Sphere of Application of the United Nations Convention on ...

Sphere of Application of the United Nations Convention

on Contracts for the International Sale of Goods 1


on Contracts for the International Sale of Goods

Kate Lannan*1)

Contents

Ⅰ. Introduction

Ⅱ. Article 1: When does the CISG apply?

1. Applicability of the CISG

2. A contract of sale

3. Goods

4. Parties and their location

Ⅲ. Article 2: Sales to which the CISG does

not apply

1. Consumer contracts

2. Auctions

3. Execution or otherwise by authority of

law

4. Stocks, shares, investment securities,

negotiable instruments or money

5. Ships, vessels, hovercraft or aircraft

6. Electricity

Ⅳ. Article 3: Contracts to which the CISG

does not apply?

1. Goods to be manufactured or produced

2. Delivery of labour and services

Ⅴ. Article 4: To which aspects of a

contract does the CISG not apply?

1. The parties

2. Formation of the contract

3. Validity of the contract and usages

4. Effect on the property of the good sold

5. Identification by courts of issues not

included in the Convention

6. Burden of proof

Ⅵ. Article 5: Not applicable to liability for

death or personal injury

Ⅶ. Article 6

1. Derogation

2. Express exclusion

3. Implied exclusion

4. Opting in

Ⅷ. Conclusion

* UNCITRAL Legal Officer

2 國際去來法硏究第 14 輯第 2 號

Ⅰ. Introduction

The United Nations Convention on Contracts for the International Sale of Goods

(CISG) has enjoyed a successful history since its adoption in 1980 and its entry into

force in 1988. It currently boasts 66 parties, and that number is still growing; in fact,

its most recent accession was that of Liberia in September of 2005.

While there are many interesting facets to discuss with respect to this thriving and

detailed convention, these matters are of a theoretical nature unless a given contract

falls within the sphere of application of Chapter I of the CISG. The text of articles 1

to 6 of the CISG set out the parameters for the application of the Convention in a

clear and logical fashion. However, the ensuing case law has generated some interest-

ing issues with respect to those provisions, and a number of commentators have raised

some additional questions regarding whether or not the CISG applies in certain

situations.

Ⅱ. Article 1: When does the CISG apply?

Article 1

(1) This Convention applies to contracts of sale of goods between parties whose pla-

ces 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.

(2) The fact that the parties have their places of business in different States is to be

disregarded whenever this fact does not appear either from 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.

(3) 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 ap-

plication of this Convention.



Article 1 provides the basic rule regarding the sphere of application of the

Convention, using the criterion of whether the parties’places of business are in differ-

ent States. However, article 1 must also be read with articles 2 and 3, which further

define the applicability of the CISG regarding which sales are included, and which

types of contracts.

1. Applicability of the CISG

The internationality of the contract for the sale of goods is insufficient on its own

to make the Convention applicable. Article 1(1) lists two alternative criteria of applic-

ability, only one of which has to be met in order for the CISG to apply. First, pur-

suant to article 1(1)(a), the Convention is “autonomously” applicable, i.e. without the

need to resort to rules of private international law, when the States in which the par-

ties have their relevant places of business are Contracting States. As the number of

Contracting States is growing, this criterion is increasingly used to apply the

Convention.

However, the autonomous application of article 1(1)(a) may be interrupted if one of

the relevant Contracting States has made a reservation pursuant to article 92. In such

a case, one must determine on the basis of article 1(1)(b) whether the Part of the

Convention to which that reservation relates is applicable.

The second alternative criterion for applicability, intended to broaden the overall

sphere of application of the CISG, is that of “indirect applicability”, which is found in

article 1(1)(b). By virtue of this provision, when only one or when neither party has

its relevant place of business in a Contracting State, the Convention will still apply as

long as the rules of private international law lead to the law of a Contracting State.

Since the applicable rules of private international law are those of the forum, it will

depend on the domestic rules of private international law of the forum whether the

parties to the contract are allowed to choose the applicable law, or whether one must

find the applicable law by means of the rules of private international law of the law

designated by the private international law of the forum, and the like.1) While diffi-

1) UNCITRAL Digest of Case Law on the United Nations Convention on Contracts for the

International Sale of Goods, art. 1, para. 20.


culties could obviously arise in choosing the relevant law when the parties have not

included an express choice of law clause in the contract, indications are that this has

not emerged as a major problem in the case law.2)

