). These abstracts are translated into the other five UN languages and are published in all six languages as part of the regular documentation of Commission. UNCITRAL has also prepared indices for the CISG "to assist users of CLOUT in identifying cases relevant to a given issue by listing cases under the provision or sub-issue with which they deal." Some of this material can also be found on the Internet.[232]

Recently, UNCITRAL added to this collection by preparing case digests of Articles 6 and 78 of the Convention.[233]

2. UNILEX

UNILEX, a product of the Centre for Comparative and Foreign Law Studies, is a veritable treasure trove of information. Available in either loose leaf or diskette form, UNILEX is a systemic collection of doctrinal references, English-language case abstracts and the full texts of cases and arbitral awards in their original languages. Each case may be retrieved by date, country or issue.

3. Computer Databases

The advent of the World Wide Web has now made it exceedingly simple to retrieve cases interpreting the CISG. By far, one of the best web sites on the CISG is the "Pace database on the CISG and International Commercial Contract Law".[234] This database allows the user to retrieve cases on a country by country basis or through a search engine.[235] Each case presentation is admirably comprehensive. A typical case presentation includes editorial remarks, a classification of the issues involved, an abstract, the text of the case itself and citations to other abstracts, case texts and scholarly commentaries. Where possible, the web site provides hyperlinks to the material referred to in the presentation.

While CLOUT, UNILEX and computer databases have all contributed significantly to promoting awareness of the CISG and its jurisprudence, there are nevertheless still three major weaknesses with the present system.

Firstly, there is no guarantee that that any of these three sources are complete. For example, although the Pace University web site already holds over 850 cases, the University admits that there may be more than double that number of rulings on the CISG.[236] Its collection of arbitral awards is particularly limited by the fact that the availability of these awards depends on requirements of confidentiality and the usage of the arbitral institution involved. It is even harder to gain access to arbitral awards that are not the result of proceedings administered by arbitral institutions.[237]

Of course, collecting judicial and arbitral cases emanating from 61 countries is a gargantuan task and it would be mean-spirited to fault any organisation for failing to capture all the cases. However, the fact that the collection of cases on the CISG is incomplete means that decision-makers may be denied the assistance of cases that could have been of decisive importance.

The second problem is that even if the collection of cases were complete, it would not be able to eradicate the attitudinal and resource problems that face practitioners and decision-makers. The scope of their research is naturally limited by the "homeward trend" to cases which emanate from countries with similar legal systems. This tendency is further exacerbated by constraints in language ability, time and money.

The third problem is that UNCITRAL has not put in place the infrastructure that is necessary to fully exploit the availability of all this information. For one thing, there is no international system of stare decisis.[238] At best, cases that deal with similar issues are merely highly persuasive. Thus, even if a case did represent the most appropriate definition of the CISG, other decision-makers are by no means required to follow it. As we saw above in the section on the application and enforcement of Article 7, this can produce a multiplicity of judicial answers to precisely the same question.

It must be acknowledged, of course, that a universal system of stare decisis would not eradicate the possibility of judicial error. In these circumstances, the least that UNCITRAL could do would be to establish a permanent editorial board to monitor and comment upon the way member states have interpreted and applied the CISG.[239] Unfortunately, this proposal was rejected, at least for the time being, by UNCITRAL for a variety of reasons:

C. Informal Checks

Practically speaking, we are thus forced to work within the system that we have now- an uncoordinated system of case reports and a decentralised system of informal checks. The latter takes the form of scholarly commentary and criticism and seminars and conferences on issues arising out of the CISG. It also takes the form of web sites, such as the one run by Pace University.[241]

The present system is of course highly unsatisfactory. Scholarly commentary, at best, is merely persuasive and there is no guarantee that it may come to the notice of those who are able to make the relevant changes. The most that can be hoped for is that the collective voice of scholars and commentators will be influential in raising the level of consciousness of decision-makers to the intricacies involved in resolving the problems that have been generated by the CISG.

VI. CONCLUSION

As pointed out above, the majority of commentators and cases are in favour of adopting a substantive version of good faith in the CISG. Their views are predicated on the assumption that the concept of good faith is capable of independently generating and imposing concrete "good faith" rights and obligations in a coherent fashion. The thesis of this paper is that this view is misguided.

It cannot be gainsaid that that the normative appeal of "good faith" is very alluring. Indeed, it sounds almost politically incorrect to advocate that its role in the Convention should be restricted as far as possible. It is submitted, however, that this position will not open the floodgates to injustice. After all, any definition of "good faith" that strives to be comprehensive is likely to be so general as to be practically useless. It is not feasible, however, to narrow the definition because such a definition will fail to capture the nuances of other principles that equally help to moderate unethical behaviour or achieve justice.

Under such circumstances, it is far better to concentrate on developing specific principles on a piecemeal basis to resolve particular problems of unfairness or injustice. This is especially so since the CISG does not have the infrastructure necessary to support the adoption of a robust doctrine in good faith. Leaving the development of a substantive doctrine of good faith to a decentralised system of courts and arbitral tribunals would only create confusion and undermine the CISG's objective of harmonising the law pertaining to contracts for the international sale of goods.

Thus, the concept of good faith should be regarded merely as a moral aspiration that drives the development of more particular principles or as a convenient catchall term for what may otherwise seem to be a series of disparate principles.

In this sense, good faith can be said to play two roles in the Convention. Firstly, it is a compendious term for the collection of more specific "good faith" principles that can be used to resolve matters governed by the Convention but not expressly resolved by it. Secondly, these very same principles can be used to resolve questions of textual ambiguity. There does not exist, however, a general doctrine of good faith that can serve as a fount of additional rights and obligations.

FOOTNOTES

* LLB (Hons) NUS; LLM (Harv); Assistant Professor, Faculty of Law, National University of Singapore. This article is based on a thesis that I wrote when I was a Landon H. Gammon fellow pursuing a LLM degree at Harvard Law School from 1999-2000. The thesis was awarded the Addison Brown Prize by Harvard Law School in June 2000 for being the best paper by a student on some subject of maritime or private international law. I wish to thank my supervisor, Professor Roy Goode, as well as Professor Albert Kritzer for their helpful comments and encouragement. All errors, however, remain mine alone.

1. For example, the Scandinavian Sale of Goods Act requires a buyer who wishes to invoke a late delivery of goods to give notice immediately upon delivery. This rule is not suitable for international sales as non-Scandinavian buyers may not be aware of it. See Ole Lando, The lex mercatoria in International Commercial Arbitration, 34 INT'L & COMP. L.Q. 747, 753.

2. Ernst Rabel, The Hague Conference on the Unification of Sales Law, 1 AM. J. COMP. L. 58, 61 (1952).

3. Final Act of the United Nations Conference on Contracts for the International Sale of Goods, Apr. 10, 1980, U.N. Doc. A/CONF.97/18 (1980), reprinted in S. Treaty Doc. No. 98-9, (1983) and 19 I.L.M. 668 [hereinafter CISG].

4. The word "doctrine" is deliberately chosen instead of a narrower term because good faith can crop up in a variety of guises. For example, it can take the form of a duty or precondition. It can also confer rights on the other party. See E. Allan Farnsworth, Comment on Michael Bridge's Paper: Does Anglo-Canadian Contract Law Need a Doctrine of Good Faith?, (1984) 9 CAN. BUS. L.J. 426, 427.

5. Belgium, the Federal Republic of Germany, Italy, Luxembourg, the Netherlands and the United Kingdom, Gambia and Israel. Only the latter two were non-European.

6. Kazuaki Sono, The Vienna Sales Convention: History and Perspective, in INTERNATIONAL SALE OF GOODS, DUBROVNIK LECTURES, 1, 3 (Paul Volken & Petar Sarcevic eds., 1986).

7. V. Susanne Cook, The Need for Uniform Interpretation of the 1980 United Nations Convention on Contracts for the International Sale of Goods, 50 U. PITT. L. REV. 197, 202.

8. Alejandro M. Garro, Reconciliation of Legal Traditions in the U.N. Convention on Contracts for the International Sale of Goods, 23 INT'L LAW. (1989) 443, 452.

9. Id. at 449.

10. Information current as of Sept. 5, 2001. See also CISG: Table of Contracting States (last modified Aug. 27, 2001) http://www.cisg.law.pace.edu/cisg/countries/cntries.html.

11. Countries that have adopted the CISG and information on its status and application (last modified Jul. 6, 1999) http://www.cisg.law.pace.edu/cisg/cisgintro.html. Notable absentees from the list of countries that have adopted the Convention are the United Kingdom and Japan.

