Source: http://www.cisg.law.pace.edu/cisg/text/digest-art-08.html
Timestamp: 2019-04-26 16:22:40+00:00

Document:
(3) In determining the intent of a party or the understanding a reasonable person have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties.
1. Whereas article 7 addresses interpretation of and gap-filling for the Convention itself, article 8 (which according to one arbitral tribunal states rules that correspond to principles generally accepted in international commerce ) is concerned with the interpretation of statements and other conduct of the parties provided (as expressly pointed out by the Supreme Court of one Contracting State) that the statements or conduct relate to a matter governed by the Convention. Therefore, whenever a party's statement or conduct relates to a matter governed by the Convention, the interpretative criteria set forth in article 8 are to be used, whether the statements or conduct relate to matters governed by Part II (on "Formation") or Part III (on "Rights and Obligations of the Parties"). This view, supported by legislative history, has been adopted in decisions: courts have resorted to the criteria set forth in article 8 to interpret statements and conduct relating to the process of formation of contract, the performance of the contract, and its avoidance.
3. According to both legislative history  and case law, article 8 governs not only the interpretation of unilateral facts of each party but also is "equally applicable to the interpretation of the contract, when the document is embodied in a single document."
4. Paragraphs 1 and 2 of article 8 set forth two sets of criteria. According to one court, article 8(1) permits "a substantial inquiry into the parties' subjective intent, even if the parties did not engage in any objectively ascertainable means of registering this intent." Article 8(1) "instructs courts to interpret the 'statements ... and other conduct of a party ... according to his intent' as long as the other party 'knew or could not have been unaware' of that intent. The plain language of the Convention, therefore, requires an inquiry into a party's subjective intent as long as the other party to the contract was aware of that intent"  or could not have been unaware of it.
5. A party that asserts article 8(1) applies -- i.e., that the other party knew or could not have been unaware of the former party's intent -- must prove that assertion.
6. The subjective intent of a party is irrelevant unless it is manifested in some fashion; this is the rationale behind one court's statement that "the intent that one party secretly had, is irrelevant."
7. Under article 8, courts must first attempt to establish the meaning of a party's statement or conduct by looking to the intent of that party, as an arbitral tribunal has emphasized; however, "most cases will not present a situation in which both parties to the contract acknowledge a subjective intent [...]. In most cases, therefore, article 8(2) of the [Convention] will apply, and objective evidence will provide the basis for the courts decision." According to one arbitral tribunal, application of article 8(1) requires either that the parties have a close relationship and know each other well, or that the import of the statements or conduct was clear and easily understood by the other party.
8. Where it is not possible to use the subjective intent standard in article 8(1) to interpret a party's statements or conduct, one must resort to "a more objective analysis"  as provided for in article 8(2). Under this provision, statements and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances. One court has characterized the result of an interpretation based on this criterion as a "reasonable interpretation".
9. Article 8(2) has been applied in a variety of decisions. In one case, a court inferred a buyer's intention to be bound to a contract, as well as the quantity of goods that the buyer intended to acquire under that contract, by interpreting the buyer's statements and conduct according to the understanding that a reasonable person of the same kind as the seller would have had in the same circumstances. The court found that, absent any relevant circumstance or practice between the parties at the time the contract was concluded (which must always be taken into account), the buyer's intention to be bound, as well as a definite quantity of goods to be sold under the contract, could be deduced from the buyer's request to the seller to issue an invoice for goods that had already been delivered.
10. Article 14(1) of the Convention provides that a proposal for concluding a contract must be sufficiently definite in order to constitute an offer, and that it is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price. One court has stated that, in determining whether a proposal satisfies this standard, it is sufficient if the required content would be perceived in the proposal by " 'a reasonable person of the same kind' as the other party (offeree) ... 'in the same circumstances'."
11. In determining the quality of the goods required by the parties agreement, one Supreme Court has stated that, since the parties had a different understanding of the meaning of the contract, the contract language should be interpreted under article 8(2) -- i.e., "according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances". The court noted that the buyer was an expert and knew that it had not been offered a new machine, but instead one built fourteen years prior to the conclusion of the contract. Although the goods did not conform to the latest technical standards, the Supreme Court reasoned that, under the standard of article 8(2), the buyer concluded the contract with full knowledge of the technical limitations of the machinery and its accessories. For these reasons, the Supreme Court found that the machine tendered to the buyer conformed with the contract.
