CISG: SCOPE AND ANALYSIS

SUBMITTED TO:

Mr. Muhammed Aamir Khan

Faculty- Trade and Investment Law

SUBMITTED BY:
Praharsh Gour
Roll No.- 115
Semester X
Section- A
B.A., LL.B (Hons.)
SUBMITTED ON:
06.04.2018

Hidayatullah National Law University Raipur, Chhattisgarh

 DECLARATION OF ORIGINALITY

I, Praharsh Gour, have undergone research of the project work titled “CISG: Scope and Analysist”,
as a student of Trade and Investment Law. I hereby declare that this Research Project has been
prepared by the student for academic purpose only, and is the outcome of the investigation done
by me and also prepared by myself under the supervision of Mr. Md. Aamir Khan, Faculty of
International Commercial Law, Hidayatullah National Law University, Raipur. The views
expressed in the report are personal to the student and do not reflect the views of any authority or
any other person, and do not bind the statute in any manner.

I also declare that this Research Paper or any part thereof has not been or is not being submitted
elsewhere for the award of any degree or Diploma. This report is the intellectual property of the
on the part of student research work, and the same or any part thereof may not be used in any
manner whatsoever in writing.

Praharsh Gour
Roll. No. 115
Semester X, Section A
 ACKNOWLEDGEMENTS

I feel highly elated to work on the topic ‘CISG: Scope and Analysis’ because it has significant
importance in the current scenario.
I express my deepest regard and gratitude for our Faculty of International Trade and Investment
Law. His consistent supervision, constant inspiration and invaluable guidance have been of
immense help in understanding the importance of the project report.
I would like to thank my family and friends without whose support and encouragement, this project
would not have been a reality.
I take this opportunity to also thank the University and the Vice Chancellor for providing extensive
database resources in the Library and through Internet.
Praharsh Gour
B.A.-L.L.B (Hons.)
 TABLE OF CONTENTS

Declaration of Originality............................................................................................................2

Acknowledgements .....................................................................................................................3

Introduction ................................................................................................................................5

Research Methodology ................................................................................................................6

Nature of Study .......................................................................................................................6
Limitations ..............................................................................................................................6
Review of Literature................................................................................................................6

Application of CISG ...................................................................................................................9

Nature of Transaction ................................................................................................................ 11

Interpretation of CISG ............................................................................................................... 14

Demerits of CISG ..................................................................................................................... 19

Conclusion ................................................................................................................................ 24

Bibliography ............................................................................................................................. 25
 INTRODUCTION

The contract of sale is the backbone of international trade in all countries, irrespective of their legal
tradition or level of economic development. The CISG is therefore considered one of the core
international trade law conventions whose universal adoption is desirable. 1

The CISG is the result of a legislative effort that started at the beginning of the twentieth century.
The resulting text provides a careful balance between the interests of the buyer and of the seller. It
has also inspired contract law reform at the national level. 2

The adoption of the CISG provides modern, uniform legislation for the international sale of goods
that would apply whenever contracts for the sale of goods are concluded between parties with a
place of business in Contracting States. In these cases, the CISG would apply directly, avoiding
recourse to rules of private international law to determine the law applicable to the contract, adding
significantly to the certainty and predictability of international sales contracts. 3

Moreover, the CISG may apply to a contract for international sale of goods when the rules of
private international law point at the law of a Contracting State as the applicable one, or by virtue
of the choice of the contractual parties, regardless of whether their places of business are located
in a Contracting State. In this latter case, the CISG provides a neutral body of rules that can be
easily accepted in light of its transnational nature and of the wide availability of interpretative
materials. 4

Finally, small and medium-sized enterprises as well as traders located in developing countries
typically have reduced access to legal advice when negotiating a contract. Thus, they are more
vulnerable to problems caused by inadequate treatment in the contract of issues relating to
applicable law. The same enterprises and traders may also be the weaker contractual parties and
could have difficulties in ensuring that the contractual balance is kept. Those merchants would

1
http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG.html (Last Accessed
on 3.04.2018)
2
Supra Note 1.
3
Stefan Kroll, Selected Problems concerning the CISG’s Scope of Application,
https://www.uncitral.org/pdf/english/CISG25/Kroll.pdf (Last Accessed on3.04.2018)
4
ibid.
therefore derive particular benefit from the default application of the fair and uniform regime of
the CISG to contracts falling under its scope. 5

RESEARCH METHODOLOGY

This project is largely based on secondary & electronic sources of data. Books, case laws, journals
& other reference as guided by faculty were primarily helpful for the completion of this project.
the research work is a descriptive and analytical study.

OBJECTIVES

 To research on Scope of CISG.

 To analyse the relevance of CISG in International Trade Law.
 To critically analyze relevance of the convention.

NATURE OF STUDY

The methodology adopted for this research paper is Doctrinal method of research. The purpose
of this research is to solve the legal problem with a new output within a short period of time with
less expenses by closely examining and analyzing the legal doctrine, legal framework and case
laws in a logical, systematic and scientific way.
LIMITATIONS

Subjected to vast nature of legal principles discussed and limited time in hand, emphasis has only
been made upon the basics of such arrangements. Also, the author has tried to cover all the related
concepts in brief in order to keep the research adhered to the problem in hand.

