Topic 8 - UN Convention on Contracts for the International Sale of Goods (CISG) Flashcards
(222 cards)
1
Q
What are the three types of legal regimes governing international sales transactions?
A
National legal regimes (e.g., UK Sale of Goods Act 1979)
Factual uniformity (e.g., UCP 600, Lex Mercatoria)
Internationally uniform law (e.g., CISG)
2
Q
What is the main objective of the CISG?
A
To create a uniform legal framework for international sale of goods contracts and reduce conflicts of laws.
3
Q
When does the CISG apply to an international sales contract?
A
The CISG applies if both parties’ businesses are in member states or if conflict of laws leads to the application of a CISG member state’s law.
4
Q
Can parties opt out of the CISG?
A
Yes, parties can expressly exclude the CISG in their contract.
5
Q
What is the difference between FOB and CIF contracts?
A
FOB (Free on Board) transfers risk when goods are loaded onto the ship, while CIF (Cost, Insurance, and Freight) includes insurance and risk transfer upon shipment.
6
Q
Under the CISG, when does risk pass from seller to buyer?
A
Risk passes when goods are handed over to the first carrier (Article 67) or when placed at the buyer’s disposal if no transport is involved (Article 69).
7
Q
Does the CISG require contracts to be in writing?
A
No, under Article 11, a contract can be concluded orally unless a member state has made a declaration requiring written form
8
Q
What is the role of bills of lading in international trade?
A
They serve as a receipt of goods, a document of title, and evidence of the contract of carriage.
9
Q
What are the obligations of the seller under the CISG?
A
To deliver goods, hand over related documents, and ensure goods conform to contract terms (Articles 30-34).
10
Q
What are the obligations of the buyer under the CISG?
A
To pay the price and take delivery of the goods as required by the contract (Article 53).
11
Q
What are the remedies for breach of contract under the CISG?
A
Includes specific performance, contract avoidance, damages, and price reduction (Articles 45-52).
12
Q
What is the ‘battle of the forms’ in contract law?
A
It refers to conflicts between standard terms in offer and acceptance, where the last-shot rule typically applies.
13
Q
How does the CISG handle contract modifications?
A
Modifications require mutual agreement and need not be in writing unless a party’s state law mandates it (Article 29).
14
Q
What is the significance of Article 79 in the CISG?
A
It provides for exemption from liability in cases of force majeure or unforeseen impediments.
15
Q
What does the CISG say about good faith in contracts?
A
Article 7(1) requires interpretation of the CISG in light of good faith in international trade.
16
Q
What is the Nachfrist principle under the CISG?
A
Under Article 47 CISG, the buyer may grant the seller additional time to perform before pursuing remedies.
17
Q
What are the key differences between the CISG and the UK Sale of Goods Act 1979?
A
While the CISG focuses on contract obligations and remedies, the SGA also covers the passing of property.
18
Q
Under the CISG, when can a buyer reject non-conforming goods?
A
If the non-conformity is fundamental and substantially deprives them of the contract’s benefit (Article 49).
19
Q
What is a documentary credit in trade finance?
A
A bank guarantee ensuring seller payment upon presentation of compliant documents (governed by UCP 600).
20
Q
How does a letter of credit (LC) function?
A
The issuing bank commits to pay the seller once documents proving shipment and compliance are presented
21
Q
What role do inspection certificates play in international trade?
A
They verify that the goods meet contractual specifications and are required in many trade finance transactions.
22
Q
What are the three main risk transfer rules under the CISG?
A
Article 67 (Risk passes when goods handed to carrier)
Article 68 (Goods in transit rule)
Article 69 (Goods placed at buyer’s disposal)
23
Q
How does the CISG address frustration of contract?
A
Unlike English law, it suspends obligations rather than discharging them entirely (Article 79).
24
Q
Can parties incorporate trade usages into their contracts under the CISG?
A
Yes, Article 9 states that trade usages known to both parties are considered part of the contract.
25
When does a contract become binding under the CISG?
When an acceptance becomes effective, which occurs upon receipt unless otherwise agreed (Article 18).
26
What is the main principle behind price reduction under the CISG?
A: If goods are non-conforming, the buyer may proportionally reduce the price (Article 50).
27
What is the primary remedy for late delivery under the CISG?
The buyer may avoid the contract if the delay constitutes a fundamental breach (Article 49).
28
How does the CISG handle contract termination?
Termination (avoidance) is possible for fundamental breach or non-delivery (Articles 49 & 64).
29
What is the key principle behind Article 35 of the CISG?
It establishes that goods must conform to the contract in terms of quantity, quality, description, and packaging.
30
How does the CISG handle partial delivery?
The buyer may seek remedies for the undelivered portion or terminate if it amounts to a fundamental breach (Article 51).
31
What happens if a buyer fails to pay under the CISG?
The seller may claim damages, require performance, or terminate the contract (Articles 61-64).
32
What is the role of promissory notes in trade finance?
They serve as formal debt instruments ensuring delayed payment security.
33
What happens if the seller delivers excess goods under the CISG?
The buyer can accept or reject the excess quantity (Article 52).
34
What is the duty to mitigate damages under the CISG?
The injured party must take reasonable steps to limit their loss (Article 77).
35
Under the CISG, can a seller correct a defective document?
Yes, if done within a reasonable time without causing significant inconvenience (Article 34).