12. Another court applied article 8(2) to determine whether a contract permitted the buyer to satisfy its obligation for the price of goods by offering, after the payment period specified in the contract had expired, to ship its own goods to the seller. Looking first to the language of the contract and then to the interpretation suggested by the parties' interests in the contract, the court found that the buyer was required to satisfy its obligations by the end of the contractual payment period: "the [buyer] could not have been unaware that it would have been commercially unreasonable for the [seller] to grant a respite in payment beyond the agreed period" merely because the buyer offered to ship goods to satisfy its payment obligations.
13. Article 8(2) has also been used to determine whether a seller had implicitly waived, through its behaviour, its right to argue that the buyer's notice of lack of conformity in the goods was not timely (see article 39). The fact that the seller negotiated with the buyer over the lack of conformity after receiving the notice, the court stated, did not necessarily waive the late-notice argument, but should instead be evaluated in conjunction with the other circumstances of the case. In the case at hand, however, the seller "negotiated over the amount and manner of a settlement of damages for practically 15 months -- [...] without expressly or at least discernibly reserving the objection to the delay" and even "offered through legal counsel to pay compensatory damages that amount to practically seven times the value of the goods." In such circumstances, the court stated, "the [buyer] could only reasonably understand that the [seller] was seeking a settlement of the affair and would not later refer to the allegedly passed deadline as a defence to the [buyer's] reimbursement claim." Thus under article 8(2) and article 8(3), the court held, the seller had waived its right to rely on the untimeliness of the notice. Another court has stated that a waiver of the seller's right to argue that the buyer's notice of non-conformity was untimely cannot be assumed merely because the seller remained willing to inspect the goods at the buyer's request. This follows, the court suggested, both from the need for certainty in commercial transactions and from the principle of good faith, which also applies when interpreting the parties' statements or other conduct.
14. One court employed article 8(2) to interpret a "franco domicile" provision in a contract, finding that the clause addressed not only the cost of transport but also the passing of risk. The court interpreted the provision in line with the understanding that a reasonable person would have had in the same circumstances as those of the parties. In the court's view, a buyer entitled to delivery of goods "franco domicile" would not be concerned with transporting the goods or with insurance on them during carriage. The fact that the seller obtained transport insurance, the court argued, also indicated that the seller was prepared to take the risk during carriage, as did the fact that that it had used its own means of transport in previous transactions with the buyer. The court therefore concluded that the parties intended to provide for the passage of risk at the buyer's place of business, and accordingly to deviate from article 31(a) CISG.
15. Another court invoked article 8(2) to determine whether the conduct of a party established that an agreement as to the purchase price had been reached. The buyer took delivery of the goods without contesting the price specified by the seller. The court, applying article 8(2), interpreted this conduct as acceptance of the seller's price.
16. The interpretive standard in article 8(2) has also been applied in determining whether a loss suffered by the aggrieved party should be considered foreseeable under article 74 of the Convention.
17. According to article 8(3), in determining a party's intent or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case. Such circumstances specifically include  the negotiations, any practices which the parties have established between themselves, usages, and any subsequent conduct of the parties. Several decisions  have noted that these criteria should be taken into account when interpreting a statement or other conduct under the standards of either article 8(1)  or article 8(2).
18. The express reference in article 8(3) to the parties' negotiations as an element to be taken into account in interpreting their statements or other conduct did not prevent one court from indicating that the "parol evidence rule" applies in transactions governed by the Convention. This rule, which despite its name applies to both parol and written evidence, seeks to give legal effect to the contracting parties intentions if they have adopted a written agreement as the final (a "partial integration"), or even final and complete (a "complete integration"), expression of their agreement. If the written agreement is determined to be a complete integration, the parol evidence rule prohibits a party from introducing evidence of prior agreements or negotiations that would contradict, or even would add consistent additional terms to, the writing. Decisions by other courts in the same State take a contrary position. One of those courts  stated that "the parol evidence rule is not viable in CISG cases in light of article 8 of the Convention"  because "article 8(3) expressly directs courts to give 'due consideration [...] to all relevant circumstances of the case including the negotiations' to determine the intent of the parties. Given article 8(1)'s directive to use the intent of the parties to interpret their statements and conduct, article 8(3) is a clear instruction to admit and consider parol evidence regarding the negotiations to the extent they reveal the parties' subjective intent." According to another court, article 8(3) "essentially rejects [...] the parol evidence rule." yet another court stated that "contracts governed by the CISG are freed from the limits of the parol evidence rule and there is a wider spectrum of admissible evidence to consider in construing the terms of the parties' agreement."
19. After pointing out the problems that may arise under the Convention with respect to parol evidence, a court has stated that the parties can avoid such problems by including in their written agreement a merger clause that extinguishes prior agreements and understandings not expressed in the writing.
