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General Principles of UN-Sales Law — part 1

Authors | Prof. Dr. iur. Ulrich Magnus

Published: Rabels Zeitschrift für ausländisches und internationales Privatrecht. 1995 (3-4). P. 469–494.

Originally published in German.

Translation from German to English: Lisa Haberfellner.

Originally, the translation of the text into English was published as part of the cisg.pace.law project.

Year: 1995.

1. Kötz’s criticism of International Uniform Law

Hardly anybody has described an Achilles’ heel of Conventions creating uniform law more pointedly than Kötz:

„The person looking at the currently effective Uniform Law from a certain distance will be surprised by its selective and fragmentary nature ...“ [1]

„Indeed it’s a scary thought that the countless current undertakings of unifying and adjusting laws develop into completed texts and that the stream of these texts could then be directed to the already overburdened mills of national legislators.“ [2]

„However, at a closer look the question appears justified whether uniform law, in as far as it intends to simplify law, does not find itself in the position of Heracles who cut off Hydra’s snake head only to be confronted with three new ones instead.“ [3]

Of course, these shortfalls of International Uniform Law partially are in the nature of things. Efforts toward unifying law cannot start right away with the — even worldwide — codification of, for example, the entire Private Law or even only the entire Law of Contracts. Such projects would squander tremendous energies and yet remain a utopia. For if law — and this truism is all the more true for International Uniform Law than on a national level — shall find acceptance, it has to be based on legal doctrines shared by the majority of those who will be subject to this law. In light of the social, economical, political, and philosophical differences which separate today’s nations and definitely affect the sensitive areas of Private Law (e.g., consumer protection etc.), already existing common basic doctrines can be identified only to a very limited extent. Therefore, an attempt to unify the law of several independent nations in my opinion as a matter of necessity — has to be made selectively for specific areas first; and experience shows that it has always been done this way.

To illustrate, the ambitious Code des Obligations of 1929 [4], which was intended to unify the entire Law of Contracts for France and Italy in numerous articles never went into effect. Even in the close legislative collaboration of the Nordic states there never was a global codification of larger areas, but only single uniform codes such as the largely identical Nordic Sales Laws. [5] The U.S. Uniform Commercial Code (UCC) — a quite comprehensive legislative work — is hardly imaginable without its selective predecessors such as the Uniform Sales Act of 1906.

The selective approach of unifying efforts inevitably entails a certain fragmentary character of the regulation. Even in Conventions as far-reaching as the UN-Sales Law [6], which intends to comprehensively regulate the relationships of parties to a sales contract, questions of the general law of obligations remain open and the incorporation in the respective national legal systems remains quite problematic. [7]

The careful reader of Kötz will realize that by criticizing — legislative — attempts to unify law he by no means rejected them completely. Rather, Kötz legitimately warns that such a unification has to be attempted moderately, that especially the coordination of various unification attempts and unifying organizations has to be improved. Every reasonable person will agree with Kötz’s opinion that a multitude of independent co-existing Conventions is not a desirable permanent state of affairs.

2. Current solutions

The structural shortfalls of international Conventions, which lie in their fragmentary nature, can be remedied only to a limited extent by formulating the respective provisions as precisely as possible. Doubtful issues and problems of incorporation will always remain, as even the example of the CISG still shows [8], which not only in that regard has been prepared with special care.

Another possible solution which shall be analyzed more closely in this context is the possibility of referring to the „general principles“ for cases of doubtful interpretation and filling of gaps. Again, the UN-Sales Law with its Art. 7(2) can serve as an illustration:

„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.“ [9]

More recent Conventions concerning Private Law issues have adopted the same formulation. [10] The following lines, which are dedicated to the honoree, examine the soundness of this approach.

3. History of Art. 7(2) CISG

A similar version of the current Art. 7(2) CISG was already included in the first draft of the Uniform Sales Law of 1935.

