New Zealand Law Students Journal
Last Updated: 14 January 2013
THE UNITED NATIONS CONVENTION ON THE INTERNATIONAL SALE OF GOODS: WHAT ARE NEW ZEALAND TRADERS MISSING OUT ON?
Contracts for the international sale of goods have long
been problematic. Issues such as conflict of laws, cultural
wide-ranging divergences in judicial interpretation have made litigation arising
out of contracts for the international
sale of goods exceedingly complex. These
difficulties have led to much uncertainty about what the outcome will be if
wrong and the contract ends up before the
The United Nations Convention on Contracts for the International Sale of
Goods (CISG) was entered into in 1980 as a way of making
transactions more certain by providing a set of universal principles that
harmonise the law on contracts for the sale
of goods at an international
level. The CISG has been heralded as one of the greatest legal
achievements in international
commercial law because of its ability to harmonise
the law and reduce the uncertainties that existed in the laws on international
sales contracts that existed prior to CISG.2
In many jurisdictions both lawyers and the courts are using the CISG to
simplify international sales contracts and are therefore reaping
that the convention has to offer.3 New Zealand, however, has been
reluctant to follow this example and traders are rarely utilising the CISG in
contracts for the international
sale of goods. This has left
∗ BSoc/LLB(Hons), University of Waikato. Candidate for LLM(Hons), University of
Waikato. The author would like to acknowledge Professor Nan Seuffert of the
University of Waikato and thank family and friends for their continuing support.
1 Koppenol-Laforce, M. (ed.) International Contracts: Aspects of Jurisdiction, Arbitration and
Private International Law (London: Sweet and Maxwell, 1996), 141.
2 Butler, P. “Celebrating Anniversaries” (2005) 36 VUWLR 775, 775.
3 Schlechtriem, P. “Requirements of Application and Sphere of Applicability of the
CISG” (2005) 36 VUWLR 781, 782.
many commentators asking why New Zealand traders are excluding the CISG from
operation when prima facie it appears to offer significant
This paper will critically evaluate the approach of New Zealand traders to
the CISG by answering the question: “Why are New
Zealand traders failing
to take advantage of the protection offered by the United Nations
Convention on Contracts for
the International Sale of Goods”? The
paper will explore what could be done to improve the use of the CISG in New
international sales contracts if New Zealand traders really are missing
As international trade increased throughout the 1900s it became increasingly
clear that steps needed to be taken to introduce some
type of uniform law on
contracts for the sale of goods to deal with the complex issues of international
trade and increase certainty
in international sales contracts.4 In
1964 two conventions were enacted with the aim of creating uniformity, the
Uniform Law for the International Sale of Goods
(ULIS) and the Uniform
Law on Formation of Contracts for the International Sale of Goods (ULF).
However, these agreements were
largely unsuccessful, with each only receiving a
small number of ratifications.5
The need for some type of uniformity continued until the 1980 Vienna
Convention. The Convention provided a significant breakthrough
in this area with
United Nations countries agreeing on a collection of rules that would reform
international law on the sale of goods
and create a uniform set of principles to
be used in the interpretation of such contracts.6 This agreement
became known as the United Nations Convention on Contracts for the International
Sale of Goods (CISG).
The CISG came into force in 1988, and currently there are 71
4 Lutz, H. “The CISG and the Common Law Courts: Is There a Problem?” (2004) 35
VUWLR 711, 712-714.
5 Bridge, M. The International Sale of Goods: Law and Practice (Oxford: Oxford University
Press, 1999), 38.
6 Ibid 40-42.
parties7, making it the most well received agreement of its
kind.8 The purpose of the CISG is to reform previous international
agreements, and to harmonise the law governing the international sale
It aims to resolve issues that contracting parties have had in the past with
determining which country’s laws should
apply to their contracts.9
The CISG is a significant development in international commercial law on
contracts for the sale of goods because it ties together
elements of both common
and civil law, in a manner which makes it useful on an international scale.
