Abstract
The term ‘usage’ generally refers to any practice that is habitual or customary within a given industry, trade or region. Under domestic U.S. sales law, the term ‘usage of trade’ is used, and usage of trade can be used under domestic U.S. sales law to interpret, explain, or supplement a written agreement. But usage of trade may not be used under domestic U.S. sales law to contradict a written agreement. Moreover, under domestic U.S. sales law, the express terms of the parties’ agreement and any course of performance or course of dealing between the parties will prevail over inconsistent usage of trade.The United Nations Convention on Contracts for the International Sale of Goods, or CISG, also provides for consideration of usage to establish the terms of the agreement between the parties, as well as to determine party intent. But the CISG does not establish a hierarchy that requires usage to defer automatically to party conduct or to the parties’ established practices. Yet, U.S courts have incorrectly assumed that the same hierarchy that they are accustomed to under the UCC must exist under the CISG as well. Because usage can be highly relevant for determining the terms of the agreement between the parties, especially when commercial arrangements are consummated without a written agreement, proper analysis of the role of usage is essential. The failure to understand the role usage plays under the CISG can improperly affect the outcomes of disputes. This Article analyzes this issue and proposes better understanding of the role usage plays for sale of goods contracts governed by the CISG.
Highlights
Imagine an ornate boardroom at the top of an office tower overlooking a fast-paced, exciting, non-U.S city, where a complex international business deal is negotiated and eventually finalized by sophisticated businesspersons and their counselors
As a consequence of Uniform Commercial Code (UCC) bias, U.S courts have utterly failed to recognize the different approach required by the Contracts for the International Sale of Goods (CISG), leaving businesspersons engaging in international sales transactions with unnecessary and undesirable uncertainty regarding the terms of their sales contracts
TDY argued that, “under the CISG, a contract term should be construed according to its customary usage in the industry unless the parties have expressly agreed to another usage.”[51]. The Eleventh Circuit appropriately rejected that desperate attempt to distort the language of the CISG, but it went too far, concluding that “the parties’ usage of a term in their course of dealings controls that term’s meaning in the face of a conflicting customary usage of the term.”[52]
Summary
Imagine an ornate boardroom at the top of an office tower overlooking a fast-paced, exciting, non-U.S city, where a complex international business deal is negotiated and eventually finalized by sophisticated businesspersons and their counselors. Sometimes there are serious misunderstandings between the parties regarding their actual intent for the contractual allocation of risk and responsibility, whether due to cultural differences, language barriers, haste in the consummation of the transaction, or other causes Those contingencies and misunderstandings can cause the relationship to deteriorate in such a way that the parties no longer have any expectation that good things will happen. As a consequence of UCC bias, U.S courts have utterly failed to recognize the different approach required by the CISG, leaving businesspersons engaging in international sales transactions with unnecessary and undesirable uncertainty regarding the terms of their sales contracts. Id. art. 9(1); see id. arts. 8(3) & 18(3). See id. pmbl. & art. 7(1)
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