„Art. 11. If this Statute does not expressly settle a question and does not formally provide for application of a national law, the court decides in conformity with the general principles on which this Statute is based.“ [11]

Rabel justified this provision as follows:

„Art. 11 establishes the general principle according to which the gaps in this Statute are to be filled. Since the judges applying this Statute are subject to different laws and used to their application, the greatest danger for maintaining a truly uniform legal situation lies in diverging judicial interpretations. We have to fear strongly that the courts will either consciously or subconsciously use their national law to fill gaps. Thus the desired legal uniformity would quickly fall apart. [...] However, a common basis for decision-making is absolutely indispensable. Therefore, this Article provides that cases not expressly settled in this Statute nevertheless are subject to it and thus have to be resolved in the spirit of the Statute in conformity with the principles permeating it. These principles are called principes généraux, a formulation which resembles the famous Art. 38 of the Statute of the International Court of Justice at The Hague and refers — with like generosity but considerably less difficulties — to the common features of legal doctrines, which are to be found through comparative legal analysis, as a source of law. [...]“ [12]

Thus, recourse to the national law applicable by virtue of the rules of private international law shall be admissible, only in those cases, however, in which the Convention „formally“ („formellement“) made a provision to that effect. [13] The utilization of private international law disappeared in the Hague Sales Law. Pursuant to Art. 17 EKG issues not expressly settled in this Statute were to be decided in conformity with the general principles on which this Statute was based. The rules of private international law were explicitly excluded in Art. 2 EKG, „unless otherwise provided in this Statute“. This was mostly interpreted to mean that gaps in the Hague Law would have to be filled exclusively in conformity with the general principles. [14] If such principles would not result from the Uniform Sales Law itself, they would have to be developed through comparative legal analysis. [15] Others wanted to utilize private international law in the event that general principles could not be ascertained in the Uniform Law itself. [16]

The court decisions on the EKG have restricted themselves to developing only a few general principles from the Uniform Law itself. [17] If this was not possible, the issue was mostly regarded as not subject to the Convention and decided pursuant to the law applicable according to the rules of private international law. [18]

The adoption of Art. 7(2) into the CISG was quite controversial and had been ruled out completely in the early stages of the discussions. [19] Even in the Diplomatic Conference of 1980, the provision, which had been accused of ambiguity, remained disputed. The current version is based on a compromise suggested by the GDR [20], which combined general principles and private international law and found a slight majority.

The entire Art. 7 CISG in its currently valid formulation has also been adopted by the later international Conventions concerning Private Law issues. [21] Thus, by now the provision is a fixed part of the general regulations of such Conventions.

4. Initial Methodological questions

The following methodological considerations are based on Art. 7 CISG, but can also be applied to the parallel provisions, e.g., in the Agency-, Leasing-, Factoring- or other Conventions concerning Private Law issues.

a) Filling of gaps

Art. 7(2) CISG is primarily designed to fill gaps — as opposed to matters of interpretation which are the primary subject of Art. 7(1) CISG. If we want to take recourse to the general principles of Art. 7(2) CISG, we first have to decide that the legal issue at hand concerns a matter governed by this Convention yet not expressly settled by it („internal gap“). [22] Thus, the basic decision regarding the applicability of the Convention has — at least theoretically — been made if general principles pursuant to Art. 7(2) CISG come into play. Yet, except for the cases clearly exempt from the CISG (such as the transfer of property), the borderline between legal issues subject to the CISG and those not governed by it often is rather uncertain. For example, does the CISG cover claims arising out of the dealings before the actual conclusion of the contract? Are setoffs at least partially regulated? Does the burden of proof belong into the CISG? Very often there will be a correlation between the existence of general principles on the one hand and the application of the Convention on the other hand, in that the Convention is applicable if and because general principles can be ascertained. If, however, general principles are lacking, the respective national law is applicable, regardless of whether the legal issue is basically covered by or exempt from the CISG.

This procedure is not objectionable from a methodological perspective as long as it is not overstretched. As far as legal thoughts subject to generalization can be derived from the Convention itself with sufficient substantiation, this procedure promotes an application of the Convention that is as uniform as possible. It is precisely this uniform application that Art. 7 CISG and the respective provisions in the more recent Conventions unifying Private Law issues intend to achieve.