12. Article 92 states that a State can declare that it will not be bound by either Part 2 or Part 3 of the Convention.

13. Article 4.

14. Id.

15. Article 5.

16. Article 95 states that a State may choose not to be bound by Article 1(1)(b).

17. Article 6. Contracting parties, however, may not vary or derogate from the effect of Article 12 when any of the parties has a place of business in a Contracting State which has made a declaration under Article 96 of the CISG. Despite its broad language, Article 6 does not permit contracting parties to vary or derogate from Part IV of the Convention as these provisions are addressed to Contracting States and not to contracting parties. Neither does it appear to permit contracting parties to derogate from provisions such as Article 28 which is addressed to courts. In the same vein, it could be asserted that this logic may be applied to the interpretive guidance recited in Article 7 that is addressed to tribunals and not to contracting parties.

18. The preamble in full states:

THE STATES PARTIES TO THIS CONVENTION,
BEARING IN MIND the broad objectives in the resolutions adopted by the sixth special session of the General Assembly of the United Nations on the establishment of a New International Economic Order,
CONSIDERING that the development of international trade on the basis of equality and mutual benefit is an important element in promoting friendly relations among States,
BEING OF THE OPINION that the adoption of uniform rules which govern contracts for the international sale of goods and take into account the different social, economic and legal systems would contribute to the removal of legal barriers in international trade and promote the development of international trade,
HAVE DECREED as follows: [the provisions of the CISG follow].

19. Other conventions which contain a similar provision are the Unidroit Convention on International Financial Leasing (Article 6) and the Unidroit Convention on International Factoring (Article 4). Interestingly, this paradigm was not adopted for the Unidroit Draft Convention on International Interests in Mobile Equipment. This Convention has dropped the reference to good faith and instead emphasises the need to promote uniformity and predictability in its application (Article 7). See generally, Roy Goode, Transcending the Boundaries of Earth and Space: the Preliminary Draft Unidroit Convention on International Interests in Mobile Equipment, (1998) I Uniform Law Review 52.

20. See infra Part III(B)(2)(b).

21. Arthur Rosett, Critical Reflections on the United Nations on Contracts for the International Sale of Goods, 45 OHIO ST. L.J. 265, 281 (1984); and Gyula Eörsi, Problems of Unifying Law on the Formation of Contracts for the International Sale of Goods, 27 AM. J. COMP. L. (1979) 311; (last modified Jan. 19, 1998) http://www.cisg.law.pace.edu/cisg/biblio/eorsi.html.

22. Gyula Eörsi, A Propos the 1980 Vienna Convention on Contracts for the International Sale of Goods, 31 AM. J. COMP. L. 333, 348-349 (1983). ("The result was strange but gained for the principle of good faith a foothold in an international convention for unification of law. It is hoped that this meager result represents a modest start.").

23. Id. at 349.

24. Garro, supra note 8 at 466.

25. Eörsi, supra note 21 at 343.

26. E.g. in the areas of good faith purchase or fiduciary duties. See E. Allan Farnsworth, Good Faith in Contract Performance, in GOOD FAITH AND FAULT IN CONTRACT LAW 153, 154 (Jack Beatson and Daniel Friedmann eds., 1995).

27. For the history of the concept, see John Klein, Good Faith in International Transactions, 15 LIVERPOOL LAW REVIEW (1993) 115, 115-120.

28. R.S. Summers, "Good Faith" in General Contract Law and the Sales Provisions of the Uniform Commercial Code, (1968) 54 VA. L. REV. 195, 198.

29. This, incidentally, is one of the reasons why the UK refuses to ratify the Convention. See Barry Nicholas, The United Kingdom and the Vienna Sales Convention: Another Case of Splendid Isolation?, Rome: Centro di Studi e Richerche di Diritto Comparato e Straniero (1993) (visited Apr. 16, 2000) http://www.cnr.it/CRDCS/nicholas.htm.

30. Roy Goode, The Concept of "Good Faith" in English Law, Centro di studi e ricerche di diritto comparato e straniero (Rome 1992), No. 2 (visited Apr. 16, 2000) http://www.cnr.it/CRDCS/goode.htm. See also generally Clayton P. Gillette, Limitations on the Obligation of Good Faith, 1981 DUKE L.J. 619.

31. E.g. Houle v. Canadian National Bank, 1990 Can. S.C.R. LEXIS 710; 3 Can. S.C.R. 122.

32. As was the experience in Nazi Germany. See RAPHAEL POWELL, GOOD FAITH IN CONTRACTS 22 (1956).

33. Summers, supra note 28, at 200 (the "excluder analysis").

34. M.G. Bridge, Does Anglo-Canadian Contract Law Need a Doctrine of Good Faith?, (1984) 9 CAN. BUS. L.J. 385, 398.

35. Robert A. Hillman, Policing Contract Modifications under the UCC: Good Faith and the Doctrine of Economic Duress, 64 IOWA L.REV. 849, 877 (1979).

36. Holmes, A Contextual Study of Commercial Good Faith: Good Faith Disclosure in Contract Formation, 39 U. PITT. L. REV. 381, 442 (1978).

37. Id. at 451.

38. C. FRIED, CONTRACT AS PROMISE 83 (1981).

39. Holmes, Is There Life After Gilmore's Death of Contract?- Inductions From a Study of Commercial Good Faith in First Party Insurance Contracts, 65 CORNELL L. REV. 330, 338 (1980).

40. Richard Thigpen, Good Faith Performance Under Percentage Leases, 51 MISS.L.J. 315, 320 (1981).

41. § 1-201(19) of the Uniform Commercial Code.

42. ONTARIO LAW REFORM COMMISSION, REPORT ON SALE OF GOODS 163 (1979).

43. Id.

44. Roberto Unger, LAW IN MODERN SOCIETY (1976) 210.

45. See generally, S.M. Waddams, Good Faith, Unconscionbility and Reasonable Expectations, (1995) 9 JCL 55.

46. Of course, there may be times when one's conduct is considered so beyond the pale by the rest of the world that it will deemed dishonest regardless of what one's own peculiar notions of morality indicate. See Goode, supra note 30: "If a person's peculiar moral code makes him think that there is nothing wrong in taking a bribe to do an improper act, he would be regarded as dishonest even under our subjective approach. So at the end of the day there may not be very much difference between the subjective and the objective test of good faith."

47. Roger Brownsword, Positive, Negative, Neutral: the Reception of Good Faith in English Contract Law, in GOOD FAITH IN CONTRACT, CONCEPT AND CONTEXT 1, 17 (Roger Brownsword, et al. eds., 1999).

48. The Hon. Mr. Justice Steyn, The Role of Good Faith and Fair Dealing in Contract Law: A Hair-Shirt Philosophy?, (1991) THE DENNING LAW JOURNAL 131, 140: "… I am not persuaded that generalised duties of good faith are useful across the spectrum contractual relations. There are so many varieties of contract. In some contexts good faith and fair dealing have no significant role to play. Such is the case, for example, in many commercial contracts where one is not concerned with fault but simply with an allocation of the risks of a particular undertaking or enterprise."

49. Brownsword, supra note 47.

50. Unfortunately, due to the limited language ability of the writer of this paper, only English language material was used.

51. Nicholas, supra note 29.

52. Nicholas, supra note 29. See also BARRY NICHOLAS, THE FRENCH LAW OF CONTRACT 48 (2nd ed. 1992).

53. E.g. Article 1901 of the Louisiana Civil Code; Article 1134 of the French Civil Code; § 242 of the German Civil Code; § 1198 Argentine Civil Code; § 1337 of the Italian Civil Code; and § 30 of the Yugoslavian Obligations Law of 1978. For the position of the doctrine of good faith in civil law, see generally PRINCIPLES OF EUROPEAN CONTRACT LAW: PARTS I AND II 115-18 (Ole Lando & Hugh Beale eds., 2000); Hein Kötz, Towards a European Civil Code: The Duty of Good Faith, in THE LAW OF OBLIGATIONS - ESSAYS IN CELEBRATION OF JOHN FLEMING 243 (Peter Cane et al. ed., 1998); and Martin Hesselink, Good Faith, in TOWARDS A EUROPEAN CIVIL CODE 285 (Arthur Hartkamp et al. eds., 2d ed., 1998).

54. GERMAN CIVIL CODE (Forrester, Goren and Ilgen trans., Fred Rothman, New Jersey 1975) (BGB). Also consider § 157 which states: "Contracts shall be interpreted according to the requirements of good faith, ordinary usage being taken into consideration."

55. Werner F. Ebke & Bettina M. Steinhauer, The Doctrine of Good Faith in German Contract Law, in GOOD FAITH AND FAULT IN CONTRACT LAW, supra note 26 at 171.

56. STAUDINGER'S Kommentar Zum Burgerlichen Gesetzbuch (13th ed., 1995).

57. Ebke & Steinhauer, supra note 55 at 171-190; POWELL, supra note 32 at 16-24 and 1 B.S. MARKESINIS, ET AL., THE GERMAN LAW OF OBLIGATIONS, 510-615 (1997).