REVIEW OF LITERATURE

1. Larry A. Dimatteo, International Sales Law, A Critical Analysis of CISG

Jurisprudence, Cambridge University Press, 2005 (Ist edn. ) – The authors of the books
critically examines the whole structure of the CISG and critically analyses all its parts
including CISG methodology and jurisprudence, formation of contract, Obligation of

5
Supra Note 1.
 buyers and seller and remedies against seller and buyers. It also discusses the results of
breach of obligations by both buyers and sellers. Lastly it has laid sown the summary and
observations of the Author with respect o filling of gaps an development of an international
jurisprudence by CISG.

2. Prof. Jonathan Yovel, The Buyer’s Right to avoid the contract in international sales,
University of Hafia and Yale Law School, 2010 updated version: This Article provides
a detailed analysisof the rights and obligations of both seller and buyers under the
Convention. It also discusses all the remedies available under the Convention to one party
against the other, It has properly cited all the case law relevant to the provisions and
compare those of CISG with PECL.

3. Ingeborg Schwenzer and Pascal Hachem, The CISG: a story of world wide success,
available at:
https://edoc.unibas.ch/45574/1/20110913164502_4e6f6c6e5b746.pdf (Last Accessed
on 25th March, 2018).: This paper focuses on the history and interpretation of the CISG.
It further discusses the problems in implementation of the CISG. It discusses the
incompleteness and invalidity of the Convention. It also criticizes each oof these aspects
and contents of the CISG.

4. Jacob, Zeigel, The scope of Convention, reaching out to Article 1 and beyond,
available at:
https://www.uncitral.org/pdf/english/CISG25/Ziegel.pdf (Last accessed on 25th
,March, 2018). This Article provides an analysis of the principal components of Article 1
of the Convention on Contracts for the International Sale of Goods (CISG),1 with particular
emphasis on some of the ongoing challenges. Part B of the Article asks why there are so
few reported CISG cases in common law jurisdictions and why, in those jurisdictions, the
Convention provisions are often inadequately discussed, or ignored altogether, in the cases
where the Convention is relevant.
5. Clayton P. Gillett, The CISG, History, methodology and interpretation, Cambridge
University Press, 2016: It provides a detailed analysis of the process through which the
CISG came into being. It also discusses the methodology of law which has been established
by the CISG. It discusses the interpretation of the CISG and elaborates upon its gap-filling
function by the use of the good faith principles.
 APPLICATION OF CISG

The 1980 UN Convention on Contracts for the International Sale of Goods (CISG) is in force for
more than 30 years. It is constantly gaining more success as more countries choose to ratify it. It
is now in force in 78 countries, whose trade activity accounts for over two thirds of all world trade.
The goal of uniformity is presented in the preamble, where it is evident that the drafters intended
the Convention to be an adoption of uniform rules governing contracts for the international sale of
goods in the interest of removing legal barriers in international trade and promoting the
development of international trade.6

The different legal systems, cultural ethos, political ideologies, economic approaches and so on
have come in the way of unification of international trade. It would be safe to assume that the
uniformity of the CISG requires little variation in international practice, and for the provisions of
the Convention to be applied similarly, if not identically, throughout the signatory States. Scholars
and practitioners agree that this provision imparts a duty on the CISG practitioner to look to
standards of international practice in the interpretation or determination of the provisions of the
Convention. 7

The international nature of the CISG is demonstrated by the fact that its jurisdiction is transaction
– centered rather than party – centered. Thus, a transaction crossing national borders is the linchpin
of CISG jurisdiction instead of the nationality of the parties concerned. The presence of two sales
law within a single legal system certainly produces conflict of interest. The differences also create
a conceptual dissonance and differences in the formal legal rules. The nationality of the party, the
place of incorporation of a party and the place of its headquarters do not matter since Article 10
states that the nationality of the parties is not to be taken into consideration in determining the
applicability of the CISG. 8

The Articles 1-6 of the CISG enumerate the sphere of application of the provisions the Convention
which combines applicability on the basis of autonomous requirements. Article 1 states: This

6
Enderlein, Fritz and Dietrich Maskow (1992) International Sales Law.
7
Honnold, J (1991) Uniform Law for International Sales under the 1980 United Nations
Convention (Second Edition) Deventer, Boston: Kluwer, p.76.
8
Supra note 6.
Convention applies to contracts of sale of goods between parties whose places of business are in
different states: a. When the States are Contracting States; or b. When the rules of private
international law lead to the application of the law of a Contracting State. Article 1(2) provides
that the fact that parties have their places of business in different states is to be disregarded
whenever this fact does not appear from either the contract or from any dealings between or from,
information disclosed by the parties at any time before or at the conclusion of the contract. The
effect of this is that a party in the usual case must become a willing party to an international contract
for the convention to apply.186 Article 1(3) states that neither the nationality of the parties nor the
civil or commercial character of the parties or of the contract is to be taken into consideration in
determining the application of convention. The international element of business is revealed in the
fact that the parties have their places of business in different countries in a realistic situation. In
fact the Contracting States are bound to apply the Convention, even in relation to non-Contracting
States which are not bound to do the same. 9