Yet, it is problematic to take recourse to general principles outside of the Convention.

For example, considering the wording and history of Art. 7 CISG, the utilization of the „general legal principles recognized by the civilized nations“ referred to in Art 38 of the Statute of the International Court of Justice is out of the question. Although this thought, as explicated above [23], has been the basis for this provision to a certain extent in the draft of 1935, it had not been adopted in its entirety even at that time. [24] The wording of Art. 7(2) CISG allows only the consideration of those principles on which the Convention „is based“ (as formulated in the weighty English text [25], whereas the French version uses the somewhat weaker „dont elle s’inspire“). Thus, the fact that a particular general principle shall apply to the Convention has to be expressed in the Convention itself or has to result from it with sufficient clarity. Without such a link to text and structure of the Convention the utilization of general principles becomes arbitrary and the goal of uniform interpretation is more endangered than furthered.

This also generally excludes the possibility to develop — based on a comparative legal analysis — common principles either from the law of all nations or even only from the law of the Contracting States of the CISG for the purpose of filling gaps ad hoc for a specific case. [26] In this case, too, the link between principles developed in such manner and the CISG as well as the truly general acceptance of such principles is lacking. In addition, the task of conducting an intensive comparative legal analysis in order to ascertain a general principle for a specific case at hand would be too much for a single person applying the Convention. Rather, the prevailing trend in many of cases will probably be to regard the solution of one’s own law as generally valid. Such a procedure cannot promote a uniform interpretation and application of the CISG.

Yet, even if recourse to general principles outside the CISG is generally out of the question, an exception has to be made if and to the extent that general basic principles develop or are developed which are internationally coordinated and actually find general acceptance. Even if the CISG were not based on these principles initially, such a development should not be impeded. [27] Rather, in this way an — often criticized — „petification“ of once created Uniform Law [28] could be counteracted. However, it has to be emphasized again that such a procedure requires the international acceptance of „general principles“ created in such manner. In how far the „Principles of International Commercial Contracts“ [29] developed by UNIDROIT fulfill this requirement shall be examined more closely under 6. below.

In general, however, Art. 7(2) CISG legitimately restricts itself to those general principles which form the basis of the CISG, inspired it and for which indications can be found in the Convention itself.

b) Nature and determination of general principles

General principles can regularly be derived from the CISG — and other Uniform Law Conventions — in four ways: [30] First, some provisions explicitly claim their applicability to the entire Convention, for example in the CISG Art. 6 (principle of party autonomy), Art. 7(1) (principle of good faith) or Art. 11 (principle of lack of form requirements). Their character as a general provision results both from their wording and their position in the Convention‚s system. In the CISG, they are incorporated in the part „General Provisions“. Strictly speaking, they might not be included in the general principles contemplated by Art. 7(2) CISG, since they expressly indicate their general applicability and thus do not constitute principles „hidden in the law [...] without having been directly expressed“. [31] However, due to their fundamental importance, which occasionally goes beyond their wording, it appears justified to regard them as part of the Convention‘s general principles. [32]

Further, a separate comprehensive thought can be derived from several provisions. For example, Art. 67(2) and 69(2) CISG provide that passing of risk requires identification of the goods to the respective contract. This rule can be extended to those cases in which the question — as in Art. 68 — is not expressly regulated.

In addition, single provisions might include legal thoughts which are subject to generalization and are to be applied in similar situations. Art. 20(2) CISG can serve as an example. According to this provision, holidays generally do not extend the period for making a declaration, except if the respective notice could not be delivered due to the holiday. This thought can be generalized to the effect that holidays are included in all time limits (e.g., also for delivery), except if the respective action (e.g., delivery) could not have been taken due to the holiday. In this case the time limit is extended accordingly. [33]

Finally, the overall context can show that a certain basic rule is implicitly assumed. An example in the CISG is the rule „pacta sunt servanda“. The sentence is not expressed anywhere, but apparently constitutes the basis for the exemption provision of Art. 79 which determines the cases in which an obligor is discharged from his obligation.

