Donald Smythe, ‘Reasonable Standards for Contract Interpretation Under the CISG’

Abstract:
The United Nations Convention on Contracts for the International Sale of Goods offers the promise of harmonizing international sales law and facilitating international trade and global commerce. But there is a ‘homeward trend bias’ that may encourage domestic courts to construe the gaps in the CISG broadly and fill them with non-uniform domestic legal rules. Questions about contract interpretation under the CISG raise the same concerns about a homeward trend bias as questions about the interpretation of express CISG provisions. The CISG has express provisions governing contract interpretation but their application may not provide an unambiguous interpretation. This presents two risks. One is that courts might reinterpret questions to be about the validity of contracts rather than their interpretation; in that case the CISG will not apply and courts will therefore apply domestic legal rules to answer the questions. The other possibility is that courts might rule that the interpretive questions are not governed by the CISG and might therefore use private choice of law rules to identify domestic legal rules to answer the questions. Neither of these possibilities should be welcomed. Courts that use non-uniform domestic laws to answer questions about the interpretation of CISG contracts will undermine the intent and purpose of the CISG no less than courts that answer other questions about matters that should be governed by the CISG using non-uniform domestic laws. All questions about contract interpretation under CISG contracts should therefore be governed either by the CISG’s explicit provisions or by the CISG’s general principles. This essay provides an analysis of the CISG’s express contract interpretation provisions and illustrates how they can result in ambiguities. It argues that when there are ambiguities, the general principles on which the CISG is based imply that courts should interpret the contracts to promote reasonable commercial standards of fair dealing in the trade.

Smythe, Donald J, Reasonable Standards for Contract Interpretation Under the CISG (September 26, 2016). Cardozo Journal of International and Comparative Law (JICL), forthcoming.

Leave a Reply