36
What happens if a party fails to mitigate losses under the CISG?
Their damages claim may be reduced (Article 77).
37
How does the CISG treat loss of profit in damages claims?
Lost profits are recoverable if foreseeable at contract formation (Article 74).
38
What is the importance of the Hague Conventions of 1964?
They were early efforts at unifying international sales law, leading to the CISG.
39
Does the CISG cover consumer sales?
No, it applies only to commercial transactions (Article 2(a)).
40
How does the CISG treat trade customs?
Parties are assumed to have incorporated widely recognized trade usages (Article 9).
41
Under the CISG, can a buyer force the seller to deliver?
Yes, but only if specific performance is a permitted remedy in the seller’s legal system (Article 46).
42
What is the CISG’s stance on price determination?
If the contract is silent, the price is the usual market rate (Article 55).
43
Can a buyer reject an early delivery under the CISG?
Yes, unless they agree to take early delivery (Article 52).
44
What role does UNCITRAL play in the CISG?
It promotes and oversees its interpretation and application.
45
How does the CISG define ‘goods’?
The CISG does not define ‘goods,’ leading to debates over inclusion of software and digital assets
46
What happens if goods are sold while in transit under the CISG?
Risk passes to the buyer at the time of contract conclusion, unless otherwise agreed (Article 68).
47
What remedies does a seller have under the CISG if a buyer fails to take delivery?
The seller may claim damages or terminate the contract if it constitutes a fundamental breach (Articles 61-64).
48
How does the CISG treat the issue of contract formation in relation to counter-offers?
A reply modifying the offer is a rejection and counter-offer, unless changes are immaterial (Article 19).
49
What does the CISG say about force majeure and contract performance?
Article 79 exempts a party from liability if performance is prevented due to an unforeseeable and uncontrollable impediment.
50
What are the main methods by which national laws can be harmonized?
Harmonization may be achieved through conventions or uniform laws that are binding on contracting states (subject to reservations and denunciations), or through model laws that states may adopt voluntarily, with or without modifications. (33.01)
51
What is the difference between a convention and a model law in the context of harmonizing laws?
A convention is binding on contracting states (subject to reservations and denunciations), whereas a model law is a non-binding template that states are free to adopt and adapt. (33.01)
52
How might a uniform law apply to contracts?
A uniform law may cover both domestic and international contracts or only international ones. It may also include mandatory rules (binding regardless of the parties’ wishes) or permissive rules (which apply only if consistent with the parties’ intentions). (33.01)
53
When is a conflict of laws convention used instead of a uniform substantive law?
A conflict of laws convention is used when harmonizing substantive law would be too complex. It sets out which state's law should govern a legal issue, without providing substantive rules itself.(33.01)
54
What is the benefit of a convention with uniform rules of substantive law?
Such a convention eliminates the need to refer to national laws and the associated conflict of laws rules by providing a direct and harmonized set of legal standards. (33.01)
55
What does a conflict of laws convention accomplish?
It designates which state's law should govern a dispute, thereby avoiding the need for the forum court to apply its own conflict of laws rules. (33.01)
56
Can a single convention include both substantive rules and conflict of laws rules?
Yes, some conventions primarily establish uniform substantive rules but include conflict of laws provisions for issues on which agreement could not be reached. (33.01)
57
What was the nature of the 1955 Hague Convention on international sales?
The 1955 Hague Convention was a conflict of laws convention, meaning it determined which national law should apply rather than establishing uniform substantive rules. (33.02)
58
What substantive uniform laws were introduced in 1964, and what did they cover?
In 1964, two substantive uniform laws were introduced:
ULIS (Uniform Law on the International Sale of Goods)
ULFIS (Uniform Law on the Formation of Contracts for the International Sale of Goods) (33.02)
59
When did the CISG enter into force and how widespread is its adoption?
The CISG entered into force on 1 January 1988 and has been ratified by 93 states. (33.02)
60
What criticisms are made of the UK’s refusal to adopt the CISG?
The UK is criticized for:
Contributing to harmonization efforts but not adopting the final product
Holding a naive belief in the superiority of its aged Sale of Goods Act
Failing to recognize the practical difficulties faced by English parties dealing with unfamiliar foreign laws and languages
Missing the opportunity for English courts to contribute to the development of CISG jurisprudence (33.02)
61
How flexible is the CISG in terms of party autonomy?
The CISG is highly flexible; parties can freely vary or exclude its provisions, making it largely gap-filling in nature. (33.02)
62
What is a major consequence of the UK’s non-participation in the CISG regime?
A major consequence is that English courts are largely excluded from shaping or interpreting the growing body of CISG case law, reducing their influence in international commercial law. (33.02)
63
What are the three criteria under Article 1(1) of the CISG that must be satisfied for the Convention to apply?
A1: The CISG applies only if:
The contract is for the sale of goods
The parties have their places of business in different states
Either:
Both states are contracting states (Art 1(1)(a)), or
The rules of private international law lead to the law of a contracting state (Art 1(1)(b)) (33.07)
64
What types of contracts fall within the definition of a "contract for the sale of goods" under the CISG?
Contracts for the supply of goods to be manufactured or produced are included unless:
The buyer supplies a substantial part of the materials, or
The supplier’s main obligations involve labour or services, rather than goods. (33.07)
65
What is required regarding the parties’ locations for the CISG to apply?