20. As several courts have pointed out, subsequent conduct by the parties may show what a statement was intended to mean when it was made. In one case, a court referred to a buyer's subsequent conduct to infer an intention to be bound to a contract, as well as to determine the quantity of goods covered by that contract, under the interpretive approach in article 8(2) (i.e., the understanding that a reasonable person of the same kind as the seller would have had in the same circumstances). The court held that, absent any relevant contrary circumstance or practice between the parties, a party's intention to be bound could be shown by its conduct after the conclusion of the contract. In particular, it held that the buyer's request to the seller to issue an invoice for textiles the seller had delivered to a third party (as contemplated by the parties' arrangement) was sufficient evidence of the buyer's intention to be bound. The fact that the buyer delayed two months before complaining about the quantity of goods delivered to the third party, furthermore, gave the court good grounds to conclude that the contract covered that quantity.
21. According to one court, reference to the circumstances listed in article 8(3) may lead to the conclusion that a party's silence amounted to acceptance of an offer.
22. In addition to the elements expressly catalogued in article 8(3), the good faith principle referred to in article 7(1) (where it is mentioned as pertinent to the interpretation of the Convention itself) must also, according to one court, be taken into account in interpreting statements or other conduct of the parties.
23. Article 8 has also been invoked in addressing the question whether standard contract terms employed by one party became part of a contract. In one case, the Supreme Court of a Contracting State held that the question was governed by the Convention's rules on interpretation rather than by domestic law. Citing article 8 of the Convention, the court stated that whether a party's standard contract terms are part of its offer must be determined by reference to how a "reasonable person of the same kind as the other party would have understood the offer; under this criterion, the court asserted, standard terms become part of an offer only if the offeree is able to become aware of them in a reasonable manner," and if the intention to incorporate such terms is "apparent to the recipient of the offer." In addition, according to the court, the Convention "requires the user of general terms and conditions to transmit the text or make it available to the other party."
24. In reaching similar conclusions regarding the incorporation of standard terms under the Convention, another court also addressed the issue of the language in which the standard terms are expressed. The court stated that incorporation of standard terms must be determined by interpreting the contract in light of article 8. To be effective, the court averred, a reference by one party to its standard terms must be sufficient to put a reasonable person of the same kind as the other party in a position to understand the reference and to gain knowledge of the standard terms. According to the court, one relevant circumstance is the language in which the standard terms are written. In the case before the court, the seller's standard contract terms were not in the language of the contract, and the court asserted that the seller should have given the buyer a translation. Because the seller had not done so, its standard contract terms did not become part of the contract. A similar approach was adopted by another court, which stated that standard contract terms written in a language different from that of the contract do not bind the other party.
25. The language issue was also dealt with in another decision  in which the court held that a case-by-case approach must be employed in determining the effectiveness of a notice written in a language other than the language in which the contract was made or the language of the addressee. Under article 8(2) and article 8(3), the court asserted, the question must be evaluated from the perspective of a reasonable person, giving due consideration to usages and practices observed in international trade. The mere fact that a notice was in a language that was neither that of the contract nor that of the addressee did not necessarily prevent the notice from being effective: the notice language might be one normally used in the pertinent trade sector, and thus potentially binding on the parties under article 9; or, as in the case before the court, the recipient might reasonably have been expected to request from the sender explanations or a translation.
26. Another court  has held that, if a party accepts statements relating to the contract in a language different from the one used for the contract, the party is bound by the contents of such statements; it is the party's responsibility to acquaint itself with those contents.
1. [ICC International Court of Arbitration, Award 7331 of 1994 (Cowhides case)] (see full text of the decision).
2. See [AUSTRIA Oberster Gerichtshof 24 April 1997 (Processing plant case)].
3. United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980, Official Records, Documents of the Conference and Summary Records of the Plenary Meetings and of the Meetings of the Main Committee, 1981, 18, stating that Article  on interpretation furnishes the rules to be followed in interpreting the meaning of any statement or other conduct of a party which falls within the scope of application of this Convention. Interpretation of the statements or conduct of a party may be necessary to determine whether a contract has been concluded, the meaning of the contract, or the significance of a notice given or other act of a party in the performance of the contract or in respect of its termination.
4. See [GERMANY Oberlandesgericht Frankfurt 30 August 2000 (Yarn case)], [AUSTRIA Oberster Gerichtshof 9 March 2000 (Roofing material case)]; [GERMANY Landgericht Zwickau 19 March 1999 (Chemical products case)]; [AUSTRIA Oberster Gerichtshof 6 February 1996 (Propane case)]; [SWITZERLAND Obergericht des Kantons Thurgau 19 December 1995 (Cloth case)]; [SWITZERLAND Handelsgericht des Kantons St. Gallen 5 December 1995 (Computer hardware devices case)] (see full text of the decision); [AUSTRIA Oberster Gerichtshof 10 November 1994 (Chinchilla furs case)].
