CISG and Sales of Good Act

Critically compare and contrast the CISG with the domestic Sales of Good Act. Should the UK adopt the CISG?

Introduction

Trade between companies has existed for a long time, but the laws governing trade have not always been as harmonies as they are in the present day (although to what extent, there is harmonisation is in itself arguable). Indeed, the very reason why the Convention on the International Sales of Goods Act, otherwise known as the Vienna Convention came about was that problems were seen in the fact that trade between different countries meant that different bodies of law of different states were, applicable. [1] Thus the Convention was concluded as part of attempts to harmonies international law. [2] The Convention applies to sale contracts for goods between parties whose place of business are in different states, with the condition that the states are contracting parties and the usual rules of private international law leads to the sales law of a particular state being applied. The Vienna Convention has come to have a considerable impact in international trade law, and indeed forms for the uniform sales law for more than two thirds of nations involved in trading on a global level. [3]

However, the UK is not a contracting party of the Vienna Convention, a fact which has been cited as one of the factors largely detracting from the influence of the Convention.Rather the UK relies on a large body of contract law comprising legislation and common law including the Sales of Good Act 1979. [4] The Sales of Goods Act 1979 can be seen to be supplemented by further legislation, including the Supply of Goods and Services Act 1982, the Sales and Supply of Goods Act 1994, and the sale and Supply of Goods to Consumers Regulation 2002. [5]

This essay shall analyses the salient features of both the Vienna Convention and the Sales of Goods Act and undertake a comparison between the two, assessing the question of whether the UK should consider the position of signing up to the CISG.

The essential features of the Sales of Goods Act 1979 are that whichever goods are delivered must ‘conform to contract’ and so must be as described, fit for the purpose and of satisfactory quality. In this instance there can be seen to be great similarities with a similar provision of conformity to contract provided by the CISG, as will be seen below. Many similarities can also be seen in the remedies provided if this is not conformed with, that purchases can request their money back ‘within a reasonable time’. However, the Sales of Goods Act provides for further provisions for damages. The Sales of Goods Act provides that up to six years after purchases, purchasers can demand damages for defective goods, an extensive period. [6]

The fact is that the Sales of Goods Act is an essential piece of legislation in the UK, and contract law is an established part of UK law recognised around the world, so much so that the UK is often the chosen place of resolution for international disputes. To move from the Sales of Good Act to the Vienna Convention would not be an easy step for the UK to take.

However, the position in the Vienna Convention is the product of long negotiation and drafting history and its substance can be seen to be highly admirable. Indeed, in many senses it is comparative to the Sales of Goods Act 1979. One example for this can be seen in the underlying theme of the Convention in the fact that it provides for freedom of contract. [7] This can be seen in the fact that (the) Convention generally applies automatically as the default positions but if parties provide in their contract that they wish to exclude the Convention from their agreement, then the party’s wishes will be respected and the Convention will not apply to the parties., furthermore, there is no limitation to this and unlike previous Conventions; a state is not allowed to add a reservation stating that the convention will only apply if specified by the parties. [8] The Convention will apply in default, unless the parties specify otherwise, which may perhaps make it more difficult for states to sign up to the Convention as it allows for less flexibility but does allow for certainty in the Convention.

“Throughout this essay it can be seen that both the ‘European’ way of dealing with cases (the procedure) and the technique of analysing cases (the legal method) are quite different from the approach of the common law. This is because the system used by the Court of Justice was created by countries (e.g. France and Germany) which rely on the Civil (or Roman) Law system. For various reasons the common law system developed separately from the Civil Law system used on the Continent. As Britain did not join the Community until 1973, there is minimal (but perhaps growing) Common Law influence to be seen in the Court of Justice.

The final court to note then (one of the increasing importance) is the European Court of.

