Is the Vienna Convention on international sale of goods too much influenced by civil law and should it contain a rule on the passing of property?

TABLE OF CONTENTS

1. INTRODUCTION

2. QUESTION PART

3. PRINCIPLES OF CONTRACT LAW AND THEIR APPLICATION IN THE VIENNA CONVENTION
A ARTICLES INFLUENCED BY CIVIL LAW
i. The Notion of Consideration
ii. The Effectiveness of an Acceptance
iii. Specific Performance
iv. Granting of an Additional Time Period ( “ Nachfrist ” )
v. Reduction of Price
vi. Interpretation Rules and Gap-Filling
B ARTICLES INFLUENCED BY COMMON LAW
i. The Revocability of an Offer
ii. The Concept of Delivery
iii. The Breach of Contract

4. CONCLUSION QUESTION PART

5. QUESTION PART

6. WHY IS TRANSFER OF PROPERTY NOT GOVERNED BY CISG?

7. DIFFERENT APPROACHES TO THE TRANSFER OF PROPERTY

8. CONCLUSION QUESTION PART

9. REFERENCES

1. INTRODUCTION

The Vienna Convention on International Sale of Goods [The Vienna Convention] is by far not the first attempt to harmonize international commercial code - there is a history of efforts to harmonization that goes back to the beginning of the 20th century. In 1930 the International Institute for the Unification of Private Law [UNIDROIT] was created in Europe. It developed its first draft sales law in 1935 and resumed its efforts in 1951 producing a draft commercial code which was circulated until the early 1960’s.¹

The first successful intermediate stage was reached, when in 1964 The Hague Conference adopted the Uniform Law for the International Sale of Goods [ULIS] and the Uniform Law for the Formation of Contracts [ULF]. High expectations accompanied the signing of the Hague Convention on Sales, but only a small number of countries ratified the Hague Convention and its application was strictly reduced to these member states. “It was especially disappointing that the Hague Conventions were not ratified by some of the signatory states - such as France and the United States - which had exercised considerable influence on the formulation of their rules.”² Despite the partial failure of the Hague Conventions international efforts to harmonization of sales law were still going on. In 1966 the United Nations founded The United Nations Commission on International Trade Law [UNCITRAL] which gave top priority to establishing a uniform international trade law. The efforts of a group comprised of 14 nations lead to the first draft text of the United Nations Convention on Contracts for the International Sale of Goods [CISG] which was “deliberated at the eleventh session of UNCITRAL in 1978 in New York” and then circulated “among the governments of UN member states for their opinions and comments”.³ In 1980 CISG was concluded at the Vienna Convention and came into force in 1988. Today almost 60 countries have adopted CISG amongst which are most of the member states of the European Union (not the UK), USA, Canada, Australia and others.⁴

As CISG is based on ULIS and ULF, the Draft Convention made by the above mentioned work group and the comments and proposals of the 62 participating nations at the Hague Convention, it was certainly influenced by different legal traditions which are in some points irreconcilable. Due to its footing on ULF an ULIS (which were considered to be predominantly of the European civil law tradition), the composition of the initial work group, and the strong Western European influence on the CISG, some lawyers might draw the conclusion that CISG is too much influenced by the principles of civil law rather than by the principles of common law. In order to analyse the verity of this thesis, the general principles on contract law in CISG will, in the following, be examined in matters of their analogy to civil / common law principles. In the second part of the essay, it will be analysed if CISG should contain a rule on the passing of property.

2. QUESTION PART 1

Is the Vienna Convention on International Sales of Goods too much influenced by principles of contract law of civil law countries rather than principles of contract law in common law countries?