One factor that has complicated the “indirect applicability” of article 1(1)(b) is ar-

ticle 95 of the CISG, which entitles a State to declare at the time of its accession

that it will not be bound by article 1(1)(b). While only six Contracting States have

done so thus far (China, the CzechRepublic, Singapore, Slovakia, Saint Vincent and

the Grenadines and the United States), two of them are very large trading countries,

such that the impact of their reservations could be quite far-reaching. While the case

law does not appear to have considered this issue in depth, the courts of Contracting

States that have made an article 95 reservation have applied the CISG as a whole by

virtue of the article 1(1)(a) autonomous application.3)

2. A contract of sale

Although the term “contract” is not defined in the CISG, the basic elements of a

contract are common to most legal systems in the world and are, nonetheless, identi-

fied in Part II of the CISG. Specific provisions clarify which types of contracts are in-

cluded: article 29 makes clear that contracts modifying a sales contract are included,

and article 73 specifies that contracts for the delivery of goods in instalments are also

covered.

The term “sale” is not defined in the Convention, either, however its meaning is

less clear. Articles 41 and 42 make clear that a sale involves a transfer of title in the

goods from a seller to a buyer, such that the buyer is provided with goods that it is

free to use, consume or resell as its own. However, it is unclear whether a “sale"

should include situations of retention of title, a matter that is discussed in more detail

under article 4 below.

2) Jacob Ziegel, “The Scope of the Convention: Reaching out to Article One and Beyond",

CISG 25thAnniversary Conference, Vienna, March 15-16, 2005, at p. 9.

3) Franco Ferrari, Harry Flechtner, Ronald A. Brand, The Draft UNCITRAL Digest and

Beyond: Cases, Analysis and Unresolved Issues in the UN Sales Convention (Sellier.

European Law Publishers, 2004) at p. 48.



While the fact that a sale excludes a lease is quite clear, what may be less clear is

whether the court should be bound by the parties’ characterization of the contractas a

lease, or whether it might be open to a tribunal to apply the CISG provisions to an

international lease.4) Also clearly excluded from the ambit of the Convention are gifts,

and bailments, as well as contracts collateral to the sales contract, such as contracts

of insurance or contracts of carriage. 5)Although there appears to be some confusion

on the matter, distribution and franchising agreements also appear to be beyond the

scope of the CISG, since they could be viewed as agreements that merely organize

distribution or entitle a franchisee or distributor to order goods, and there is no sales

agreement until the distributor or franchisee actually places an order.6) However, it

has been held in numerous cases that the various contracts for the sale of goods con-

cluded in the execution of a distribution agreement can be governed by the

Convention.7)

Although certain articles of the Convention, such as articles 30 and 53, imply that

the CISG applies to contracts pursuant to which goods are exchanged for money,

there is some discussion regarding whether barter or counter-trade could or should fall

within the scope of the CISG. Sales of goods legislation in some Contracting States

defines “price” in terms of money consideration, thereby expressly excluding barter

and counter-trade. Since “price” is not defined in the CISG, there has been some dis-

cussion amongst commentators regarding whether or not barter or counter-trade could

or should be included within the scope of the Convention.8)

3. Goods

While “goods” are not defined in the text of the CISG, the case law has further

4) Ziegel, supra note 2 at pp. 3-4. See also Ferrari et al, supra, note 3, at pp. 63-64.

5) David Fairlie, “a commentary on Issues Arising Under Articles 1-6 of the United Nations

Convention on Contracts for the International Sale of Goods”(With Special Reference to the

Position in Australia), UNCITRAL-Singapore International Arbitration Centre Conference,

22-23 September 2005, Singapore, at p. 5.

6) Ziegel, supra note 2 at p. 4.

7) Digest, supra note 1, art 1, para. 6.

8) Fairlie, supra note 5, at pp 5-6


defined this generally understood term. Goods that fall within the sphere of application

have been held to be goods that are, at the moment of delivery, moveable and tangi-

ble, regardless of whether they are solid or not, new or used, and alive or not. While

these examples have suggested that the goods must be tangible, and thus have ex-

cluded such intangibles as intellectual property rights, an interest in a limited liability

company, a contract for the preparation of a research marketing report, or the assign-

ment of debt. However, it has also been noted by the judiciary that the concept of

goods is to be interpreted “extensively”.9)

One key issue that has emerged is whether the sale of computer software can

qualify as a sale of goods. While the sale of a computer chip has been held to be a

sale of goods, it has been seen to be difficult to argue that where the software is not

embedded in a tangible item at the time of sale, such as software that is embedded

in an MP3 player or a mobile phone, it is still a “good” pursuant to the Convention.