58. For more examples, see id.

59. Ebke & Steinhauer, supra note 55 at 173.

60. Ebke & Steinhauer, supra note 55 at 175.

61. Ebke & Steinhauer, supra note 55 at 180-189.

62. E. Allan Farnsworth, Good Faith Performance & Commercial Reasonableness Under the Uniform Commercial Code, 30 U. CHI. L. REV. 666 at 678 (1963).

63. See E. Allan Farnsworth, The Concept of "Good Faith" in American Law, Centro di studi e ricerche di diritto comparato e straniero (Rome 1993), No. 10 (visited Apr. 16, 2000) http://www.cnr.it/CRDCS/farnswrt.htm.

64. Interfoto Picture Library Ltd v. Stiletto Visual Programmes Ltd, [1989] Q.B. 433 at 439, per Bingham L.J..

65. Section 61(3) of the Sale of Goods Act provides that: "A thing is deemed to be done in good faith within the meaning of this Act when it is in fact done honestly, whether it is done negligently or not."

66. See generally Goode, supra note 30; Arcos v E.A. Ronaasen & Son, [1933] AC 470. See also Allen v. Flood, 1898 App. Cas. 1, at 46 (P.C. 1897) which stipulates that "any right given by a contract may be exercised as against the giver by the person to whom it is granted, no matter how wicked, cruel or mean the motive may be which determines the enforcement of the right."

67. The Moorcock, (1889) 14 PD 64.

68. Reigate v. Union Manufacturing Co (Ramsbottom), [1918] 1 KB 592 at 605; Shirlaw v. Southern Foundries, (1926) Ltd [1939] 2 KB 206 at 227, [1939] 2 All ER 113 at 124. A term may also be implied by custom or by statute. Courts may also imply terms into particular types of contracts. See generally ANDREW PHANG BOON LEONG, CHESHIRE, FIFOOT & FURMSTON'S LAW OF CONTRACT 253-274 (2d Singapore and Malaysian ed., 1998).

69. Trollope and Colls Ltd v. North West Metropolitan Regional Hospital Board, [1973] 2 All ER 260 at 268.

70. Steyn, supra note 48 at 138; Lord Steyn, Contract Law: Fulfilling the Reasonable Expectations of Honest Men, (1997) 113 L.Q.R. 433 at 439; and PROFESSOR REINHARD ZIMMERMANN & DR. SIMON WHITTAKER, GOOD FAITH IN EURPOPEAN CONTRACT LAW (2000).

71. See Peter Schlechtriem, Good faith in German Law and in International Uniform Laws, Centro di studi e ricerche di diritto comparato e straniero (Rome 1997) 1-21 (visited Apr. 16, 2000) http://www.cnr.it/CRDCS/frames24.htm.

72. Ewan McKendrick, Good Faith: A Matter of Principle?, in GOOD FAITH IN CONTRACT AND PROPERTY 39, 44-48 (A.D.M. Forte ed. 1999); and Scott Crichton Styles, Good Faith: A Principled Matter, in id. 157, 160-161.

73. E.g. Derry v. Peek, (1889) 14 App Cas 337; Akerhiem v. De Mare, [1959] AC 789; Gross v. Lewis Hillman Ltd [1970] Ch 445; and McGrath Motors (Canberra) Pty Ltd v. Applebee (1964) 110 CLR 656.

74. E.g. Philips v. Brooks, Ltd, [1919] 2 KB 243; Ingram v. Little, [1961] 1 QB 31; and Lewis v. Averay, [1972] 1 QB 198.

75. E.g. the Argentine Civil Code § 1198 (1970), which requires that contracts be "made" as well as construed and enforced in good faith; the Israeli Contracts (General Part) Law, 5733 -- 1973 § 12, which requires that in "negotiating a contract, a person shall act in customary manner and in good faith"; the Italian Civil Code § 1337 (1942), which requires the parties to act in good faith "in the conduct of negotiations and the formation of the contract"; and the Yugoslavian Obligations Law of 1978 § 30, which imposes liability on a party who engages in negotiations "without intention to conclude a contract" or "who renounces this intention without legitimate reason."

76. E. Allan Farnsworth, Precontractual Liability and Preliminary Agreements: Fair Dealing and Failed Negotiations, 87 COLUM. L. REV. 217, 240 (1987); and Friedrich Kessler & Edith Fine, Cupla in Contrahendo, Bargaining in Good Faith, and Freedom of Contract: A Comparative Study, 77 HARV. L. REV. 401 (1964).

77. Farnsworth, supra note 63.

78. Farnsworth, supra note 76 at 242.

79. See generally, Farnsworth, supra note 76.

80. Farnsworth, supra note 76 at 241.

81. Banque Financiere de la Cité S.A. v. Westgate Insurance Co. Ltd (unreported, Court of Appeal of England, 28 July 1988).

82. Goode, supra note 30. See also ROY GOODE, COMMERCIAL LAW IN THE MILLENNIUM at 19-20 (1998).

83. See for e.g. REZIYA HARRISON, GOOD FAITH IN SALES (1997); J.F. O'CONNOR, GOOD FAITH IN ENGLISH LAW (1990); Roger Brownsword, 'Good Faith in Contracts' Revisited, (1996) CURRENT LEGAL PROBLEMS, Autumn 1996 49 n2 p111-157; H.O. Hunter, The Duty of Good Faith and Security of Performance, (1993) 6 JCL 19; John Swan, Party Autonomy and Judicial Intervention: The Impact of Fairness in Commercial Contracts, (1994) 7 JCL 1; S.M. Waddams, Commentary on 'The Impact of Fairness in Commercial Contracts', (1994) 7 JCL 28; J.W. Carter, Commentary on 'The Impact of Fairness in Commercial Contracts', (1994) 7 JCL 30; The Right Hon. Lord Justice Staughton, Good Faith and Fairness in Commercial Contract Law, (1994) 7 JCL 193; Roger Brownsword, Two Concepts of Good Faith, (1994) 7 JCL 197; Professor Michael Furmston, Good Faith and Fairness in Negotiated Contracts (pts. 1 & 2), (1994-1995) 8 JCL 1 and 91; Hugh Beale, Commentary on 'Good Faith and Fairness in Negotiated Contracts', (1995) 8 JCL 120; J. Beatson, Commentary on 'Good Faith and Fairness in Negotiated Contracts', (1995) 8 JCL 141; L.S. Sealy, Commentary on 'Good Faith and Fairness in Negotiated Contracts', (1995) 8 JCL 143; David Yates, Commentary on 'Two Concepts of Good Faith', (1995) 8 JCL 145; John N. Adams, The Economics of Good Faith in Contract, (1995) 8 JCL 126; and Gunther Teubner, Legal Irritants: Good Faith in British Law or How Unifying Law Ends Up in New Divergences, (1998) 61 MOD. L. REV. 11.

84. Official Journal EC L 95/29 of 21 April 1993. See generally Ewoud Hondius, EC Directive on Unfair Terms in Consumer Contracts: Towards a European Law of Contract, (1994) 7 JCL 34; Hugh Beale, Legislative Control of Fairness: The Directive on Unfair Terms in Consumer Contracts, in GOOD FAITH AND FAULT IN CONTRACT LAW, supra note 26 at 231; Hugh Collins, Good Faith in European Contract Law, 14 Oxford Journal of Legal Studies 229.

85. Lord Goff of Chieveley, Opening Address at the Second Annual JCL Conference in London on 11 September 1991, (1992) 5 JCL 1, 4. But see now Johnson v Unisys [2001] 2 All ER 801, 812 where Lord Steyn (dissenting) intimated that that the duties of good faith or fair dealing could "live together" with the express terms of a contract. Unfortunately, Lord Steyn did not elaborate on this point.

86. See generally, RESTATEMENT (SECOND) OF CONTRACTS § 205 cmt. d (1981).

87. Over fifty of the some 400 Code Sections mention good faith specifically.

88. RESTATEMENT (SECOND) OF CONTRACTS, supra note 86, cmt. a.

89. RESTATEMENT (SECOND) OF CONTRACTS, supra note 86.

90. Summers, supra note 28; and Robert S. Summers, The General Duty of Good Faith- Its Recognition and Conceptualization, 67 CORNELL L. REV. 810 (1982).

91. See generally Nicholas Seddon, Australian Contract Law: Maelstrom or Measured Mutation?, 1994 JCL LEXIS 11.

92. Sir Anthony Mason in a Foreword to 'Contract: Death or Transfiguration?' (1989) 12 UNSWLJ 1, 2-3. Sir Mason, however, is of the view that the doctrine must be legislatively adopted. See Sir Anthony Mason, Good Faith and Fault in Contract Law, (1996) 11 JCL 89, 90 (book review).