The Convention also provides that the application of the CISG does not depend on whether the
parties are considered civil or commercial. The Convention thereby avoids the intricate problem
of defining a commercial party. It is also irrelevant whether the sales contract is commercial or
private in character. The nationality of the parties is insignificant. Thus, in certain circumstances,
a contract between two Germans would be controlled by the Convention, such as if one of the
parties has his place of business - or, alternatively, his habitual residence - in France and this fact
was known to the other party.10

Article 4 specifies the ambit of the substantive legal issues covered by it, and propounds a non-
exhaustive list of matters not covered by it. The convention governs only the formation of the
contract of sale and the rights and obligations of the seller and buyer arising from such a contract.
But, it is concerned with – a) the validity of the contract or any of its provisions or of any usage
and b) the effect which the contract may have on the property in the goods sold. It reveals that

9
Maskow, D (1987) Obligations of the Buyer, in Binaca, C and Bonnel, M (eds) Commentary on
the International Sales Law – the 1980 Vienna Sales Convention, Milan: Guiffre, pp.386-87.
10
Ibid.
many rules of the domestic law of a particular forum may apply to a contract’s dispute which is
otherwise covered by the convention. 11

The Article 4, like ULIS Article 8, limits the Convention's sphere of application to the rules on
formation of contract and the rights and obligations of the seller and the buyer arising from it.
Article 5 states that the convention does not apply to the liability of the seller for death or personal
injury caused by the goods to any person. These matters are best regulated by the domestic laws.

The scholars have noted the existence of some structural and practical differences in regard to the
interpretation and application of the CISG. Practically it is not possible to ensure that all regions
and modernizations of law adopt the CISG since it contains highly general and open-ended terms
which have created uncertainty. The CISG needs to have a case history to support interpretation
of terms and facilitate application of various provisions in a changing economic environment
Nuances of CISG

To trigger the Convention it must be shown that the transaction involves (1) a contract, (2) of sale,
(3) of goods, (4) between parties (i) who are located in different Convention states, or (ii) where
the rules of private international law governing the contract lead to a Convention state. Of these
prerequisites, it is probably a fair assessment that requirement 4 is the one most litigated in practice.

NATURE OF TRANSACTION
Contract of Sale

Neither “contract” nor “sale” has been defined in CISG. However, the basic tenants of a contract
i.e. offer and acceptance—are ubiquitous to modern legal systems and are appropriately mentioned
in Part II of the instant Convention. 12 The term in itself, acts as a prerequisite to the application of
the CISG and does not seem to have incepted any significant complexities. The meaning of the
term “sale” is more troublesome, thereby generates problems. The term hasn’t been defined in the
CISG. According to available information, sale involves around a transfer of title in goods from a
seller to a buyer thereby serves the whole purpose of the transaction i.e. is to provide the buyer

11
Zeller, Bruno (2007) CISG and the Unification of International Trade Law, Routledge-Cavendish, Abingdon,
Oxon.
12
CISG arts. 14-24.
with goods that he is free to use, consume or resell as his own.13 There is also some varied opinion
regarding whether a barter agreement can under any circumstances qualify as a sale given that
“price” is not defined in the CISG. The characterization of distribution and franchising agreements
also appears to be a source of some confusion. 14 In light of which the correct position appears to
be that if the agreement merely entitles the distributor to order goods from the other party there is
no sale agreement unless and until the distributor or franchisee actually places an order.15

Goods and Merchandises

The bone of contention here is whether a sale of computer “software” will qualify as a sale of
goods? The sale of a computer chip has been held to be a sale of goods16 whereas, not surprisingly,
a contract for the preparation of a research marketing report has not.17

Parties to the contract

This too is an undefined term. However, Article 1(3) CISG prescribes that the nationality of the
parties or their civil or commercial character is irrelevant. 18

Location of the parties

Determining the correct location of the parties is an undying issue, since Article 1(1)(a) will not
be triggered unless both parties had their places of business in different Convention states at the
material time and the location was known by or disclosed to the other party prior to the contract.19