The parties must have their places of business in different states. (33.07)
66
How does Article 1(1)(a) trigger CISG applicability?
Article 1(1)(a) applies if both states where the parties are based are contracting states to the CISG. (33.07)
67
How does Article 1(1)(b) operate to make the CISG applicable?
Article 1(1)(b) applies when private international law rules lead to the application of the law of a contracting state, even if only one party’s state is a CISG signatory. (33.07)
68
Is the physical movement or delivery location of the goods relevant to the application of the CISG?
No. The location or intended place of delivery of the goods is irrelevant to the application of the CISG. (33.08)
69
Can a contracting state limit the CISG’s application to cases where the parties expressly incorporate it into the contract?
No. Unlike under ULIS, contracting states cannot impose such a limitation under the CISG. (33.08)
70
What is the effect of implementing the CISG into domestic law (e.g. in the UK)?
If implemented, the CISG would apply by default unless excluded by the parties, meaning it would govern relevant contracts without needing express incorporation. (33.08)
71
What happens in cases under Article 1(1)(a) if conflict of laws rules point to a non-contracting state?
If both parties are from contracting states (Article 1(1)(a)), the CISG must be applied even if the conflict rules point to the law of a non-contracting state—unless the parties have expressly chosen the law of a non-contracting state. (33.08)
72
Why was Article 1(1)(b) of the CISG controversial?
A1: Some states found Article 1(1)(b) controversial because:
It was seen as unduly limiting the scope of their domestic law
It introduced uncertainty by requiring reference to private international law, which differs across jurisdictions. (33.09)
73
What did some states do in response to Article 1(1)(b)?
Under Article 95 of the CISG, some states made a declaration opting out of applying Article 1(1)(b). (33.09)
74
Despite the controversy, what positive effect has Article 1(1)(b) had?
Article 1(1)(b) helped to accelerate the early application of the CISG and expanded its scope, especially before many states had ratified the Convention. (33.09)
75
Why were early CISG cases more likely to rely on Article 1(1)(b) than 1(1)(a)?
In early cases, both parties' states had not yet ratified the CISG, so courts used Article 1(1)(b) to apply it through the rules of private international law. (33.09)
76
Has the reliance on Article 1(1)(b) declined over time? If so, why?
Yes. As more states ratified the CISG, Article 1(1)(a) became more widely applicable, reducing the need to rely on Article 1(1)(b). (33.09)
77
Does the CISG allow contracting states to exclude parts of the Convention?
Yes. The CISG permits contracting states to exclude certain provisions by making declarations. (33.10)
78
What parts of the CISG can be excluded under Article 92?
A2: Under Article 92, a state may declare that it will not be bound by:
Part II (Formation of the contract), or
Part III (Rights and obligations in sales) (33.10)
79
What other article allows a state to make a declaration to exclude a provision?
Article 95 allows a state to exclude Article 1(1)(b), thereby avoiding the application of the CISG based on private international law rules. (33.10)
80
What does a declaration under Article 95 of the CISG do?
A declaration under Article 95 allows a contracting state to opt out of applying Article 1(1)(b), meaning it refuses to apply the CISG when the only basis for doing so is via private international law rules. (33.11)
81
What determines the effect of a declaration under Article 95?
Its effect depends on whether the declaration was made by the forum state (i.e. the state whose court is hearing the case) or by another state whose law is applicable under the forum’s private international law rules. (33.11)
82
What happens if a non-reserving state’s court is asked to apply the law of a reserving state?
The better view is that the CISG should still apply, because:
Article 95 does not explicitly say that a reserving state ceases to be a "contracting state" for Article 1(1)(a)
Therefore, only the reserving state’s courts are bound by its Article 95 declaration
Non-reserving states may apply the CISG if their conflict rules lead to the law of a reserving state. (33.11)
83
What is the opposing view held by Germany and some scholars?
They argue that a state making a declaration under Article 95 should not be regarded as a contracting state for the purposes of Article 1(1)(b), and thus the CISG should not apply when the applicable law is that of such a reserving state. (33.11)
84
What if the forum state itself has made a declaration under Article 95, but its conflict rules point to the law of a non-reserving state?
The forum court should still apply the CISG, but not via Article 1(1)(b). It applies the CISG under its own conflict of law rules leading to the non-reserving state's law. (33.11)
85
What if the forum state’s conflict rules point to its own law and it has made an Article 95 declaration?
In this case, the forum state’s policy decision (reflected in the Article 95 declaration) prevents it from applying the CISG via private international law. So, the CISG will not apply. (33.11)
86
What happens when proceedings are brought in a non-contracting state whose conflict rules point to a contracting state?
If the law referred to is that of a non-reserving state, the court is likely to apply the CISG, but under its own conflict rules, not Article 1(1)(b)
If the law referred to is that of a reserving state, the court is more likely to apply the domestic law of that state, not the CISG. (33.11)
87
Are the CISG's provisions on its sphere of application exhaustive?
The CISG's scope provisions are exhaustive only when the Convention is applied as a treaty, i.e., based strictly on the criteria in Article 1. (33.12)
88
Can the CISG be applied even if the conditions of Article 1 are not met?
Yes. Courts and arbitral tribunals have found at least three other ways to apply CISG rules even without a formal link to a contracting state. (33.12)
89
What does this imply about the practical reach of the CISG?