This has encouraged participation
from a much wider range of countries
than has been achieved in any previous attempts to create uniformity in contract
Parties to the convention include Australia, Canada, and the United States.
However, the United Kingdom has not yet ratified.11 New Zealand
ratified the CISG in 1992 and has incorporated it into domestic law by
virtue of the Sale of Goods (United Nations
Convention) Act 1994. Under section
5 of the Act the CISG is to be used as a code for determining issues arising out
for the international sale of goods and:12
[S]hall, in relation to contracts to which it applies, have effect in place
of any other law of New Zealand relating to contracts
of sale of goods
This means that, provided the parties do not contract out of the CISG, New
Zealand’s domestic law on international sales will
not be of application
to contracts for the international sale of goods entered into in New
7 Institute of International Commercial Law, CISG: Table of Contracting States available online at http://cisgw3.law.pace.edu/cisg/countries/cntries.html (last accessed 21 July
8 Lando, O. “CISG and its Followers: A Proposal to Adopt Some International Principles of Contract Law” (2005) 53 AM. J. Comp. L. 379, 381.
9 Ibid, 380.
10 Carr, I. International Trade Law (3rd ed.) (London: Cavendish Publishing, 2005), 61.
11 Institute of International Commercial Law, CISG: Table of Contracting States available online at http://cisgw3.law.pace.edu/cisg/countries/cntries.html (last accessed 21 July
12 Sale of Goods (United Nations Convention) Act 1994.
B. Scope and application of the CISG
The CISG will apply to contracts for the international sale of goods entered
into after the date that country ratified.13 When it applies, and the
parties have not contracted out, it will replace both the choice of laws rules
and any domestic law on the
international sale of goods.14 As
explained in Attorney General & NZ Rail Corporation v Dreux Holdings Ltd,
this means that because New Zealand has ratified effort should be made to
interpret New Zealand law in a manner that is consistent
It should not go unnoticed that the United Nations Convention on Contracts
for the International Sale of Goods, known as the Vienna
Sales Convention, is
now, by virtue of the Sale of Goods (United Nations Convention) Act 1994, part
of New Zealand law...There is
something to be said for the idea that New Zealand
domestic law should be generally consistent with best international
However, the CISG does not apply to all contracts between parties, but only
to contracts for the sale of goods internationally.16
“Sale” and “goods” are not defined in the
CISG.17 However, in most cases it will only apply to commercial sales
of goods and not to “goods brought for personal, family, or household
use”; contracts for services will also be excluded.18 There are
also some other elements of contract law, such as validity of contract and
consideration which CISG does not address and
which must continue to be dealt
with under domestic law.19 It is important to note, therefore, that
the CISG will not be applicable to every international contract. It is to be
the facts of each case as to whether or not the CISG
There are three important factors that must be present for the CISG to apply
to a contract for the sale of goods. Firstly, under Article
1(1)(a) the parties
to the contract must be based in different countries.