Footnotes

H. Kötz, Rechtsvereinheitlichung -- Nutzen, Kosten, Methoden, Ziele: RabelsZ 50 (1986) 1 et seq. (3); H. Kötz, Europäische Juristenausbildung: ZEuP 1 (1993) 268 et seq.; see also M.H. Bonell, Restatement 10; H.-J. Mertens, Nichtlegislatorische Rechtsvereinheitlichung durch transnationales Wirtschaftsrecht und Rechtsbegriff: RabelsZ 56 (1992) 219 et seq. (221).

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Kötz, Rechtsvereinheitlichung 5; Kötz, Europäische Juristenausbildung 269 (both previous note).

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Kötz, Rechtsvereinheitlichung (above page 1) 7.

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See Projet de Code des Obligations et Contrats (1929).

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See for the (old) Nordic Sales Law T. Almén, Das Skandinavische Kaufrecht, German edition by F.K. Neubecker, I-III (1922); for the current situation L. Sevón, The New Scandinavian Codification on the Sale of Goods and the 1980 United Nations Convention on Contracts for the International Sale of Goods, in: Einheitliches Kaufrecht und nationales Obligationsrecht, published by Schlechtriem (1987) 343 et seq. (cited as: Einheitliches Kaufrecht); in general G. Carsten, Europäische Integration und nordische Zusammenarbeit auf dem Gebiet des Zivilrechts: ZEuP 1 (1993) 335 et seq.

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United Nations Convention on Contracts for the International Sale of Goods of April 11, 1980, BGB1. 1989 III 588; hereinafter cited as CISG.

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E.g., the relationship between the CISG and general contract avoidance due to error or the law of torts; see in more detail v. Caemmerer/Schlechtriem(-Herber) Art. 4 notes 13, 23, Art. notes 4 et seq.; Staudinger(-Magnus) Art. 4 notes 48 et seq., Art. 5 notes 11 et seq.

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One only has to compare the doubts raised in the commentaries regarding Art. 4 and 5 CISG.

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(2) Les questions concernant les matières régies par la présente Convention et qui ne sont pas expressément tranchées par elle seront reglées selon les principes géneraux dont elle s inspire ou, à défaut de ces principes, conformément à la loi applicable en vertu des règles du droit international privé.

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See Art. 6(2) Convention on Agency in the International Sale of Goods of February 17, 1983 (published in: Rev. dr. uniforme 1983 I-III, 133/137); Art 6(2) Convention on International Financing Leasing of May 22, 1988 (published in: RabelsZ 51 [1987] 730); Art. 4(2) Convention on International Factoring of May 28, 1988 (published in: RabelsZ 53 [1989] 733).

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The draft is published in: RabelsZ 9 (1935) 8.

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E. Rabel, Der Entwurf eines einheitlichen Kaufgesetzes: RabelsZ 9 (1935) 1 et seq. (54).

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Wording of Art 11 E 1935 and Rabel (previous note) 55.

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Dölle(-Wahl), Kommentar zum Einheitlichen Kaufrecht, Die Haager Kaufrechtsübereinkommen vom 1. Juli 1964 (1976) Art. 17 notes 75 et seq.; R.H. Graveson/E.J. Cohn/D. Graveson, The Uniform Laws on International Sales Act 1967 (1968) 62.

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Dölle(-Wahl) Art. 17 notes 75 et seq.; Graveson/Cohn/Graveson (both previous note).

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H.-J. Mertens/E. Rehbinder, Internationales Kaufrecht, Kommentar zu den Einheitlichen Kaufgesetzen (1975) Art. 17 notes 5 et seq.

