Are Democratic Protections Necessary to Assure the

Representation of Least Developed Nations’ Interests in International Commercial Law?

 

A Comparative Study of the UNIDROIT Principles of

International Commercial Contracts and the

United Nations Convention on the International Sale of Goods

 

Mateo Goldman

 

Overview

I. Introduction……………………………………………………………….        1

II. Drafting Procedures for the CISG and UNIDROIT Principles….............            2

III. Implications for Democratic Legitimacy………………………………..           11

IV. The Evolution of the UNIDROIT Principles into Hard Law…………...             13

V. Identification of LDC Interests in International Contract Law………….              16

VI. Presence of LDC Interests in the CISG…………………………………         21

VII. Presence of LDC Interests in the UNIDROIT Principles……………...           30

VIII. Identifying the Victors in Both Instruments…………………………..             37

IX. Explanations…………………………………………………………….        38

X. Conclusions……………………………………………………………...        40

 

I.                   Introduction

A. Brief Overview

This paper argues in favor of harmonizing international commercial law as a means of expanding international commerce in a fair and equitable manner.  To expedite the harmonization process, the paper looks at whether the democratic principles typically used in drafting international treaties are necessary to assure that least developed nations’ (“LDC”) interests are adequately represented.  This analysis is done by making a substantive comparison of the United Nations Convention on the International Sale of Goods (“CISG”) and the UNIDROIT Principles of International Commercial Contracts (“the Principles”).  The former instrument was drafted with traditional democratic protections of having government representatives enter into negotiations, which eventually required government ratification for its effectuation.  The Principles, on the other hand, were drafted by a group of scholars working in their “individual capacity” and required no government ratification.  This paper looks to the substance of both instruments to determine whether the democratic protections used in the CISG were necessary to assure that LDC interests were adequately represented. 

After looking at the total number of LDC interests present in both instruments, this paper demonstrates that there is essentially a tie in the total number of LDC interests represented, proving that LDCs fared no better in having their interests represented in the CISG than in the Principles.  In both instruments, LDCs made similar concessions on provisions which were important to them, while at the same time gaining important ground in other areas.  The lesson from these findings is clear: drafting equitable and balanced international commercial law, that adequately represents LDC interests, does not require laborious and time consuming democratic protections.  In many areas of law, simply allowing for academics and other professionals to produce a set of laws, without any democratic protections, allows for the creation of a body of law which fairly represents many diverging interests. 

In recent years, there has been a great effort to develop harmonized international commercial law through a variety of drafting mechanisms.  Professor Roy Goode has established two primary justifications for the unification and harmonization of international commercial law.  First, creating a uniform set of international commercial law rules allow for increased legal predictability and a reduction in transaction costs.[1]  Uniform law achieves these goals by allowing contracting parties to work with a common set of rules, which prevents parties from having to enter into agreements governed by unfamiliar foreign law.  Harmonized laws also provide “gap fillers” when parties have dealt with each other informally and thereby have not establishing either a detailed enough agreement or designated a body of law to govern their responsibilities.[2]  Second, harmonization “improve[s] rules which in national systems are non-existent . . .unclear or unsuited to international transactions, and thereby remove impediments to cross-border trading which the parties cannot resolve by agreement under national law.”[3]

            One of the biggest impediments to drafting harmonized international commercial law is the tedious and lengthy negotiation process required to reach a compromise.  A brief glance at the almost thirty year period it took to draft the CISG makes the case in point.  The primary reason for this time consuming process of the CISG, as discussed below, is that the instrument had to accommodate the diverging interests of sixty-two representative members, all of whom came from diverging legal, political, and economic systems.  The document produced had to be acceptable to a broad enough base to assure the requisite minimum number of states would ratify it.  Otherwise it would have been an exercise in futility to spend nearly three decades on an instrument which never came into effect for lack ratification.  

            In contrast, the Principles, a body of similar rules, were drafted in a relatively short period of time—10 years.  As discussed below, the drafters of the Principles were not faced with the same political pressures incident to ratification and therefore were able to complete the document in only a fraction of the time. 

            As Professor Goode has pointed out, “[t]here has long been a feeling that transnational law is dominated by developed countries and is then imposed on developing countries and new market economies, who may feel that their views are not being adequately considered.”[4]  A fundamental goal, therefore, in choosing drafting procedures for international law is to assure that LDCs have their interests adequately represented.  This goal, however, must be balanced with the need of having the commercial laws be drafted as quickly and efficiently as possible.  This paper examines the consequences of opting for the latter set of values at the expense of the former.  More specifically, what happens when a group of mostly unaccountable academics get together to draft international commercial law?  To what degree are the interests of LDCs fairly represented?  To answer these questions, this article compares the substance of both CISG and the Principles to determine which document more adequately represents LDC interests. 

B. CISG

            The CISG's previous incarnation began in 1930 as the Uniform Law on International Sales (ULIS).[5]  The initiative was actually started by UNIDROIT, in Rome, which created a committee exclusively composed of Europeans to draft the document.[6]  Several drafts of the instrument were produced, first adjusted by the League of Nations in 1939, then after the postponement due to World War II, by a 21-nation conference at The Hague.[7]  After subsequent additions, the draft was finally completed in 1963.[8]  Due to several extenuating conditions, however, only eight nations signed on.[9]

            After the failure of the ULIS to take hold, the UN Commission on International Trade Law (“UNCITRAL”) decided to make the creation of an international sales law a priority.[10]  A working group was established in 1969, which produced the first draft in 1976, considered by many to be a “redraft” of the ULIS.[11]  The final draft of the agreement was finally completed in 1980, which to date has been ratified by sixty-nine countries.[12]

            The scope of the CISG is equivalent to Article 2 of the U.C.C.[13]  The scope of the agreement covers contract formation, as well as the rights and obligations of parties entering into international commercial contracts.[14]  After a country has decided to adopt the CISG, the ratifying country may chose not to be bound by provisions regarding the formation of contracts and rights and obligations, but may not make reservations regarding the “sphere of application” or other mandatory provisions found in Part IV.[15]  After becoming a signatory to the agreement, the CISG becomes the default set of rules for international contracts between parties situated in signatory countries.  Contracting parties, however, may opt out of the CISG by an express provision in their contract. 

 

 

 

 

C. UNIDROIT Principles

            In 1980, UNIDROIT officially undertook the task of drafting a text of principles on international commercial contracts.[16]  In 1994, UNIDROIT published the first edition of the Principles, but kept open the possibility of further amending the draft.  Three years later, the Working Group began work on its second draft, which was subsequently produced in 2004.[17]  Currently, a third draft is being produced.

            The Principles represent “a totally new approach to international trade law.”[18]  It does not fall under the traditional categories of a binding “convention,” nor any other model law.[19]  Rather, the Principles are a complete set of rules, in that they can be used exclusively to govern a contract without any supplemental laws, and can be used by legislators, judges and contracting parties in a variety of ways.  As stated in the Principles, legislators may look to the Principles as a model for drafting their own law, judges may look to them as the governing law to a dispute, and contracting parties may choose to have the Principles apply as lex contractus.[20]

            The Principles include 119 articles divided into seven chapters: General Provision, Formation, Validity, Interpretation, Content, Performance, and Non-performance.[21]  Unlike the CISG, the Principles also contain sets of commentary and illustrations after each provision. 