13 Mo, J. International Commercial Law (3rd ed.) (NSW: LexisNexis Butterworths, 2003), 78.
14 Bridge, above n 5, 37.
15 Attorney General & NZ Rail Corporation v Dreux Holdings Ltd (1996) 7 TCLR 617 (CA),
16 Mo, above n 13, 78.
17 Bridge, above n 5, 45.
18 Schlechtriem, above n 3, 786.
19 Carr, above n 10, 67.
Secondly, the countries where the parties trade from must have ratified the
CISG, and thirdly, the goods must be capable of fitting
within the goods
accepted by the CISG.20 Article 6 provides an exception which allows
people in member states to opt out of the CISG. It is also possible for parties
states to opt in and agree that the CISG will apply to their
Where parties to an international sales contract choose to use Article 6 to
opt out, they must expressly state their intention to
exclude the CISG from
operation. It will not be enough to say that the laws of New Zealand will apply
to the contract. The CISG is
part of New Zealand law and if express words are
not used then CISG may be applicable despite the parties’ intention that
is to be excluded.22
C. Benefits of the CISG
One of the significant benefits that commentators argue New Zealand traders
are missing out on by failing to use the CISG is the uniformity
of law and
judicial interpretation that the convention has to offer.23 In its
1992 report into whether New Zealand should ratify CISG the New Zealand Law
Commission summarised the benefits of the CISG
as follows: 24
When it applies, it avoids the often complex problems of first ascertaining
the applicable law in accordance with conflict of law
doctrines, and second
determining what is required by the applicable foreign law once it has been
Because of the many different countries that New Zealand traders do business
with there are often conflicts between the laws
of New Zealand and
those of the other parties to international sales contracts. This can lead to
complex disputes as to which states
laws should apply. It is argued that the
CISG helps to simplify contracts for the
20 Mo, above n 13, 78.
21 Schlechtriem, above n 3, 784-785.
22 Ziegel, J. “The Future of an International Sales Convention from a Common Law
Perspective” (2000) 6 NZBLQ 336, 339.
23 Butler, above n 2, 776.
24 Law Commission “The United Nations Convention on
Contracts for the International Sale of Goods: New Zealand’s Proposed
Acceptance” (Wellington: New Zealand Law Commission, 1992),
international sale of goods because it introduces one clear set of laws that
are applicable to transactions between New Zealand and
most of its major trading
partners. This means that when disputes arise it is clear exactly what law will
apply.25 This is advantageous to the parties as it prevents them
having to negotiate complex conflict of laws clauses when they enter into
agreements for the international sale of goods. Therefore the application of the
CISG would be likely to significantly reduce the
costs for New Zealand traders
as it would reduce the need to engage the help of experts, such interpreters and
paralegals.26 It also has the potential to save time as it provides a
compromise when parties cannot agree. Therefore, they should not have to spend
so much time trying to reach an agreement as to whose laws should apply.27
There should also be decreased legal costs as it is less likely that
parties will have to pay lawyers to undertake research into different
systems every time they want to enter into a contract.28
Another argument in favour of the uniformity of principles that the CISG has to offer is that it makes judicial outcomes more certain if something goes wrong and the contract ends up before the courts.29
Article 7 requires that all judges interpret the CISG in a way that
provides for its international nature. This implies that domestic law should
not be used to interpret unless there are gaps that the
CISG itself does not
cover; and that there should be a uniform interpretation in the courts of all
member states.30 The intention of this Article is to facilitate the
development of an international body of CISG case law, which will in turn
uniform precedents that can be applied to contracts for the sale of
goods irrespective of which parties’ courts decide the
Rajeev Sharma argues that because the CISG provides for uniformity of
interpretation across the globe universal precedents
developed on how each Article is to be interpreted.32 It is argued
25 Carr, above n 10, 57.
26 Schlechtriem, above n 3, 794.
27 Bridge, above n 5, 37-38.
28 Schlechtriem, above n 3, 794.
29 Sharma, R. “The United Nations Convention on Contracts for the International Sale of
Goods: The Canadian Experience” (2005) 36 VUWLR 847, 856.
30 Koppenol-Laforce, above n 1, 196.
31 Bridge, see above n 5, 57-58.
32 Sharma, above n 29, 856-857.
this will help to make international transactions more certain as parties can
be sure of what principles will be applied to the contract
if something does go
wrong and will know what the likely outcome will be if the issue ends up in the
courts.33 Because the CISG, and its body of resulting case law, do
make potential outcomes clearer there will be less reason for parties to
into litigious disputes over contracts for the international sale of goods as
they will be able to predict the legal outcome.34 However, as will
be discussed in more detail in Part VI, uniform interpretation has been slow to
emerge and has made lawyers in some
CISG parties reluctant to apply it to
contracts that they draft.
