1. Prof. Giorgio F. COLOMBO

2. Lesson n. 3

3.  Goods  movables ◦ Tangible ◦ Natural or artificial ◦ Final products or parts ◦ Liquid/Gas ◦ Animals?  No real estate  Exceptions: ships, electricity, etc.  Other exceptions

4.  What if the good does not exist yet? (e.g. crops)  What if the goods are immovable but then become movable? (e.g. trees  wood)  How about non-tangible goods?

5.  Is software a «good» in the sense of the CISG? ◦ Is software a «movable»? ◦ Is there any difference if the software is downloaded or sold on tangible supports (e.g. DVDs)? ◦ Is software really «sold»? ◦ Licence vs. Copyright restrictions

6.  Art. 3  (1) Contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the good undertakes to supply a substantial part of the materials  (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 labour or other services

7.  Art. 3  (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 labour or other services

8.  Generally speaking, all the operations necessary to procude or assembly the goods are not considered labour or other services;  They therefore fall into 3 (1) and not into 3 (2)  «Other services» may include mainteinance, supervision, training, etc.

9.  How do we evaluate a «substantial» part of the materials?  Is it quantitative or qualitative? ◦ French (official language): une part essentielle des éléments matériels ◦ Spanish (official language): una parte sustancial de los materiales  Does it only refer to materials or also to «immaterial» contributions? (e.g. know-how, patented techologies, etc.)

10.  CISG Advisory Council ◦ Basic criterion is the «economic» value of the materials to be supplied ◦ It is not a fixed percentage, but should be determined according to the circumstances of the case

11.  A Japanese company orders from an Italian manufacturer a number of violins to be delivered to Japan  The Japanese company procures the wood to be used in the production from Croatia  The Italian manufacturer provides the work and the special vernish that gives the violin a characteristic sound  Wood is 35% of the price. Manufacturing 40%. Vernish 25%.  The contract says «This contract shall be governed by Japanese Law»  Does the CISG apply?

12.  A French company orders from a German manufacturer some remote control units  The French buyer supplies the design and the central chip  The German manufacturer provides the work and all the remaining materials  The chip is 10% of the price, but it is essential for the functioning of the remote control  The contract does not have any indication about the applicable law  Does the CISG apply?

13.  Generally speaking, the CISG governs «mixed» contracts in which the Seller provides additional services  However, when the services constitute the «preponderant» part of the contract  Again, how do we establish if services are «preponderant»?

14.  CISG Asvisory Council  In the interpretation of the parties’ agreements relevant factors include: ◦ Denomination ◦ Content ◦ Price’s structure  In assessing the preponderance, economic value comes first  However, «preponderant» should not be quantified by predetermined percentages of value. It should be determined on the basis of an overall assessment

15.  An Austrian company (Buyer) enters into a contract with a German company (Seller). Under the contract, the German company shall supply and install steel bars  The price for the installation is exactly 50% of the overall contract price  The contract’s title says «Contract for the purchase of steel bars»  The contract is silent about the applicable law  Does the CISG apply?

16.  A Chinese company (Buyer) enters into a contract with an Italian company (Seller) to buy a machine to manufacture paper  The contract provides for on-site training on the Chinese employees plus 10 years mainteinance services (at least one check a year).  The price is EUR 100.000. It does not specify the proportions allotted to the machine and the services  The contract is silent about the applicable law  Does the CISG apply?