13
CISG arts. 41-42.
14
. Cf. HONNOLD, supra note 5, § 56.2.
15
See Viva Vino Import Corp. v. Farnese Vini S.r.l., No. CIV.A. 99-6384, 2000 WL 1224903, *1 (E.D. Pa. Aug. 29,
2000); CLOUT Case No. 379 [Corte Suprema di Cassazione, Italy, 14 Dec. 1999] (Imperial Bathroom Co. v.
Sanitari Pozzi S.p.a.), published in GIUSTIZIA CIVILE 2333-334 (2000), available at
http://www.unilex.info/case.cfm?pid=1&do=case&id=390&step=FullText (Italian), English translation available at
http://cisgw3.law.p Zeller, Bruno (2007) CISG and the Unification of International Trade Law,
Routledge-Cavendish, Abingdon, Oxon.
ace.edu/cases/991214i3.html. (Last Accessed at 26th March, 2018)
16
CLOUT Case No. 131 [Landgericht München, Germany, 8 Feb. 1995], available at
http://www.unilex.info/case.cfm?pid=1&do=case&id=225&step=FullText (German), English translation available
at http://cisgw3.law.pace.edu/cases/950208g4.html. (Last accessed on 25th March, 2018).
17
CLOUT Case No. 122 [Oberlandesgericht Köln, Germany, 26 Aug. 1994], available at
http://www.unilex.info/case.cfm?pid=1&do=case&id=66&step=FullText (German), English translation available at
http://cisgw3.law.pace.edu/cases/940826g1.html
18
CISG. Art. 1.
19
See Impuls I.D. Internacional, S.L. v. Psion-Teklogix, Inc., 234 F. Supp. 2d 1267 (S.D. Fla. 2002), available at
http://cisgw3.law.pace.edu/cases/021122ul.html.
Article 10 clarifies the position where a party has more than one place of business but difficulties
may still arise in complex corporate structures where several divisions of a group may be involved
in the negotiation or performance of a contract.20 Finally, difficulties may arise in satisfying the
Article 1(1) requirements in multipartite contracts where some of the parties are located in different
contracting states and others are located in non-convention states. 21

Goods Excluded
The kinds of property sold. The Convention does not apply to:

 sales "of electricity" (Art. 2(f)) 22

 sales "of stocks, shares, investment securities, negotiable instruments or money" (Art.
2(d));
 sales "of ships, vessels, hovercraft or aircraft" (Art. 2(e))

Parties who supply parts to manufacturers of ships, vessels, hovercraft or aircraft may have
a question as to the applicability of the Convention to such items. Because Article 2(e) does
not define these terms, Kantor states:

"It is therefore not clear whether sales of engines, propellers, spare parts and other
separately manufactured items are excluded from the scope of the Convention by operation
of this Article. Aircraft engine sales provide an example of the issues which may arise, as
engines are manufacture by different companies from the airframe manufacturer and may
be attached to the airframe by the airframe manufacturer or the aircraft user. By way of
comparison, the Geneva Convention on the International Recognition of Rights in Aircraft
specifically includes in its definition of 'aircraft' such items as 'engines, propellers, radio

20
Cf. Asante Technologies Inc. v. PMC-Sierra, Inc., 164 F. Supp. 2d 1142 (N.D. Cal. 2001).
21
Id.
22
"Such sales are excluded because they are governed by special and mostly mandatory rules in numerous countries."
Enderlein & Maskow, supra note 2 at 35. The phrase "otherwise by authority of law" does not include a "sale without
any intervention of the court in pursuance of a security document giving power to one party to sell in the event of
default." Warren L.H. Khoo, in: Bianca/Bonell eds., "Commentary" (Milan: Giuffre 1987) 38. Nor does this phrase
encompass the situation in which "the buyer fails to pay for the goods [and] the seller may be empowered to 'avoid'
the contract and resell the goods. Similar rights may be given to the buyer when the seller delivers seriously defective
goods (Arts. 49, 64, 75, 81, 88). Such resales by a party to the contract, even though authorized by the Convention,
are not excluded from the Convention as sales '(c) on execution or otherwise by authority of law.' The same principles
apply when a secured party on default by the debtor resells the collateral at a private sale rather than by auction. . . ."
Honnold, Uniform Sales.
 apparatus and all other articles intended for use in the aircraft whether installed therein or
temporarily separated therefrom'".

McMahon states:

"[The exclusion of separately manufactured items may apply] when the sale of such items
is a non-separable element of, or incidental to the sale of a vessel [or aircraft], but there is
nothing in the CISG which indicates that sales of such items unrelated to the sale of a vessel
[or aircraft] are excluded".23

INTERPRETATION OF CISG

The adoption of the principles and practices of CISG would go a long way in promoting fair and
mutually beneficial commercial relations. It is a matter of judgment and disputed opinion to
attempt to describe the fundamental principles underlying a particular legal regime. Unification of
the law relating to the international sale of goods assumes great significance in the present times.
Scholars have pointed out that there is a strong convergence between CISG and arbitral norms.
Studies have revealed additional interpretation challenges through the mismatch between common
law drafting norms and CISG principles which deal with substantive rights and obligations in any
international sales contract. The member states are required to ensure consistent and constructive
approaches to successful acceptance and application of international uniform law instruments. The
uniform interpretation of laws becomes the most decisive factor to achieve uniformity and prevent
conflict of interest. The CISG should not be read like a normal domestic statue but interpretation
of the convention requires a more holistic approach.

In reality, the principles which are not part of the CISG cannot be used as tools of interpretation.
Besides this, the provisions of CISG consist of improved versions when compared to the previous
conventions and treaties which dealt with international sale of goods. Hence, Article 7 of the CISG
primarily addresses the special features and goals of the CISG even though it does not specify the
methods of interpretation. Article 7(1) states: “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

23
Supra Note 16.
the observance of good faith in international trade”. Article 7(2) states: “Questions concerning
matters governed by this Convention which are not expressly settled in it are to be settled in
conformity with the general principles on which it is based or, in the absence of such principles,
in conformity with the law applicable by virtue of the rules of private international law”.