It has also been argued that one of the advantages of having the CISG apply
is that it provides a neutral set of laws. This places
both parties in an equal
position and provides a more equitable situation for the parties as neither
party will have a home advantage,
but both parties should have equal access to
information and legal advice.35 In their 1992 report the Law
Commission cited this as one of the potentially significant benefits to New
Zealand traders. Prior
to the CISG, the generally smaller size of New
Zealand traders meant that they had significantly less bargaining power to be
able to negotiate for New Zealand law to apply to international sales
Nottage argues that without the CISG New Zealand traders may be unable to
avoid having to use a foreign set of laws to negotiate and
international sales contract.37 In many cases, large traders in
countries like the USA will not enter into an agreement unless it is their law
that applies.38 This has often meant that New Zealand traders have
had to work with unfamiliar legislation from overseas which is often not well
to New Zealand trading conditions. It also means that New Zealand traders
have experienced excessive costs in obtaining advice on
the law of foreign
states.39 By providing a uniform set of laws that applies to both
parties the CISG removes the advantages that
33 Ibid, 856.
34 Schlechtriem, above n 3, 794.
35 Butler, above n 2, 777.
36 Law Commission, above n 24, 56.
37 Nottage, L. “Whose Afraid of the Vienna Sales Convention (CISG)? A New
Zealander’s View From Australia and Japan” (2005) 36 VUWLR 815, 836.
38 Ibid, 836.
39 Law Commission, above n 24, 56.
larger trading partners have had over New Zealand traders, at least with
respect to negotiating conflict of laws clauses. New Zealand
traders are in a
position where they have much more bargaining power than they would without the
One of the other significant advantages for traders in particular, is that the CISG is drafted in a relatively simple manner which is well suited to the nature of international trading agreements. Therefore it makes these types of transactions easier to understand for the parties involved.41
Luke Nottage argues that because the structure of the CISG is “logical,
coherent, and comprehensive” and describes complex legal issues in a
manner that is understandable to people with little knowledge
sales law. Thus, it can be more useful to traders than domestic contract law
which uses language unfamiliar to many
people without a legal
background.42 The simple drafting of the CISG is helpful for
traders as it means that they are able to understand the provisions themselves
without having to get extensive legal advice.43 If they wish, parties
can easily look up the provisions of the CISG themselves to clarify advice given
to them or to learn about what
the implications will be if they take certain
One of the final benefits of the CISG is that it is modelled on common
business practices of international traders.45 It is
therefore more suitable for contracts for the international sale of goods than
domestic law is, as domestic contract law
is made to apply to a wide range of
contracts; whereas the CISG is specific to international sales contracts. Using
CISG should simplify
issues by keeping reference to domestic law to a
D. New Zealand’s approach to the CISG
In many member states the CISG has been warmly embraced. Traders and lawyers
alike are “as familiar with the convention as they
40 Ibid, 56.
41 Nottage, above n 37, 827.
43 Ziegel, above n 22, 339.
44 Nottage, above n 37, 827.
45 Butler, above n 2, 779.
46 Law Commission, above n 24, 38.
their domestic law.”47 However, in many common law
countries, including New Zealand, traders have not been so quick to utilise the
CISG in contracts for
the international sale of goods.48 There has
been a notable lack of use in New Zealand with few cases even citing CISG. This
has led to the CISG being described as the
“sleeping beauty of New
Zealand’s statute book.”49
The New Zealand Law Commission was initially enthusiastic about how the CISG
would be received in New Zealand.50 However, despite the significant
benefits that the CISG appears to offer New Zealand traders, many New Zealand
traders are choosing
to use Article 6 to opt out of the application of the
CISG.51 In 2005, Petra Butler pointed out that CISG is excluded from
standard form contracts in most law firms and has appeared before the
even fewer instances.52 Only nine New Zealand cases mentioning the
CISG appearing on the Pace University CISG case law database.53 This
lack of use raises questions about why New Zealand traders are failing to use
the CISG in international contracts when prima facie there appear to be
significant advantages if the CISG is applied.54
Some argue that the lack of case law does not necessarily mean that the CISG
is not being used, but may suggest that its use is resulting
contracts and therefore very little litigation.55 However, the more
popular view amongst commentators is that the CISG is being excluded from
contracts because traders and their legal
advisers are either ignorant of, or
unfamiliar with, the CISG and therefore are reluctant to use
47 Schlechtriem, above n 3, 782.
48 Ziegel, above n 22, 337.
49 Butler, above n 2, 776.
50 Law Commission, above n 24, 10.
51 Butler, above n 2, 776.
53 As at 27 July 2008. For an up to date list of New Zealand CISG cases see http://cisgw3.law.pace.edu/cisg/text/casecit.html#newzealand.