93. The Honourable Mr. Justice L.J. Priestley, A Guide to a Comparison of Australian and United States Contract Law, (1989) 12 UNSWLJ 4; L.J. Priestley, Contract- The Burgeoning Maelstrom, (1998) 1 JCL 15; and Renard Constructions (ME) Pty Ltd v Minister for Public Works, (1992) 26 NSWLR 234, 263-268.

94. Service Station Association Ltd V. Berg Bennett & Associates Pty Ltd, 117 A.L.R. 393.

95. See infra Part II(B)(3).

96. Specifically, Article 1134, paragraph 3 of the French Civil Code states: "Agreements lawfully formed take the place of law for those who have made them. They cannot be revoked except by mutual consent or on grounds allowed by law. They must be performed in good faith." The translation is that given in VON MEHREN-GORDLEY, THE CIVIL LAW SYSTEM 589-590 (2nd ed. 1971).

97. Bridge, supra note 34 at 414-415.

98. THE FRENCH LAW OF CONTRACT, supra note 52 at 153; and O'Connor, supra 83 at 97.

99. See generally Michael P. Van Alstine, Of Textualism, Party Autonomy and Good Faith, 40 WM. AND MARY L. REV. 1223.

100. Farnsworth, supra note 63; Farnsworth, supra note 62. See also Tymshare v. Covell, 727 F.2d 1145, 1152 (D.C. Cir. 1984): "correct . . . is the perception of Professor Farnsworth that the significance of the doctrine is 'in implying terms in the contract'".

101. Summers, supra note 90.

102. Steven Burton, Breach of Contract and the Common Law Duty to Perform in Good Faith, 94 Harv. L. Rev. 369, 369 (1980).

103. Id. at 372-373.

104. Id. at 373. See also Steven Burton, Good Faith Performance of a Contract Within Article 2 of the Uniform Commercial Code, 67 Iowa L. Rev. 1 (1981); and Steven Burton, More on Good Faith Performance of a Contract: A Reply to Professor Summers, 69 Iowa L. Rev. 497, 499 (1984).

105. E.g., Foley v. Interactive Data Corp., 765 P.2d 373 (citing both Summers and Burton). However, Farnsworth, supra note 63, argues that the three views are not necessarily inconsistent.

106. Farnsworth, supra note 62 at 672. However, it is arguable that the difference between the objective and subjective standards of good faith is not that wide: supra note 46.

107. 2 E. ALLAN FARNSWORTH, FARNSWORTH ON CONTRACTS 326 (2d ed. 1998). However, he goes on to say that "[h]owever, most courts do not regard their mandate as limited to the application of traditional principles "rechristened" as a principle of "good faith" (id., at 376). See also Gillette, supra note 30.

108. STEVEN J. BURTON & ERIC G. ANDERSEN, CONTRACTUAL GOOD FAITH: FORMATION, PERFORMANCE, BREACH AND ENFORCEMENT 122-126 (1995).

109. David Stack, The Two Standards of Good Faith in Canadian Contract Law, (1999) 62 SASKATCHEWAN LAW REVIEW 201, 203. See also generally Shannon Kathleen O' Byrne, Good Faith in Contractual Performance: Recent Developments, [1995] 74 LA REVUE DU BARREAU CANADIEN 70.

110. (1992), 25 R.P.R. (2d) 236 (Ont. Gen. Div.).

111. Id. at 246.

112. (1996), 4 R.P.R. (3d) 267 (B.C.S.C).

113. Comment 2 to Article 1.7. The comment can be found at (visited Apr. 16, 2000) http://www.unidroit.org/english/principles/chapter-1.htm.

114. Dr. iur. Rolf Herber, Article 7, in COMMENTARY ON THE UN CONVENTION ON THE INTERNATIONAL SALE OF GOODS (CISG) 64 (Peter Schlechtriem ed. & Geoffrey Thomas trans., 2d ed. 1998): "Unlike almost all other international conventions, materials on the CISG are remarkably accessible. The Conference proceedings and documents are reproduced in the detailed Official Records, and the preliminary discussions in UNCITRAL and in its working group are reproduced in the UNCITRAL year books. In addition, many provisions are taken from the Hague Conventions, on which there is already considerable case law and literature available in the few former contracting states, including the Federal Republic of Germany."

115. Vienna Convention on the Law of Treaties (1969) reprinted in 63 Am. J. Int. L. 875. The Convention's rules on the interpretation of treaties appear in Part III, Sec 3, at Arts. 31-33. See also JOHN HONNOLD, UNIFORM LAW FOR INTERNATIONAL SALES UNDER THE 1980 UNITED NATIONS CONVENTION 111-112 (3rd ed. 1999).

116. Honnold, id. at 89-95.

117. M. AKEHURST, A MODERN INTRODUCTION TO INTERNATIONAL LAW 121 (5th ed. 1984).

118. M.J. Bonell, Interpretation of Convention, in BIANCA-BONELL, COMMENTARY ON THE INTERNATIONAL SALES LAW, THE 1980 VIENNA SALES CONVENTION 90 (1987).

119. JOHN HONNOLD, DOCUMENTARY HISTORY OF THE UNIFORM LAW FOR INTERNATIONAL SALES: THE STUDIES, DELIBERATIONS, AND DECISIONS THAT LED TO THE 1980 UNITED NATIONS CONVENTION WITH INTRODUCTIONS AND EXPLANATIONS 298-299, paras. 70-87 (1989).

120. Analysis of comments and proposals relating to articles 1-17 of the Uniform Law on the International Sale of Goods (ULIS): note by the Secretary-General, 3 UNCITRAL Yearbook 76 no. 52 (1972), U.N. Doc. A/CN.9/WG.2/WP.11.

121. However, the debate on the proposal was at ninth session.

122. U.N. Doc. A/CN/.9/WG.2/WP, annex, para. 3.

123. Honnold, supra note 119, para. 71.

124. Honnold, supra note 119, para. 81.

125. Honnold, supra note 119, para. 87. This article was part of a new Draft Convention on the Formation of Contracts International Sale of Goods. This draft was later consolidated with the new Draft Convention on the International Sale of Goods to form the CISG.

126. Honnold, supra note 119 at 369-370, paras. 42-60.

127. See infra Parts III(B)(1)(a) and (2)(a) for an evaluation of this argument. See also infra note 157 and accompanying text.

128. Note by the Secretary-General: Draft Convention on the Formation of Contracts for the International Sale of Goods, UN. Doc. A/CN.9/143.

129. Honnold, supra note 126, at para. 45.

130. Honnold, supra note 126, at para. 47.

131. This version is exactly the same as the present Article 7(1) but for the words "and application". It is submitted, however, that the omission of these words makes no difference to the meaning of Article 7(1) because the interpretation of the Convention is but a prelude to its application.

132. Honnold, supra note 119, at 476, 478-480, paras. 6, 40, 39-57.

133. Honnold, id., at para. 6. The equivalent of the present Article 8 then read:

134. The relevant part of its proposal reads: "In the formation [interpretation] and performance of a contract of sale the parties shall observe the principles of good faith and international co-operation." (U.N. Doc. A/CONF. 97/C.1/L.59).

135. Of the 10 countries who took part on the debate on the Norwegian proposal, only two (Korea and Iraq) were in favour. Brazil, however, was of the opinion that no amendment was required because "good faith was already understood to be one of the underlying principles of law and was implicit in any legal transaction". Honnold, supra note 132, para. 53. See infra Parts III(B)(1)(a) and (2)(a) for an evaluation of this argument. See also infra note 157 and accompanying text.

136. U.N. Doc. A/CONF.97/C.1/L.10: "The parties may exclude the application of this Convention or, subject to article 11 [became CISG article 12], derogate from or vary the effect of any of its provisions. However, except where the parties have wholly excluded this Convention, the obligations of good faith, diligence and reasonable care prescribed by this Convention may not be excluded by agreement, but the parties may by agreement determine the standards by which the performance of such obligations are to be measured if such standards are not manifestly unreasonable." For the debate on this proposal, see Honnold, supra note 119, at 468-469 at paras. 53-65.

137. U.N. Doc. A/CONF.97/C.1/L.95: "Where in the course of the preliminary negotiations or the formation of a contract a party fails in his duty to take reasonable care, the other party is entitled to claim compensation for his expenses." For the debate on this proposal, see Honnold, supra note 119, at 515-516, paras. 75-87.

138. In so far as the Canadian proposal is concerned, consider the following comments from the debate:
"Mr. HJERNER (Sweden) said that he could not support the Canadian proposal precisely because of the reference it made to the three principles (i.e. diligence, reasonable care and good faith) mentioned by the previous speaker. He saw no mention anywhere in the draft of the principles of "diligence and reasonable care"; as for the principle of "good faith", it was mentioned only once, in article 6 [became CISG article 7], but in a totally different context." (Honnold, supra note 136, para. 58).
"Mr. FARNSWORTH (United States of America) said that, like the Swedish representative, he could not support the Canadian amendment. An a contrario interpretation would suggest a general obligation of good faith." (Honnold, supra note 136, para. 60).
In so far as the German proposal is concerned, consider the following from the debate:
"Mr. DATE-BAH (Ghana) could not accept the proposal, which he saw as a further attempt to import the concept of good faith into the Convention, a concept which had caused great difficulty to the common law countries. It had been agreed as a compromise to introduce that concept into article 6 [became CISG article 7], but it was not appropriate in the present context." (Honnold, supra note 137, para. 85).