The CISG can extend beyond its treaty-based scope, as tribunals may apply its rules by alternative legal mechanisms, enhancing its influence in international sales law. (33.12)
90
Can parties apply the CISG even if it does not apply automatically under Article 1?
Yes. Parties can incorporate CISG provisions by reference into their contract. (33.13)
91
How is the CISG treated when incorporated by reference in the United Kingdom?
In the UK, incorporation by reference means that CISG provisions become contractual terms, not binding international law. The CISG is applied as if it were part of the contract, not as an overriding legal framework. (33.13)
92
Does an English court have a duty to apply the CISG when it is incorporated by reference?
No. The court does not apply the CISG as law, but only to the extent that it would apply any other agreed contractual term between the parties. (33.13)
93
How did an ICC arbitral tribunal justify applying the CISG in one case?
The tribunal relied on Article 21(2) of the ICC Rules, which requires taking account of relevant trade usages, and held that the CISG was the best source for identifying such usages. (33.14)
94
What was problematic about the tribunal’s application of the CISG in that case?
The case was controversial because:
Neither party's country was a CISG contracting state
The contract predated the CISG’s adoption
The applicable law had already been determined, but the tribunal ignored it in favor of the CISG, viewing that law as unreasonable. (33.14)
95
What does this case suggest about the use of the CISG as trade usage?
It shows a broad and arguably unjustified assumption that the CISG reflects universal trade usage, even where the CISG would not formally apply under treaty or contract. (33.14)
96
What is a more appropriate source of trade usage than the CISG, according to the text?
A more appropriate and fruitful source is the ICC’s Incoterms® 2020, which can be used as evidence of trade usage even if not expressly incorporated into the contract under national law. (33.14)
97
What is the lex mercatoria?
The lex mercatoria refers to a body of uncodified international trade law and usage that is said to exist independently of national legal systems. (33.15)
98
Has the CISG been applied as part of the lex mercatoria?
Yes. The Iran–United States Claims Tribunal applied the CISG rules as part of the lex mercatoria, treating them as expressions of general principles of international trade law. (33.15)
99
Does English law recognize the lex mercatoria as an independent legal system?
No. English law is not thought to recognize lex mercatoria as a separate legal order. However, English law may apply trade usages agreed to by the parties and refer to the CISG as evidence of such usage. (33.15)
100
Under English law, how may the CISG still be relevant despite the rejection of lex mercatoria?
English courts may use the CISG as evidence of trade usage, especially where the parties have expressly or impliedly incorporated such usages into their contract. (33.15)
101
Does the CISG apply to consumer sales?
No. The CISG does not apply to consumer sales, i.e., sales of goods bought for personal, family, or household use. (33.16)
102
What other types of sales are excluded from the CISG?
The CISG does not apply to:
Sales by auction
Sales under execution or court order. (33.16)
103
What types of items are excluded from the CISG’s scope?
The CISG does not apply to sales of:
Securities
Negotiable instruments
Money
Ships, vessels, hovercraft, or aircraft
Electricity (33.16)
104
Does the CISG apply to liability for death or personal injury caused by the goods?
No. The CISG excludes liability for death or personal injury caused by the goods to any person. (33.16)
105
Can parties exclude the CISG or modify its provisions?
Yes. Under Article 6 (and subject to Article 12), the parties may exclude the application of the CISG or derogate from or vary any of its provisions.
106
How can parties exclude the CISG?
Exclusion may be express (clearly stated) or implied (inferred from the contract or circumstances). (33.17)
107
Is choosing the law of a CISG contracting state an implied exclusion of the CISG?
No. Since the CISG is part of that state's law, selecting it does not amount to an implied exclusion—unless the parties clearly intended to apply only the domestic sales law of that state, excluding the CISG. (33.17)
108
Is choosing the law of a non-contracting state an implied exclusion of the CISG?
Yes, this is generally treated as an implied exclusion of the CISG.
However, this does not apply where the law of the non-contracting state is selected only through conflict rules, not by party choice. (33.17)
109
When else might an implied exclusion of the CISG arise?
An implied exclusion may arise when the contract is so detailed and comprehensive that:
The CISG rules cannot sensibly apply, or
The terms suggest an intention to rely on domestic law or other non-CISG rules. (33.17)
110
If the CISG is excluded, what law applies to the contract?
The law that applies is the domestic law of the state determined under the conflict of laws rules of the forum—excluding the CISG. (33.17)
111
What does the CISG govern?
The CISG governs only:
Formation of the contract (i.e., offer and acceptance), and
The rights and obligations of the seller and buyer arising from the contract. (33.18)
112
What important matters are excluded from the scope of the CISG?
The CISG does not govern:
The validity of the contract, any of its terms, or any usage
The effect of the contract on property in the goods sold (i.e., transfer of title)
Proprietary rights or title conflicts between the buyer/seller and third parties
Extrinsic invalidity issues like mistake, fraud, or duress (33.18)
113
How are matters like mistake, fraud, and title to be resolved in a CISG-governed contract?
These issues fall outside the CISG and must be resolved by the applicable domestic law, as determined under conflict of laws rules. (33.18)
114
Does the CISG cover international trade terms like FOB and CIF?
No. The CISG does not address f.o.b., c.i.f., or combined transport transactions. (33.18)
115
Why were proprietary and trade terms excluded from the CISG?
