WIEN CONVENTION (Encyclopedia)

WIEN CONVENTION OF 1980 ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS

Preamble

The Wien Convention (Convention) on contracts for the international sale of goods, adopted by the United Nations in 1980, is a uniform law convention, thus incorporated in the legal systems of the contracting states. The Convention was drafted by UNCITRAL during a period of ten years and it substituted two 1964 Hague uniform law conventions (on the international sale of goods and on the formation of contracts for the international sale of goods), which had been ratified by very few states. About 70 states, from different geographic areas and juridical traditions, have currently ratified the Convention.
The Convention entered into force in Italy on 1 January 1988 and it is fully applied as for our country, as Italy has not utilised the possibility of not applying Section Two or Section Three of the Convention.
The Convention applies to contracts for the international sale of goods, entered into between parties having their respective place of business in different states when these are contracting states or when conflict of law rules lead to the application of the law of a contracting state. Parties can, nevertheless, exclude fully or partially the application of the Convention. When this happens, the applicable law is to be determined according to private international law, including the 1980 Rome Convention or, for contracts entered into after 17 December 2009, Regulation (CE) 592/2008, also known as “Rome I”.
The Convention rules on the formation of the contract of sale and on the rights and duties arising between seller and buyer, while it does not concern the validity of the contract and its effects on the sold goods. As for issues not regulated by the Convention (such as transfer of property and determination of the price), private international law of the concerned states will apply.

General principles

Concept of sale

The Convention does not provide a definition of sale. Nevertheless, scholars prevalently believe that, based on the reciprocal duties established between the parties, a sale can be defined as the contract according to which the seller undertakes to deliver goods and the related documents and to transfer property, while the buyer undertakes to take delivery and pay the price (Articles 30 and 53).
Other scholars, considering that Article 3 of the Convention also includes an obligation of facere, note that the notion of sale can also include the provision of goods that are still to be manufactured at the time the contract is entered into, unless the materials are provided by the party ordering the goods; in the latter case, the obligation of facere would be prevailing, thus excluding the contract from the application of the Convention under paragraph 2 of Article 3. Therefore, the issue of prevalence of materials on work, which in the Italian law is taken into consideration by distinguishing the sale from the procurement, is relevant for the Convention only when the material is provided by the party ordering the good.
The Convention also rules on contracts modifying an international sale contract, on preliminary contracts, and – according to some scholars – on supply contracts. Article 2 consists of a list of contracts explicitly excluded.

Application of the Convention

For a sale - as defined above - to fall under the application of the Convention, it shall first of all be international, which means that, according to Article 1, paragraph 1, the parties must have their places of business in different contracting States (the nationality of the parties is irrelevant). A place of business can be not only the main seat of a company, but also the secondary ones. On the other hand, the seat of the agent who entered a contract in the name of another party is not relevant. When the party does not have a place of business, the habitual residence is taken into account (Article 10, paragraph 2). The internationality of the sale as defined shall be known by the parties (Article 1, paragraph 2).
If the contract is international, one of two additional criteria established in Article 1, paragraph one shall also be satisfied:
i) the States where the parties have their place of business must be contracting States; or
ii) Conflict of law rules must lead to the application of the law of a contracting State1.
Even when these criteria are fulfilled, according to Article 6, the parties can exclude, fully or partially, the execution of the Convention. In that case, the law resulting from a domestic conflict of law rules or international convention will apply (which typically recognises the principle of freedom of choice by the parties and, more recently in EC Regulations, protection of the weaker party2).
The exclusion of the Convention can also be implicit, if the wish of the parties can be identified clearly. To this end, the designation of a specific domestic law is not sufficient, as the Convention, once ratified, becomes an integral part of the juridical system of the contracting State. Thus, the law of the designated State would apply to all issues not regulated by the Convention, which would otherwise apply.
Finally, even when the Convention does not apply according to the above criteria, the parties can decide to apply it on a contractual basis. In this case, compulsory domestic provisions prevail over the Convention.

Form of the contract and of communications between the parties

According to Article 11, the contract is not subject to any formal requirement, neither for its validity nor for its proof, except for the faculty of the party to agree on subjecting its modification to the written form (Article 29, paragraph 2). The freedom of forms does not, however, apply to contracts where at least one party has its place of business in a contracting State that has rendered the declaration referred to in Article 123.
As for communications during the validity of the contract, the Convention explicitly recognises the relevance of telegrams and telexes. It is commonly recognised that fax communications are also valid, while more uncertainty persists concerning electronic communications.