139. E.g. Bonell, supra note 118, at 84; Herber, supra note 114, at 63; Isaak I. Dore & James E. DeFranco, A Comparison of the Non-Substantive Provisions of the UNCITRAL Convention on the International Sale of Goods and the Uniform Commercial Code, 23 HARV. INT'L L.J. (1982) 49 (last modified May 12, 1998) http://www.cisg.law.pace.edu/cisg/biblio/dore.html; Amy H. Kastely, Unification and Community: A Rhetorical Analysis of the United Nations Sales Convention, 8 N.W. J. INT'L. L. & BUS. (1988) 574 (last modified Apr. 12, 1999) http://www.cisg.law.pace.edu/cisg/biblio/kastely.html; Klein, supra note 27; Phanesh Koneru, The International Interpretation of the UN Convention on Contracts for the International Sale of Goods: An Approach Based on General Principles, 6 MINN. J. GLOBAL TRADE (1997) 105 (last modified Aug. 16, 1999) http://www.cisg.law.pace.edu/cisg/biblio/koneru.html; Maureen T. Murphy, United Nations Convention on Contracts for the International Sale of Goods: Creating Uniformity in International Sales Law, 12 FORDHAM INT'L L.J. (1989) 727 (last modified Aug. 13, 1999) http://www.cisg.law.pace.edu/cisg/biblio/murphy.html; Ulrich Magnus, Editorial remarks on the manner in which the UNIDROIT Principles may be used to interpret or supplement CISG Article 7 (last modified Mar. 3, 1998) http://www.cisg.law.pace.edu/cisg/principles/uni7.html#um; Franco Ferrari, Uniform Interpretation of The 1980 Uniform Sales Law, 24 GA. J. INT'L & COMP. L. (1994-95) 183 (last modified Nov. 1997) http://www.cisg.law.pace.edu/cisg/biblio/franco.html; Carolina Saf, A Study of the Interplay between the Conventions Governing International Contracts of Sale: Analysis of the 1955 Hague Convention on the Law Applicable to Contracts of International Sales of Movable Goods; the 1980 Rome Convention on the Law Applicable to Contractual Obligations; and the 1980 United Nations Convention on Contracts for the International Sale of Goods (last modified Jan. 18, 2000) http://www.cisg.law.pace.edu/cisg/text/saf7.html.

140. Gyula Eörsi, General Provisions, in INTERNATIONAL SALES: THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS § 2.03 (Nina Galston & Hans Smit eds., 1984).

141. Norway speculated on this possibility during the Vienna Conference. See Honnold, supra note 132, para. 41: "…it was not clear from the existing text of article 6 [became CISG article 7] how good faith was to be interpreted in practice to general rules of law. It might possibly mean, for example, that if a court were to find that one of the provisions of the Convention ran counter to the observance of good faith in international trade, it need not require it to be applied."

142. Honnold, supra note 115, at 101.

143. Peter Winship, Commentary on Professor Kastely's Rhetorical Analysis, 8 N.W. J. INT'L. & BUS. (1988) 623 (last modified Feb. 6, 1998) http://www.cisg.law.pace.edu/cisg/text/saf7.html.

144. Dr. iur Rolf Herber, Article 4, in COMMENTARY ON THE UN CONVENTION ON THE INTERNATIONAL SALE OF GOODS (CISG), supra note 114, at 47.

145. "New" as compared to the ancient or medieval lex mercatoria.

146. Keith Highet, The Enigma of the lex mercatoria, in lex mercatoria AND ARBITRATION 133, 135 (Thomas. E. Carbonneau ed., 1998).

147. KLAUS PETER BERGER, INTERNATIONAL ECONOMIC ARBITRATION 544 (1993); ALAN REDFERN AND MARTIN HUNTER, LAW AND PRACTICE OF INTERNATIONAL ECONOMIC ARBITRATION para. 2-61 (3rd ed., 1999); The Rt. Hon. Justice Mustill, The New lex mercatoria: The First Twenty-five years, (1988) 4 ARBITRATION INTERNATIONAL 86; Berthold Goldman, The applicable law: general principles of law: the lex mercatoria, in CONTEMPOARY PROBLEMS IN INTERNATIONAL ARBITRATION 116 (Julian D.M. Lew ed., 1986); Thomas E. Carbonneau, Rendering Arbitral Awards with Reasons: The Elaboration of a Common Law of International Economic Transactions, 23 COLUM. J. TRANSNAT'L LAW 580, 589 (1985); and Bernardo M. Cremades, The Impact of International Arbitration on the Development of Business Law, 31 AM. J. COMP. L. 526, 527 (1983).

148. Carbonneau, id..

149. See Mann, Private Arbitration and Public Policy, 4 CIVIL JUSTICE Quarterly 257, 264 (1985): "What this so-called law is or should be is a complete mystery. It is usually said that it comprises uniform law embodied in or derived from international conventions, trade usages, customs, ideas of business fairness, efficacy or reasonableness. The object is to dispense with the conflict of laws, which is said to create insoluble problems and to lead to artificial and unrealistic results. It is hardly necessary to emphasise that no such law exists." For a general survey of the debate in this area, see Christopher W. Stoecker, The lex mercatoria: To what Extent does it exist?, 7 J. INT'L ARB. 101 (1990); Vanessa L.D. Wilkinson, The New lex mercatoria, Reality or Academic Fantasy?, 12 J. INT'L ARB. 101 (1995); Michael T. Medwig, The New Law Merchant: Legal Rhetoric and Commercial Reality, 24 LAW & POL'Y INT'L BUS. 589 (1993); and Lando, supra note 1.

150. Lando, supra note 1, at 748-752.

151. Award of October 26, 1979, Case 3131, reprinted in [1984] Y.B. COM. ARB. 109, 110. For a case comment, see D.T., The lex mercatoria in Paris and Vienna, 17 JOURNAL OF WORLD TRADE LAW 358 (1983).

152. Roy Goode, Usage and its Reception in Transnational Commercial Law, 46 ICLQ 1, 7 (1997).

153. Carbonneau, supra note 147, at 591 n.31.

154. See generally Garro, supra 8, at 476-480.

155. See infra note 177 and accompanying text.

156. Bonell, supra note 118, at 78. See also generally Gert Brandner, Admissibility of Analogy in Gap-filling under the CISG (last modified Dec. 21, 1999) http://www.cisg.law.pace.edu/cisg/biblio/brandner.html; Jan Hellner, Gap-Filling By Analogy, Art. 7 of the U.N. Sales Convention in Its Historical Context, STUDIES IN INTERNATIONAL LAW: FESTSKRIFT TIL LARS HJERNER (Stockholm 1990) 219 (last modified Jan. 31, 1998) http://www.cisg.law.pace.edu/cisg/text/hellner.html; and Nives Povrzenic, Interpretation and Gap-Filling under the United Nations Convention on Contracts for the International Sale of Goods (last modified Feb. 6, 1998) http://www.cisg.law.pace.edu/cisg/biblio/gap-fill.html.

157. Ulrich Magnus, General Principle of UN-Sales Law (Lisa Haberfellner trans.) (last modified Aug. 1997) http://www.cisg.law.pace.edu/cisg/text/magnus.html.

158. Troy Keily, Good Faith and the Vienna Convention on Contracts for the International Sale of Goods (CISG), 3 VINDOBONA JOURNAL OF INTERNATIONAL LAW AND ARBITRATION, Issue 1 (1999) 15 (last modified Feb. 1, 2000) http://www.cisg.law.pace.edu/cisg/biblio/keily.html.

159. Honnold, supra note 119, at 408.

160. See supra note 139.

161. E.g. Ferrari, supra note 139; Kastely, supra note 139; and Keily, supra note 158.

162. Kastely, supra note 139.

163. Klein, supra note 27, at 124-133.

164. See also Zeller, infra note 168 and Powers, infra note 180 for alternative definitions of 'good faith' in the CISG.

165. PETER SCHLECHTRIEM, UNIFORM SALES LAW 39 (1986). Unfortunately, he does not identify what these provisions are. See generally Pace Law School Institute of International Commercial Law, REASONABLNESS (last modified Jan. 23 2001) http://www.cisg.law.pace.edu/cisg/text/reason.html#view, for the position of the concept of reasonableness as a general principle of the Convention.