Such issues were excluded for pragmatic reasons, as agreement could not be reached during the Convention's negotiation. (33.18)
116
In practice, when does the CISG tend to apply?
The CISG is likely to apply:
Where parties inadvertently fail to exclude it, or
Where parties deliberately allow it to apply because they cannot agree on any national law as governing law. (33.18)
117
Is the CISG a comprehensive legal code?
No. The CISG does not claim to be a comprehensive code. It recognizes that gaps exist in its provisions. (33.19)
118
How should gaps in the CISG be filled?
Gaps should be filled:
Primarily by reference to the general principles on which the CISG is based
Only if no such principles exist, by applying the domestic law determined through the rules of private international law (33.19)
119
Why is national law a last resort for filling CISG gaps?
Because relying too readily on national law undermines the goal of harmonization, which is a core objective of the CISG. (33.19)
120
What does Article 7(1) of the CISG state?
A1: Article 7(1) provides:
“In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade.” (33.20)
121
Why is Article 7(1) significant in contrast to English law?
Because English law lacks a general duty of good faith in the exercise of legal rights and remedies, whereas the CISG requires regard for good faith in international trade, promoting a more flexible and harmonized interpretive approach. (33.20)
122
How should national courts interpret the CISG?
A3: Courts should avoid domestic interpretive rigidity and instead:
Consider the international character of the Convention
Promote uniformity in application
Give the Convention an autonomous interpretation (i.e., not importing meanings from domestic legal systems) (33.20)
123
Should courts assume CISG terms have the same meaning as domestic legal terms?
No. Terms that are legal terms of art in a domestic system may not carry the same meaning under the CISG, which requires independent interpretation based on its own context and purpose. (33.20)
124
What resources assist in interpreting the CISG autonomously?
Resources include:
Databases containing court decisions and arbitral awards
Extensive academic commentaries
CISG Advisory Council (CISG-AC) opinions addressing divergent interpretations across jurisdictions (33.20)
125
Are national courts bound by foreign decisions on the CISG?
No. Courts are required only to have regard to foreign decisions and the goal of uniformity; they are not bound to follow foreign rulings. (33.20)
126
Is there a general duty of good faith imposed on parties by the CISG?
This is debated. One view holds that Article 7(1) does not impose a general duty of good faith on the parties, but instead only requires courts to observe good faith when interpreting the Convention’s provisions. (33.21)
127
What does the restrictive view say about the purpose of Article 7(1)?
It suggests that Article 7(1) aims to ensure that the CISG's rules are used, not abused, and should be interpreted to prevent parties from manipulating remedies or provisions in bad faith. (33.21)
128
What interpretive difficulty arises with Article 7(1)?
It is difficult to separate interpretation from substance, especially when trying to define what constitutes an abuse of the Convention’s provisions. (33.21)
129
What example illustrates the problem of interpreting good faith under the CISG?
A default remedy in the CISG may be invoked by an innocent party who has suffered no actual loss but seeks to escape an unfavorable contract (e.g., due to market fluctuations). It's unclear whether good faith bars this behavior. (33.21)
130
What is the broader view regarding good faith under the CISG?
Some argue that the CISG embodies a general duty of good faith, to be applied through Article 7(2) as a general principle filling gaps in the Convention. (33.21)
131
Why is a uniform interpretation of good faith under the CISG difficult?
Because there is no universally accepted definition of good faith, and conceptions of its meaning vary between legal systems, undermining consistency. (33.21)
132
What is a possible “common core” understanding of good faith across legal systems?
Avoiding conduct that reasonable commercial actors would find dishonest, unethical, or contrary to fair dealing. (33.21)
133
How do common law and civil law systems differ in approaching good faith?
Common law systems are typically more cautious and reluctant to apply general principles like good faith
Civil law systems are more receptive to good faith and more willing to define and apply it in commercial contexts (33.21)
134
What does Article 7(2) of the CISG provide?
“Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles upon which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.” (33.22)
135
When does Article 7(2) apply?
Article 7(2) applies only when the issue falls within the scope of the Convention, but is not expressly settled by it. (33.22)
136
Can Article 7(2) be used to deal with matters entirely outside the CISG?
No. Article 7(2) cannot be used for matters outside the scope of the CISG, such as transfer of property. It applies only to gaps within the Convention’s scope. (33.22)
137
What is the first step under Article 7(2) in addressing an unsettled issue?
The issue must be resolved in accordance with the general principles on which the CISG is based, if such principles can be identified. (33.22)
138
How is a general principle of the CISG identified?
A principle is generally recognized if it is common to several provisions of the Convention. However, in some cases, a single article, such as Article 6 (party autonomy), may suffice. (33.22)
139
What are some general principles identified in the CISG?
Recognized general principles include:
Party autonomy (Art 6)
Estoppel
A duty to act reasonably
Strict liability of the seller in performing obligations (33.22)
140
What happens if no general principle can be found within the CISG?
If no principle applies, the issue must be resolved using the domestic law determined by the rules of private international law of the forum. (33.22)
141
Why is recourse to private international law considered a last resort under Article 7(2)?
Because relying on conflict of laws rules defeats the goal of uniformity, substituting national law for a uniform international standard intended by the CISG. (33.22)
142
What does Article 11 of the CISG provide regarding the form of a contract?