While this distinction has been viewed as somewhat artificial, domestic sales law sys-

tems have also had to face this issue, and have had mixed responses. Inlight of this,

it has been argued that it would be best to continue to distinguish between a sale of

software embedded in a tangible thing, and a sale of software not so embedded.10)

4. Parties and their location

While “parties” is also an undefined term, article 1 makes clear that their nation-

ality or their civil or common character is irrelevant. It could be open for consid-

eration, however, to what extent the CISG provisions apply to sales not made in the

ordinary course of the seller’s business, such as, for example, the sale of used office

furniture or computers by a business.11)

The location of the parties is also an issue of recurring importance. Article 1(1)(a)

will be triggered only if both parties had their place of business in different

Convention States at the material time and the location was known by or disclosed to

9) Digest, supra note 1, art. 1, para. 9.

10) Ziegel, supra note 2 at pp. 4-6.




the other party prior to entering into the contract.

The term “place of business” may also be problematic, since it is not defined in the

CISG. Courts have not uniformly definedthis term, while a fairly recent decision de-

fined “place of business” as “the place from which a business activity is de facto car-

ried out … this requires a certain duration and stability as well as a certain amount

of autonomy”.12) While article 10 of theConvention clarifies which is the relevant place

of business when a party has more than one place of business, there could still be

problems in situations of multiparty contracts or those involving complex corporate

structures with several different divisions involved in the negotiation or performance of

a contract.13)

Ⅲ. Article 2: Sales to which the CISG does not apply

Article 2

This Convention does not apply to sales:

(a) of goods bought for personal, family or household use, unless the seller, at any

time before or at the conclusion of the contract, neither knew nor ought to

have known that the goods were bought for any such use;

(b) by auction;

(c) on execution or otherwise by authority of law;

(d) of stocks, shares, investment securities, negotiable instruments or money;

(e) of ships, vessels, hovercraft or aircraft;

(f) of electricity.

12) Digest, supra note 1, art. 1, paras. 12 and 13. Oberlandesgericht Stuttgart, Germany, 28

February 2000, Internationales Handelsrecht, 2001, 66; Trib. Rimini, Italy, 26 November

2002, Giurisprudenza Italiana, 2003, 896 ff.; for a similar definition see CLOUT case No.

106 [Oberster Gerichtshof Austria 10 November 1994] (see full text of the decision); for a

court decision stating that the Convention’s definition of “place of business” requires the

parties to “really” do business out of that place, see Amtsgericht Duisburg, Germany, 13

April 2000, available on the Internet at <http://www.cisg.law.pace.edu/cisg/text/000413g1

german.html>.



Article 2 of the Convention contains a list of types of sales that are excluded from

its application, either because of the purpose of the sale (goods bought for personal,

family orhousehold use), the nature of the sale (sales by auction, on execution or oth-

erwise by law) or the nature of the goods themselves (stocks, shares investment se-

curities, negotiable instruments, money, ships, vessels, hovercraft, aircraft or elec-

tricity). In many States, some or all of these sales are governed by special rules that

reflect their special nature, and it was thought that parties from other states purchas-

ing such goods should still be subject to the special domestic regime.

1. Consumer contracts

Article 2(a) quite clearly excludes goods bought for personal use from the CISG’s

sphere of application. The key to determining the nature of the contract is the buyer’s

intention before or at the conclusion of the contract, regardless of the ultimate actual

use of the goods. Further, goods need not be purchased by a commercial entity: those

that are purchased by an individual for a commercial or professional purpose are with-

in the sphere of application of the Convention, e.g. the purchase of a camera by a

professional photographer. In addition, the exclusion operates only when goods are

bought exclusively for personal use, and not just primarily for personal use. It has

been observed that one of the difficulties in applying this provision is the requirement

that the seller must have knowledge of the intended use of the goods being sold.14)

2. Auctions

Auctions were specifically excluded pursuant to article 2(b) for the reason of having

a special domestic regime as cited above, and for the fact that auctions, by their na-

ture make unclear the issues surrounding the formation of the contract. Further, it

was thought to be difficult to know the international character of the parties involved.

All of these uncertainties were said to make it unclear whether the CISG would be

triggered.