Experts have said that “From the outset it was argued that the application of Article 7(1) could be
unpredictable because it was inevitably vague and as a consequence, would have been open to
surprising result. On the other hand, it was also stressed that a considerable merit of the paragraph
would lay in the fact that it proclaimed an up-to-date legal policy in harmony with the exigencies
of world trade which postulated that no recourse to national law should be admitted in
interpretation”. 24

The interpretation of the unified law texts have to be guided by the maxim of good faith. It is clear
that no specific national good faith concept can be applied but only one which fits into the context
of international trade relations. The parties shall act in accordance with the maxim since the
convention intends to secure those sales contracts between parties from different countries are
governed by the principle of good faith. Thus, the principle can help to clarify the actual object of
the good faith principle contained in the CISG. Schlerctriem and Schwenzer (2005) has pointed
out that interpretation of the CISG is autonomous and should promote uniformity and good faith
in international trade. It also contains its own rules for necessary gap-filling. 25

Civil law and common law authorities traditionally had their own way of interpretation which was
different from each other.26 Since the nature of CISG is particular so there is a need for a different
approach. The interpretation of CISG should be independently, according to its international
character and the effective significance of foreign decisions to secure uniform interpretation and
application of it.27

24
Komarov, Alexander S (2005) Internationality, Uniformity and Observance of Good Faith as Criteria in
Interpretation of CISG: Some Remarks on Article 7(1), U.Pitt.J.L and Comm, 25(1):75-76.
25
Schlerctriem, Peter and Ingeborg Schwenzer (2005) Commentary on the UN Convention on the International Sale
of Goods, Article 7.
26
In this field see Bashiri, Akbar, & Prof. C.B.Raju, 2011, Comparative Study of Good Faith in Un Convention on
Contracts for the International Sale of Goods(1980), Civil Law and Common Law, Asian Journal of Development
Maters, Vol.5, No.3, 348.
27
Ibid at p. 351.
The good faith principle also demands fair negotiations with a clear view to reach agreement even
though the CISG does not govern the pre-contractual phase. The formation and modification of
contract need no form in order to be valid. The provisions also deal with the questions of material
validity of contracts. But the contract interpretation must be guided by good faith and fair dealing.
The CISG clearly states that the seller is obliged to supply goods which are fit for a particular
purpose indicated to the seller. But the seller does not attract any punishment for breach of
obligation if he delivers goods which are in tune with the buyer’s wishes.

Each party shall cooperate with the other party when such cooperation may reasonably expect for
the performance of that party’s obligations. The principle of good faith states that neither party
must hinder the performance through the other nor otherwise militate against contractual purpose.
Accordingly, the party may not rely on the non performance of the other party to the extent that
such non performance was caused by the first party’s act or omission. An aggrieved party cannot
claim damages for losses which he/she could have avoided. The aggrieved party should not profit
from own omissions. Thus, the principle of good faith plays an important role in the international
contracts and it should be applied for the purpose of interpreting the terms of the CISG in the light
of its overriding goals of uniformity and autonomous interpretation.

Article 8 of the CISG lays down the methodology for interpreting an international sales contract.
It states that for the purpose of this convention statements made by and other conduct of a party
are to be interpreted according to his intent where the other party knew or could not have been
unaware what that intent was. Article 8 applies to conduct as well as statements. The leading
principle under the CISG is that interpretation must follow the intent of the party. Interpretation is
the ascertainment of meaning which the document would convey to a reasonable person having all
the background knowledge which would reasonably have been available to the party in the
situation in which they were at the time of the contract.

Article 8 deals with the principles to be applied in determining the intention of the parties and
related matters. A specific provision of the CISG has been devoted to the interpretation of the
parties' intention. Both subjective and objective standards have been harmonized in CISG.28

28
Bashiri, Akbar, & Dr. C.B.Raju, (2012), Contractual Intention of Parties under United Nations Convention on
Contracts for the International Sale of Goods, 1980 (Cisg), and Iranian Civil Code. The Bangalore Law Journal, Vol
4, No 1, 125.
Article 8 (1) approves a subjective approach to the question – statements made by, and other
conduct of, a party or to be interpreted according to intent where other party knew are could not
have been unaware what that intent was. Article 8 (2) specified a reasonable person of the same
kind and deals with cases where the above provision is not applicable. But the statements should
be interpreted according to the understanding that a reasonable person of the same kind as the other
party would have had in the same circumstances. Article 8(3) defines what data may be revealed
in determining the issues concerning the intent with due consideration of all relevant circumstances
of the case including negotiations.29

Article 9 (1) states that the parties are bound by any usage to which they have agreed and by any
practice which they have established between themselves. This is in accordance with the common
law principle whereby terms may be implied into a contract by reference to their prior course of
dealing. Article 9(2) establishes a rebuttable presumption that the parties have impliedly made
applicable to their contract of its formation a usage of which they knew or ought to have known
reasonably. The parties are free to agree upon a trade usage or analogous standardized practice in
trade. The term ‘usage’ is of more general application and it does not spring merely from the
interaction between two parties to a contract. Usually, the usage grows up because everybody in
the market knowing the usages tacitly assumes that the contract he is making, whether as a buyer
or seller, is subject to the usage. The binding character of a usage is born of innumerable individual
transactions entered into by the parties to them in the knowledge that certain usages are in practice
habitually followed in that market. Although the terms usage and custom are often used
interchangeably, they are in law distinct. Usage differs from custom properly so called in that,
whereas custom takes the place of the common law for certain purposes in the locality where it
operates.30