166. Cf. for e.g. Jane Stapleton, Good Faith in Private Law, (1999) CURRENT LEGAL PROBLEMS 1, 8, who argues that the concepts of good faith and reasonableness are separate and distinct: "The interrelationship of and difference between good faith and reasonableness is subtle but of great importance. A requirement to satisfy a standard of reasonable behaviour is more demanding than the requirement of good faith. Certainly, acting in good faith is necessary for reasonable conduct: to be dishonest, deliberately contradictory, or exploitative is always unreasonable. But acting in good faith is not sufficient to satisfy a reasonableness standard: as most inadvertent negligence cases show, a person may act in good faith but nevertheless have acted unreasonably as judged by an objective standard." Cf. Styles, supra note 72, at 168: "the difference between a general principle of good faith and a general principle of reasonableness or fairness is, it is submitted, largely rhetorical" and Renard Constructions v. Minister for Public Works, supra note 93, at 263: "[t]he kind of reasonableness I have been discussing seems to me to have much in common with notions of good faith which are regarded in many of the civil law systems of Europe and in all States in the United States as necessarily implied in many kinds of contract."

167. Bonell, supra note 118, at 81.

168. According to Bruno Zeller, Good Faith- The Scarlet Pimpernel of the CISG (last modified Jul. 19, 2000) http://www.cisg.law.pace.edu/cisg/biblio/zeller2.html, this is one of the meanings of 'good faith' in the context of the CISG. He also argues that the 'good faith' in the context of Article 7(1) "refers to the state of mind of those interpreting the Convention". However, he concedes that "the problem with a state of mind is that it is not measurable and cannot give rise to legal obligations". See also Bruno Zeller, The UN Convention on Contracts for the International Sale of Goods (CISG) - a leap forward towards unified international sales laws (last modified Dec. 4, 2000) http://www.cisg.law.pace.edu/cisg/biblio/zeller3.html; 12 PACE INT'L LAW REV. (SPRING 2000) 79.

169. E. Allan Farnsworth, Problems of Unification of Sales Law from the Standpoint of the Common Law Countries, in PROBLEMS OF UNIFICATION OF INTERNATIONAL SALES LAW (Working Papers Submitted to the Colloquium of the International Association of Legal Science, Potsdam, August, 1979) 19 (1980). Cf. Eörsi, supra note 140, at § 2.03: "After lengthy discussions, a proposal of an ad hoc Working Party recommended that as a compromise good faith could survive but should be shifted to the provisions on interpretation of the Convention, thus consigning it to a ghetto and giving it an honourable burial."

170. Whether the compromise has any substantive legal merit is of course a different question. See supra Part III(B)(2)(b)(i) ("There is no coherent content to the concept of good faith in the Convention") and infra p. 63.

171. E. Allan Farnsworth, Duties of Good Faith and Fair Dealing under the UNIDROIT Principles, Relevant International Conventions, and National Laws, 3 TUL. J. INT'L & COMP. LAW 47, 56 (1994).

172. M.J. BONELL, AN INTERNATIONAL RESTATEMENT OF CONTRACT LAW: THE UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS 65 (2nd ed., 1997). See also Article 1:201 of the Principles of European Contract Law (PECL) which states "(1) Each party must act in accordance with good faith and fair dealing. (2) The parties may not exclude or limit this duty." It is clear from the notes and comments on the Article that this Article went beyond merely codifying the prevailing position in the European Union. See LANDO & BEALE, supra note 53, at 112-18.

173. Thomas E. Carbonneau & Marc S. Firestone, Transnational Law-making: Assessing the Impact of the Vienna Convention and the Viability of Arbitral Adjudication, 1 EMORY JOURNAL OF INTERNATIONAL DISPUTE RESOLUTION 51, 77 (1986).

174. E.g. Ferrari, supra note 139; Eörsi, supra note 140; Bonell, supra note 118 at 84; Magnus, supra note 139; and Keily, supra note 158.

175. Winship, supra note 143.

176. WEBSTER'S NEW WORLD COLLEGE DICTIONARY 747 (Michael Agnes ed., 4th ed., 1999).

177. Honnold, supra note 115, at 100.

178. Honnold, supra note 115, at 101.

179. E.g. Dore & DeFranco, supra note 139.

180. Summers, supra note 28, at 206. Paul J. Powers, Defining the Undefinable: Good Faith and the United Nations on Contracts for the International Sale of Goods, 18 J.L. & COM. 333, 352 defines "good faith" in the context of the CISG as "an expectation of each party to a contract that the other will honestly and fairly perform his duties under the contract in a manner that is acceptable to the trade community. The duty of good faith is an international doctrine that requires parties to an international transaction to act reasonably, as they would expect the other party to act. This definition is international in spirit and captures the best of domestic definitions around the world. Good faith is a lot like the golden rule: treat others as you wish to be treated. Performing contract duties in a manner which is honest, fair, and reasonable will almost always be considered good faith performance." However, he admits that this definition is "vague and may not answer all of the concerns voiced by the drafters of the CISG regarding the vagueness of good faith obligation".

181. Bonell, supra note 167.

182. Of course, more than one may be implicated; in which case the tribunal should resolve the problem in a way that best upholds all these principles.

183. This example is adapted from one that is given in Schlechtriem, supra note 71 in the context of a discussion on the UNIDROIT Principles for International Commercial Contracts.

184. A comparison of the CISG with the PECL is useful in this context. Article 1:302 of the PECL states that "reasonableness is to be judged by what persons acting in good faith and in the same situation as the parties would consider to be reasonable. In particular, in assessing what is reasonable the nature and purpose of the contract, the circumstances of the case and the usages and practices of the trades or professions involved should be taken into account." (emphasis added)

185. I.e. "unreasonable" in this context.

186. Again, only English language material was surveyed.

187. ICC Arbitration Case No. 8611 of 1997. Case abstract can be found at UNILEX, D.1997-3. Full text can be found at PACE REVIEW OF THE CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (CISG) 397 (1998) (Beate Satory, trans.). Case presentation can also be found at PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, CISG CASE PRESENTATION: ICC ARBITRATION CASE NO. 8611 OF 1997 (last modified Jan. 14, 2000) http://cisgw3.law.pace.edu/cases/978611i1.html.

188. PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, id.

189. Oberlandesgericht (Provincial Court of Appeal) München, case number 7 U 1720/94. Decided on 8 February 1995. Case law on UNCITRAL texts (CLOUT), abstract no. 133. See also PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, CISG CASE PRESENTATION: GERMANY 8 FEBRUARY 1995 OBERLANDESGERICHT MÜNCHEN [7 U 1720/94] http://cisgw3.law.pace.edu/cases/950208g1.html. Cf. the case abstract at UNILEX, D.1995-3.

190. Note, however, that the UNILEX and CLOUT abstracts differ in their interpretations of the case. The UNILEX abstract states that the buyer actually did have the right to avoid the contract because the seller actually did not deliver the goods. The Court, however, found that the non-delivery of the goods had been caused by the buyer's failure to take delivery. Therefore, it concluded that the buyer lost its right to damages pursuant to Article 80 of the CISG. The CLOUT abstract, however, states that "[s]ince the parties had not agreed on the precise date of delivery, the [seller's] readiness to deliver in August and October was no breach of contract, let alone a fundamental one. Thus, the right to declare the contract avoided because of the non-delivery of the cars was lost by the [buyer]. To allow the [buyer] now, i.e., 2 1/2 years later, to declare the contract avoided would violate the principle of good faith (article 7 (1) CISG)." This paper assumes that the interpretation of the CLOUT abstract is the correct one. It is also consistent with the interpretation given by other commentators. See Keily, supra note 158; Michael P. Van Alstine, Dynamic Treaty Interpretation, 146 U. PA. L. REV. 687, 779 n. 387 (1998); and Diane Madeline Goderre, International Negotiations Gone Sour: Precontractual Liability Under The United Nations Sales Convention, 66 U. CIN. L. REV. 257, 275 n. 141 (1997).

191. Keily, supra note 158.

192. John Wightman, Good Faith and Pluralism in the Law of Contract, in GOOD FAITH IN CONTRACT, CONCEPT AND CONTEXT, supra note 47 at 41, 60 n.56 cites the English doctrine of undue influence as an example: "In Lloyds Bank v Bundy [1975] QB 326 an elderly man mortgaged his farm to the bank as security for his son's business debts. He had been guided by the Bank in his financial affairs before, but it was clear that the main object of the Bank on this occasion had been to reduce their exposure on an unsecured overdraft. In the Court of Appeal, Sir Eric Sachs held the mortgage voidable on the basis of undue influence which (in essence) arises where one person takes advantage of the trust and confidence placed in them by another. Lord Denning, however, chose to base the outcome on inequality of bargaining power, but it would clearly be covered by a requirement of good faith in negotiation. The argument in favour of direct resort to undue influence rather than good faith or inequality of bargaining power is not so much that it uses the 'well-tested tools of contract law'…, but that it pinpoints more clearly and accurately the moral argument which justifies the court's intervention."