However, it has been suggested that while international auctions might once have

14) Digest, supra note 1, art. 2, paras. 2 to 3. Ferrari et al, supra, note 3, at pp. 84-86.



been fairly rare creatures, the advent of the internet has changed this quite

dramatically. The argument in favour of including auctions within the ambit of the

CISG suggests that lack of knowledge regarding the application of the CISG could be

remedied by including a provision regarding its application in the standard contract

terms for all successful bidders, and that the overall result would bring greater uni-

formity to the very diverse area of domestic law relating to auctions.15)

3. Execution or otherwise by authority of law

The sale of goods pursuant to judicial or administrative execution or otherwise by

authority of law is excluded from the application of the CISG since such sales are

usually governed by mandatory laws of the State under whose authority the execution

is made.

4. Stocks, shares, investment securities, negotiable instruments or

money

Again, the exclusion of stocks, investment securities, negotiable instruments and

money is intended to avoid a conflict with mandatory domestic rules. Documentary

sales are included in this exception to the Convention.16)

5. Ships, vessels, hovercraft or aircraft

The sale of ships, vessels, hovercraft, and aircraft are clearly outside of the sphere

of application of the CISG. However, since such exclusions must be interpreted re-

strictively, the sale of parts of ships, vessels, hovercraft and aircraft have been held to

fall within the sphere of application, even when those parts are essential to the whole

craft, as, for example, with respect to engines. Interestingly, according to one arbitral

tribunal, the sale of an entire decommissioned military submarine did not fall within

the scope of the article 2(e) exclusion.17)

15) Fairlie, supra note 5, at, p. 6.



6. Electricity

Similarly, it has been suggested that the international sale of electricity should no

longer be excluded from the scope of the CISG, since the special problems arising in

that regard at the time of the Convention’s drafting are no longer applicable today,

such as, for example, the fact that the majority of electrical transactions today no

longer involve state enterprises. It has further been suggested that many of the fea-

tures specific to the drafting of contracts for the sale of electricity are equally appli-

cable to contracts for the sale of goods, such as oil and gas transactions, to which the

CISG does apply.18)

Ⅳ. Article 3: Contracts to which the CISG does not apply?

Article 3

(1) Contracts for the supply of goods to be manufactured or produced are to be con-

sidered sales unless the party who orders the goods undertakes to supply a sub-

stantial part of the materials necessary for such manufacture or production.

(2) This Convention does not apply to contracts in which the preponderant part of

the obligations of the party who furnishes the goods consists in the supply of la-

bour or other services.

Pursuant to article 3, contracts of sale are distinguished from contracts for services

in two important respects. Excluded from the application of the CISG are contracts

for goods to be manufactured or produced when the party ordering the goods supplies

a substantial part of the materials necessary for their manufacture or production, as

are those contracts where one party’s obligation consists mainly of the supply of la-

bour or services.


18) Fairlie, supra note 5, at p. 4.



1. Goods to be manufactured or produced

A sale for the supply of goods to be manufactured or produced falls within the

ambit of the Convention unless the party who orders the goods undertakes to supply

a substantial part of the materials necessary for their manufacture or production.

While this provision makes clear that the CISG does not only apply to ready-made

goods, but also to ‘made-to-order’ goods, other aspects of it are less clear. No guid-

ance is given regarding what is required in order to meet the threshold of a

“substantial part” of the materials necessary for the manufacture or production of the

goods. One decision has suggested that a purely quantitative criterion should be used

to determine whether this threshold is met.19)

A related issue concerns whether the buyer’s supply of instructions, design specifica-

tions, and the like, meets the requirement of “a substantial part of the materials nec-

essary” for the manufacture or production of the goods. One decision held that the

CISG did not apply to the situation in which the buyer provided the design specifica-

tions for the manufacture of the goods, since the plans and instructions supplied by

the buyer met the necessary threshold for exclusion. However, other courts have

found that specifications are not considered “materials necessary” for the production of

the goods.20)

CISG Advisory Council Opinion No. 4, published in October 2004 (the Opinion),21)

attempts to clarify this last issue. With respect to so-called “know-how”, i.e. draw-

ings, technical specifications, technology or formulas provided by the party who orders

the goods, the Opinion states that they meet the requirement of “materials necessary

for such manufacture” only if they “enhance the value of the materials supplied by

the parties.” In effect, such know-how would not be considered materials per se,

which, it has been suggested, is logical, given how common it is to produce or manu-

facture goods to the buyer’s specifications. However, it is also noted that know-how is

still preserved as an ingredient in the manufacturing process, such as for example,



21) CISG-AC Opinion No. 4, Contracts for the Sale of Goods to Be Manufactured or Produced

and Mixed Contracts (Article 3 CISG), 24 October 2004. Rapporteur: Professor Pilar