Article 11 states that a contract of sale does not need to be in writing and is not subject to any formality requirements. It can be proved by any means, including witness testimony. (33.23)
143
Does the CISG allow contracts concluded by phone or electronically?
Yes. Like English law, the CISG allows contracts to be formed and enforced through telephone or electronic communication, so long as the contract can be proven. (33.23)
144
Can a state restrict the application of Article 11?
Yes. Under Article 96, a contracting state may declare that it excludes Article 11, requiring contracts to comply with its domestic form requirements (e.g., written evidence). (33.23)
145
When does a declaration under Article 96 affect a contract?
A declaration under Article 96 applies where one of the parties has its place of business in the state that made the declaration. (33.23)
146
Do the CISG’s rules on offer and acceptance follow common law or civil law traditions?
The CISG’s rules are based on civil law traditions and are generally considered more closely aligned with commercial practice than the common law approach. (33.24)
147
When does an acceptance become effective under the CISG?
A2: An acceptance becomes effective when it reaches the offeror, not upon dispatch. (33.24)
148
Can an acceptance be withdrawn under the CISG?
Yes. An acceptance can be withdrawn if the withdrawal reaches the offeror before or at the same time as the acceptance would have become effective. (33.24)
149
Does merely dispatching an acceptance bind the offeree?
No. Dispatching an acceptance alone does not bind the offeree. However, dispatch does prevent the offeror from revoking the offer thereafter. (33.24)
150
When is revocation of an offer excluded under the CISG?
A5: Revocation is excluded when:
The offeror states or implies that the offer is irrevocable (e.g., by fixing a time for acceptance)
It was reasonable for the offeree to rely on the offer being irrevocable and the offeree has acted in reliance. (33.24)
151
What happens if an acceptance contains modifications to the offer?
If the acceptance includes additions, limitations, or other modifications, it is treated as a rejection and becomes a counter-offer. (33.24)
152
Is there any exception to the rule that modified acceptances are counter-offers?
Yes. If the modifications are not material, the acceptance is effective on the original terms as varied, unless the offeror objects without undue delay. (33.24)
153
What are the two principal duties of the seller under the CISG?
The seller must:
Deliver the goods in accordance with the contract terms
Tender goods that conform to the contract (33.26)
154
What does the requirement of conformity include under the CISG?
The conformity requirement includes:
Supplying goods fit for their ordinary purposes
Supplying goods fit for any particular purpose expressly or impliedly made known to the seller
Ensuring the goods are packaged in the usual manner for such goods (33.26)
155
How closely do the CISG’s conformity provisions align with English law?
The CISG’s conformity provisions closely follow the Sale of Goods Act, particularly regarding fitness for purpose and packaging standards. (33.26)
156
Are all remedies under the CISG available for any breach of contract?
No. Certain remedies are available only where there is a "fundamental breach" of contract. (33.27)
157
How does the CISG define a “fundamental breach”?
Under Article 25, a fundamental breach is one that "results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract," unless the breaching party could not foresee, and a reasonable person would not have foreseen, such a result. (33.27)
158
Is the term “breach” defined in the CISG?
No. The CISG does not define "breach", but Article 79 implies it includes any failure to perform, whether excused or not, unlike English law where a breach generally means an unexcused failure. (33.27)
159
What is novel to English lawyers about the CISG’s concept of fundamental breach?
The foreseeability test for determining whether a breach is fundamental is unfamiliar in English law, which focuses more on the nature of the term broken. (33.27)
160
How does the CISG’s “substantial deprivation” test compare with English law?
The CISG focuses on the effect of the breach (i.e., substantial deprivation of expected benefit)
English law, except in the case of innominate terms, tends to treat breach of a statutory implied condition as automatically entitling the buyer to terminate, regardless of the seriousness of the consequences (33.27)
161
What does English law allow under s.15A of the Sale of Goods Act 1979?
Section 15A allows a minor breach of condition not to give rise to a right of termination if the breach is so slight that it would be unreasonable to reject the goods—though this is still more rigid than the consequence-based approach of the CISG. (33.27)
162
Are all remedies under the CISG available regardless of the severity of breach?
No. Some remedies are only available where there is a fundamental breach of contract. (33.28)
163
What are the CISG remedies that require a fundamental breach to be exercised?
The following remedies are restricted to cases of fundamental breach:
(a) The buyer’s right to require substitute goods in place of nonconforming goods
(b) The right of either party to avoid the contract for non-performance by the other
(c) The buyer’s right to avoid the contract for partial delivery (33.28)
164
What does “avoidance” of the contract mean under the CISG?
A3: “Avoidance” refers to terminating the contract and releasing both parties from their unperformed obligations, usually following a fundamental breach. (33.28)
165
Is rejection the same as avoidance under the CISG?
No. Rejection and avoidance are not synonymous. Avoidance terminates the contract, while rejection may simply involve refusing to accept nonconforming goods without ending the contract. (33.29)
166
When is avoidance permitted for nonconforming goods under the CISG?
Avoidance for nonconformity is only allowed if the nonconformity constitutes a fundamental breach. (33.29)
167
Can a buyer reject nonconforming goods and require repair even if the breach is not fundamental?
Yes. The buyer can reject the goods and request repair of the nonconformity regardless of whether the breach is fundamental, unless such a request would be unreasonable in the circumstances. (33.29)
168
When can the buyer demand substitute goods?
