Conformity of Goods under the United Nations Convention on Contracts for the International Sale of Goods (“CISG”)

Por  Carolina Lana, revisão por Helder Fonseca

Conformity of goods is at the core of International Sales Law. The debate on whether the delivered goods should be considered conforming or not, pursuant to Article 35 CISG, is root of endless controversies and one of the main reasons for litigation. This matter is relevant not only for manufacturers to ensure the compliance of its own products, but also to demand or question compliance from direct suppliers and sub suppliers.
The UN Convention for the International Sales of Goods (CISG) is currently adopted by over 80 countries, including Brazil. In essence, the CISG is to be applied whenever the parties are from countries that are signatories to it – unless the parties have opted out of the Convention – or when the rules of private international law lead to the application of the law of a Contracting State.

The Convention establishes its requirements for conformity in Article 35. Its opening statement leads to the basic rule that establishes the quantitative and qualitative descriptions under the Contract as the primary reference for verification of conformity. Those specifications may even be implied or provided under a duty of disclosure. It is quite common that the requirements derive from one party’s standard terms that were incorporated to the contract, as long as the offeror’s intention to incorporate its standard terms is apparent to the offeree and the terms are either transmitted or made available in another way.

Professor Schwenzer (2010) defines “quality” as the goods’ physical condition as well as “all factual and legal circumstances concerning the relationship of the goods to their surroundings”. She states that such circumstances are to be considered relevant only if they affect either the usability or the value of the goods.

Nowadays, with the increasing demand for sustainably and/or ethically produced goods, the requisites for conformity of goods have been amplified. They are no longer limited to the physical features of goods, but have also incorporated immaterial factors, commonly known as Ethical Standards. Even though ethically sourced goods may be physically identical to those that were produced unethically, compliance to ethical standards is to be considered an enforceable contractual obligation as long as they are reasonably made known to the seller, pursuant to Article 35 CISG. That is because it is increasingly recognized in International Sales Law that ethical standards create an emotional value that allows premium pricing. Customers are often willing to pay a higher amount for the assurance that the products negotiated were produced ethically.

Moreover, Article 35(2) contains a subsidiary definition of conformity. In case the contract does not contain sufficient requirements to determine the conformity of the goods, Article 35(2)(b) establishes the secondary criteria. The goods must be fit for “any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the contract” even if that purpose was not contractually agreed upon. A particular purpose may exist, for example, if the goods need to be fit for a market that specifically demands the observance of certain ethical principles.

A supermarket located in a Jewish community, for instance, could determine that only Kosher products (those that fulfill the requirements of Jewish law) would be acceptable from its suppliers. Furthermore, a costumer purchasing vegan products is entitled to demand not only that the goods are exempt from animal-derived ingredients, but also that they have been ethically produced.

On the other hand, it is essential for the enforceability of a particular purpose, pursuant to Article 35(2)(b) CISG, that the buyer is able to rely on the seller’s skill and judgment under the given context. The matter is especially important, for instance, when the seller’s and the buyer’s States have public law regulations that set different standards to the goods.

In the New Zealand Mussels Case, a Swiss company exported New Zealand mussels to Germany. However, the mussels presented a higher cadmium level – a toxic heavy metal with low permissible exposure to humans – than was acceptable under the German Good Safety laws. The Bundesgerichtshof (Federal Supreme Court of Germany) decided that the CISG does not oblige the seller to supply goods in conformity to all public standards that are in force in the buyer’s State, unless those standards also exist in the seller’s State or if those provisions were previously made known to the seller. Therefore, the German company could not have relied on the seller’s skill and judgment to the point where it would trust that the Swiss exporter would be aware of such specific regulations from a foreign country.

Under a systematic interpretation of the CISG, the provisions of Article 35(2)(a) are subsidiary to those of Article 35(2)(b). Therefore, if the seller makes no reference to an intended particular purpose, then the fitness for the purpose for which the goods would be ordinarily used, pursuant to Article 35(2)(a), becomes relevant. In that case, if the goods are only fit for some of its ordinary purposes, the buyer must be informed beforehand.

The most important ordinary purpose of any good is its merchantability. A good’s fitness for commercial purposes may be measured, for instance, through its compliance to the applicable manufacturing standards and to any advertisements or labels made by the seller, the producer or their representatives. Other requirements refer mainly to the trade sector concerned. Food products must be edible. Clothing must be wearable. Any deviation from the most essential characteristics to be reasonably expected from a product as such may be considered as lack of conformity.