Perales Viscasillas, Universidad Carlos III de Madrid.


know-how that carries an industrial or intellectual property right, like a patent.22)

2. Delivery of labour and services

Difficulties in the application of this exception have arisen concerning the question

of how much in the way of labour or other services amounts to a “preponderant

part” of the obligations of the party who furnishes the goods. It has been suggested

that a comparison must be made between the economic value of the obligations re-

garding the supply of labour and services and the economic value of the obligations

regarding the goods, as if two separate contracts had been concluded. In effect, when

the obligation for the supply of labour or services amounts to more than 50% of the

seller, then the CISG is inapplicable. It has also been suggested by one court that

other circumstances such as those surrounding the conclusion of the contract and the

purpose of the contract should be taken into account in this evaluation. Still another

court referred to the essential purpose of the contract in order to make its determi-

nation in this regard.23)

One particular area of uncertainty that must be considered under article 3(2) of the

CISG is the issue of “turnkey” contracts. Turnkey contracts can take many forms,

but all of them involve considerable input of labour by the seller, both in the design

and manufacture of the goods or process, as well as in assembly and installation.

Nonetheless, an identifiable product that would be classified as a “good” under the

CISG usually results from such contracts. It is not clear from the existing case law

whether “turnkey” contracts should be excluded from the Convention by means of ar-

ticle 3(2), nor does the Opinion provide much guidance in this regard, suggesting only

that a case by case analysis must be undertaken in order to make a determination

with respect to such contracts.24)

22) CISG AC Opinion No. 4, ibid. Fairlie, pp. 6-7.

23) Digest, supra note 1, art. 3, paras. 4-5.

24) Fairlie, supra note 5, at p. 7.



Ⅴ. Article 4: To which aspects of a contract does the CISG not

apply?

Article 4

This Convention governs only the formation of the contract of sale and the rights and

obligations of the seller and the buyer arising from such a contract. In particular, ex-

cept as otherwise expressly provided in this Convention, it is not concerned with:

(a) the validity of the contract or of any of its provisions or of any usage;

(b) the effect which the contract may have on the property in the goods sold.

This provision sets out those aspects of the transaction regarding which the CISG

prevails over domestic law, i.e. the formation of the contract of sale and the rights

and obligations of the parties that arise from that contract. The second sentence of

article 4 contains a non-exhaustive list of those issues with which the CISG is not

concerned, i.e. the validity of the contract or its provisions or of any usage, or the ef-

fect of the contract on the property in the goods sold. This latter exclusion was made

so as to avoid prolonging the preparation and conclusion of the Convention.25)

1. The parties

Since only the rights and obligations of the parties to the contract of sale are speci-

fied in article 4, it leads to the conclusion that third party rights do not fall within

the scope of the CISG. Further, it has been held in numerous cases that the issue of

whether a contract was validly concluded by a third person acting on behalf of one of

the parties is left to applicable domestic law, since agency is not specified in the

Convention.26)

2. Formation of the contract

25) See Report of the Working Group on the International Sale of Goods on the work of its

ninth session (Geneva, 19-30 September 1977)(A/CN.9/142), reproduced in the

UNCITRAL Yearbook, 1978, at p. 65, paras. 48-51, 66, 69.



With respect to the formation of the contract of sale, the CISG in Part II governs

the objective requirements for the conclusion of the contract. However, the issue of

whether the contract was validly formed is left to applicable domestic law, except for

those specific areas in whichthe Convention provides exhaustive rules, such as with

respect to errors made by a party regarding the qualities of the goods to be delivered,

or the solvency of the other party. Issues thus left to domestic law include the ca-

pacity of the parties to contract, illegality, mistake, duress, fraud, and the like.27)

3. Validity of the contract and usages

While the CISG generally leaves issues regarding the validity of contracts or the val-

idity of standard contract terms to applicable domestic law, as noted above, it does so

“except as otherwise expressly provided in this Convention”. Article 11 expressly pro-

vides that “a contract of sale need not be concluded in or evidenced by writing and

is not subject to any other requirement as to form”. This could be considered an issue

of validity, since some legal systems consider the form requirement for such a con-

tract to be an issue of validity of contract.28)

The validity of usages is also expressly excluded from the ambit of the CISG, and

has been left to domestic law. However, it is clear from the text of article 9 of the

CISG that the validity of usages must be distinguished from the issue of how to de-

fine usages, under what circumstances they are binding on the parties, and what their

relationship is with the rules set forth in the Convention.29)

4. Effect on the property of the good sold

Article 4(b) makes it clear that the CISG does not govern the passing of property

in the goods sold. Reference has already been made above to the difficulties in pre-

paring a unifying rule in this regard. These matters are thus left to applicable domes-

tic law.