54 Nottage, above n 37, 817.
55 Lewis, M. “Comments on Luke Nottage’s Paper” 36 VUWLR 859, 861.
56 Lutz, above n 4, 731; Murray, J. “The Neglect of CISG: A Workable Solution” (1998)
17 JLC 365 372-373.
E. Why are New Zealand traders not embracing the CISG?
There are two main arguments as to why New Zealand traders are not embracing
the CISG, both related to the types of legal advice they
are receiving from
their lawyers. Firstly, it has been argued that many lawyers in New
Zealand are ignorant about what
the CISG is, and the potential benefits it has.
Therefore they are not advising their clients of its uses either because they do
not know it exists or because they feel more secure using domestic laws which
are more familiar.57 Secondly, some argue that lawyers are advising
clients against using the CISG because lack of uniform interpretation has led to
in how it will be interpreted in the courts.58 These
arguments are discussed in detail below.
Arguably one of the main reasons the CISG is not being used in New Zealand is
that New Zealand lawyers do not know enough about the
CISG to advise their
clients as to its use and application.59 Lawyers may be clinging to
the common law rules of contract because it is familiar to them.60
Some lawyers therefore choose to draft contracts for the international
sale of goods in accordance with domestic law because they
think that it is
likely to provide a more desirable outcome for their
One of the reasons for this is that CISG is rarely addressed as part of the
New Zealand legal education, especially at undergraduate
few lawyers have been exposed to the CISG during their education.62
It is possible that one of the reasons the CISG is being excluded is
because New Zealand lawyers do not know it exists.
Australia has had a similar experience with lack of knowledge about the CISG.
The lack of knowledge in Australia was illustrated in
the case of Perry
Engineering v Bernold where neither party’s lawyers knew that
57 Lutz, above n 4, 731.
58 Murray, above n 56, 372.
59 Lutz, above n 4, 732.
60 Nottage, above n 37, 830.
61 Murray, above n 56, 372-373.
62 Ziegel, above n 22, 344.
CISG applied to their client’s contracts, or even existed.63
There has been no New Zealand case law to date which suggests similar
incidents. However, the lack of CISG case law in New Zealand
could be used to
infer a similar lack of understanding in this country.64
One of the arguments put forward as to why lawyers are reluctant to advise
clients to use the CISG is that there is too much uncertainty
as to how issues
will be resolved in the courts, due to a general lack of understanding of CISG
issues by judges and lawyers.65 This lack of understanding about how
the CISG should be interpreted and its gaps filled has meant that there has not
interpretation of the CISG in the courts. This leads to serious
concerns for legal advisers as to whether there will be an effective
their clients if the relationship between the parties
(a) Is the risk argument justified?
Given that one of the main goals of the CISG was to increase certainty in
contracts for the international sale of goods, it is essential
whether the arguments that lack of certainty under the CISG in causing lawyers
to avoid applying CISG when drafting international
sales contracts are
One of the major reasons lawyers fear that the CISG will not provide the best outcomes for their clients is that there are many gaps in the CISG where important questions are left unanswered. This means that domestic law will still need to be referred to and conflicts of laws will still need to be negotiated. Therefore it may be easier for lawyers to draft contracts in accordance with one set of laws rather than having to jump back and forwards between the CISG and domestic legislation.67
In other situations, it is argued, that while the CISG deals with
63 Perry Engineering v Bernold  SASC 15.
64 Butler, above n 2, 776.
65 Nottage, above n 37, 776.
66 Murray, above n 56, 372-373.
67 Schlechtriem, above n 3, 784.
issues, they are dealt with inadequately and so do not provide appropriate
remedies for the client. For example, under Article 78
a successful party may
claim interest on judgment. However, the CISG does not state at what rate the
interest is to be calculated.68 Article 78 is one of the most heavily
litigated sections of the Convention.69 This shows that there is
significant uncertainty at least in some provisions of CISG.
