V.

Isakova1

CONTRACTUAL CHOICE AND GOOD FAITH UNDER THE

CISG

The role of contractual choice is identified in the general principle of

Article 6, which provides that:

“The parties may exclude the application of this Convention or,

subject to Article 12, derogate from or vary any of its provision”.

The limitation of Article 12 identifies that derogation or limitation will

not be allowed if the contracting Member State makes an Article 96
declaration to this effect [16]. However, as the CISG is both international
in nature and within the text allows leeway within its provisions for party
autonomy, the effect of Article 12 CISG does not remove contractual
choice in its entirety [14]. The impact of Article 12 simply requires that
the CISG is the binding set of principles for contract, which overall
provides a broad model of choice [15, p. 258]. In fact, the only mandatory
Article in the whole of the CISG is Article 12 if one considers the text of
Article 6 [15, p. 261]. There are inferences that there are other mandatory
elements under the CISG, of which Article 7 is considered an important
balance to freedom of contract [1].

The question of balance is an important consideration when dealing with

an international regime that upholds the primacy of contractual freedom
[13, p. 781]. The rationale for this is that having principles, such as good
faith or fair dealing ensures that both parties really have freely engaged in
and agreed to the given contractual terms [13, p. 790]. The problem
present in cross-border contracting there is that there will always be a

1
Ph.D., Senior Lecturer at the International Law department of the Yaroslav Mudryi National Law
University

conflict of laws, unless there is international agreement that international
laws and norms will take precedent (i.e. an international law merchant
(lex mercatoria)) [9, p. 133]. The concept of lex mercatoria dates back to
Medieval Europe, in which freedom to contract is the key underpinning
with pact sunt servanda [9]. In this period “international trade was largely
governed by transnational commercial law”, as opposed to domestic
regimes [10, p. 178].

The implication is that the creation of the CISG, which upholds party
autonomy, is a return to traditional principles. There are arguments that
the CISG was preceded by the Hague Uniform Sales Law 1964, which
created the foundation for the transnational law [7, p. 326]. This
predecessor was unsuccessful, which is due to its inflexibility. The lex
mercatoria of medieval times was based on flexibility, in which the
freedom to contract was balanced by canon law (i.e. fair dealing
principles of the state) [11, p. 199-200]. Arguably, during the late 19th
and 20th Century the traditional transnational law was lost, which
conventions such as the Hague Uniform Sales Law 1964 tried to revive
[7]. The problem experienced is that the domestic regimes of commercial
law stood as an obstacle to a truly transnational law [4]. The CISG is
identified as being able to find this balance once again. The inference is
that the CISG tries to provide a difficult balance between a gap-filling
legal regime for domestic law and retaining an international “standalone”
character [4]. Felemagas argues that:

“The adoption of the CISG is only the preliminary step towards

the ultimate goal of unification of the law governing the
international sale of goods. The area where the battle for
international unification will be fought and won, or lost, is the
interpretation of the CISG’s provisions. Only if the CISG is

 interpreted in a consistent manner in all legal systems that have
adopted it, will the effort put into its drafting be worth anything”
[5].

The issue of interpretation that Felemagas is pointing at is that there

needs to be a unified set of principles at the international level, in order to
provide certainty without the intentions of the contracting parties falling
foul of the conflict of laws. The development of a good faith principle
falls within this application, because there is a general trend for such a
framework on the outset [4]. The fundamental problem that exists is that
the common law system rejects such a principle, unless there has been an
express provision in the contract or it has been confirmed within the
given legal system. Thus, unlike the civil law system the principle of
bonne foi is simply not a natural principle.

The inference is that in the civil law application there will be support for
a general good faith principle, which is less applicable in the common
law systems [8, p. 181]. The US system, which incorporates the CISG in
its Uniform Civil Code (UCC), has experienced problems with respect to
the application of the CISG as a whole (i.e. to what extent it is self-
executing) [2, p. 119]. The issue of self-execution is important, because
the text of Article 7(1) refers to the requirement that the CISG be
interpreted through its international character [2]. The inference of this is
that if the good faith principle is accepted part of the law merchant then it
cannot be derogated from. However, this is not clear, because the
commentary implied that different domestic jurisdictions applying the
CISG approach the good faith principle from different angles [8, p. 181].

In some systems, the good faith principle is seen as an international norm

(i.e. the essential bonne foi concept from the civil law). In fact, arguably
the preparatory documents of the CISG appear to suggest that the entirety

of its text is more geared towards civil law than the common law [12, p.
122]. On the other hand, the good faith principle is linked to the
contractual choice of the parties (i.e. it can be opted out or in), which is
the prevalent approach under the common law applications [12, p. 121].
The fact that there are different applications and assumptions indicates
that the application of the good faith principle may result in a framework
where there are different weightings, as opposed to the permanent self-
executing principle [8, p. 181]. The good faith principle seems to be a
particular problem for the incorporation of the CISG in Anglo-Common
law systems, especially that of English law [3]. The implication present is
that the treatment of this principle is important to the validity of Article 7
as part of international lex mercatoria. It is recognised that the civil law
principle of bonne foi makes the CISG more compatible with the civil
law system [6, p. 150]. However, as identified earlier there are different
interpretations within the civil law system of bonne foi. This indicates
that such a common/civil law application may be overly simplistic.

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