One issue that has arisen in this regard is with respect to retention of title clauses,

at whose heart is the notion that property in the goods to be sold does not pass to

the buyer until payment in full has been made. Several cases have found such clauses

to fall within article 4(b), and thus to be subject to applicable domestic law, while

the CISG applied to the rest of the contract. However, it has been argued that judges

should not accept too readily that the CISG would apply at all to a contract where

property does not pass until there is payment in full, even though the buyer already

has possession of the goods. The suggestion is that in certain jurisdictions, default-

under a retention of title clause is dealt with under personal property security legis-

lation, and a default in payment is dealt with as the enforcement of security and not

as a contractual breach. As such, it is thought that the CISG should apply only to

the sales component of the contract but not to the remedies component. However, in

countries where there is a payment default under a retention of title clause, and the

issue is addressed in contractual terms, difficulties will arise from the uncertainty re-

garding how domestic law will resolve the issue. 30)

5. Identification by courts of issues not included in the Convention

Articles 4 and 5 of the CISG, read together, make clear a number of issues that

are expressly not included in the ambit of the Convention. A number of other issues

are not dealt with by the Convention, and a number of them have been identified in

the case law. These include: the validity of a choice of forum clause; the validity of

a penalty clause; the validity of a settlement agreement; the assignment of receiv-

ables, the assignment of contract; the applicable statute of limitations; and the issue

of whether a court has jurisdiction; other issues of procedural law; the assumption of

debts; the acknowledgement of debts; the effects of the contract on third parties;

and joint liability. 31)

In addition, one court ruled that the question of who had priority rights in the

30) Fairlie, supra note 5, at pp. 8-9. Roder Zelt und Hallenkonstruktionen GmBH s Rosedown

Park Pty Ltd, 13 ACLC 776, Usinor Industeel v Leeco Steel Products, Inc (Federal Dist

Ct [N. Dist. Ill.] 28 March 2002).

31) For the list of cases referred to in this paragraph, see Digest, supra note 1, art. 4, para. 13.


goods as between the seller and the third party creditor was beyond the scope of the

CISG pursuant to article 4. Under the applicable domestic law, the third party creditor

prevailed.32)

However, certain issues have emerged as subjects of controversy in the case law

with respect to whether or not they are within the ambit of the CISG. The issue of

estoppel has arisen as one of some discussion. While one court found that estoppel is

not dealt with by the CISG, other courts have concluded that it should be regarded

as a general principle of the Convention.33)

The issue of set-off has also been one of some judicial disagreement.While the ma-

jority of cases exclude set-off from the matters which fall within the parameters of

the CISG, there are two court decisions that hold set-off to be governed by the

CISG, as long as the mutual debts arise from contracts that are, in turn, governed by

the Convention.34)

Another matter that has arisen and been held to be outside of the scope of the

CISG, and thus subject to domestic law, is the currency of payments under the con-

tract of sale, absent a choice by the parties. However, one court has ruled that the

currency of payment in such circumstances is to be determined by resort to the cur-

rency of the place of payment, determined on the basis of article 57.35)

6. Burden of proof

While burden of proof is not listed in article 4, some courts andcommentators have

concluded that the CISG also governs the issue of burden of proof. Others have dif-

fered on this point. The argument in favour of including burden of proof within the

matters governed by the Convention stems from at least one instance in which the

CISG deals with the burden of proof, that of article 79, regarding proof by the party



34) Ferrari et al, supra, note 3, at pp. 107-108. See Amstgericht Duisburg, Germany, 13 April

2000, CLOUT case No. 360 (Internationales Handelsrecht 114f. (2001); Oberlandesgericht

Muenchen, Germany, 9 July 1997, available at http://www.cisg-online.ch/cisg/urteile/282.htm.




that its failure to perform an obligation was due to an impediment beyond its control.

As such, it is suggested, the CISG does govern burden of proof, at least implicitly.

The argument to the contrary suggests that rules on the burden of proof are proce-

dural matters, which are left to domestic law. A further complication rests in the fact

that even amongst those who agree that the CISG governs burden of proof, at least

implicitly, there is no agreement regarding how the actual burden of proof should be

allocated in fact.36)

Ⅵ. Article 5: Not applicable to liability for death or personal injury

Article 5

This Convention does not apply to the liability of the seller for death or personal in-

jury caused by the goods to any person.