193. E.g. ICC Arbitration Case No. 7331 of 1994, PACE LAW SCHOOL INSTITUTE OF COMMERCIAL LAW, CISG CASE PRESENTATION: ICC ARBITRATION CASE NO. 7331 OF 1994 http://cisgw3.law.pace.edu/cases/947331i1.html ("G]eneral principles of international commercial practice, including the principle of good faith, should govern the dispute. . . [F]or the present dispute, such principles and accepted usages are most aptly contained in the [CISG]. . . ."); Renard Constructions v. Minister for Public Works, supra note 93, at 264 (To support the proposition that good faith is widely recognized in contract law, Judge Priestly refers to "the ratification by a great many countries of the United Nations Convention on Contracts for the International Sale of Good (Vienna, 11 April 1980), art. 7(1) of which requires regard to be had to the observance of good faith in international trade in the interpretation of the convention". This is the sole reference to the CISG in the opinion.); Germany 5 October 1998 Oberlandesgericht Hamburg, PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, CISG CASE PRESENTATION: GERMANY 5 OCTOBER 1998 OBERLANDESGERICHT HAMBURG (last modified Feb. 16, 2000) http://cisgw3.law.pace.edu/cases/981005g1.html; Dulces Luisi, S.A. de C.V. v. Seoul International Co. Ltd. y Seoulia Confectionery Co., PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, CISG CASE PRESENTATION: MEXICO 30 NOVEMBER 1998 COMPROMEX ARBITRATION PROCEEDING (DULCES LUISI, S.A. DE C.V. v. SEOUL INTERNATIONAL CO. LTD. Y SEOULIA CONFECTIONERY CO.) (last modified June 28, 1999) http://cisgw3.law.pace.edu/cases/981130m1.html ("Article 7, in the opinion of the Tribunal, imposes upon the parties a standard of behaviour in accordance with the principles of good faith. Referring to the principle of good faith as one of the general principles of international commercial trade, the Tribunal stated that the parties cannot exclude or modify this principle and that the principle of good faith must be interpreted internationally without resorting to its meaning under Mexican law."); Hungarian Chamber of Commerce and Industry Court of Arbitration, VB/94124. Decided on Nov. 17, 1995. Case abstract at UNILEX, D. 1995-28.2.

194. Case abstract at UNILEX, D. 1997-5.1; PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, CISG CASE PRESENTATION: NETHERLANDS 5 MARCH 1997 ARRONDISSEMENTSRECHTBANK ZWOLLE (CME COOPERATIVE MARITIME ETAPLOISE S.A.C.V. v. BOS FISHPRODUCTS URK BV) (last modified Jul. 14, 1999) http://cisgw3.law.pace.edu/cases/970305n1.html.

195. Case abstract at UNILEX, D. 1995-7; case abstract at Case law on UNCITRAL texts (CLOUT), abstract no. 154; PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, CISG CASE PRESENTATION: FRANCE 22 FEBRUARY 1995 COUR D'APPEL GRENOBLE (SARL BRI PRODUCTION "BONAVENTURE" v. SOCIÉTÉ PAN AFRICAN EXPORT) (last modified Feb. 22, 2000) http://cisgw3.law.pace.edu/cases/950222f1.html; PACE REVIEW OF THE CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (CISG) 379 (1998) (Gary Bell trans.).

196. Case abstract at Case law on UNCITRAL texts (CLOUT), abstract no. 154, id.

197. For another example of a case that contradicts the express wording of the CISG, see Oberlandesgericht Hamburg, case no. 1 U 167/95. Decided on Feb. 28, 1997. Case abstract can be found at UNILEX, D.1997-4.4.

198. PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, CISG CASE PRESENTATION: AUSTRIA 15 JUNE 1994 VIENNA ARBITRATION PROCEEDING SCH-4318 http://cisgw3.law.pace.edu/cases/940615a4.html; case abstract at UNILEX, D. 1994-13; case abstract at Case law on UNCITRAL texts (CLOUT), abstract no. 94.

199. Unification and Certainty: The United Nations Convention on Contracts for the International Sale of Goods, 97 HARV. L. REV. 1984, 1998 (1984).

200. See generally John Felemegas, The United Nations Convention on Contracts for the International Sale of Goods: Article 7 and Uniform Interpretation (last modified Apr. 4, 2001) http://www.cisg.law.pace.edu/cisg/biblio/felemegas.html; and Robert A. Hillman, Applying the United Nations Convention on Contracts for the International Sale of Goods: The Elusive Goal of Uniformity, (1995) CORNELL REV. OF THE CONVENTION FOR THE INTERNATIONAL SALE OF GIOODS 21.

201. Therefore the paper will not, for example, discuss the problems of having six different language texts, all of which are of equal authenticity. As a hint of the problems involved in this area, however, consider the following from Tristan Laflamme: "An abundance of this sort [i.e. having multiple official texts] may provoke two contradictory situations. On one side, it may prove helpful to look at the different wordings in order to solve ambiguities. In this perspective, each text contributes to the construction of the others and clarifies the intention of the Contracting States. The opposite may also be true, however, and the advantages of having many authentic versions become drawbacks. It is extremely demanding to find equivalent expressions in six languages and literal translations can be misleading. In addition, since any legal community tends to interpret a text with distinct cultural, linguistic and social reflexes, divergent constructions are a constant threat to the uniform application of the Convention on the international scale." The United Nations Convention on the International Sale of Goods (Vienna 1980): Some Significant Changes for the Practitioner, March 1994, p. 15 [essay on file at the Institute of International Commercial Law of the Pace University School of Law] (last modified Oct. 12, 1999) http://www.cisg.law.pace.edu/cisg/text/text.html.

202. Carbonneau & Firestone, supra note 173, at 70.

203. See Eörsi, supra note 21, at 353-356. Quote taken from Garro, supra note 8, at 452.

204. However, it is possible that the CISG may apply even if the goods in question do not cross national borders. It is enough that the parties have places of business which are in different Contracting States or that the rules of private international law lead to the application of the law of a Contracting State. (Article 1 CISG).

205. It has been argued that one should not be concerned about the havoc a general obligation of good faith could wreak because it has not caused chaos in the domestic context (e.g. Dore & DeFranco, supra note 139 & Summers, The General Duty of Good Faith- Its Recognition and Conceptualization, supra note 90, at 824). However, it must be remembered that the domestic context has the benefit of a shared legal and cultural heritage. A shared heritage helps to moderate any centrifugal tendencies.

206. Curran, however, believes that the approaches of adjudicators from common law and civil law jurisdictions may come to approximate each other as civilians increase their dependence on precedent as a source of binding authority while their common law counterparts come to refer more to scholarly writing on the CISG. See Vivian Grosswald Curran, The Interpretive Challenge to Uniformity, Les Premičres applications jurisprudentielles du droit uniforme de la vente internationale, Claude Witz. Paris: Librairie Générale de Droit et de Jurisprudence. 1995, 15 J. L. & COM. (1995) 175 (book review) (last modified May 12, 1998) http://www.cisg.law.pace.edu/cisg/biblio/curran1.html. The differences among common law and civil lawyers may become less stark if they are also willing to observe an international practice of comity.

207. Honnold, supra note 119, at 1. See also John Honnold, The Sales Convention in Action-Uniform International Words: Uniform Application?, 8 J.L. & Com. 207, 208 (1988): "Years of professional training and practice cut deep grooves. How can we avoid the tendency to think that the words we see are merely trying, in their awkward way, to state the domestic rule we know so well?"

208. See generally, V. Susanne Cook, The UN Convention on Contracts for the International Sale of Goods: A Mandate to Abandon Legal Ethnocentricity, 16 J. L. & COM. (1997) 257.

209. And this is not even factoring in the scholarly commentary that was produced even before this period. The work of the Institute of International Commercial Law of the Pace University School of Law, however, has been instrumental in helping researchers to navigate the volume of CISG case law, scholarly commentary and travaux préparatoires available and extract that which is most relevant to the object of one's research. It has made the travaux more accessible by permitting researchers to search the records in total http://www.cisg.law.pace.edu/cisg/conference.html and to trace the Conference development of each article in the CISG in chronological sequence http://www.cisg.law.pace.edu/cisg/article-by-article.html. It is doing the same for the preceding ten-year UNICITRAL legislative history of the CISG. It has also made CISG doctrine more accessible by publishing a bibliography that prints out to nearly 500 pages http://www.cisg.law.pace.edu/cisg/biblio/full-biblio.html. It archives full text copies of law journal articles, monographs and books on uniform law http://www.cisg.law.pace.edu/cisg/biblio/bib2.html. It also works at translations of doctrine. For an example, see Ulrich Magnus, supra note 157 (last modified Aug. 1997) http://www.cisg.law.pace.edu/cisg/text/magnus.html. For the Institute's work on case law, see infra Part V(B)(3). The Institute offers the information in an integrated manner through Annotated Texts of provisions of the CISG http://www.cisg.law.pace.edu/cisg/text/cisg-toc.html.

