Art. 20 CISG–UP, by John Felemegas [Australia

Abstract

GENERAL SCHEME OF INTERPRETATION AND SUPPLEMENTATION IN THE CISG AND PECL The nature and content of PECL Art. 1:106, as well as its function within the instrument to which it belongs, are very similar to those of CISG Art. 7. In both cases, the respective provisions provide the built-in interpretation and supplementation mechanism that the drafters have embedded in their corresponding instruments. The relevant provisions provide that the interpretation of the law in both instruments must pay regard to the concept of good faith. The Notes to PECL Art. 1:106(1) confirm that the basic elements found in the structure of Art. 1:106 either are virtually identical or express similar ideas to the ones of the corresponding provision in CISG Art. 7(1). GOOD FAITH AND FAIR DEALING IN THE INTERPRETATION OF THE CONTRACT The concept of “good faith and fair dealing” does not operate merely as a rule of interpretation of each PECL article. The duty of good faith, as this is embedded in PECL Art. 1:201, is mandatory on the parties. In contrast to CISG Art. 7(1) (or any other CISG provision), PECL Art. 1:201 imposes upon each party a positive duty of good faith and fair dealing in exercising its rights and performing its duties under the contract. The PECL Comments to Art. 1:201 not only refer to good faith as “a basic principle running through the Principles” but also expressly state that “[g]ood faith and fair dealing are required in the formation, performance and enforcement of the parties' duties under a contract, and equally in the exercise of a party's rights under the contract” (see PECL Comment A).