Justice (ECJ). Today we tend to think only of the European Community (the EC—also known as the European Union or EU), but prior to the EC there existed the European Coal and Steel Community (ECSC), founded under the Treaty of Paris 1951. The Court of Justice began life as the Court for the ECSC and therefore, pre-dates the European Community. The Court of Justice became part of the European Economic Community (as it was then known) when that Community was founded under the Treaty of Rome 1957. It remained the Court of Justice for the ECSC and became the court for the other Community created at the same time as the Economic Community, viz. the European Atomic Energy Community (Euratom)”.

Certain distinctions of the Convenient with the Sales of Goods Act can broadly be seen in the fact that the Convention seems to adhere more to civil law systems concepts of law rather than those in the common law systems such as the Sales of Goods Act in the UK, the basis of common law systems. Indeed, there can be seen to be a geographical divergence in the states which have adopted the Convention, with more civil law systems adopting the Convention [9] and much more case-law in such states than common-law states, which have adopted the Convention less and have fewer extensive cases dealing with the provisions of the Convention, which often results in the interpretation of the Convention with reference to domestic law rather than Convention law in of its own right.

Civil law often has additional requirements not contained in the Sales of Goods Act. During the drafting of the Convention, the French, therefore, insisted that if an offer was made for goods, it had to include the prices for the goods if it were to come within the provisions of the Convention. This was not agreed to by other delegates in the Convention. [10] The eventual position was that the requirement was set out in Art 14(1) but Art 55 was added to limit this. [11]

The Convention did try and adopt a conciliatory approach, and it adopted both civil and common law concepts in its drafting. However, this has often meant that there is an imprecise language in the Convention and uncertainty as a result.

Cases where there has been a successful compromise between the two concepts can be seen to be the doctrine of good faith,which is provided for in the Sales of Goods Act. There was a divergence in this concept with other civil law jurisdictions, and the Vienna Convention seeks to resolve this by providing in Article 16(1) that good faith shall be taken into account when interpreting provisions of the convention. Thus while good faith does not from a substantive provision it is taken into account of in interpretation.

A key issue in the Sales of Goods Act is a repudiation of contracts. As is well known in the UK, where a fundamental breach is committed of the contract, the aggrieved party is entitled to consider the contract as repudiated and no longer proceeds with performance under the contract. [12] The British Sales of Goods Act implies obligations in contracts and creates a distinction between conditions and warranties so that where there has been a breach of a condition, there is a right to repudiation, whereas a breach of a warranty might not lead to such a result. The Convention does not adopt such a distinction, which is present in common law and applies it to all including civil law jurisdictions. Rather it provides that repudiation and the remedy of avoidance is available only if there is a ‘fundamental breach’ of the contract. This of course led to much dispute over the exact definition of what fundamental breach constituted. [13]

Another example can be seen in the remedies offered by British law including the Sales of Goods Act and the Vienna Convention. While British law allows for remedies including specific performance and compensation when there have been breaches of contracts, the usual position is that compensation is a much more usual remedy than that of specific performance. In civil law jurisdictions, however, specific performance is the more usual remedy that is awarded. Application of the substantive provisions of the Convention in relation to remedies of contracts. Article 28, therefore, provides that specific performance as a remedy would not be granted, unless under the usual laws of the country in which the applicable law applies, specific performance would be granted., Therefore, if the applicable law is in a civil jurisdiction specific performance would be granted. If the applicable law was that of a common law jurisdiction however then it was less likely that specific performance would be granted. This has the effect of ensuring that the tenets of the systems are preserved and allowed for negotiation on the Convention to proceed.

In addition to the fact that the Convention can be seen to have certain differences with the Sales of Goods Act, the Convention also has certain aspects of contract law, which might be seen to be essential which it does not cover. One example of this might be seen to be quite a fundamental one in that the Convention does not provide any substantive provisions to determine whether or not the contract is valid. Furthermore, the Convention fails to deal with the property effects of the contract. The rules which govern the validity of a contract are therefore, that of the domestic law, [14] detracting from the idea that the Convention provides a comprehensive set of rules and providing fewer incentives to sign up to the Convention.