 

 

D. Methodology and Ability to Compare Instruments

            As mentioned above, the methodology used is a comparison of several different provisions in both the CISG and Principles which cover the same principle of law, such as open price terms or the applicability of trade usages.  An initial question may be asked as to whether the CISG and Principles can actually be compared.  While the CISG only covers contracts relating to transactions for the sales of goods, the Principles extend to all international commercial contracts.  The Principles, however, constitute a complete body of contract law, which can be exclusively used to govern a contract dispute, including disputes concerning contracts for the international sale of goods.  Therefore, the Principles can completely replace the CISG if contracting parties agree, or if an adjudicator chooses to do so.  A substantive comparison is therefore appropriate.

 

II.                Drafting Procedures of the CISG and UNIDROIT Principles

A. CISG

            The procedures used at UNCITRAL for the creation of the CISG involved typical procedures for drafting an international legal instrument.  Through the organization of UNCITRAL, sixty-two nations were represented in the drafting process.[22]  Of those nations, twenty-two came from developed countries, eleven were from “socialist regimes,” and twenty-nine were from the “Third World.”[23]  During negotiations, members negotiated in “blocks” of countries from Africa, Asia, Latin America, Eastern Europe, and Western Europe (including the United States).[24]  In total, the largest block of representatives constituted members of LDCs.  The blocks worked together to provide a united front over certain provisions during negotiations which revised the draft document produced by a working group.

             A fourteen-member working group was appointed to write a draft convention, which was later modified during further negotiations with other member nations.[25]  The members of the working group represented nations from Brazil, France, Ghana, Hungary, India, Iran, Japan, Kenya, Mexico, Norway, Tunisia, USSR, the United Kingdom, and the United States.[26]  According to World Bank definitions’ of low-income and lower-middle income countries[27], fifty percent of the Working Group was composed of representatives from low and lower-middle income nations.

            The group met annually, beginning in 1969, and after almost ten years produced a draft convention.[28]  The draft was then submitted to the entire sixty-two-member Commission, which reviewed and amended the draft after lengthy negotiations between the different blocks of nations.[29]  After approving the document, the Commission recommended to the United Nations to convene a diplomatic conference, which was held in Vienna in 1980.[30] The conference was held over a five-week period, where representatives of all member nations, as well as representatives from non-governmental organizations and inter-governmental organizations attended.[31]  At the end of the period, the instrument was adopted unanimously.[32]

            At the diplomatic conference, member nations had the option to accede to the Convention by September 30, 1981, which would then enter into force within twelve months.[33]  After the deadline passed for ascension, however, a nation could still accede at any time afterwards.[34]   Once a country becomes a signatory, the CISG will become the default governing law in international sales contracts between parties in signatory countries.  The treaty provides, however, that parties may opt out of the country by expressly agreeing so in their agreement.[35] 

B. UNIDROIT Principles

            The International Institute for the Unification of Private Law (UNIDROIT), an intergovernmental organization funded by its sixty-member nations, maintains a three tiered structure: a Secretariat, General Council, and General Assembly.[36]  The General Assembly is made up of representatives from all sixty-member nations, which elects, in turn, the twenty-five-member General Council every five years.[37]  The General Council “supervises all policy aspects of the means by which the Institute's statutory objectives are to be attained.”[38]  The members of the General Council come from Austria, Turkey, Argentina, Germany, Italy, Egypt, Denmark, the U.S., Australia, Hungry, the Netherlands, Ireland, Japan, the United Kingdom, the Russian Federation, the Republic of Korea, Uruguay, Mexico, India, Poland, France, Canada, Spain, Greece, Switzerland, and the People’s Republic of China.[39]  According to World Bank classifications of low income and lower-middle income countries,[40] only six of those members, or twenty-four percent were from low to lower-middle income countries.[41]  The General Council appoints the Secretariat, which is responsible for the day to day activities of the organization.[42]

            After UNIDROIT determines that the drafting of a particular instrument should be pursued, in this case, a set of contract rules for international commercial transactions, the Secretariat establishes and chooses members for a “study group,” otherwise known as a “working group,” to draw up a preliminary draft of the instrument.[43]  Working groups are composed of experts who are working “in their personal capacity,” as opposed to representing the nations from which they come.[44]  It is the Secretariat, itself, which chooses members “to ensure as balanced a representation as possible of the world’s different legal and economic systems and geographic regions.”[45]  In 1980, the Working Group for the 1994 UNIDROIT Principles was established.  It was composed of seventeen members, four of which came from low to lower-middle income countries.[46]  The 2004 version of the UNIDROIT Principles had a seventeen-member working group with four members from the same low to lower-middle income countries.[47]  After the preliminary draft of the UNIDROIT Principles were drafted by the Working Group, they submitted it to the Governing Council, which in turn approved it.[48] 

The process used by UNIDROIT was similar to that of the UNCITRAL in that the greater General Assembly was required to approve the work proposed by the working group.  The most important distinction, however, is the fact that the “buck stopped” at the General Assembly in drafting of the UNIDROIT Principles.  Getting approval for the CISG at the General Assembly, conversely, was a minor hurdle compared with the task of requiring home country ratification, in which the realm of domestic politics becomes a completely new factor to contend with.  For the UNIDROIT Principles, as soon as the General Assembly approved the instrument, it became a viable instrument of international commercial law.

 

III.             Implications for Democratic Legitimacy

A. CISG

            The procedures implemented in drafting the CISG assured that LDC interests would be represented in the final text of the document in several ways.  First, the choice that each nation retained in whether or not to ratify the instrument imposed a great amount of accountability on the drafters to assure that all members’ interests were represented.  One main consideration the drafters had to keep in mind was that without a large number of ratifying countries, the instrument’s effectiveness would be limited.  Pressure was, therefore, continually placed on the drafters to make sure that no one block of interest groups was overly represented in drafting the text.  For example, Professor Garro noted that a “crisis” ensued during negotiations over provisions for notification for non-conforming goods, when many delegates “feared that a failure to give some deference to the objections over notification of defects might result in the developing nations refusing to ratify the Convention.”[49]  As is noted later, the pressure to garner as many signatories as possible, forced member nations to compromise, leading to many provisions favoring LDCs.  

            The power of each country to ratify with reservations also assured that at least if LDCs’ interests were not represented in a certain provision, those countries could still protect themselves by opting out of that provision.  The CISG provides that a signatory county may decide that it will not be bound by Part II, on the formation of contracts, and Part III on the sphere of application and other general provisions [50]  Signatory countries, however, may not opt out of Part I on the sphere of application and Part IV on the final mandatory provisions.[51]  For instance, a signatory country cannot expand the scope of application of the CISG, to also apply to the validity of the contract or towards property.  

B. UNIDROIT Principles

            None of the democratic protections put in place in the drafting of the CISG were present in the drafting of the Principles.  First and foremost, there is no ratification required of the Principles.  As mentioned above, the only approval required for the Working Group’s draft is the General Council’s endorsement.[52]  Therefore, the drafters of the Principles are faced with considerably less pressure to draft their rules in a way that will gain as wide as approval as possible.  The only pressure placed on these drafters is the pragmatic consideration to have the instrument chosen to be applicable by either adjudicating bodies or contracting parties. 