The third ancillary requirement for the determination of conformity of the goods is correspondence to any samples taken or models provided. Those two concepts differ slightly. Samples are those taken from the goods that are to be delivered, whereas a model is provided when goods themselves are unavailable.

Generally, it is expected that the goods comply with both a sample or model and the requirements established under the contract. However, if there is any conflict among those, the contract must be interpreted with a special focus on the original intention of the parties to prioritize either one, pursuant to Article 8(1) CISG. If the intention of the parties is not clear, then the final decision should consider the understanding that a reasonable person of the same kind would have had in the same circumstances, pursuant to Article 8(2).

Article 35(2)(d) establishes the final requirement of conformity under the CISG. The goods must be packaged in the manner usually applicable in that specific market or, in case there isn’t one, the packaging must be done in a manner that is sufficient to preserve and protect the goods. To determine whether the packaging is adequate, the nature of the goods, the duration and kind of transport, the weather and other external factors, need to be taken into consideration. Needless to say, the seller will not be held liable for any damages to the packaging, unless it forms part of the goods.

Lastly, we have to consider that a seller must not be held liable if the buyer either knew or could not have been unaware of the lack of conformity under paragraph (2). In that sense, a party that buys goods with apparent defects is considered to have accepted the notable lack of conformity, i.e., if a buyer was given a reasonable opportunity to examine the goods, then, by purchasing them, his satisfaction to their apparent condition is implied.

SCHLECHTRIEM, Peter and SCHWENZER, Ingeborg. Commentary on the UN Convention on the International Sales of Goods (CISG), 2010, pp. 568-594.
SCHLECHTRIEM, Peter and BUTLER, Petra. The UN Convention on International Sale of Goods, 2010, pp. 113-124.
BIANCA, Cessare. Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 268-283. Reproduced with permission of Dott. A Giuffrè Editore, S.p.A.
RAMBERG, Christina. (2015). Emotional Non-Conformity in the International Sale of Goods, Particulararly in Relation to CSR-Policies and Codes of Conduct.
TOMIMATSU, Camila. A Incorporação de Características Imateriais como Requisitos de Conformidade nos Contratos de Compra e Venda Internacional. Standards éticos como requisitos de conformidade das mercadorias à luz do Artigo 35 da CISG. In A CISG e o Brasil: convenção das Nações Unidas para os contratos de compra e venda internacional de mercadorias. Assembled by Ingeborg Schwenzer, Cesar A. Guimarães Pereira, Leandro Tripodi. 1. Ed. São Paulo: Marcial Pons; Curitiba: Federação das Indústrias do Estado do Paraná, 2015, pp. 343-174.
CISG-AC Opinion No. 13, Inclusion of Standard Terms under the CISG, Rapporteur: Professor Sieg Eiselen, College of Law, University of South Africa, Pretoria, South Africa. Adopted by the CISG Advisory Council following its 17th meeting, in Villanova, Pennsylvania, USA, on 20 January 2013.
Germany 8 March 1995 Supreme Court (New Zealand mussels case). Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=108&step=Abstract>; [1996] 3 European Current Law, Monthly Digest (Euro CL) No. 84 [72-73] and [1996] Euro CL No. 97 [118] = [1996] Euro CL No. 1081 [490] and No. 1084 [491]; Forum des Internationalen Rechts /The International Legal Forum [English Language Edition] 1 (1996) 15
United Nations Convention on Contracts for the International Sale of Goods, 1980

 

Carolina Lana Castilho é estudante de Direito da UFMG e estagiária do Escritório GVM | Guimarães & Vieira de Mello Advogados, atuando no contencioso cível. Membro do GEDCC (Grupo de Estudos em Direito Civil Contemporâneo) e do GACI (Grupo de Estudos em Arbitragem e Contratos Internacionais) desde 2017. Experiência de intercâmbio acadêmico de um ano no Canadá. Inglês fluente, francês e alemão básicos. Oradora da UFMG no XXV Willem C. Vis International Commercial Arbitration Moot. E-mail: clana@gvmadvogados.com.br

Helder Felipe Fonseca Damasceno é Advogado do Escritório GVM – Guimarães & Vieira de Mello Advogados com atuação nas áreas de Direito Corporativo, Societário e M&A, coordenador de operações de planejamento sucessório/tributário, reestruturações societárias, compliance societário, Project Finance, litígios societários, Merger & Acquisitions e new business development. Palestrante no evento “I Fórum de Direito Empresarial em Energia”, sobre o tema “Funding para novos projetos e recuperação de empresas em risco”.  E-mail: hfonseca@gvmadvogados.com.br