1. Prof. Giorgio F. COLOMBO

2. Lesson n. 4

3.  Art. 7 CISG  (1) In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade

4.  Art. 7 CISG  (2) 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

5.  International commercial law should be detached from national practices  If national courts were to interpret international instruments according to their local views, uniformity and consistency in the system would be jeopardized  The CISG is applied simoultaneously by a number of different national (courts) and a- national (arbitral tribunals) decisiorial bodies

6.  Unlike national (and some international) jurisdictions, the CISG lacks of a «final instance court» ◦ Is it allowed to refer to national/arbitral «precedents»? ◦ What is the legal value of those precedents?  Six official languages: Arabic, Chinese, English, French, Russian, Spanish ◦ What happens in case of discrepancies? ◦ Vienna Treaties Convention ◦ Not too literal

7.  What is «good faith» under a legal perspective? ◦ Civil law tradition ◦ Common law tradition (but UCC: honesty in fact and observance of reasonable commercial standards of fair dealing)  How to interpret «good faith» in the framework of the CISG? ◦ Art. 40 (...could not been unaware) ◦ Art. 77 (duty to mitigate damages) ◦ Etc.

8.  As mentioned, the CISG does not cover every and any aspect related to the international sale of goods  However, to ensure a consistent and autonomous application, Art. 7.2 comes into play  When a matter is not explicitly regulated by the CISG, first reference is to be made to the «general principles» behind it  For example ◦ Burden of proof ◦ Set-off

9.  Art. 8 CISG  (1) For the purposes of this Convention, statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was

10.  Art. 8 CISG  (2) If the preceeding paragraph is not applicable, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances

11.  Art. 8 CISG  (3) In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practice which the parties have established between themselves, usages and any subsequent conduct of the parties

12.  Subjective interpretation (8.1) ◦ Only applicable if the other party knew or could not have been unaware ◦ Difficult to prove ◦ Burden of proof on the party  Objective interpretation (8.2) ◦ Reasonableness

13.  Mr. A, The CEO of Buyer, American company dealing with ceramics visits a business fair in Bologna, Italy  There he meets with Mr. B, the CEO of Seller, an Italian company producing ceramic tiles  As Mr. A does not speak Italian, he communicates with Mr. B through Mr. C, a translator who works for Mr. B

14.  Mr. A and Mr. B reach an agreement about quantities, quality, delivery time, etc., they wrote down their agreement on the forms provided by Seller  The forms are written in Italian. One of the clauses says «The buyer hereby states thet he is aware of the sales conditions stated on the reverse and that he expressely approves them»

15.  Those conditions included a procedure for reporting defective goods and the right of Seller to suspend its performance in case of late payments  After a few successful shipments, Buyer found some problems in the tiles, and therefore suspended payments for the defective tiles  Seller stopped sending the tiles  Buyer brought a legal action against Seller

16.  Seller argued that Buyer was not allowed to suspend payments, as it did not comply with the procedure to claim for defects described in the sales conditions  Moreover, Seller was entitled to stop the deliveries according to the same conditions  Buyer replied that it never intended to be bound by those terms and conditions. Seller conceded that, but also stated that Buyer signed the contract nevertheless

17.  If you were the judge: ◦ Would you allow Buyer and/or Seller to use evidence external to the contract and referring to an oral agreement? ◦ Who would win the case?

18.  Art. 9  (1) The parties are bound by any usage to which they have agreed and by any practice which they have established between themselves

19.  Art. 9  (2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by parties to contracts of the type involved in the particular trade concerned

20.  A Spanish Buyer and an Italian Seller enter into a contract for the supply of floor scrubbing machines for industrial use  According to their contract, Spanish courts have jurisdiction. The Spanish Code of Civil Procedure says that documents, to have evidentiary value, must be in Spanish or accompanied by a translation in Spanish  Seller, however, only sent invoices to Buyer either in Italian or English

21.  After a few claims about the quality of goods, the Buyer suspended the payments  Seller brought a legal action and won in first instance  Buyer appealed, claiming that the invoices on which Seller based its action were not valid evidence before a Spanish court  Who is right?