The question if CISG is too much influenced by the principles of contract law of civil law countries is a rather subjective one and will be definitely answered upon differently by lawyers in relation to their different legal backgrounds. Common law lawyers might be more likely to affirm a major influence of civil law, whereas civil law lawyers might see it different. Moreover, out of the question arises another question. Too much influenced by civil law what for? Too much influenced to be possibly adapted by common law countries? Too much influenced to be understandable and acceptable for a common lawyer? Not being a lawyer (business background) and coming from a civil law country (Germany) I can hardly answer the question if CISG is acceptable from the perspective of a common law lawyer. Therefore I will rather answer the question if CISG is stronger influenced by one of the two main legal traditions (by giving some selective examples) and if so, in which way this might make it unacceptable to one legal tradition or in which way such a stronger influence might be justified.

3. PRINCIPLES OF CONTRACT LAW AND THEIR APPLICATION IN THE VIENNA CONVENTION

A Articles influenced by Civil Law

i. The Notion of Consideration

“The notion of consideration, vital to the common law concept of contracts, is not referred to in the Convention.”⁵ Although the details vary considerably, Consideration can be roughly described as follows: “A contractual promise is binding if there is a counter-performance by the other party or the promise of such a counter-performance.”⁶ There is no conflict in the formation of a sales contract, as a sale is said to be an “onerous transaction, where Consideration is supplied by the exchange of promises to deliver and to pay”⁷. But in CISG Consideration is (in contrast to most common law jurisdictions) even not needed for unilateral promises like an offer or modification affecting the obligations of only one party (see art. 16(2) and art. 29 (1) CISG). These articles could therefore be seen as neglecting the concept of Consideration, as they “recognize the irrevocability of an offer in certain circumstances and the power of the parties to modify a contract by the mere agreement of the parties”⁸.

ii. The Effectiveness of an Acceptance

The classic common law approach regards a contract to be perfected when the acceptance is dispatched by the offeree which lays the burden of the risk of loss or delay of the acceptance on the offeror. In civil law, the contract is not completed until it reaches the offeror - that places the risk on the offeree. At first sight it seems that CISG strictly follows that receipt-approach (see Article 18 (2) CISG). In fact, Article 16 (1) CISG “provides for the most important consequence of the common law mail-box rule, that is, an offer may not be revoked if the revocation reaches the offeree after it has dispatched an acceptance”⁹. Furthermore Article 18 (3) CISG makes an exclusion to the receipt theory as it allows the possibility of an acceptance to become effective by an act of the offeree that shows his assent (i.e. payment of the price).¹⁰ “Therefore, although the Convention adopts the receipt theory for the most part, a closer look at the practical consequences of the provisions on the formation of contract reveals a well-balanced compromise between civil law and common law principles.”¹¹

iii. Specific Performance

Art. 46 CISG confers on the buyer the right to “require performance of the seller of his obligations unless the buyer has resorted to a remedy which is inconsistent with this requirement”. It also contains a provision in favour of the seller as he is entitled to require the buyer to pay the price, take delivery or perform his other obligations (art. 62 CISG).¹²

This indicates that the common law approach of substitutional relief (and claim for damages) would be less readily available than specific performance, which is the primary remedy in civil law jurisdictions. As this was uncongenial to common law lawyers and those jurisdictions where a court must not award specific performance, art. 28 CISG was added. It makes a reservation in favour of the lex fori by only entitling the buyer or seller to specific performance if the court would also do so under the law of the forum.¹³

This can be seen as a clear compromise between the legal traditions and might be regrettable as it could lead to different interpretations and might be seen as contradictory to the overall objective of uniformity. Whereas some common law lawyers might cheer art. 28 CISG as a useful escape clause¹⁴, Peter Schlechtriem warns that this interpretation “should not open the road to domestic law whenever CISG gives a remedy unknown to the local law of the forum”¹⁵. However, in practice this might have not a great impact (except with unique goods) as an aggrieved party, particularly in international sales transactions, will not bother with bringing a claim for performance due to the great amount of time, money and effort needed for such proceedings. The party would rather liquidate their unsuccessful transactions respectively claim substitute performance and claim damages.¹⁶

iv. Granting of an Additional Time Period (“Nachfrist”)