Lawyers in common law jurisdictions may rightfully be nervous about accepting
the CISG as, in trying to take a route which is useful
for both common law and
civil jurisdictions, it has failed to include some of the most important
elements of common law contract
law.70 For example,
consideration71, passing of property, and validity of contract are
all- important concepts to common law contracts.72 While these gaps
are able to be filled by reference to domestic law, and may be considered
necessary so that the CISG can have universal
means that lawyers may be correct to conclude that the outcomes may be all to
risky if something goes wrong. In the 1992 Law Commission
Report Sir Kenneth
Keith identified the risks of potentially having to fill the gaps in the CISG
with unfamiliar foreign law:74
The uncertainties and potential costs associated with transacting business
under unfamiliar laws increase the risks of international
commerce and are
likely to reduce [CISG’s] efficiency.
However, as discussed in Part IV it is arguable that there will be more
uncertainty if the CISG were not applied and New Zealand traders
are required to
negotiate and litigate an entire contract under a foreign set of laws.75
In addition, to state that uniform law does not exist is not entirely true
as, as courts are becoming more familiar with the CISG,
a uniform set of
principles is beginning to emerge.76
68 Ziegel, above n 22, 346.
69 Bridge, above n 5, 61.
70 Lutz, above n 4, 718.
71 Ibid, 721.
72 Carr, above n 10, 61.
73 Whittington, N. “Comment on Professor Schwenzer’s Paper” (2005) 36 VUWLR 809,
74 Law Commission, above n 24, 13.
75 Carr, above n 10, 57.
76 Butler, above n 2, 780.
Others argue that definitional gaps in the CISG also make its
application confusing. While the CISG states that it
contracts of sale of goods, the CISG defines neither ‘sale’ nor
goods’ nor ‘contract
of sale of goods’.”77
However, Indira Carr suggests that this argument is unfounded as what is
included in these definitions becomes clear on reading the
articles of the
convention dealing with the obligations of buyers and sellers.78 For
example, under Article 30 of the CISG a seller “must deliver the
goods, hand over any documents relating to
them and transfer the
property in the goods.”79 Under Article 53 a buyer is
required to “pay the price for the goods and take delivery of
them.”80 In my view, any person who is involved in the
international sale of goods or in the drafting of contracts for the
of goods is unlikely to be in any doubt as to what these
words mean and the obligations that they place on a contract party.
Because the gaps in the CISG make its interpretation uncertain, there appears
to be some justification for the reluctance by many
lawyers to use the CISG.