5. [GERMANY Bundesgerichtshof 25 November 1998 (Surface protective film case)] (dealing with the issue of whether the offer to pay damages on the seller's part constitutes a waiver of the seller's right to rely on articles 38 and 39).
6. [GERMANY Oberlandesgericht Koblenz 31 January 1997 (Acrylic blankets case)] (dealing with the issue of whether a certain conduct amounted to avoidance of the contract) (see full text of the decision).
7. [GERMANY Landgericht Hamburg 26 September 1990 (Textiles case)] (see full text of the decision).
8. United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980, Official Records, Documents of the Conference and Summary Records of the Plenary Meetings and of the Meetings of the Main Committee, 1981, 18.
9. [ICC International Court of Arbitration, Award 7331 of 1994 (Cowhides case)] (see full text of the decision).
10. United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980, Official Records, Documents of the Conference and Summary Records of the Plenary Meetings and of the Meetings of the Main Committee, 1981, 18; see [SWITZERLAND Bundesgericht 22 December 2000 (Used rotary printing textile machine case)].
11. [UNITED STATES Federal Court of Appeals for the Eleventh Circuit 29 June 1998 (MCC-Marble v. Ceramica Nuova)].
12. [UNITED STATES Federal Court of Appeals for the Eleventh Circuit 29 June 1998 (MCC-Marble v. Ceramica Nuova)] (internal citation in quoted material omitted) (see full text of the decision); for other cases in which the part of article 8(1) referred to in the text was cited, see [FRANCE Cour d'appel Grenoble 21 October 1999 (Footwear case)] (see full text of the decision); [GERMANY Bundesgerichtshof 11 December 1996 (Marzipan case)]. For an express reference to the subjective interpretation, see [GERMANY Oberlandesgericht Frankfurt 30 August 2000 (Yarn case)].
13. For references to this part of article 8, paragraph 1, see [SWITZERLAND Bezirksgericht St. Gallen 3 July 1997 (Fabrics case)] (see full text of the decision).
14. [SWITZERLAND Bezirksgericht St. Gallen 3 July 1997 (Fabrics case)] (see full text of the decision).
15. [GERMANY Landgericht Hamburg 26 September 1990 (Textiles case)] (see full text of the decision).
17. [UNITED STATES Federal Court of Appeals for the Eleventh Circuit United States 29 June 1998 (MCC-Marble v. Ceramica Nuova)] (see full text of the decision).
18. [ICC Court of International Arbitration, Award 8324 of 1995 (Magnesium case)].
19. Id.; for other cases that refer expressly to interpretation under article 8(2) as being on a more objective basis, see [GERMANY Oberlandesgericht Köln 16 July 2001 (Farm animals case)]; [SWITZERLAND Bundesgericht 22 December 2000 (Used rotary printing textile machine case)]; [GERMANY Oberlandesgericht Frankfurt 30 August 2000 (Yarn case)]; [UNITED STATES Federal Court of Appeals for the Eleventh Circuit 29 June 1998 (MCC-Marble v. Ceramica Nuova)] (see full text of the decision); [NETHERLANDS Hoge Raad 7 November 1997 (Vodka case)]; [GERMANY Landgericht Kassel 15 February 1996 (Marble slab case)].
20. It may well be that neither article 8(1) nor article 8(2) leads to an interpretation wanted by a party: see [NETHERLANDS Hoge Raad 7 November 1997 (Vodka case)].
21. [GERMANY Landgericht Zwickau 19 March 1999 (Chemical products case)]; [AUSTRIA Oberster Gerichtshof 20 March 1997 (Mono ammonium phosphate case)]; [NETHERLANDS Hoge Raad 7 November 1997 (Vodka case)]; [SWITZERLAND Bezirksgericht St. Gallen 3 July 1997 (Fabrics case)] (see full text of the decision); [GERMANY Arbitration-Schiedsgericht der Handelskammer Hamburg, 21 March 1996 and 21 June 1996 (Chinese goods case)] (see full text of the decisions); [HUNGARY Arbitration Court of the Chamber of Commerce and Industry of Budapest, Award Vb 94124 of 17 November 1995 (Mushrooms case)]; [AUSTRALIA Federal Court, Adelaide, 28 April 1995 (Tent hall structures case)] (see full text of the decision); [AUSTRIA Oberster Gerichtshof 10 November 1994 (Chinchilla furs case)].