            Second, members of the Working Group are not “representatives” of their home country; instead, they are asked only to present their views in a “personal capacity.”[53]  These members are not chosen as a delegation from their home country, but are chosen by the UNIDROIT Secretariat.[54]  The drafters have no home country agency/department to report back to and therefore have no responsibility to represent the interests of their home country.  Therefore, it cannot even be assumed that members coming from LDCs will necessarily represent the specific interests of those nations.  Many scholars have argued that this creates the problem in which the Principles “illegimately exclude[] (elected) lawmakers and judiciaries from international contract regulation”,[55] leaving the rules to be decided largely by unaccountable academics.  

 

IV.              Evolution of the UNIDROIT Principles into Hard Law

            At first blush, the lack of democratic legitimacy of the UNIDROIT Principles should not technically be a problem because legal principles are not hard law.  The Principles have been largely compared to the Restatements of Law promulgated by the American Law Institute.[56]  If the Principles are regarded in this light, LDCs have little to fear. 

            The reality, however, is that the Principles have been recently used as the governing law in international commercial disputes in several different situations.  The Principles itself, establish five different scenarios where the instrument may be used as the governing law in a contractual dispute.  The Preamble states:

They shall be applied when the parties have agreed that their contract be governed by them.  They may be applied when the parties have agreed that their contract be governed by general principles of law, the lex mercatoria or the like. They may be applied when the parties have not chosen any law to govern their contract.  They may be used to interpret or supplement international uniform law instruments.  They may be used to interpret or supplement domestic law.[57] 

 

When the Principles are applied in these scenarios, it is clear that it is transformed from soft to hard law.  Therefore it becomes particularly important to determine whether or not LDC interests are in fact represented in this document.  

A. Use of Principles as Governing Law

            The Principles have been used as the governing law of international contract disputes regularly in all five of the above mentioned scenarios.   International arbitral tribunals have been above and beyond the most common forum in which this has occurred.  

            The Principles have been applied as the governing law to a dispute when parties contractually agree that their contract will be govern by the general principles of international law, or the like.  Charles Brower and Jeremy Sharpe have identified several choice of law clauses which have induced arbitrators to use the Principles.[58]  These include: “generally accepted principles of international commercial law,” “general standards and rules of international contracts,” “international practices,” “natural justice,” “general principles of equity,” and “even Anglo-Saxon principles of law.”[59]  The authors have also shown that many courts, including one in the U.S., are willing to uphold arbitral decisions which have applied the Principles as governing laws to disputes.[60] 

            There have also been several instances when parties expressly state in their contracts that the Principles will apply as governing law to their agreement.[61]  As of 2000, the Center for Transnational Law, through a world-wide survey, has reported that there have been fifty-three instances where parties have expressly agreed to have the Principles govern the dispute.[62] 

            Contracting parties also fail, from time to time, to designate a law governing their contract.[63]  When parties fail to do so, international arbitral laws are not always helpful because they “provide no uniform method for determining applicable law.”[64]  Currently there are a variety of methods in which an arbitral tribunal can select a choice of law theory, including applying the law of location of the tribunal, direct selection of choice of law rules, and selection of law most closely related to a dispute.[65]  The use of the Principles as applicable law has provided a viable alternative to this complex set of choice of law options, and has been used regularly as the governing law, when no choice of law has been expressly contracted for.[66]

            There are also several situations in which the Principles may be used to play the role as a gap-filler or a replacement for domestic and international laws which have been expressly selected by the parties but are inadequate to cover a dispute.[67]  The Principles have been used in several cases to supplement and interpret the CISG, as well as other international commercial instruments. 

B. Theoretical Implications for LDCs

            Theoretically, this move towards the use of the Principles as hard law has the potential to be problematic for LDCs in several respects.  The clearest issue arises when the Principles are chosen by arbitral tribunals, without the express consent of contracting parties, to govern international commercial disputes.  Citizens of LDCs will be subject to a body of law in which its government has not had the opportunity to ratify and in many cases make even a small contribution to its drafting.  Theoretically, these parties may be governed by a body of law which adversely affects their specific interests.

            The same theoretical issues arise when parties explicitly have chosen the Principles to govern their contracts.  Although, it is arguable that parties from LDCs would not agree to apply the Principles to their contract if the body of law adversely affected them, practically speaking this express choice of law may still be problematic.  This is because parties with less bargaining power will typically be subject to the choice of law of the stronger party.  For example, typically in international commercial contracts between LDC parties and US corporations, US law generally applies to the dispute.  Following that example, it is clear that although parties situated in LDCs may contractually agree to have the Principles apply as the governing law, it cannot be inferred that the Principles therefore must not adversely affect their interest.  Even members of the Working Group of the Principles have commented that agreement by parties to apply the Principles as governing law may be unadvisable for legitimacy purposes.[68]

 

V.                 Identifying LDC Interests

            In order to determine to what degree LDC interests are represented in the two instruments in question, specific LDC interests in international contract law must be identified.  The best method for deducing these interests is to examine the proposals and arguments LDCs and other nations put forward during negotiations for the CISG.  Two unique characteristics of LDCs manifest themselves in many of the proposals they put forward during these negotiations:  a) their tendency to primarily export agricultural products, and b) “their markets’ underdeveloped technological and legal condition.”[69]  In total, there are roughly five distinct areas of international contract law in which LDCs have unique, identifiable interests: a) notification of non-conformity of goods, b) trade usage, c) suspension of performance, d) open price terms, and e) excuse of performance.

A.     Notification of Non-Conformity of Goods

            During negotiations for the CISG, one of the most contentious issues for LDCs involved the amount of time during which a buyer was required to notify the seller for non-conforming goods, and the penalty for failing to do so.[70]    Professor Garro has stated that LDCs have argued for as great amount of time as possible for buyer’s notification requirements because they typically import “technically complex machinery whose defects may not be readily ascertainable.”[71]  Furthermore, importing LDC merchants may be illiterate and often times require foreign experts to test imported machinery, many times requiring goods to remain in their port of entry for up to two years before they are finally delivered to the purchaser.[72]  Developed countries’ laws, on the other hand, typically require the buyer to “seasonably” indicate to the seller that delivered goods do not conform to contract specifications, with a severe penalty for failing to do so.[73]  The U.C.C. §2-605(1), for example, precludes a buyer from suspending its own performance after receiving non-conforming goods, if it fails to notify the seller.  LDCs, on the other hand, have argued that in international commercial contracts, they should not be required to provide timely notification for non-conforming goods and have advocated vociferously against any provisions providing a severe penalty for failing to do so.  

B.   Trade Usage

            Developed countries (“DC”) argue that trade usages should be used as an interpretative mechanism for determining the meaning of international commercial contracts.[74]  They have argued that allowing “trade usages” permits contracting parties to “increase mercantile flexibility and economic efficiency.”[75]  The U.C.C., for instance, construes express terms of a contract to be consistent with trade usage whenever possible.[76]  LDCs, however, advocate for the opposite position in international contract law.  This stems primarily from two concerns.  First, because international trade usages have been developed historically by DCs, many private LDC actors may not be aware of them.[77]  Second, trade usages are typically created by powerful international actors, such as large multinational corporations based out of DCs.  These trade usages are created with the interests of the powerful actors in mind, and do not take into account LDC interests.[78]  Therefore, it is in the LDCs best interest for trade usages to play as limited a role as possible in international contract law.

