The Structure of the Convention

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The Structure and the Application of the CISG

The Structure of the Convention

The CISG is divided into four parts. Part I describe the sphere of application and state the general provisions of the convention.24 Part II regulate the formation of the contract and part III cover the rights and obligations of the contracting parts.25 The last part of the CISG, Part IV, regulate how and when the Convention come into force, which kind of res-ervations and declarations that are permitted by the adopting states, and how states may denounce the Convention.26 Part IV, along with the Preamble, is addressed primarily to the signatory states and not to businesses attempting to use the CISG for international trade. The Part may, however, have an impact upon the CISG’s applicability to a given sales con-tract, thus required be taken into account when determining each particular case. The pro-visions in Part IV should therefore not be ignored because of their location in the last part of the convention since some of the provisions address matters which can be attributable to other parts of the Convention. 27

The Sphere of Application

The CISG applies in two alternative cases. Firstly, the CISG applies to contracts of sale of goods between businesses located in different signatory states.28 Secondly, the CISG applies if the rules of private international law lead to the application of the law of a state that has signed the CISG.29 The CISG is, however, optional and the contracting parties may exclude the application of the CISG in their contract or derogate from or vary the effect of any of its provisions.30
Moreover, the CISG is only applicable regarding contract on sale of goods. However, the convention defines neither “sale” nor “goods” nor “contract of sale of goods”. Although, certain types of sale as well as certain types of property are explicitly excluded. Consumer sales, auction- and compulsory sales are all expressly excluded from the CISG’s sphere of application. Additionally, securities, ships and aircrafts and electricity also fall outside the scope of the Convention.31 The CISG governs the formation of the contract and the rights and obligations of the seller and the buyer arising from the contract. Thus the CISG do neither regulate the validity of the contract or of any of its provisions, nor the effect that the contract may have on the property in the goods sold.32
The CISG states that the interpretation of the Convention should be done in the light of the Conventions international character and that consideration should be given to the need to promote a uniform application of the CISG and to the observance of good faith in in-ternational trade.33 This provision is to certify a unanimous interpretation of the CISG and to induce the courts to escape the trap of a ‘homeward tendency’ in interpretation.34 The meaning of ‘the need to promote the observance of good faith’ is, however, something of a mystery. It is unclear if the statement is an expression for a legal principle to be incorpo-rated in the contract between the parties, meaning that the parties’ rights and duties are subject to good faith, or if it is to be seen as a mere moral principle.35 Questions concerning matters governed by the CISG but not expressly settled in the convention are to be settled in conformity with the general principles upon which the CISG is based or, in the absence of such principles, in conformity with the law applicable according to the rules of private international law.36

Formation of the Contract

According to the CISG, a contract is formed the moment when the offeree accept the offer made by the offeror.37 A proposal for concluding a contract is considered to be an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is considered to be sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provisions for determining the quantity and the price of the goods to be sold.38 Until a contract is concluded an offer may be revoked if the rev-ocation reaches the offeree before he has dispatched an acceptance. An offer cannot, how-ever, be revoked if it is reasonable for the offeree to rely on the offer as being irrevocable or if the offer indicates that it is irrevocable by stating a fixed time for acceptance or oth-erwise implies that it is irrevocable.39
The offeree makes an acceptance by a statement or other conduct, indicating assent to the offer. Silence or inactivity by the offeree may never in itself be considered as acceptance. If by virtue of the offer or as a result of practices, which the parties have established between themselves, the offeree may indicate assent by performing an act. An acceptance is effec-tive when the indication of assent reaches the offeror within a reasonable time or within the time the offeror has fixed, or at the moment the act is performed. An oral offer must, however, be accepted immediately in order to be effective, unless the circumstances indi-cate otherwise.40 A late acceptance may be effective if the offeror informs the offeree that a late acceptance will be considered as an acceptance by the offeror.41 The offeree may only withdraw an acceptance if the withdrawal reaches the offeror no later than at the same time as the acceptance otherwise would have become binding.42

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The Rights and Obligations of the Contracting Parts

The CISG regulates the obligations of the seller and the buyer. The seller is obligated to de-liver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract.43 The buyer is obliged to pay the price, which include taking such steps and complying with such formalities as may be required under the con-tract or under any laws or regulations to enable payment to be paid. The buyer is also obli-gated to take delivery of the goods as required in the contract.44 The goods delivered by the seller must be of the quality, quantity and description required by the contract and the goods must be contained and packaged in accordance with the contract.45 It is however up to the buyer to examine the goods within as a short a period as is achievable after the deliv-ery.46 The seller is liable for any lack of conformity, which exist at the time when the risk passes to the buyer. The risk generally passes from the seller to the buyer when the goods are handed over to the carrier and the goods are clearly identified to the contract.47
If the buyer or the seller fails to perform any of their obligations the remedies depends on the character of the breach of the contract. If the breach is fundamental the aggrieved party may avoid the contract and claim damages.48 A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party, which the party is not entitled to expect under the contract, provided that the breach could not have been foreseen.49 In case of avoidance of the contract, both parties are released from their obliga-tions. A party, who has performed the contract either wholly or partly, may however, claim restitution from the other party of what the first party has supplied or paid under the con-tract.50 If a breach is not fundamental, the remedies are to be sought by claiming damages, requiring performance or adjustment of price.51 If a party’s failure is due to the failure by a third party whom is engaged to perform the whole or a part of the contract, the first party is exempted from liability only under certain circumstances.52A party is however not liable to perform any of its obligations if a failure to perform is due to an impediment beyond the party’s control that the party neither could reasonably be expected to have taken in regard at the time of the conclusion of the contract, nor to have avoided or to overcome its con-sequences.53

Final Provisions

The last part of the CISG deals with technical matters regarding the Convention’s ratifica-tion and questions regarding rights and obligations the Convention give rise to for the sig-natory states.54 However, the final provisions may also have an impact on the Convention’s applicability to a given sales contract and many of the provisions correspond to provisions that are to be found in other parts of the Convention. For example, one of the final provi-sions55 of the CISG states that the Convention applies to the formation of a contract only when the proposal for concluding the contract is made on or after the date when the Con-vention entered into force in the contracting states, which thereby correspond to the signa-tory states referred to in part I regarding when the CISG is applicable to a given sales con-tract.56 The CISG’s Final Provisions may thus have a significant impact on the Conven-tion’s applicability to a particular sales contract and need consequently be considered when dealing with the CISG. The location in the final part of the Convention should therefore not distract from the fact that many of the provisions address matters, which are also to be found elsewhere in the Convention.57

1 Introduction
1.1 Background
1.2 Aim
1.3 Delimitations
1.4 Methodology and Material
1.5 Disposition
2 The CISG
2.1 Background
2.2 The Aim of the CISG
2.3 An Influential Convention
3 The Structure and the Application of the CISG
3.1 The Structure of the Convention
3.2 The Sphere of Application
3.3 Formation of the Contract
3.4 The Rights and Obligations of the Contracting Parts
3.5 Final Provisions
4 Problems with the Application of the CISG
4.1 Introduction
4.2 Uniform Application by the National Courts
4.3 Gap-Filling
5 The Exclusion of the CISG
5.1 Introduction
5.2 Ways of Exclusion
5.3 Frequency of Exclusion
6 Relevant Factors When Excluding the CISG
6.1 Introduction
6.2 Unfamiliarity with the CISG
6.3 Time and Costs
6.4 Negotiation Strength
6.5 Standard Form Contracts and Standard Terms
6.6 No Concern Over the Law Governing the Contract
6.7 Differences Depending on Legal Tradition
7 Analysis
8 Conclusion
List of references
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