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E.g., the principle of good faith: OLG Düsseldorf January 20, 1983, in: Schlechtriem/Magnus Art. 17 No. 7; the principle of reasonableness: Hof Amsterdam January 5, 1978, S & S 1978, 79; the prohibition against abuse: OLG Karlsruhe July 25, 1986, RIW 1986, 818; further the principle that the place of performance for payment as well as repayment of the purchase price is the seller s place of business: BGH October 22, 1980, BGHZ 78, 257; the principle that, in case of doubt, payments have to be applied first to interest on default, then to the oldest outstanding debt: Rb. Alkmaar May 27, 1982, in: Schlechtriem/Magnus Art. 17 No. 4; Hof Amsterdam November 4, 1982, Ned. IPR 1983 No. 215; the principle that the law of the seller is applicable to issues of prescription: OLG Schleswig-Holstein April 8, 1992, RIW 1992, 582; the principle that in case of doubt the payment has to be made in the currency at the creditor s place of business: OLG Koblenz January 21, 1983, in: Schlechtriem/Magnus Art. 17 No. 8; and finally the principle that the theory of complete restitution applies to compensation for damages: BGH November 28, 1990, NJW 1991, 639 (640).

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See for the transfer of rights (OLG Hamm July 1, 1982, in: Schlechtriem/Magnus Art. 17 No. 5), the Ordinance (OLG Koblenz March 1, 1985, Art. 17 No. 11), the liability for third parties (BFH March 14, 1984, NJW 1984, 2034; OLG Hamm December 19, 1983, Art. 40 No. 7) and the setoff (AG Frankfurt January 31, 1991, IPRax 1991, 345).

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See UNCITRAL Yb. 1 (1968--70; published: 1971) 159 (170 et seq.); UNCITRAL Yb. 2 (1971; published: 1972) 37 (49 et seq.).

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Off. Rec. 87.

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Art. 6 Agency Convention of 1983; Art. 6 Leasing Convention of 1988; Art. 4 Factoring Convention of 1988 (all above page 10).

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Karollus 16.

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See above under 3.

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See Rabel (above page 12); but Neumayer/Ming Art. 7 page 7.

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In case of doubt the English version (above page 9) is of particular importance, because English was the language of the preliminary drafts and deliberations in Vienna. In addition, the Spanish version of Art. 7(2) CISG corresponds to the English version: „en los que se basa“.

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See also v Caemmerer/Schlechtriem(- Herber) Art. 7 page 35; Enderlein/Maskow/Strohbach Art. 7 page 2; but Bianca/Bonell (-Bonell) Art. 7 page 2.3.2.2 (filling of gaps through comparative legal analysis); Frigge, Externe Lücken und Internationales Privatrecht im UN-Kaufrecht (Art. 7(2)) (1994) 74.

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Generally, in favor of a certain„creative development“ of the CISG Enderlein/Maskow/Strohbach Art. 7 page 10.1; Herber/Czerwenka Art. 7 page 11.

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Kötz, Rechtsvereinheitlichung (above page 1) 11; P. Behrens, Voraussetzungen und Grenzen der Rechtsfortbildung durch Rechtsvereinheitlichung: RabelsZ 50 (1986) 19 et seq. (26); Mertens (above page 1) 221; P.H. Neuhaus/J. Kropholler, Rechtsvereinheitlichung -- Rechtsverbesserung?: RabelsZ 45 (1981) 73 et seq. (80 et seq.).

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Published in 1994; see in detail Bonell (above page 1).

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See also F. Ferrari, Vendita internazionale di beni mobili I, in: Commentario del Codice Civile Scialoja-Branca, published by Galgano, Libro IV: Obbligazioni (1994) Art. 7 page 9; Karollus 16 et seq.; Staudinger(-Magnus) Art. 7 page 40.

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So defined by H. Dölle, Bemerkungen zu Art. 17 des Einheitsgesetzes über den Internationalen Kauf beweglicher körperlicher Gegenstände, in: FS Ficker (1967) 138 et seq. (141).

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They are regularly regarded as part of the general principles of Art. 7(2) CISG; see Bianca/Bonell (-Bonell) Art. 7 page 2.3.2.2; v. Caemmerer/Schlechtriem (-Herber) Art. 7 page 36; Herber/Czerwenka Art. 7 page 12; Reinhart Art. 7 page 7.

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See also below 5 b (18).

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