C. Suspension of Performance

            Because conditions in LDCs may be perceived as more unstable than those of DCs, many LDCs advocate against recognizing extensive privileges of a party to suspend performance based on anticipatory breach.[79]  During CISG negotiations, LDCs argued for a high standard (“beyond doubt”) before a party could conclude the other was not going to fulfill its obligations.[80]  One LDC representative even argued against a provision which would require a potentially breaching party to prove it would fulfill its obligations, as is required in US law.[81]  The LDC representative argued that requiring parties to prove its fulfillment of obligations would impose an excessive cost on those contracting parties.[82]  LDC interests, therefore, require that a party be subject to a high standard in demonstrating another party would not fulfill its obligations before the former can suspend its own performance.

D. Open Price Terms

            During negotiations for the CISG, LDC representatives argued against allowing for a contract to contain open price terms.  They argued that in the event of a contract dispute, a court, which needed to supply the price for an open price term in an LDC commodity export contract, would likely look to the commodities market to determine the reasonable price.[83]  However, in a contract with open price terms for the sale of manufactured goods originating in DCs, a court would look to the manufacturers themselves to determine what the price would be.[84]  This would have an adverse effect on LDC parties in a dispute with DC manufacturers because the latter would have both the incentive and ability to make their price as high as possible.  Many DCs allow for open price terms in their contract law.  US contract law, for example, is very permissive in allowing contracting parties to leave open price terms in their contracts.  The U.C.C. will still find a contract valid if a) the price terms completely open, b) the price is left to be determined by future negotiations but the parties fail to agree, and c) the price is to be determined by some agreed standard.[85]

            Although LDCs may have an interest in the freedom to contract, they have a greater interest in allowing for a paternalistic clause prohibiting them from entering into open price term contracts.  This stems partially from the difference in bargaining power typically associated with contracts between parties from DC and LDCs, with the greater favor usually in the former’s hands.  If the international contract law prohibits open price terms, then LDC private parties will be protected from being forced into agreements which in some cases could lead to a court supplying an unexpected high price for manufactured goods. 

 

 

E. Excuse of Performance

            LDCs typically seek to allow for greater permissibility on excuse of performance for force majeure events.  Because LDCs often have “fragile political and economic conditions” LDCs seek to allow for as much permissibility for excuse of performance as possible due to unforeseen circumstances.[86]  DCs, however, generally have “stringent interpretation of force majeure allowing for excuse of performance only in a limited number of circumstances.[87]  Sweden, for example, will only allow consider the “equivalent [of] a World War” to constitute a force majeure.[88]

            This interest is reconcilable with the LDC interest in limiting a party’s suspension of performance due to anticipatory breach.  This is because that while an LDC private party may not want its counterpart in a developed nation to suspend performance due to the fragility of conditions in its own country, the former will still want to be excused from performance if conditions in its own country prevent it from performing. 

G. Other Considerations

            One author has argued that LDCs place a greater emphasis on the need for a writing than do DCs.[89]  The author argues that DCs do not emphasize the need for a writing because they want to allow for parties to conclude contracts as quickly as possible.[90]  According to the author, LDCs, in contrast require writing in order to “further the objectives of a planned, state-run economy.”[91]  This argument fails in several respects.  First, many LDCs have moved towards free-market lassiez-faire markets in the last several decades, making this need irrelevant.  Second, it can hardly be said that the U.C.C., for example, is permissive in its requirement for writing.  Any transaction for the sale of goods over $500 requires a writing, which will basically include all commercial deals of any moderate size.[92]  Therefore it seems unlikely that LDCs today are any more interested in requiring a proof of writing than are DCs. 

 

VI.              The Presence of LDC Interests in the CISG

 

A.     Notification of Non-Conformity

 

Article 39(1): The buyer must examine the goods, or cause them to be examined, with as short a period as is practicable in the circumstances.[93]  

The buyer loses the right to rely on lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it.[94]

 

Article 39(2): In any event, the buyer loses the right to rely on a lack of conformity of the goods if he does not give the seller notice thereof at the latest within a period of two years from the date on which the goods were actually handed over to the buyer, unless the time limit is inconsistent with a contractual period of guarantee.[95]

 

Article 44(1): Notwithstanding the provisions of paragraph (1) of article 39. . . the buyer may reduce the price in accordance with article 50 or claim damages, except for loss of profit, if he has a reasonable excuse for his failure to give the required notice.[96]

 

            As mentioned before, the primary controversy concerning the buyer’s notification of non-conforming goods emerged from the amount of time the buyer was required to notify the seller of a defect, and the effect of the former’s failure to do so.  The final text of the CISG established rules for the notification of non-conformity in three provisions: Article 38(1), 39(1), and 44.  Article 38(1) requires that the buyer inspect the goods within the shortest period possible in light of the circumstances.[97]  This provision works in “tandem” with Article 39(1) which requires the buyer to notify the seller of any defects of the goods within a reasonable period of time after a defect has been discovered or “ought” to have been discovered.[98] 

            These first two provisions, on their face, represent a defeat for LDCs in several respects.  First, the buyer is required to inspect the goods in the “shortest time possible as practicable.”[99]  This provision works against the interests in those LDC buyers, which at times require outside inspectors to examine the goods to determine their conformity.  Second, buyers are required to notify sellers in a “reasonable” amount of time.[100]  The delegate from Ghana specifically argued that there should be an indefinite time requirement for a buyer’s notification of non-conformity.[101]  Although the perception of what constitutes “reasonable” amount of time will vary depending on the adjudicating court, many DC courts accustomed to US law will likely interpret this provision to mean a relatively short amount of time.  Third and finally, Article 39(1) places constructive knowledge of a defect of non-conforming goods on the buyer for defects which it “ought” to have known.[102]  This language will force a court to find a buyer to have constructively known a good was defective, even if there was no actual knowledge, placing an additional burden on unsophisticated LDC buyers who may not be able to ascertain whether or not goods are in conformity.

            LDCs, however, were able to score an important victory with respect to penalties on buyers which failed to provide adequate notice to sellers.  The general rule on the penalty for failing to give appropriate notice is a total bar from damages.[103]  Professor Garro notes, however, that “after a flurry of debate,” LDCs were able to push through Article 44 which allows for a buyer to “deduct the value of the defect from the price despite the lack of timely notice, if he has ‘a reasonable ‘excuse’ for his failure to give” adequate notice.[104]  Of course the effectiveness of this provision in protecting LDC buyers will depend largely on the interpretation of “reasonable excuse.”  This provision, however, provides at least the possibility of a complete excuse for any buyer who has failed to provide any notice to the seller of non conforming goods.  This represents a significant victory for LDCs because many DCs do not have any similar provision in their own domestic law, demonstrating a important compromise on their part. 

B.      Trade Usage

Article 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.[105]

 

            As mentioned before, LDCs made strong arguments against allowing for trade usages to be used to interpret a contract.  They argued that because trade usages were generally created by DC multinational corporations which mostly favored those parties, allowing for trade usages to be used as an interpretive mechanism would unfairly injure them.  During negotiations for the CISG, socialist countries, which maintained the same opposition to trade usages as LDCs, argued for a rule which would only allow trade usages to be used if parties explicitly agreed to them, and if they did not violate any statutory provisions.[106]  DCs, on the other had, following their own legal traditions which liberally apply trade usages, argued that usages should be applied when parties agreed to them “impliedly.”[107]

            LDCs were not successful in having their views represented in this portion of the CISG.  Article 9 states that trade usages will be applied to a contract when parties either have known or should have known of the usage, and they are widely known.[108]  The only victory LDCs might claim is the lack of any provision indicating whether or not trade usages supersede statutory provisions.[109]  Regardless, it is clear that all contracting parties must take into account prevailing trade usages when drafting their contracts.