22. [GERMANY Oberlandesgericht München 9 July 1997 (Leather goods case)].
23. [SWITZERLAND Bezirksgericht St. Gallen 3 July 1997 (Fabrics case)] (see full text of the decision).
24. [AUSTRIA Oberster Gerichtshof 10 November 1994 (Chinchilla furs case)].
26. [GERMANY Oberlandesgericht Dresden 27 December 1999 (Chemical products case)] (internal citations to Convention omitted).
27. [GERMANY Bundesgerichtshof 25 November 1998 (Surface protective film case)].
28. Id. (internal citations to Convention omitted) (see full text of the decision).
29. [SWITZERLAND Handelsgericht des Kantons Zürich 30 November 1998 (Lambskin coat case)] (see full text of the decision).
30. [GERMANY Oberlandesgericht Karlsruhe 20 November 1992 (Frozen chicken case)].
31. [FRANCE Cour d'appel Grenoble 26 April 1995 (Candy case)].
32. [AUSTRIA Oberster Gerichtshof 14 January 2002 (Cooling system case)].
33. According to the Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980 (United Nations publication, Sales No. E.81.IV.3), 18, the list to be found in article 8, paragraph 3 is not an exhaustive list of elements to be taken into account in interpreting statements or other conduct by the parties.
34. For references to article 8, paragraph 3, see [SWITZERLAND Bezirksgericht St. Gallen 3 July 1997 (Fabrics case)]; [AUSTRIA Oberster Gerichtshof 10 November 1994 (Chinchilla furs case)].
35. In arbitration, see [ICC Court of International Arbitration, Award 8324 of 1995 (Magnesium case)].
36. [GERMANY Bundesgerichtshof 11 December 1996 (Marzipan case)], expressly stating that the elements referred to in article 8, paragraph 3 have to be taken into account when interpreting a statement or other conduct by a party in the light of article 8, paragraph 1(see full text of the decision).
37. [AUSTRIA Oberster Gerichtshof 10 November 1994 (Chinchilla furs case)].
38. [UNITED STATES Federal Court of Appeals for the Fifth Circuit 15 June 1993 (Beijing Metals v. American Business Center)].
39. See [UNITED STATES Federal Court of Appeals for the Eleventh Circuit 29 June 1998 (MCC-Marble v. Ceramica Nuova)]; [UNITED STATES Federal Western District Court for Michigan 17 December 2001 (Shuttle Packaging Systems v. Tsonakis)]; [UNITED STATES Federal District Court, Northern District of Illinois, 27 October 1998 (Mitchell Aircraft Spares v. European Aircraft Servce)].
40. [UNITED STATES Federal Court of Appeals for the Eleventh Circuit 29 June 1998 (MCC-Marble v. Ceramica Nuova)].
41. Id. (see full text of the decision).
42. [UNITED STATES Federal District Court, Southern District of New York, 14 April 1992 (Filanto v. Chilewich)] (see full text of the decision).
43. [UNITED STATES Federal District Court, Southern District of New York, 6 April 1998 (Claudia v. Olivieri Footwear)] (see full text of the decision).
44. [UNITED STATES Federal Court of Appeals for the Eleventh Circuit 29 June 1998 (MCC-Marble v. Ceramica Nuova)] (see full text of the decision).
45. [SWITZERLAND Bezirksgericht St. Gallen 3 July 1997 (Fabrics case)]; [GERMANY Landgericht Hamburg 26 September 1990 (Textiles case)] (see full text of the decision).
46. [SWITZERLAND Bezirksgericht St. Gallen 3 July 1997 (Fabrics case)] (see full text of the decision).
47. [UNITED STATES Federal District Court, Southern District of New York, 14 April 1992 (Filanto v. Chilewich)].
48. [SWITZERLAND Handelsgericht des Kantons Zürich 30 November 1998 (Lambskin coat case)] (see full text of the decision); [GERMANY Arbitral Tribunal of the Hamburg Chamber of Commerce 21 June 1996 (Chinese goods case)].
49. [GERMANY Bundesgerichtshof 31 October 2001 (Machinery case)].
51. [GERMANY Landgericht Heilbronn 15 September 1997 (Film coating machine case)].
52. [BELGIUM Rechtbank Koophandel Hasselt 2 June 1999 (Sandwich panels case) ].
53. [GERMANY Oberlandesgericht Hamm 8 February 1995 (Socks case)].
54. [GERMANY Landgericht Kassel 15 February 1996 (Marble slab case)].

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.