However, it is arguable that the gaps in the CISG do not make it any more
uncertain than domestic regimes
as there are often gaps in domestic law which
need to be filled by common law principles. This suggests, perhaps, that lawyers
not doing enough to weigh up the costs and benefits between the two
alternatives but are rather clinging to the principles that they
(ii) Lack of uniformity
One of the arguments made by those who chose to exclude the CISG is that it
has not resulted in a uniform interpretation and therefore
does not provide the
certainty which those who argue in favour of CISG cite as being its major
success. Uniform application is more
difficult to achieve than the CISG suggests
as there are vastly different methods of interpretation between different
and also between civil and common law countries. This has led to a
lack of uniform interpretation
77 Bridge, above n 5, 45.
78 Carr, above n 10, 62.
79 United Nations Convention on the International Sale of Goods 1980.
81 Nottage, above n 37, 830.
and has introduced uncertainties into how the CISG will be
While Article 7 provides that courts in member states must interpret the CISG
in a uniform manner; the CISG has not provided any mechanisms
to ensure this
occurs.83 There is no superior court to ensure that a uniform
body of case law develops.84 Because there is no real guidance as to
how uniformity will be achieved, most domestic courts, reluctant to move away
from their own
principles of contract law, have interpreted CISG principles with
reference to domestic law rather than considering the principles
CISG on its own as required in Article 7.85 This has led to the
development of a body of contradictory case law whereby different judges,
reluctant to refer to the decisions
of other jurisdictions, have interpreted
articles in vastly different manners.86 Opponents argue that this
reason alone provides justification for excluding the CISG as it lacks
certainty. Therefore, it is preferable
to apply domestic law because domestic
laws usually provide a developed set of principles to guide parties as to what
be. It has been suggested, by Ziegel, that rather than
having to negotiate all of the inadequacies of the CISG many lawyers
it preferable to choose a country’s domestic law to govern the contract.
The reasoning for such a decision is that
it is likely to create greater
Some opponents of the CISG have argued that where the parties to an
international trading arrangement wish to have the terms of their
governed by a uniform set of rules it is preferable to use the United Kingdom
Sale of Goods Act.88 This is because the United Kingdom statute
already has a developed body of case law and a much more comprehensive set of
Therefore, it will be more likely to provide certainty of outcomes
for the parties. It is also argued that the parties will not have
the excess costs of having to be the first to litigate an issue under the CISG.
However, others argue that
82 Ferrari, F. “Uniform Interpretation of the 1980 Uniform Sales Law” (1994-95) 24
Georgia Journal of International and Comparative Law 183, 204-208.
83 Kilian, M. “CISG and the Problem with Common Law Jurisdictions” (2001) 10 Journal of Transitional Law and Policy 217, 227.
84 Butler, above n 2, 780.
85 Whittington, above n 73, 811.
86 Ibid, 810.
87 Ziegel, above n 22, 346.
88 Carr, above n 10, 58.
using the United Kingdom Act as an alternative to CISG does not provide any significant advantages. It is suggested that even the United Kingdom Sale of Goods Act does not provide a comprehensive code. It requires that principles are adapted into agreements, from the common law, in order to cover issues that are excluded from the statute.89 Nottage argues that even a long established set of principles, such as is found in the United Kingdom law, is only helpful to those who have an understanding of that law. He is skeptical as to whether this argument is justification for excluding the CISG as the benefits will only be received by those who have knowledge of the United Kingdom Act. Those who do not will still have exactly the same difficulty of having to research the law as those who choose to use the CISG.90
Therefore it is arguable that using the United Kingdom Sale of Goods
Act provides little or no benefits above the CISG.
While there may be some advantages in applying the United Kingdom law because
it is already established, I am of the view that overall
CISG is better suited
to contracts for the international sale of goods because it is designed for
universal application and with
the needs of international traders in mind. It
is, therefore, more likely to meet the needs of people trading on an
One of the reasons that have been put forward as to why the CISG will benefit
New Zealand traders is the decreases in costs that will
be experienced with
having a uniform law.91 Critics of the CISG, however, argue that
there can still be significant costs arising out of negotiation and litigation
the CISG. Bridge points out that because there has been a lack of
interpretation of many of the Articles of the CISG parties may
face being the
first to litigate on a particular section. This will lead to significant
costs for litigants as it is necessary
to conduct extensive research in
order to prove that the interpretation a party wishes to take is the correct
interpretation.92 This may be one of the reasons why there is a lack
of CISG jurisprudence as parties are unwilling to be the first to litigate an
not only because of the
89 Nottage, above n 37, 829.
91 Law Commission, above n 24, 56.
92 Bridge, above n 5, 38.
uncertainties but also because of the significant cost.93
In addition, Bridge argues that decreased costs as a result of reduced levels
of negotiation on conflict of laws is a fallacy and
cannot be included as one of
the advantages of the CISG. Bridge argues that there remains a need for the
parties to negotiate about
whose domestic law should be used to cover gaps in
the CISG. In many instances it will also be necessary for the parties to
as to whether or not the CISG should be applied to their
In my opinion this argument is not entirely justified. An array of CISG
precedents are starting to emerge as evidenced by the ever
expanding number of
cases recorded internationally.95 Therefore traders that use the
CISG are no longer likely to be faced with being the first to litigate on a
particular article. In
any case, as discussed earlier, it is likely that greater
costs would arise if parties need to resolve a conflict of laws dispute.