The buyer can require the delivery of substitute goods only if the nonconformity amounts to a fundamental breach. (33.29)
169
In what two situations does the CISG give the buyer the right to avoid the contract?
The buyer may avoid the contract:
If the seller commits a fundamental breach, or
If the buyer has fixed an additional time for delivery which the seller fails or refuses to observe. (33.30)
170
How does the second ground for avoidance compare to English law?
It is similar to the English law rule allowing a party to make time of the essence by giving notice. (33.30)
171
Is tender of nonconforming goods automatically a fundamental breach under the CISG?
No. CISG case law shows greater reluctance than English law to treat nonconforming goods as grounds for repudiation, especially if the goods are usable, resalable, or repairable. (33.30)
172
What does Article 39(1) of the CISG require regarding notice of nonconformity?
The buyer loses the right to reject the goods unless they give notice specifying the lack of conformity within a reasonable time after discovering or ought to have discovered it. (33.30)
173
How does Article 39(1) compare to section 35 of the Sale of Goods Act 1979?
Article 39(1) takes a more flexible, contract-law-based approach, while section 35 imposes stricter conditions on rejection under English law. (33.30)
174
What happens if the buyer fails to give timely notice under Article 39(1)?
The buyer may be barred from rejecting the goods and can be required to pay the price, even if the goods were nonconforming. (33.30)
175
Is there an absolute deadline for giving notice under the CISG?
Yes. Article 39(2) imposes an outside limit of two years from the date of physical delivery, regardless of when the buyer discovered the defect. (33.30)
176
What obligation does the buyer have in relation to examining the goods?
The buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances (see Article 38). (33.30)
177
What remedies are available to the buyer if they cannot or choose not to reject the goods?
The buyer may instead claim:
A reduction in the price, and/or
Damages (33.31)
178
How can the price reduction remedy be exercised?
The buyer can:
Withhold the amount representing the reduction when paying, or
Recover the excess amount if the price has already been paid (33.31
179
How is the amount of the price reduction calculated under the CISG?
The price is reduced in the same proportion as:
the value of the goods actually delivered (at the time of delivery) bears to the value the goods would have had if they had conformed to the contract. (33.31)
180
Does the CISG give the seller a right to cure a defective or incomplete delivery?
A1: Yes. The seller has the right to cure a defective or incomplete delivery of goods or documents. (33.32)
181
When can the seller exercise the right to cure?
(1) Before the due date for delivery
(2) After the due date, provided that:
(a) Cure can be effected without unreasonable delay
(b) It causes the buyer no unreasonable inconvenience
(c) It does not create uncertainty of reimbursement for expenses advanced by the buyer (33.32)
182
When is the seller’s right to cure lost?
The right to cure is lost once the buyer exercises the right to avoid the contract. (33.32)
183
When can a party suspend performance of their obligations under the CISG?
A party may suspend performance if, after concluding the contract, it becomes apparent that the other party will not perform a substantial part of their obligations. (33.33)
184
What grounds justify suspending performance?
Suspension is justified if the other party's:
(a) Ability to perform or creditworthiness is seriously deficient, or
(b) Conduct in preparing or performing the contract reveals likely non-performance. (33.33)
185
What remedy is available for a repudiatory breach before the due date?
If a party repudiates the contract before performance is due, the other party has the right to avoid the contract (terminate it). (33.33)
186
Does the CISG use a current-market price rule to assess damages?
Yes, the CISG provides a current-price rule, but it is flexible, allowing it to be displaced by actual losses from a substitute transaction. (33.34)
187
How does the CISG approach differ from the English market-price rule?
The CISG avoids the rigidity of the English rule by prioritizing actual losses from substitute transactions over theoretical market differences, provided the transaction is reasonable. (33.34)
188
What happens when the innocent party enters into a substitute transaction?
The actual loss suffered in the substitute transaction replaces the current-market price loss as the measure of damages (33.34)
189
How are damages calculated for a seller who resells after buyer non-acceptance?
The seller can claim the difference between the original contract price and the lower resale price, assuming the resale was reasonable. (33.34)
190
How are damages calculated for a buyer who covers after seller non-delivery?
The buyer can recover the excess of the substitute purchase price over the original contract price, again assuming the cover purchase was reasonable. (33.34)
191
What determines the passing of risk under the CISG—property or control?
The CISG links risk to control, not to property. Risk passes when the buyer or carrier takes control of the goods under specified conditions. (33.35)
192
When does risk pass to the buyer in a carriage-of-goods contract with no fixed delivery place?
Risk passes to the buyer when the seller hands the goods over to the first carrier for transmission. (33.35)
193
What if the contract specifies a particular place for delivery to the carrier?
In that case, risk passes when the goods are handed over to the carrier at the specified place. (33.35)
194
When does risk pass in sales of goods already in transit?
Risk passes at the moment the contract is concluded, as the goods are already in transit. (33.35)
195
When does risk pass in contracts not involving carriage?
Risk passes to the buyer when the buyer:
Takes over the goods, or
Fails to take delivery on time, in which case risk passes from the moment the goods were placed at the buyer’s disposal and the buyer was in breach. (33.35)
196
What happens if the goods do not conform to the contract at the time of loss or damage?
The buyer may exercise his right to avoid the contract, in which case the risk reverts to the seller. But he may also reject the nonconforming goods. (33.35)
197
Does the passing of risk affect the buyer’s remedies for fundamental breach?