CISG makes a clear distinction between usages and practices. When referring to usages, the
Convention intends to deal with a broad concept that embraces at least those business conducts
that are routinely adopted by a certain group or category of business players, taken as a whole. On
the other hand, the concept of practices is narrower and by its nature relates to certain behaviors

29
Ibid at p. 124
30
Ibid.
established among the same parties involved in specific series of transactions through repeated
courses of dealings. 31

Article 13 establishes a clear presumption that for the purposes of the convention, writing
practically includes telegram and teletext. Electronic mail, Internet, telefax and other modes of
communication can be used in international business transactions. After the convention, a number
of other means of communication have started to play an important role in international business
transactions. In reality, modern means of communication can be considered to fulfill writing
requirements for the purpose of CISG since they are clearly within the scope of the convention.
The main purpose of a writing requirement under the CISG identified by some commentators is to
establish the content of a declaration and to permit the identification of its author.

Honnold (1991) argues: “Article7 of the Sales Convention embodies mutual obligations of the
Contracting States as to how their tribunals will construe the Convention. Hence the Vienna
Convention would be pertinent to a question concerning the construction of article 7, but the
Vienna Convention would not govern the interpretation of the articles dealing with the obligations
of the parties to the sales contract, for these articles are to be construed according to the principles
of article 7”.32 The scholar has identified to different tasks namely – the interpretation and
application of article 7 which deals with the obligations of the parties to the sales contract. The
CISG has no well defined and designed tools and methodologies respectively in order to interpret
the provisions of the article concerned. Hence, the task of interpretation should be left to the VCLT
or to the rules of customary public international rules. This limitation could be overcome if article
7 becomes clear and unambiguous in letter and spirit.

The CISG demands first assent to the language and values of the text itself and then use of language
and values to inform their relations with one another.170 Hence, CISG has unique values when
compared to other conventions and treaties. It demands precise and uniform interpretation
irrespective of the cultural or legal background of people who make use of the provisions. A

31
Leonardo Graffi, (2011), Remarks on Trade Usages and Business Practices in International Sales Law, University
of Belgrade, Belgrade Law Review, Year LIX (2011) no. 3, 105
32
Honnold, J (1991) Uniform Sales for International Sales, p.159.
generic interpretative tool cannot be superior or replace an interpretative instrument specifically
designed to serve a rhetorical community through the use of principles.

It is now universally recognized that in the interest of uniformity national courts must construe
conventions on broad principles of general acceptance. Such broad principles could be termed
valid customary international law if a uniform understanding as to the custom could be established.
But the evidence of usage should be international in nature in order to term the custom
international. In reality, an international customary law actually demands both intra - state
compliance and inter - state recognition. Article 31 indicates that an ordinary meaning has to be
given to the terms of a treaty in their context and in the light of its object and purpose, notes
WTO.33

The judicial authorities are required to apply the ordinary meaning rather than cultural meaning of
the terms of a treaty. Broadly speaking, the object and purpose of a treaty must be viewed in context
in order to arrive at its correct construction.

DEMERITS OF CISG
Lack of In-Depth Analysis34

A look at the Case Laws reveals that there is an abundant number of cases where reference is
made to Article 4. Most of these decisions, however, mention Article 4 only in passing. An in-
depth analysis of the provision and the notions or concepts used is generally lacking. It is widely
accepted that, in accordance with Article 7(1) CISG, the notions should be interpreted
autonomously.5 However, only in very few cases have the courts actually tried to give such an
autonomous interpretation of any of the three central notions of Article 4 “formation of the
contract,” “rights and obligations of the seller and buyer” or “validity.” One exception with
reference to the notion of “validity” is the U.S. District Court for the Southern District of New
York’s decision in Geneva Pharmaceuticals Tech. v. Barr Lab. 6 It held that by validity the “CISG
refers to any issue by which the domestic law would render the contract void, voidable, or

33
WTO Panel Report (2000) WT/DS160/R, June 15, 2000, United States the Section 110 of the US Copyright Act.
34
Stefen Kroll, Selected Problems Concerning The CISG’s Scope Of Application,
https://www.uncitral.org/pdf/english/CISG25/Ziegel.pdf (Last Accessed on 4.4.2018)
enforceable.” In light of this definition the court considered that the issue of the need for
consideration is governed by the applicable national law. The decision is an example of the
proposition that even an autonomous interpretation of the notions used in Article 4 may not suffice
to guaranty a uniform application of the CISG. If the issue of qualification of certain legal concepts
is left to the national law it will, in the end, be the national law which determines the scope of
application of the CISG.7 Consequently the qualification of national legal institutes should also be
governed by the principles set out in Article 7(1) CISG.