C.     Suspension of Performance

Article 72 (1): If prior to the date for performance of the contract it is clear that one of the parties will commit a fundamental breach of contract, the other party may declare the contract avoided.[110]

 

            LDCs sought very strict rules regarding a seller’s ability to suspend its own performance when a buyer’s execution of its obligations was uncertain.  They argued that the uncertain conditions present in many LDCs should not unfairly lead to sellers suspending their own performance.  The first draft of the CISG allowed for parties to suspend their performance when there were “‘good grounds to conclude’ that the other party would not perform a substantial part of his obligations.”[111] The final provisions of the CISG changed the draft document to only allowing suspension of performance when “it becomes apparent” that the other party plans to breach its obligations.[112]  Some commentators, including the delegate from Ghana, have argued that the final provision still allows for too great an excuse for suspension of performance, which only needs to be based on “mere appearances.”[113]  Professor Garro argues, however, that although that the provision falls short of requiring the objective test of a bankrupt buyer before suspension of performance, the final draft is “a great deal less subjective” than the original draft,[114] making this a modest victory for LDCs.

D.     Excuse of Performance

Article 79(1): Non-performance by a party is excused if that party proves that the non-performance was due to an impediment beyond its control and that it could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.[115]

           

            As mentioned above, the uncertain economic, political and social conditions in many developing nations requires that international contract laws allow for parties situated in these countries to be able to excuse their own performance when an event outside of their power occurs making performance difficult.

             The force majeure provision of the CISG essentially establishes a three part test for a party to justify an excuse of performance.  First, the parties must establish that “non-performance was due to an impediment beyond its control.”[116]  Then the parties must either a) show that the impediment could not have been taken “into account at the time of the conclusion of the contract,” or b) to have been able to avoid or “overcome” the consequences of the impediment.[117] 

            This provision creates a very rigid test for a party wishing to invoke force majeure as an excuse of performance.  For the second prong to be met, a party is expected to have

analyze[d] the market, the situation in the country(ies) where the manufacturing of the goods takes place, where the delivery should occur, where the transport passes, and so on for each step in the performance of the contract. Such an analysis would require the party to foresee a large number of events, particularly in the unsettled world in which we are, so much so that the first part of the condition may not be fulfilled very easily.[118]

 

The third prong condition is equally burdensome in “that internal excuses connected with business operations, general management of the company, financial structuring of the activities or social management of the undertaking will probably never be accepted as events beyond the control of that party.”[119]  Therefore, even in the case where executing a contract would bankrupt a company, if the problem emanates from an internal problem within the company, there will be no excuse of performance.

            Compared to the U.C.C., the CISG is much more restrictive in the types of events which can lead to excuse of performance.  Under the U.C.C., a party may excuse performance due to impracticability, impossibility, or frustration of purpose.[120]  In the impracticability doctrine of §2-615, a party is excused from performing when a) an unexpected event occurs, b) the risk of the occurrence was not placed on the party invoking the exception, and c) the event renders performance impracticable.[121] 

            In a few respects, the CISG is broader than the U.C.C. in what constitutes an excuse of performance.  First, the U.C.C. only applies to sellers’ excuses of delayed performance and non-delivery of the goods.[122]  The CISG, on the other hand, allows for excuse of performance for both buyers and sellers.[123]  This difference could be important for LDC parties in that they may need to invoke the force majeure provision not only to excuse delivery of the goods, but from purchasing them as well.  Second, the U.C.C. requires that even after a force majeure event occurs, if a party can partially perform, it must do so.[124]  This could also be beneficial for LDC parties wishing to excuse as much performance as possible.

The more visible differences, however, are the greater restrictions the CISG requires than the U.C.C.  First, the U.C.C. makes no requirement that the event be completely “unforeseeable,” as does the CISG.[125] Second, and more importantly, the CISG only allows for excuse of performance in cases where performance is actually impossible; there is no provision which allows for excuse of performance where performing would either be economically impracticable or would frustrate the purpose of the contract.[126]  The lack of an economic impracticability doctrine can have an important adverse effect on LDC private parties which are situated in less economically stable situations.  Sharp changes in currency valuations, finance availability, as well as general political and social upheaval, could easy cause performance of a contract to be impracticable, while at the same time remaining possible to perform.  Therefore, although, LDCs did benefit from the excuse of performance extending to buyers and sellers alike, the lack of an impracticability or frustration of purpose doctrine generally outweighed any victories gained.

F. Open Price Term

 

Article 14(1): A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price.[127]

 

Article 55: Where a contract has been validly concluded but does not expressly or implicitly fix or make provision for determining the price, the parties are considered, in the absence of any indication to the contrary, to have impliedly made reference to the price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the trade concerned.[128]

 

            During negotiations for the CISG, the US delegation unsuccessfully attempted to amend Article 14(1), which on its face, prohibited open price terms.[129]  In an effort to compromise, however, the drafters added Article 55, which allows for open price terms in the event the contract was validly concluded.[130]

 These two seemingly contradictory provisions have generated a significant amount of debate as to the general position the CISG takes on open price terms.  At the head of this debate are Professors Farnsworth and Hannold.  Farnsworth argues that Article 55 has no meaning because for that provision to apply, a contract must first be validly concluded.[131]  To determine whether a contract has been validly concluded, one must look to Article 14, which states that there is no valid contract where a price term has not been set explicitly or implicitly.[132]  Therefore, according to Farnsworth, a contract with no price term will be invalid.[133] Professor Hannold, on the other hand, argues that Article 55 must be read in conjunction with Article 14 which would mean that a contract “may” be valid with no price term.[134]  Currently, it is Professor Hannold’s view which has held the most sway.[135]

      Regardless of one’s interpretation of these two provisions, it seems that LDCs made a modest gain in the drafting of the CISG.  Although they were not outright victorious, the diverging interpretations of the two provisions will at least arm parties situated in LDCs with powerful arguments during negotiations with their DC counterparts.  Just the possibility that a court could deem a contract invalid, depending on the adjudicating judge’s legal scholar of choice, should be enough to protect LDC parties from having to enter into contracts with no price term.

 

VII.           The Presence of LDC Interests in the UNIDROIT Principles

            As mentioned in the introduction, the Principles can serve to govern a contract which is solely for the exchange of goods, but can also extend to most any other contracts in general.  For purposes of this analysis, however, the substance of the Principles will be examined in light of how these rules would affect a contract for the sale of goods.  Therefore the terms “buyer” and “seller” are used regularly, but it should be noted that these terms could equally be applied to a supplier or consumer of a service.  

A. Notification of Non-Conformity

Article 7.3.2: If performance has been offered late or otherwise does not conform to the contract the aggrieved party will lose its right to terminate the contract unless it gives notice to the other party within a reasonable time after it has or ought to have become aware of the offer or of the non-conforming performance.[136]

           

             Unlike the CISG, this provision does not discuss the amount of time in which the buyer must inspect goods, or any other services rendered, to determine whether they conform to the terms of the contract.  The Principles only discuss the consequences of failing to give proper notice.  This may or may not be considered a victory for LDCs.  The CISG specifies that a buyer must inspect the goods in “the shortest a period as is practicable.”[137]  The Principles, however, do no such thing.  Without any clear guidelines as to how soon a buyer would have to inspect the goods after they have been received, it is likely that a court applying the Principles to a contract dispute would find a “reasonableness” requirement implied in the provision.  There would be no other real choice.  If that is the case, the LDCs have improved their situation in the Principles because requiring buyers to inspect goods within a “reasonable” period of time clearly is better than as “short” a time as possible.