210. Goderre, supra note 190, at 278.

211. Rosett, supra note 21, at 296.

212. The United States, for example, strongly urged that a commentary be adopted: "The United States strongly urges that a commentary accompany the final text. The existing commentary has been prepared by the Secretariat and has thus far accompanied the draft as an explanation of its provisions. Such a commentary, including unofficial captions to each section, has proved most helpful to practitioners in the United States who have studied the draft CISG. It can be expected that a commentary would facilitate efforts to have the resulting convention ratified. Since the draft CISG contains a number of concepts that are unknown in common law systems, a commentary is of special importance to a common law country such as the United States." A/CONF.97/8, p. 26 (11 January 1980).

213. Peter Winship, A Note on the Commentary of the 1980 Vienna Convention, 18 INT'L LAW. 37, 37 (1984).

214. Id.

215. Supra note 159 and accompanying text.

216. Unification and Certainty: The United Nations Convention on Contracts for the International Sale of Goods, supra note 200, at 1995.

217. Another is Farnsworth, supra note 171.

218. Winship, supra note 143.

219. For a discussion of this issue, see R.H. Graveson, The International Unification of Law, 16 AM. J. COMP. L. 4, 12 (1968), where the author states that, "Textual uniformity on an international or an interstate basis is far from a delusion, but it is often given an exaggerated value. Real and effective uniformity depends on the possibility of a uniform application in various countries of the agreed uniform text. Allowing for the necessary and inevitable divergence of human decision, a problem still remains of ensuring that any tendencies towards divergence in the application of uniform laws shall be corrected at appropriate times and in suitable ways. How then shall continuing uniformity be ensured? Shall it be done by giving ultimate jurisdiction to an international court, such as the International Court of Justice?" (emphasis added).

220. A problem would probably arise, however, as to those aspects involving private international law. Countries would be especially unwilling to allow an international commercial court to adjudicate on domestic law.

221. See Article 177 of the Treaty of Rome setting up the European Community. See also Jurisdiction (visited Apr. 17, 2000) http://europa.eu.int/cj/en/pres/comp.htm.

222. UNCITRAL rejected a proposal to set up a permanent editorial board (Report of the United Nations Commission on International Trade Law on the Work of its Twenty-First Session (1988), 19 UNCITRAL Y.B. 3, 16 (1988), U.N. Doc. A/43/17, paras. 107-109). See infra p.94. One can infer that it would have a fortiori would have rejected a proposal to establish an international commercial court. See also Dissemination of decisions concerning UNCITRAL legal texts and uniform interpretation of such texts: note by the secretariat, 16 UNCITRAL Y.B. 387 (1985), 389-390, U.N. Doc. A/CN.9/267, paras. 10-16; and Rene David, The International Unification of Private Law, in 2 INTERNATIONAL ENCYCLOPEDIA OF COMPARATIVE LAW ch. 5, at 4 (1971).

223. I.e. the CISG.

224. Bonell, supra note 118, at 89.

225. Id.

226. Dissemination of decisions concerning UNCITRAL legal texts and uniform interpretation of such texts: note by the secretariat, supra note 222, para. 13.

227. Dissemination of decisions concerning UNCITRAL legal texts and uniform interpretation of such texts: note by the secretariat, supra note 222, paras. 12-14.

228. The charter members of this Council are: Eric E. Bergsten, Michael Joachim Bonell, E. Allan Farnsworth, Alejandro M. Garro, Royston M. Goode, Sergei N. Lebedev, Jan Ramberg, Peter Schlechtriem, Hiroo Sono and Claude Witz. Additional Council members are to be selected by the Council. Peter Schlechtriem has been elected Chair of the Council. Loukas A. Mistelis is the Secretary of the Council.

229. The first two interpretive rulings of the Council are to be on notice of lack of conformity of goods and electronic issues under the CISG. They are being authored by Council members Eric E. Bergsten and Jan Ramberg.

230. Report of the United Nations Commission on International Trade Law on the Work of its Twenty-First Session (1988), supra note 222, para. 98-106. See also Dissemination of decisions concerning UNCITRAL legal texts and uniform interpretation of such texts: note by the secretariat, supra note 222; and Collection and Dissemination of information on interpretation of UNCITRAL legal texts: note by the Secretariat, 19 UNCITRAL Y.B. 136 (1988), U.N. Doc. A/CN.9/312, paras. 1-28.

231. UNCITRAL Thesaurus on United Nations Convention on Contracts for the International Sale of Goods & UNICITRAL Index of the United Nations Convention on Contracts for the International Sales of Goods-Revision 2 (visited Apr.16, 2000) http://www.uncitral.org/en-index.htm.

232. United Nations Commission on International Trade Law (UNCITRAL), Index, Case Law on UNCITRAL Texts (CLOUT) (visited Apr. 16, 2000) http://www.uncitral.org/en-index.htm.

233. Uniform Interpretation of UNCITRAL texts: sample digest of case law on the United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980), U.N. Doc A/CN.9/498. For an Internet reproduction of the digests, see PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, UNIFORM INTERPRETATION OF UNCITRAL TEXTS: … DIGEST OF CASE LAW ON THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (VIENNA, 1980), UNCITRAL DIGEST OF CISG ARTICLE 6 CASE LAW (last modified Aug. 27, 2001) http://www.cisg.law.pace.edu/cisg/digest/art06.html, PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, UNIFORM INTERPRETATION OF UNCITRAL TEXTS: … DIGEST OF CASE LAW ON THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (VIENNA, 1980), UNCITRAL DIGEST OF CISG ARTICLE 78 CASE LAW (last modified Aug. 27, 2001) http://www.cisg.law.pace.edu/cisg/digest/art78.html.The Institute's reproductions of the digests are more complete in they fill in added case citation details and insert hyperlinks to case presentations.

234. (last modified Mar. 13, 2000) http://www.cisg.law.pace.edu/. Examples of other web sites are CISG-FRANCE (visited Apr. 16, 2000) http://witz.jura.uni-sb.de/CISG/; CISG online (visited Apr. 16, 2000) http://www.jura.uni-freiburg.de/ipr1/cisg/; CISG-ISRAEL (last modified Mar. 1, 2000) http://www.biu.ac.il/law/cisg/; and CISG Spain & Latin America (visited Apr. 16, 2000) http://www.uc3m.es/uc3m/dpto/PR/dppr03/cisg/index.html.

235. See generally, PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, CASE SCHEDULE (last modified Aug. 27, 2001) http://www.cisg.law.pace.edu/cisg/text/casecit.html. The growth of this case collection is aided by members of the Autonomous Network of CISG Websites. See PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, THE AUTONOMOUS NETWORK OF CISG WEBSITES (last modified Jul. 10, 2001) http://www.cisg.law.pace.edu/network.html On Sept. 27, 2000, the Institute, in concert with the Centre for Commercial Law Studies of Queen Mary College, University of London, established a Case Translation Programme http://www.cisg.law.pace.edu/cisg/text/queenmary.html. For a report on the 151 English text or English case text translations that are currently offered, see PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, TAMING THE DRAGONS OF UNIFORM CASE LAW: SHARING THE REASONING OF COURTS AND ARBITRAL TRIBUNALS (last modified Aug. 29, 2001) http://www.cisg.law.pace.edu/cisg/text/schedule.html.

236. PACE LAW SCHOOL INSTITUTE OF INTERNATIONAL COMMERCIAL LAW, CASES ON THE CISG (last modified May 9, 2001) http://www.cisg.law.pace.edu/cisg/text/caseschedule.html.

237. Id. See also Case Law on UNCITRAL Texts (CLOUT) User Guide, U.N. Doc. A/CN.9/SER.C/GUIDE/1 (visited Apr. 16, 2000) http://www.uncitral.org/en-index.htm.

238. In the absence of an international system of stare decisis, one must rely on international comity.

239. See generally, M.J. Bonell, A Proposal for the Establishment of a 'Permanent Editorial Board' for the Vienna Sales Convention, in INTERNATIONAL UNIFORM LAW IN PRACTICE 241 (UNIDROIT ed., 1988).

240. Report of the United Nations Commission on International Trade Law on the Work of its Twenty-First Session (1988), supra note 222, at para. 108. See also Dissemination of decisions concerning UNCITRAL legal texts and uniform interpretation of such texts: note by the secretariat, supra note 222.

241. This web site holds, inter alia, case presentations, annotated analyses of each Article, the legislative history of each article, an extensive bibliography and a collection of full-text scholarly writings. See supra note 209 and 234.

Pace Law School Institute of International Commercial Law - Last updated September 25, 2001

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