The principle of granting an additional Period of Time in case of delayed or defective performance is more familiar to civil law lawyers and might have been inspired by the German concept of “Nachfrist” (§ 326 Bürgerliches Gesetzbuch). Art. 47 CISG and art. 63 CISG entitle the buyer as well as the seller to fix an additional period of time for performance in case of delayed or defective performance.¹⁷ That grants the party in failure another chance to performance, i.e. delivery in case of delay or repair (see art. 48 CISG) in case of defective goods. Furthermore, the granting of additional time fits into the CISG concept of fundamental breach, as after expiry of the additional period “the buyer can consider a fundamental breach to have occurred and avoid the contract”¹⁸. Although this concept might be new to common law lawyers there was only “little opposition from common law delegates”¹⁹ in regard to art. 47 and 63 CISG.

v. Reduction of Price

Art. 50 CISG confers on the buyer the right to “reduce the price in the same proportion as the value that the goods actually delivered had at the time of the delivery bears to the value that conforming goods would have at that time”. This is, of course, not available in case of complete performance by the seller or an unjustifiable rejection of cure.

Despite the long legal tradition of this remedy in civil law (back to Roman law actio quanti minoris)²⁰ it is unknown in common law countries. But it was still accepted by the common law delegates with minor opposition, although it lead to some confusion in the draft phase. Some common law delegates confounded the right to price reduction with a kind of damages. Actually, it is more a self-help remedy of the buyer²¹ which avoids the cost and uncertainty of litigation. A study conducted in 1998 indirectly proves that art. 50 CISG is indeed used as selfhelp remedy, as in only a minor part of the ten examined cases the buyer brought an action against the seller (most cases were the other way round).²²

Nevertheless, later art. 50 CISG was criticised for not deciding cases where defects in title or third-party-claims are concerned. Peter Schlechtriem suggests, that “the general similarity of the prejudice caused by these defects with that caused by other defects justifies the availability of price reduction in these cases as well.”²³

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¹ See Unidroit Homepage <http://www.unidroit.org/english/presentation/main.htm> (20.05.2004).

² Peter Schlechtriem, Uniform Sales Law - The UN Convention on Contracts for the International Sale of Goods, (1986, Manz) at 17.

³ Id at 18.

⁴ See UNCITRAL Homepage <http://www.uncitral.org/en-index.htm> (20.05.04).

⁵ Bernard Audit, “The Vienna Sales Convention and the Lex Mercatoria” in Thomas Carbonneau ed., rev. ed., Lex Mercatoria and Arbitration (Juris Publishing 1998) at 180.

⁶ Ulrich Drobnig, “General Principles of European Contract Law” in Petar Sarcevic & Paul Volken eds, International Sale of Goods: Dubrovnik Lectures, Oceana (1986), Ch. 9, at 315.

⁷ Alejandro M. Garro, “Reconciliation of Legal Traditions in the U.N. Convention on Contracts for the International Sale of Goods” (1989) 23 International Lawyer at 453.

⁸ Above n4 at 315.

⁹ Above n5 at 447.

¹⁰ Above n1 at 53.

¹¹ Above n5 at 447.

¹² See Peter A. Piliounis, “The Remedies of Specific Performance, Price Reduction and Additional Time (Nachfrist) under the CISG: Are these worthwhile changes or additions to English Sales Law?” (Spring 2000) 12 Pace International Law Review at 1-46.

¹³ See above n5 at 448.

¹⁴ See above n10 at 1-46.

¹⁵ Above n1 at 62.

¹⁶ See above n4 at 319-320.

¹⁷ See Anette Gärtner, “Britain and the CISG: The Case for Ratification - a Comparative Analysis with Special Reference to German Law” (2000-2001) Kluwer Law International at 59-81.

¹⁸ Above n10 at 1-46.

¹⁹ See above n5 at 448.

²⁰ See above n15 at 59-81.

²¹ See above n10 at 1-46.

²² See above n10 at 1-46.

²³ Above n1 at 78.