Interpretation

Interpretation is ruled by Article 7, according to which it is necessary to promote, as far as possible, a uniform international interpretation of the Convention. This has led courts to rule that the judge shall take into account decisions by foreign courts, although not being bound by them4. Also, the interpretation of the Convention should be as far as possible based on the Convention itself and its general principles, rather than on domestic interpretative rules. The explicit reference to good faith in the Convention excludes a purely formalistic interpretation. As for the interpretation of the contract, subjective interpretation prevails over objective interpretation, with the objective meaning of a clause prevailing only when it is not possible to identify a common intention of the parties.

Usages

Usages are of great importance in international trade, having been explicitly recognised in international conventions and representing the substantial base of the discussion concerning a new Lex Mercatoria. Coherently with the relevance recognised to international usages, the Convention presumes a tacit agreement by the parties to consider the usages they knew or ought to know and which are typical of a certain trade (Article 9).

Formation of the contract

The formation is ruled in Part II of the Convention (Articles 14-24), with detailed rules on the offer, its validity and withdrawal, and acceptance. The general principle is that the contract is concluded when acceptance is effective according to the Convention (Article 23).

Main provisions

Obligations of the parties

Given its nature of uniform law convention, a large part of the Convention – Articles 30 to 44 – concerns the reciprocal obligations of the parties.
As for the seller, its typical obligation is to deliver the goods, transfer the property and, the case being, deliver the documents relating to them (Article 30). The delivery of goods is ruled in Articles 31 to 34, which is particularly important with regard to the liability of the seller in case of loss or problems concerning the delivery.
The conformity of the goods is ruled in Articles 35 to 44. The overall non-formalistic approach of the Convention is confirmed, as non-conformity only arises in the case of non-fitness with the ordinary or specifically agreed use for the goods. The notice of the lack of conformity is to be served within a reasonable time from when the lack of conformity was discovered or ought to be discovered (Article 39).
The goods shall be delivered free of any right or claim of a third party, unless the buyer agrees on getting the goods in such conditions (Articles 41-43).
As for the buyer, the Convention establishes the duties to pay the price and to take delivery (Article 53). Specific rules concern the determination of a price that has not been explicitly agreed in the contract5. Finally, a specific section rules the obligation of the buyer to take delivery, which includes the duty of doing all the acts that could reasonably be expected of him/her in order to allow delivery.
A specific section rules third party claims6.

Remedies

As a general rule, avoidance of contract is only allowed as an extrema ratio against a breach of contract. Thus, Article 25 requires not only that the breach be fundamental, but also that the party in breach be aware (or ought to be aware) of its being fundamental.
The Convention also provides for other remedies, based on the kind and seriousness of the breach or non-compliance. It is, thus, possible to allow the seller a reasonable additional term for compliance (Article 47) or to remedy its failure, at certain conditions7, even after the date of delivery (Article 48). Lack of conformity allows the buyer to reduce the price (Article 50), while partial delivery can allow partial avoidance (Article 51).
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1The applicability of the Convention can, thus, also result from the choice of law rules established by the Rome Convention or the “Rome I” Regulation, or The Hague Convention of 15 June 1955. 
2This is particularly the case for Articles 5 and 6 of the “Rome I” Regulation.
3According to Article 12, provisions allowing other forms than in writing do not apply “where any party has his/her place of business in a Contracting State which has made a declaration under Article 96 of this Convention.
4See, for Italy, Tribunale of Pavia, 29 December 1999, Fallimento tessile 21 srl c. Nana Anast Platania and Tribunale of Vigevano, 12 July 2000, Soc. Rheinland Versicherungen c. Srl Atlarex.
5As a general principle, when the price has not been determined in the contract, the price to be applied will be the one generally charged at the time of the conclusion of the contract “[…] for such goods sold under comparable circumstances in the trade concerned” (Article 55). If the price is fixed according to the weight of the goods, in case of doubt the net weight will be considered (Article 56).
6Section II of Chapter II, Articles 35-44.
7As per paragraph 1, the seller acts at his/her own expense, without causing an unreasonable delay and “[…] without causing the buyer unreasonable inconvenience or uncertainty of reimbursement by the seller of expenses advanced by the buyer …” The buyer keeps anyway the right to claim damages.


Editor: Lucio LANUCARA
© 2009 ASSONEBB