The Convention does not include further substantive provisions in its reach including purchasers for personal use as they are not considered to be international in scope. [15] This might be justified by the fact that the Convention is not meant to apply to commercial law but is aimed at consumer contracts instead. However, in some instances the Convention does provide for consumers where purchases are bought from an international border or foreign mail companies. This might be seen as some as being a fine distinction and creating uncertainty as to which provisions of consumer the Convention does and does not cover, creating a certain dichotomy on its reach.

The fact that the UK has not ratified the Convention has not gone unnoticed, and while the Convention is now in wide reach of the world commentators have tried to look at reasons why the Convention has not been ratified by certain states. Other than the reasons above, it has been noticed that there is often a slight lack of knowledge in the Convention. As it has been noted above, the Convention would have some familiar concepts to the civil law jurisdictions but perhaps less to the common law jurisdictions, such as, for example, in finding specific performance an ordinary rather than an exceptional remedy. The fact that there is a lack of knowledge in such Conventions means that states are less likely to sign up to it. The fact that states are less likely to sign up to it means that there will be less case-law of the Convention leading to further incentives not to sign up to the Convention, and thus repeating the Cycle. Furthermore, the fact that the Convention is not necessarily binding on parties and the fact that parties may choose as regularly as they like to contract out of the provisions of the Convention means that often, lawyers and parties will not see it as necessary to go to the extra trouble to become familiar with the provisions of the Convention so as to contract to it.Contracting parties, lawyers and Courts all look to certainty in provisions and if there is a body of law, which is more established, has more case-law, is more familiar and therefore, more certain such as the Sales of Goods Act 1979 in the UK, this is much more likely to be adopted than the less familiar Convention.

In addition, the Convention lacks consistency of interpretation. The Sales of Goods Act is interpreted by Courts in England and Wales, which are bound by the doctrine of precedent and so the Courts must follow rulings of the other Courts. [16] This provides for a high level of consistency and a great number of authorities for such Acts. Even in supra-national systems, there is often a body which can authoritative state what the interpretation of a provision ought to be, as might be seen to be the case with the European Court of Justice for European Community law.However, the Convention lacks this, there is no hierarch ally superior authority, which can be authoritative determine what the final interpretation of the law should be and while countries are supposed to refer to the interpretations made by other countries by appreciating that the Convention is international in character, these countries are not bound by such a reference and so will therefore, often go on to make their interpretation. This allows for a large discretion in the nature of the Convention which given the variety of countries involved is likely to be a large-ranging discretion. Suggestions have been made for an international commercial la tribunal or even for European Countries to give the European Court of Justice Jurisdiction in interpreting the provisions of the Convention. [17]

Conclusion

In conclusion, it can be seen that there are many differences between the UK legislation encompassed by the Sales of Good Act and that provided for in the Vienna Convention. Such differences are often seen to be irreconcilable in many events given that there are different approaches in the UK towards certain concepts. Certainly, the CISG seems to be much more geared towards civil law concepts of contract law and its associated provisions than it is towards the common law and the provisions of the Sales of Goods Act. Furthermore, there are many provisions, most importantly those governing the validity of a contract that are covered by the Sales of Good Act but not covered by the Vienna Convention. However, the fact is that the globalised nature of the world means that increases harmonisation must be called for.. The fact that the UK is not part of the Vienna Convention is often a much-quoted fact detracting from the importance of the Convention, and it is important to try and harmonies laws to encourage further trade in the process. It is this writer’s view that it is difficult to see how the UK with its rich history of legislation in the Sales of Goods Act and case law in this could adopt the Vienna Convention without difficulty. This, however, does not preclude the possibility of future negotiation and further assimilation of the Vienna Convention with common law concepts, which may lead the UK to adopt the CISG in the near future.