No. Article 70 clarifies that the passing of risk does not prejudice the buyer’s remedies for a fundamental breach by the seller. (33.35)
198
What does Article 79(1) of the CISG provide?
A party is not liable in damages for failure to perform if the failure was due to an impediment beyond their control, and they:
Could not reasonably have foreseen the impediment at contract formation, and
Could not have avoided or overcome it or its consequences. (33.36)
199
Is foreseeability of the event a bar to relying on Article 79?
No. The mere foreseeability of an event is not necessarily a bar. What matters is whether the party could reasonably have been expected to take it into account, and whether its impact was foreseeable. (33.36)
200
What kinds of events qualify as an “impediment” under Article 79?
“Impediment” includes:
Physical obstacles
Supervening legal impediments
It does not include:
Initial illegality, which relates to contract validity and lies outside the CISG’s scope (33.36)
201
Can economic hardship qualify as an impediment under Article 79?
Possibly, but only in exceptional cases. Courts are reluctant to treat mere changes in market conditions as a qualifying impediment. (33.36)
202
Does Article 79 prevent a party from exercising other remedies under the CISG?
No. Article 79 only exempts the party from damages. Other remedies—such as avoidance or fixing additional time for performance—remain available. (33.36)
203
What happens if the impediment causes a fundamental breach?
The other party may:
Avoid the contract under Article 49(1) (if breach is fundamental)
If the issue is delay, the buyer may set an additional period for delivery under Art. 49(1)(b) and avoid the contract if performance is still not made. (33.36)
204
How does this approach differ from English law on frustration?
Under English law, frustration terminates the contract and treats the non-performance as not a breach at all (33.36)
Under the CISG, even excused non-performance under Article 79 is still treated as a breach—but one that does not give rise to damages (33.36)
205
To which legal concept is Article 79 more closely related—English frustration or French force majeure?
Article 79 is more closely related to French force majeure than to English frustration. (33.37)
206
What is the effect of a force majeure event under the CISG (Article 79)?
The effect is suspensory—the obligation to perform is paused, but once the impediment is removed, the duty to perform resumes. (33.37)
207
Does the contract automatically end under Article 79 if performance becomes impossible?
No. Even if the impediment is permanent, the contract does not automatically terminate. The other party must invoke avoidance to end the contract. (33.37)
208
Is specific performance still available in cases where Article 79 applies?
Yes. Since Article 79 only suspends performance and does not terminate the contract, specific performance remains a viable remedy. (33.37)
209
What obligation does the non-performing party have under Article 79?
The party must notify the other party of:
The impediment, and Its effect on performance
This notice must be given within a reasonable time after the party knew or ought to have known of the impediment. (33.37)
210
What happens if the required notice is not given in time?
The non-performing party becomes liable for damages resulting from the other party’s failure to receive timely notice. (33.37)
211
What kind of liability does Article 79 exclude under the CISG?
Article 79 excludes only liability for damages; it does not affect other remedies under the Convention. (33.38)
212
What remedies remain available when Article 79 applies?
The other party may still:
Claim a price reduction under Article 50
Demand specific performance, particularly when the impediment was temporary and has ended (33.38)
213
What controversial judicial development has occurred in relation to supplementing the CISG?
The Belgian Supreme Court held that the Unidroit Principles of International Commercial Contracts may be used to supplement the CISG. (33.38)
214
What was the context of the Belgian Supreme Court’s ruling?
In a case involving a significant increase in the market price of steel, the Court allowed a seller to request renegotiation of the contract—drawing on the Unidroit Principles. (33.38)
215
Why is the use of the Unidroit Principles to supplement the CISG controversial?
Because the CISG does not expressly incorporate or refer to the Unidroit Principles, using them to alter or supplement its provisions raises questions of legitimacy and interpretative consistency. (33.38)
216
Can Article 79 of the CISG be modified or excluded by the parties?
Yes. Article 79 may be varied or excluded by agreement of the parties under the principle of party autonomy. (33.39)
217
How do parties commonly address impediments to performance in their contracts?
Parties often include force majeure clauses in their contracts that define the consequences of specific impediments to performance. (33.39)
218
Does the inclusion of a force majeure clause automatically displace Article 79?
Not necessarily. Whether a force majeure clause displaces Article 79 depends on the interpretation of the clause—i.e., whether the clause was intended to replace or supplement the CISG provision. (33.39)
219
What is the key legal question when both Article 79 and a force majeure clause are present?
The key question is one of contractual construction: did the parties intend the force majeure clause to override Article 79, or does Article 79 still apply alongside it? (33.39)
220
What are the three possible meanings of the term "international commercial law", according to Norbert Horn?
1. A legal regime for sales transactions, e.g. SGA 1979.
2. Commonly accepted rules, e.g. lex mercatoria; Uniform Customs and Practice for Documentary Credits (UCP 600).
3. Formal international law, e.g. the UN Convention on Contracts for the International Sale of Goods (CISG).
221
What principle did the House of Lords set out in Transfield Shipping of Panama v Mercator Shipping of Monrovia (The Achilleas) [2008]?
That liability (damages) for loss of profits under the Hadley v Baxendale second limb depends on an 'assumption of responsibility' as well as foreseeability, promoted by Lords Hoffman and Hope.
222