Therefore CISG is likely to make conflicts over sale of goods less costly for
parties that utilise it.96
F. What changes could be made to further the use of the CISG?
As discussed, one of the major reasons that the CISG is not being used is a
lack of knowledge by lawyers as to its existence and usage.
One of the ways that
knowledge could be improved is by including a segment on the CISG as part of the
New Zealand legal education.
Evidence suggests that the CISG is rarely discussed
in New Zealand law schools at undergraduate level and in many cases only gets
brief mention even at postgraduate level. In contrast, in countries where the
CISG is being more widely used it has been covered
in courses at law
school.97 It has also been suggested that continuing education
seminars conducted by the New Zealand Law Society, to educate existing
on how the CISG can be used. This would further increase
understanding of the CISG and incentivise its use in contracts for the
sale of goods.98
94 Ibid, 38.
95 Butler, above n 2, 780.
96 Schlechtriem, above n 3, 794.
97 Nottage, above n 37, 842-843.
98 Ibid, 830.
Another possible way to increase the use of the CISG in New Zealand would be
to make its application to contracts for the international
sale of goods
compulsory. Kilian argues that allowing parties to contract out of the CISG
reduces its effectiveness and leads to
uncertainties, which the CISG was meant
to prevent.99 By making the CISG a compulsory consideration its
effectiveness would be likely to be increased and many of the identified issues
surrounding its lack of use reduced.100 However, freedom to contract
is one of the foundational principles of the CISG, and contract law in
general.101 Forcing parties to a contract use the CISG would go
against the long established principle of freedom of contract. Thus, this
reform is unlikely to gain any widespread acceptance.
The issue of lack of uniform interpretation must also be dealt with to help
make the outcomes of decisions under the CISG more certain.
has argued that one way that this could be achieved would be to encourage judges
to refer to precedents from
other countries when applying CISG to
contracts.102 However, as Whittington points out, language barriers
can present a problem with relying on overseas precedents.103
Education of judges could play an important role in this respect. However,
in my opinion, what is required first and foremost is the
development of an
international law reporting system for CISG cases. Such a database would need to
be translated into a variety of
different languages so that CISG parties would
be able to use precedents set in other countries. I am of the view that by
CISG jurisprudence more readily accessible international precedents are
more likely to emerge.
The United Nations Convention on Contracts for the International Sale of
Goods has the potential to be a highly useful instrument
in contracts between
New Zealand and international traders. However, New Zealand traders have
been reluctant to embrace the
CISG in contracts
99 Kilian, above n 83, 226-227.
100 Ibid, 225.
101 Lando, above n 8, 387-388.
102 Whittington, above n 73, 812.
for the international sale of goods.
Prima facie the lack of use by New Zealand traders appears strange
given the range of benefits often attributed to CISG; including uniformity
law, decreased transaction costs, and increased bargaining power. However, it
can be seen from a deeper analysis of the issues
that the CISG is not the all
encompassing regime that had been expected. To certain degree the effectiveness
of the CISG has suffered
as a result.
In New Zealand, and some of the other common law countries, the lack of certainty and uniformity that has become apparent has resulted in lawyers advising their clients against using the CISG. In many cases this is why traders are excluding the CISG from their contracts. Whether this position is justified is highly debated. Yet, while the CISG does have concerns that may need to be addressed, there remain significant advantages to its use that New Zealand traders are currently missing put on. These advantages appear to outweigh the reasons, given by critics of CISG, as to why the Convention should be excluded. These advantages indicate that there is a need in New Zealand for knowledge of the CISG to be expanded within the legal profession, so that lawyers and traders are able to embrace the CISG and make use of its principles in contracts for the international sale of goods.