Pursuant to this provision, liability for death or personal injury caused by the goods

to any person, presumably including the buyer and any third party, is expressly ex-

cluded from the CISG’s scope of application. While this provision would seem rela-

tively straight-forward, a number of cases and commentators have raised some issues

with respect to its precise ambit.

Since liability for death or personal injury to “any person” is excludedfrom the

scope, it would seem that any claim that the buyer might make for pecuniary loss

resulting from a claim against the buyer for personal injury caused by the goods

should equally fall outside of the scope of the CISG. However, at least one court has

applied the CISG to those types of claims.37)

Further, while liability for personal injury caused by the goods is excluded from the

CISG, liability for damage caused to property is not. However, such claims require the

seller to have been notified within the reasonable time period specified in article 39.

38) There is an ongoing discussion concerning whether the fact that it is unclear in

36) For further discussion of these issues, see Ferrari et al, supra, note 3, at pp. 110-113.



the CISG if a damaged party could also bring a tort claim for such damage could set

up a potential conflict between contractual claims based on the CISG and tort claims

based on applicable domestic law. 39) In addition, damage to property that is not

caused by the goods, as, for example, in the situation where a buyer’s property is

damaged upon delivery of the goods, the liability issue is governed by applicable do-

mestic law.40)

Ⅶ. Article 6

Article 6

The parties may exclude the application of this Convention or, subject to article 12,

derogate from or vary the effect of any of its provisions.

Since the parties may exclude the application of the Convention, derogate from its

provisions, or vary the effect thereof, even once a determination has been made that

the CISG is otherwise applicable, an analysis must be conducted regarding whether

the parties excluded it, or derogated or varied from its provisions. According to various

judicial interpretations, the possibility of opting out of the Convention is subject to the

clear intent of the parties. This may be seen as affirmation of the central role played

by party autonomy in the rules governing international sales contracts.41)

1. Derogation

Derogation from the provisions of the CISG encounters some limitations in the text

of the Convention. Article 12 provides that where one of the parties to the contract

for the international sale of goods has its place of business in a State that has made

a reservation pursuant to article 96, the parties may not derogate from or vary the

effect of article 12. As such, any provision that allows a contract or its modification


39) Ferrari et al, supra, note 3, at pp. 103-4.


41) Digest, supra note 1, art. 6, paras. 1-2.



or agreement or any offer or acceptance may be made in any form other than writ-

ing does not apply. In addition, the public international law provisions contained in

Part IV of the CISG, consisting of articles 89 to 101, may not be derogated from.

2. Express exclusion

Express exclusion of the Convention has revealed two lines of case law: exclusion

with and exclusion without any indication by the parties of the law applicable to their

contract. Where applicable law is indicated by the parties, the law applicable to the

contract will be that applicable by virtue of the rules of private international law of

the forum, which usually makes applicable the law chosen by the parties. Where the

CISG is expressly excluded without an indication of applicable law, the applicable law

is identified by means of the private international law rules of the forum. 42)

3. Implied exclusion

Although a few courts have held the contrary view, the majority of decisions in-

dicate that the CISG can also be implicitly excluded.43) This approach seems to be

supported by the Official Record, which indicates that a majority of delegates at the

diplomatic conference were opposed to a proposal that a total or partial exclusion of

the Convention could only be made “expressly”.44)

Implicit exclusion may be accomplished most simply by means of the parties choos-

ing the law of a non-contracting State as the law applicable to the contract. In addi-

tion, some courts have held that implicit exclusion occurs when the parties choose the

law of a Contracting State as theapplicable law, since otherwise, that choice would

have no meaning. However, most courts have held that implicit exclusion of the CISG

is not accomplished this way, since the law of the Contracting State includes the

CISG, and resort may be had to it to fill any gaps that there may be in the


43) Digest, supra note 1, art. 6, para 6.

44) Official Records of the United Nations Conference on Contracts for the International Sale of

Goods, Vienna, 10 March-11 April 1980(United Nations publication, Sales No. E.81.IV.3), 85-86.