            Several parts of this provision directly mirror that of the CISG.  First, the amount of time in which the buyer is required to notify the seller after discovery of non-conforming goods is the same in both the Principles and CISG.  The Principles, as the CISG, require that the buyer to notify the seller within a “reasonable” amount of time after the buyer has actual or constructive knowledge of the non-conforming goods.[138]  Second, the Principles, as with the CISG, put a constructive knowledge requirement on the buyer in that a court may determine that it “ought” to have known that certain goods were non-conforming.[139]  As in the CISG, this provision goes against LDC interests because it will have deemed an unsophisticated buyer, which may not have the means to inspect the goods, to have constructive knowledge of a defect. 

            The most visible difference between the CISG and Principles is the lack of the CISG Article 44 exception in the latter instrument.  The CISG, as mentioned before, allows for a buyer to still be able to collect damages for non-conforming goods even after it failed to notify the seller if the buyer had a “reasonable excuse.”[140]  The lack of a comparable provision in Principles marks a significant disadvantage for LDCs in the Principles compared with the CISG.  The Principles clearly state that a buyer that fails to give proper notice of non-conformity will lose its right to terminate the contract based on the non-conformity.[141]

B. Trade Usages

Article 1.9(2): The parties are bound by a usage that is widely known to and regularly observed in international trade by parties in the particular trade concerned except where the application of such a usage would be unreasonable.[142]

           

The Principle’s trade usage provision mirrors the CISG in most respects.  There are the requirements that the usage be widely known as well as that the usage be confined to transactions involving international trade. 

            The Principles, however, make a departure from the CISG in respect to the last sentence of Article 1.9(2).  The Principles explicitly provide for an exception to the use of trade usages when such application would be “unreasonable.”[143]  The official commentary of the Principles indicates that the application of trade usages will be unreasonable depending upon “the particular conditions in which one or both parties operate and/or the atypical nature of the transaction.”[144]  This provision provides an important exception for LDCs in that an explicit loophole is provided for LDC private parties who may be completely unaware of those trade usages.  As mentioned before, many of the primary arguments advocated by LDCs during CISG reasoned that because trade usages were primarily developed by large businesses in Western countries, many private parties situated in LDCs would not be aware of those trade usages.  It is unclear from the provision whether or not unawareness of a trade usage would constitute a “particular condition.”  Regardless, this exception provides for one way in which LDC private parties may argue out of being bound by trade usages.

            The other primary concern of LDCs in the use of trade usages was that because trade usages were designed by parties in DCs, the trade usages would be developed to favor those parties’ interests.  It is also unclear whether that the exception provided for in Principles could be interpreted to extend to situations in which a particular trade usage unfairly benefits parties situated in DCs.  As with the above mentioned concern, this exception at least provides LDC parties fodder for any arguments directed against the application trade usages.

C.  Suspension of Performance

Article 7.3.3: Where prior to the date for performance by one of the parties it is clear that there will be a fundamental non-performance by that party, the other party may terminate the contract.[145]

 

            The Principles’ suspension of performance provision is almost identical in all respects to that of the CISG.   The most contentious issue concerning LDCs was to what degree the party wishing to terminate the contract based on anticipatory breach needed to be sure before it was entitled to breach.  LDCs typically argued that there should be an objective approach and that nothing short of the declaration of bankruptcy would give adequate justification to suspend performance.  The Principles, as in the CISG, rejected that approach, opting instead for a subjective test.  With both instruments, a court will look to whether or not it was clear to the party suspending performance that a fundamental breach was about to occur. 

D.  Excuse of Performance: Force Majeure and Hardship

Article 7.1.7(1): Non-performance by a party is excused if that party proves that the non-performance was due to an impediment beyond its control and that it could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.

 

Article 6.2.2 There is hardship where the occurrence of events fundamentally alters the equilibrium of the contract either because the cost of a party’s performance has increased or . . . has diminished, and

a) the events occur. . . after the conclusion of the contract,

b) the events could not reasonably have been taken into account. . . at the time of the conclusion of the contract,

c) the events are beyond the control of the disadvantaged party; and

d) the risk of the events was not assumed by the disadvantaged party.[146]

 

            The Principles allow for the excuse of a party’s performance in two separate provisions.  First, is Article 7.1.7(1) which allows for excuse of performance after a force majeure event.[147]  The wording of Article 7.1.7(1) is exactly verbatim to the force majeure provision in Article 79 of the CISG.[148]  As with the CISG, this provision is completely “draconian and unforgiving” in that “[n]othing short of total impossibility will excuse non-performance.”[149]  Therefore at first blush, it appears that LDCs fared exactly the same in both treaties, which is to say, poorly. 

            The Principles contain an additional provision, however, which allows for an additional excuse of performance due to a “hardship.”[150]  A party must satisfy the above mentioned four part test, which is similar to that of force majeure, the difference being that the party wishing to suspend performance only has to demonstrate that there was a change in the cost to perform.[151]  Once a hardship has been established, the party wishing to suspend performance must demand a renegotiation of the contract “without undue delay.”[152]  If the negotiations fail, a court is entitled to terminate the contract or “attempt to restore equilibrium.”[153]

            The Principles’ hardship provision goes above and beyond what the CISG and even the U.C.C. allow as excuse of performance.  Under the U.C.C., a party can only invoke the impracticability doctrine if there is going to be very severe economic consequences to the seller.  The Principles, however, only require there to be a fundamental shift in the “equilibrium” of a contract, considered by at least one commentator to amount to a fifty percent change in the cost or value of performance.[154]        The hardship provision also extends to include the U.C.C. excuse of frustration of purpose.  The Principles clearly state that in evaluating what types of circumstances constitute hardship, they state that a “substantial decrease in the value or the total loss of any of performance may be due to. . . the frustration of purpose for which the performance was required.”[155]

            It is clear, therefore, that LDC interests received great representation in the drafting of the hardship provision in the Principles.  In fact, the Principles’ approach to excuse of performance represents one of the most lenient forms of excuse of performance in contract law today. 

E.     Open Price Terms

Article 2.1.2: A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance.

 

Article 5.1.7 (1) Where a contract does not fix or make provision for determining the price, the parties are considered, in the absence of any indication to the contrary, to have made reference to the price generally charged at the time of the conclusion of the contract for such performance in comparable circumstances in the trade concerned or, if no such price is available, to a reasonable price.

 

            Article 5.1.7 is in most respects similar to Article 55 of the CISG.  The most important element that is missing is the CISG’s controversial reference to the precondition of a valid contract.  Regardless, even if the Principles had required a contract to first be valid before an open price term could be permitted, as does the CISG, this would not have created a loophole for LDCs.  Under Article 2.1.1, the only requirement for an offer to be valid is that the offeror intends to be bound.  There is no express requirement that a price term be supplied.  The official commentary to Article 2.1.1 expressly states that

essential terms, such as the precise description of the goods or. . . the price to be paid for them. . . may be left undetermined in the offer without necessarily rendering it insufficiently definite: all depends on whether or not the offeror by making the offer, and the offeree by accepting it, intends to enter into a binding agreement.[156] 

 

This is a strikingly different provision than in the CISG.  Here, the Principles leave absolutely no room for LDC parties to use the threat of invalidity when arguing against open price terms in an international contract.