Lack of Distinction Between Article 4 and the Second Alternative of Article 7(2)35

Another problem in analysing the case law is that where courts do resort to national law, they
rarely explain clearly their reason for doing so. National law may be applicable by virtue of Article
4, where the matter is outside the scope of the CISG, or by virtue of the second alternative of
Article 7(2), in regard to matters “governed by this Convention which are not expressly settled in
it. . . .” Consequently, applying national law on the basis of Article 7(2) implies that the court
considered the matter as such to be governed by the CISG but could find neither an express nor
implied regulation for a particular question.8 While the final result, the application of a national
law, may be the same under these two provisions, the underlying legal reasoning is different. In
the case of Article 7(2) CISG, even if a question is not explicitly regulated, before resorting to the
application of a national law, a court first has to search for an answer to the question on the basis
of the general principles underlying the CISG according to the first alternative of Article 7(2). In
practice, the exclusion of a certain matter from the scope of the Convention is often deduced from
the lack of an explicit regulation for a particular question. While there may be a strong indication
for such a conclusion, it is not compelling. In relation to the lack of regulation, the CISG
distinguishes between a matter falling outside the CISG in the sense of Article 4 and a question
not regulated by the CISG and its underlying principles in the sense of Article 7.

Exclusion by Contracting Parties

Another well established criticism against the CISG is that parties often excludes it. A survey by
Koehler shows that 70.8%of parties in the United States of America, 72.2% of contracting parties

35
Ibid.
in Germany exclude the applicability of the CISG. In a wider survey carried out at the Netherlands,
smaller Dutch companies and infact government owned corporations exclude the applicability of
the CISG. The usual (although feeble) arguments given for the exclusion of the CISG are that, in
case parties are aware of the substantive rules of the CISG, they fear that it leaves too much room
for varying interpretations and again, when the content is unknown to the parties, they are reluctant
to invest the time. It is often surprising that this exclusion is most times perceived as a problem in
the academic side of the CISG. It is to be noted that the CISG as a special convention is that it
creates a uniform regime and does not mean or suffice to replace existing national laws or guides
on the formation of contact in relation to sale of goods. It only serves to add extra option for parties
to feel safer and assurred since it is universal and creates uniformity. It is important not to confuse
the need for uniformity with interest of parties or the wish to promote international trade.

Uniform Interpretation

One major criticism against the CISG is that of uniform interpretation of the CISG, the CISG is
blamed for its lack of precision and vagueness such as usage of terms like “reasonable” and for
the usage of general clauses . According to the postulation of Koji Takahashi (2003) “ the CISG
rules do not provide a high degree of legal certainty and predictability, in as much as they rely
upon ambiguous concepts such as “fundamental breach” and “reasonable length”. This allows for
vagueness and uncertainty, leaving loophole for parties to exploit and use if allowed to their
advantage against the adverse party in the agreement. While it has been the position of common
law attorneys who are extremely accustomed to common law background and accustomed to
extremely detailed statutes, the delicate relationship of the Judiciary and the Lawyers having
transcend into different views and interpretation supremacy leading to extensive and different
catalogues of definitions for the vague and imprecise words of the CISG . And it is a well
established fact that the CISG does not correspond to the common law system but has instead been
greatly inspired by continental civil codes. Again, unlike the European communities or the partly
African OHADA, the CISG member states have no common or overseeing supreme court guiding
the interpretations of the uniform or harmonized CISG although it has been said that there is now
a common ground to safeguard the uniformity of the CISG and that is the fact that it is now a
common ground that the CISG is to be interpreted autonomously and regard is to be given to its
international character.
Incompleteness of The CISG

Another criticism plaguing the CISG relates to the incompleteness of the convention. Article 4
states that the scope of the CISG encompasses the formation of contracts and the rights and
obligations. The CISG is however not concerned with the validity of the contract or of any of its
provisions. While some authors have stated that “Validity” as a team is unclear this has led to wide
range of inconsistent application and definitions across jurisdictions, for example, it is clear that a
contract relating to nonexistent goods is valid not minding the otherwise stated position of the
domestic law. This is because the CISG provide for the risk of loss in cases where at the time of
concluding the agreement, the goods (which is the object) of the agreement had already been lost
or damaged, for instance, in oil contracts, probably while trying to ship in the product, the ship
capsize or ran aground, leading to the complete loss of the oil and unsalvageable. The same holds
true for the sale of goods that the seller does not own at the time of the conclusion of the contract
. Likewise errors in expression that are only recognized as relevant in a few legal systems does not
qualify as a matter of validity to be resolved by domestic law but from the general principles of
the CISG. It can be drawn that where the party that is to receive a declaration was aware or could
not have been unaware of the real intent of the party making the declaration as seen in article 8 (1)
of the CISG, it is important to state that the receiving party bears the risk that the declaration has
not been expressed the proper way. This some holds where a reasonable third party in the mold of
a receiving party would have recognized the real intention of the party that made the declaration.
Conclusively, under the CISG, the risk of error of transmission of a declaration has to be borne
solely by the receiving party. It is important to state that a special defect of the CISG needs to be
addressed and that has to do with the validity of general conditions or Standard Business Terms,
it is crystal clear that incorporation of standard terms is regulated solely by the provisions of the
CISG on the formation of contract this concerns basically issues that have to do with accessibility,
language, transparency, battle of forms as well as interpretation. However, sadly, in light of the
provision of the clear wordings of article 4 of the CISG, the substantive validity of clauses has to
be determined by otherwise applicable domestic law.