Convention, thus providing meaning for that choice by the parties. When the parties

make express reference to domestic law, however, it has been held that the CISG

was implicitly excluded.45) Similarly, implicit exclusion may also occur by way of

choice of forum by the parties, or by way of choice of an arbitral tribunal, provided

that two requirements are met: (1) the parties must have made clear by their choice

their intention to have the domestic law of the State where the forum or arbitral tri-

bunal is located govern their contract, and (2) the forum must not be in a

Contracting State, since the Convention would then be applicable.46)

The question has arisen regarding whether the CISG is implicitly excluded when

the parties argue their case solely on domestic law, despite the fact that the case

would meet the requirements for the applicability of the Convention. The case law in-

dicates that this issue will be determined depending on the law of the forum regard-

ing whether a judge is required to apply the correct law even if the parties based

their arguments on law that does not apply to the case. 47)

4. Opting in

While the previous 1964 Hague Convention relating to a Uniform Law on the

Formation of Contracts for the International Sale of Goods did contain an express pro-

vision allowing parties to render the Convention applicable when it would not other-

wise be applicable, the CISG does not expressly address the issue. There is some sup-

port in the Official Record for the view that it is possible for the parties to opt into

the Convention, based upon the principle of party autonomy.48) In addition, it has

been pointed out that by virtue of such “opting in”, the Convention becomes part of

the contract in a manner similar to other contractual clauses.49)

45) Digest, supra note 1, art. 6, paras. 8 and 9. See also Ferrari et al, supra, note 3, at pp.

124-128.

46) Ferrari et al, supra, note 3, at pp. 129-130.


48) See Official Records of the United Nations Conference on Contracts for the International

Sale of Goods, Vienna, 10 March-11 April 1980(United Nations publication, Sales No.86, 252-253.

49) Ferrari et al, supra, note 3, at p. 137.



Ⅷ. Conclusion

The sphere of application provisions in Part I of the CISG are undoubtedly some of

its most important provisions, since they provide the entryway for the application of

the Convention to a particular contract for the sale of goods. These provisions have

been drafted as inclusively as possible in order to allow for the attainment of the goal

of harmonization of the law with respect to contracts for the international sale of

goods.

Given the importance of these provisions, it is understandable why they have al-

ready generated a rather large body of case law to assist in their interpretation. This

body of jurisprudence, in addition to the growing body of commentary, indicates that

many of the questions that have not been answered explicitly in the text of the

Convention can, nonetheless, be answered by reference to its provisions. However, the

passage of time, and certain changes that have taken place in the conduct of the in-

ternational sale of goods have caused new questions to be raised regarding the sphere

of application of the CISG. Its continued growth and success will stem from the abil-

ity of courts and arbitral tribunals to maintain their interpretation of these provision

within the ambit of the spirit in which the Convention was prepared and adopted.

※ Key Words : CISG, applicability of CISG, contract of sales, goods, consumer

contracts


<국문초록>

국제물품매매계약에 관한 국제연합협약의 적용범위

Kate Lannan

국제물품매매계약에 한 국제연합 약(CISG) 제1편 제1장 제1조 내지 제6조는 명확

하고 논리 으로 약의 용범 를 설정하고 있다. 그러나 법원은 이와 련하여 계속

해서 흥미 있는 논 을 제기하고 있다. 법학자들도 일정한 경우 CISG의 용여부에

한 의문을 제기하고 있다.

본 논문에서는 조문별로 그 해석과 용상의 문제 을 살펴보고자 한다. 제1조와 련

하여서는 CISG의 용범 , 매매계약, 물품, 계약당사자 업소의 문제를 다루었다.

제2조에서는 소비자의 물품매매, 경매에 의한 매매, 강제집행 그 밖의 법령에 의한 매매,

주식․지분․투자증권․유통증권 는 통화의 매매, 선박․소선․부선․항공기의 매매,

기의 매매와 같이 CISG가 용되지 않는 경우를 제3조에서는 물품을 제조 는 생산

하여 공 하는 계약의 경우와 물품을 공 하는 당사자의 의무의 주된 부분이 노무 그

밖의 서비스의 공 에 있는 계약의 경우를 살펴보았다. 제4조와 련하여서는 계약당사

자, 매매계약의 성립, 계약과 행의 유효성, 매매된 물품의 소유권에 하여 계약이 미

치는 효력, 입증책임에 하여 알아보았다. 제5조에서는 물품으로 인하여 발생한 사람의

사망 는 상해에 한 매도인의 책임에 한 용 외를 살펴보았다. 제6조와 련해

서는 당사자간의 합의에 의한 약의 용배제에 하여 논의하 다.

※ 주요어 : 국제물품매매계약에 관한 국제연합협약, CISG 적용범위, 물품매매계약,

계약당사자, 매도인 책임

Sphere of Application of the United Nations Convention on ...

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