 

VIII.        Identifying the Victors in Both Instruments

Assessing which instrument LDCs were most successful in having their interests represented requires an analysis of which interests are more important than others, and to what greater degree certain LDC interests were represented in one document over another.  The former factor is almost impossible to determine because although there are many common traits to LDC economies, there are many different economic actors between different industries as well between importers and exporters.  Each of these individuals would place a different emphasis on different provisions.  A nation-wide empirical analysis would be required to compile cross-sector and cross-employment values to calculate these factors with any accuracy.  As of date, there is no such available evidence.  It is most likely, however, that of the five interests described above, when averaged by the entire population of LDC businessmen and women, all interests would most likely be favored more or less equally.  Therefore the analysis as to in which document LDCs fared better should center on to how much greater an LDC interest is represented in each document for each provision. 

In total, LDCs had greater success in the drafting of the CISG for the provisions on notification of non-conforming goods and open price terms.  Conversely, LDCs were more successful in drafting the Principles in the provisions of trade usages and excuse of performance.  The provision on suspension of performance is identical in both documents.  On notification of non-conforming goods, the CISG provides an express exception for failing to provide adequate notification where there was “good cause.”  This exception is not present in the Principles.  For open price terms, the CISG provides seemingly contradictory provisions, which opens up at least the possibility that a contract will be deemed invalid with no price term.  The Principles, on the other hand, clearly allow for open price terms.  For trade usages, the Principles allow for trade usages to be excluded from the interpretation of a contract, where such a use would be “unreasonable.”  The CISG, however, makes no such exception.  On excuse of performance, the Principles create a broad exception for both force majeure and financial hardship.  The CISG, conversely, takes an even stricter approach than the U.C.C., allowing for an excuse of performance where there is total impossibility. 

In contention for the heavy weight champion of the world, both the CISG and Principles are 2-2-1. 

 

IX.              Explanations

            The substantive comparison of both the CISG and Principles produces very curious results.  In sum, all of the democratic protections put in place under the drafting of the CISG produced no greater assurance that all members’ interests were equally reflected in the result than the closed drafting process of the Principles.  There are several explanations for this result, all which lead to the general conclusion that in many different subject areas, drafting international commercial law does not require lengthy and costly democratic protections to assure that all nations’ diverging interests are represented in a balanced and fair way. 

            One element that may explain the results is the difference in the different capacities drafters took on as “representatives” and as “individuals.”  The Principles state in their introduction that the Working Group was composed of individuals from “all the major legal systems of the world. . . most academics, some high ranking judges or civil servants who all sat in personal capacity[157] (emphasis added).  It is arguable that the drafters of the Principles were able to remove themselves from the desire to solely represent the interest of their home countries, and instead seek to develop law which most broadly reflected and equally represented many different diverging interests.  As mentioned, most of the drafters were academics, as opposed to government representatives, and could therefore take a more objective approach to drafting the law.[158] 

Another possible explanation is that the financial stakes of international contract law are not as high as in other areas of international economic law, such world trade laws.  This could have lead to fewer pressures from working group member’s home country special interest groups to assure that certain provisions fall in line with their interests.  Had the financial stakes been higher, special interest groups would have been more likely to attempt to influence the drafters.  Because of the lack of democratic protections put in place in drafting the instrument, the drafters could have been easy targets for special interest groups.  It is clear from the final product, however, that the drafters of the Principles were fair in assuring that all diverging interests were equally met.

The general lack of visibility of international contract law may have also lead to the fact that the democratic protections put in place in drafting the CISG were overstated.  It is likely that ratifying governments did not have to concern themselves with the public opinion on whether or not they ratified the statute because the general public was unaware of the treaty in the first place.  In fact today, a good number of lawyers engaged in international commerce are not even aware of the treaty.  After all, when was the last time a candidate’s voting record on international contract treaty ratification became an issue in a campaign?  It is probably safe to say that only international economic law which has a significant effect to the ratifying nations’ population as a whole, such as the General Agreement on Tariffs and Trade, draws enough publicity to put any great accountability on the governments’ choice to ratify a particular instrument. 

 

X.                 Conclusion

In conclusion, the costly democratic protections put in place to assure that diverging interests of different nations’ are fairly represented in international commercial law are not always essential.  Clearly there are many areas of law in which this process of unaccountable legal drafting would not work, namely in areas where issues of national security and general economic stability become a factor.  The fact remains, however, that although the drafting of these two legal instruments was completed by completely different processes, the same equitable results were produced. 

In advancing the goal of a unified international legal system for commercial transactions, it seems clear that in many cases drafting procedures which allow unaccountable academics to draft laws, will allow for the production of equitable instruments which will be international recognized and applied.  



[1] Roy Goode, Rule, Practice, and Pragmatism in Transnational Commercial Law, 54 Int’l & Comp. L Q. 539, 555 (2005). 

[2] Id.

[3] Id. at 556.

[4]  Goode, supra note 1, at 559.

[5] E. Allan Farnswoth, Developing International Trade Law, 9 Cal. W. L. Rev. 461, 463 (1979).

[6] Id.

[7] Id. at 461-2.

[8] Id. at 462.

[9] Id.

[10] Id. at 463.

[11] Id. at 464.

[13] Farnsworth, supra note 5, at 461.

[14] Alejandro M. Garro, Reconciliation of Legal Traditions in the U.N. Convention on Contracts for the International Sale of Goods, 23 Int’l. Law. 443, 446-447, (1989) (hereinafter “Garro, Reconciling Legal Traditions”).

[15] Id. at 447.

[16] International Institute for the Unification of Private Law, UNIDROIT Principles of International Commercial Contracts xiv (2004) (hereinafter “UNIDROIT Principles”).

[17]Id. at vii.

[18] Michael Bonell, The UNIDROIT Principles of International Commercial Contracts: Why? What? How?, 69 Tul. L. Rev. 1121, 1122 (1995).

[19] Id. 

[20] UNIDROIT Principles, supra note 16, at 1.

[21] Bonell, supra note 18, at 1127.

[22] Id at 444.

[23] Id.

[24] Farnsworth, supra note 5, at 461.

[25] Garro, Reconciling Legal Traditions, supra note 14, at 483 n.2.

[26] Id.

[28] Garro, Reconciling Legal Traditions, supra note 14. 

[29] Id.

[30] Avery W. Katz, Claus Ott and Hans-Bernd Schäfer, The Political Economy of International Sales Law, 25 Int'l Rev. L. & Econ. 446, 450 (2005).

[31] Id.

[32] Id.

[33] Garro, Reconciling Legal Traditions, supra note 14, at 483 n.6.

[34] Id. at 483 n.5. 

[35] Id. at 447-8.

[36] International Institute for the Unification of Private Law: Presentation, http://www.unidroit.org/english/presentation/structure.htm (last visited Sept. 28, 2006). 

[37] Id.

[38] Id. 

[39] Members of the UNIDROIT Governing Council, http://www.unidroit.org/english/presentation/gc.htm (last visited Sept. 28, 2006).

[40] Data-Country Groups, supra note 7. 

[41] These include Argentina, Egypt, Uruguay, Mexico, India, and the People’s Republic of China.

[42] International Institute for the Unification of Private Law: Presentation, supra note 12. 

[43] Id.

[44] Id. 

[45] Id.

[46]UNIDROIT Principles, supra note 16, at xviii (low to lower-middle income countries included Brazil, Ghana, Argentina, and the People’s Republic of China).