Hardship
Several authors have complained about the hardship created by the absence of rules pertaining to
a severe change of circumstances and the lack of an express provision on Hardship . It is important
to stress that academics in area of international law have pointed out other uniform projects or
domestic laws which have introduced such provision to regard to hardships and as such, authors
have criticized the CISG for lacking such provision and thus advocate the applicability of the
remedies laid down in these various rules to matters or cases arising out of the CISG. Authors and
practitioners emphasize particularly the duty to renegotiate and the possibility that a court may
adjust the contractual obligation to the changed circumstances.

Content

Another criticism that has been advanced against the CISG is that the content or positions therein
are seller friendly. Again some commentators argue that the positions therein are buyer friendly.
Again, it is still argued that the CISG conflicts with international practice and widely used trade
terms and widely contested is the suitability of the CISG to govern commodity trade. The argument
in support that the convention is seller friendly is basically based on the obligation of the buyer to
examine the goods and give notice of non- conformity . At the Vienna conference, this position
was supported by countries whose legal systems did not provides for any notice requirements but
it merits emphasis to stress that interpretation of Articles 38 and 39 CISG invalidates such
criticism.
 CONCLUSION

The Convention for International Sale of Goods also known as the Vienna Convention has gained
worldwide acceptance and as it stands today, 72 states have ratified it; nine out of ten leading trade
nations being member states it has been estimated that about seventy to eighty percent of all
international sales transactions are governed by the CISG. It has been described as a world wide
success and applauded by many as the greatest international sale agreement guide. Infact, countries
like England that have failed to ratify the CISG have referred to it in various articles and court
decisions. Despite few criticisms and loopholes, the convention has faced the test of time. The
uniformity standard which the convention sets to achieve although somehow violated by exclusion
clauses of the CISG has not been utterly defeated as well as it is well established that the
convention seeks to establish uniformity for the formation of international sales contract and save
parties of unforeseeable crisis arising out of conflict of laws. This thesis explicitly speaks about
the traditional offer and acceptance. While the failure of some countries to ratify the convention
cannot be overlooked, it must be stated that it has not frustrated the global acceptance of the
convention as many countries as of today are considering or even working on ratifying the CISG.
All in all, the story of the CISG has been one of worldwide success. Criticism that has been put
forward can largely be either rejected as unfounded or met by a correct interpretation of the
convention. The success of the CISG shows that pursing the unification of laws is the right was to
help international transactions and agreements reach a friendly and profitable height.

It is recommended that for the CISG to establish an implementation or monitoring

council/committee like the economic and social council that monitors the implementation of the
economic, social and cultural rights, such as committee will again serve as a body of review and
make necessary interpretations that can serve a persuasive purpose and also send Repporteurs to
sell the goal of the convention to non-member states. It is also recommended that a special arbitral
tribunal that serves solely the purpose of adjudicating on matters that arise out of the convention
should be established, this will allow for a uniformity in interpretation of the Articles of the CISG
and save the convention from different pronouncements on the same subject matter.
 BIBLIOGRAPHY

BOOKS
 Larry A. Dimatteo, International Sales Law, A Critical Analysis of CISG Jurisprudence,
Cambridge University Press, 2005 (Ist edn. )

ARTICLES
 Prof. Jonathan Yovel, The Buyer’s Right to avoid the contract in international sales,

University of Hafia and Yale Law School, 2010 updated version

 Ingeborg Schwenzer and Pascal Hachem, The CISG: a story of world wide success,
available at:
https://edoc.unibas.ch/45574/1/20110913164502_4e6f6c6e5b746.pdf (Last Accessed on
25th March, 2018).
 Jacob, Zeigel, The scope of Convention, reaching out to Article 1 and beyond, available
at:
https://www.uncitral.org/pdf/english/CISG25/Ziegel.pdf (Last accessed on 25th ,March,
2018).
 Clayton P. Gillett, The CISG, History, methodology and interpretation, Cambridge
University Press, 2016

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 https://www.ladissertation.com/Divers/Divers/Basic-Rights-And-Obligations-Of-The-
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 http://www.albayrakhukuk.com/images/albayrak/makale/cisg.pdf

 https://edoc.unibas.ch/45574/1/20110913164502_4e6f6c6e5b746.pdf

 https://www.uncitral.org/pdf/english/CISG25/Ziegel.pdf

 https://www.cisg.law.pace.edu/cisg/text/treaty.html

 https://www.cambridge.org/core/services/aop-cambridge-
core/content/view/9F8D1CA654AE6172883A71500FF4F657/9781316570364c1_p1-
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 http://lauda.ulapland.fi/bitstream/handle/10024/60403/Sepp%E4l%E4.Sampsa.pdf;jsessio
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