[47] Id. at x.

[48] International Institute for the Unification of Private Law: Presentation, supra note 12.

[49] Garro, Reconciling Legal Traditions,  supra note 14, at 471.

[50] Id. at 446.

[51] Id. at 446-7.

[52] International Institute for the Unification of Private Law: Presentation, supra note 12.

[53] Id.

[54] International Institute for the Unification of Private Law: Presentation, supra note 12.

[55] Lars Meyer, Soft Law for Solid Contracts?  A Comparative Analysis of the Value of the UNIDROIT Principles of International Commercial Contracts and the Principles of European Contract Law to the Process of Contract Law Harmonization, 34. Denv. J. Int’l L. & Pol’y 119, 134 (2006).

[56] Charles Brower and Jeremy Sharpe, The Creeping Codification of Transnational Commercial Law: An Arbitrator’s Perspective, 45 Va. J. Int’l L. 199, 202 (2004). 

[57] UNIDROIT Principles, supra note 16, at 1.

[58] Charles Brower and Jeremy Sharpe, The Creeping Codification of Transnational Commercial Law: An Arbitrator’s Perspective, 45 Va. J. Int’l L. 199, 208-9 (2004). 

[59] Id. 

[60] Id. at 209.

[61] UNIDROIT Principles, supra note 16, at 22. 

[62] Brower and Sharpe, supra note 56, at 208. 

[63] Alejandro Garro, The Contribution of the UNIDROIT Principles to the Advancement of International Commercial Arbitration, 3 Tul. J. Int’l & Comp. L. 93, 116 (1995) (hereinafter “Contribution of UNIDROIT Principles”). 

[64] Id.

[65] Id. at 116-8.

[66] For a full list of arbitral awards referencing the UNIDROIT Principles, see the UNILEX website, available at http://www.unilex.info/dynasite.cfm?dssid=2377&dsmid=13620.  See, e.g., Arbitral Award 12111 International Court of Arbitration (2003) (finding the UNIDROIT Principles to govern the dispute).

[67] Garro, Contribution of UNIDROIT Principles, at 121-4.

[68] Goode, supra note 1, at 545.

[69] Gyula Eorsi, A Propos the 1980 Vienna Convention on Contracts for the International Sale of Goods, 31 Am. J. Comp. L. 333, 349 (1983).

[70] Garro, Reconciling Legal Traditions, supra note 14, at 469-70. 

[71] Id. at 469. 

[72] Id.

[73] U.C.C. § 2-602(1) (1994). 

[74] Lisa M. Ryan, The Convention on Contracts for the International Sale of Goods: Diverging Interpretations, 4 Tul. J. Int’l &Comp. L. 99, 102-3 (1995).

[75] Id.

[76] Id. (citing U.C.C. § 2-208(2)). 

[77] Id. at 104.

[78] Id.

[79] Garro, Reconciling Legal Traditions, supra note 14, at 473. 

[80] Id. at 474.

[81] U.C.C. § 2-609(1) allows for a party to demand reasonable assurance that another contracting party will fulfill its obligations once a reasonable ground for insecurity has arisen. 

[82] Garro, Reconciling Legal Traditions, supra note 14, at 474-5. 

[83] Garro, supra note 14, at 483 n.88.

[84] Id.

[85] U.C.C. § 2-305(1). 

[86] Ryan, supra note 74, at 113.

[87] Id. (citing U.C.C. § 2-615(a) (1994)).

[88] Id. 

[89] Id. at 105-6.

[90] Id.

[91] Id. at 106. 

[92] U.C.C. § 2-201(1).

[93] United Nations Convention on the International Sale of Goods, art. 38(1), April 11, 1980, 1489 U.N.T.S. 3 (hereinafter “CISG”).

[94] CISG, art. 39(1).

[95] CISG, art. 39(2).

[96] CISG, art. 44(1).

[97] CISG, art. 38(1).

[98] Garro, Reconciling Legal Traditions, supra note 14, at 470-1.

[99] CISG, art. 38(1).

[100] Id.

[101] Garro, Reconciling Legal Traditions, supra note 14, at 471.

[102] CISG, art. 39(1)

[103] Garro, Reconciling Legal Traditions, supra note 14, at 471.

[104] Id. at 472. 

[105] CISG, art. 9(2).

[106] Garro, Reconciling Legal Traditions, supra note 14, at 477-8.

[107] Id.

[108] CISG, art. 9(1).

[109] Garro, Reconciling Legal Traditions, supra note 14, at 479. 

[110] CISG, art. 72(1).

[111] Garro, Reconciling Legal Traditions, supra note 14, at 473.

[112] CISG, art. 71

[113] Garro, Reconciling Legal Traditions, supra note 14, at 474 (quoting Professor Date Bah).

[114] Id. at 474-5.

[115] CISG, art. 71(1).

[116] CISG, art. 71(1). 

[117] CISG, art. 71(1). 

[118] Catherine Kessedjian, Competing Approaches to Force Majeure and Hardship, 25  Int’l Rev. L. & Econ. 415, 418 (2005). 

[119] Id.

[120] Jennifer M. Bund, Force Majeure Clauses: Drafting Advice for the CISG Practitioner, 17 J.L. & Com. 381, 394 (1998).

[121] Id. at 394-5.

[122] Id. at 402.

[123] Id. at 403.

[124] Id.

[125] Id. at 395.

[126] Sarah Howard Jenkins, Exemption from Non-Performance: UCC, CISG, and UNIDROIT Principles-A Comparative Assessment, 72 Tul. L. Rev. 2015, 2024 (1998).

[127] CISG, art. 14(1).

[128] CISG, art. 55.

[129] Garro, Reconciling Legal Traditions, supra note 14, at 463-4.

[130] Id.

[131] Id.

[132] Id.

[133] Id.

[134] Jumpita Ruangvichathorn, Commentary on Whether the UNIDROIT Principles of International Commercial Contracts May be Used to Interpret or Supplement Article 55 of the CISG, available at http://www.cisg.law.pace.edu/cisg/biblio/ruangvichathorn.html#r* (last visited Dec. 04, 2006).

[135] Id.

[136] UNIDROIT Principles, supra note 16, at 223-4.

[137] CISG, art. 38(1)

[138] UNIDROIT Principles, supra note 16, at 223-4

[139] Id.

[140] CISG, art. 44

[141] UNIDROIT Principles, supra note 16, at 223-4.

[142] Id. at  24.

[143] UNIDROIT Principles, supra  note 16, at 24.

[144] Id. at 26. 

[145] Id. at 225.

[146] Id. at 183.

[147] Id. at 206-7.

[148] Id.; CISG, art. 79.

[149] Joseph M. Perillo, Force Majeure and Hardship under the UNIDROIT Principles of International Commercial Contracts, 5 Tul. J. Int’l & Comp. L. 5, 21 (1998).

[150] UNIDROIT Principles, supra note 16, at 183.

[151] Id.

[152] Jenkins, supra note 106, at 390.

[153] Id. at 391.

[154] Perillo, supra note 149, at 22.

[155] UNIDROIT Principles, supra note 16, at 184.    

[156] Id. at 36.

[157] Id. at xiv.

[158] In a couple of cases, some of the same government representatives in the CISG were members of the UNIDROIT Working Group, namely Professor Date-Bah, from Ghana.  It would be interesting to see whether or not his positions changed from acting as a different capacity in drafting the two instruments.