Presentation on the CISG Article 35: Conformity of Goods and its interpretation in the context of Corporate Social Responsibility.

1. Trade Development through the Harmonization of Commercial Law
International Sale of Goods Session
Joyce Williams, Esq.
UNCITRAL-UM ASIA-PACIFIC FALL CONFERENCE 2014

2. Road Map
Article 35-
Conformity of
the Goods of the
contract
UN Global
Compact
The Way
Forward
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3.  Three sections of Article 35
(1) Conformity of the goods to the terms of the contract
(2) Expressed assumptions about the contractual requirements for the goods
(3) Exception to the seller’s liability for some lack of conformity of goods, where
the buyer knew or could not have been unaware of the lack of conformity.
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ARTICLE 35 OF THE CISG

4. Definition of Conformity of the Goods
 Goods must be of
 Quality
 Quantity
 And description required by the contract
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5. Example
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6. Analysis of conformity under the
traditional definition
 Issue:
Whether the goods do possess all the features described in the contract?
 Rule:
The primary rule for the assesment of of the conformity of goods is that the seller
must deliver goods that are of the quantity, quality, and description required by
the contract.
 General conclusion:
If a good does not contain the qualities, not fit for its purpose or does not posses the
qualities as contractually agreed upon, then there will be a breach of Article 35.
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7. Inquiry
Can a good which is of quality, quantity and description as
required by the contract be deemed non-conforming?
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8. United Nations Global Compact Initiative
“Global Compact”
 It is an international policy intiative where companies agree to align their
business processes and operations with 10 principles of corporate social
responsibility
 These 10 principles are grouped in four categories:
 Human Rights
 Principle 1: Support and respect the protection of internationally proclaimed human
rights; and
 Principle 2: Make sure that they are not complicit in human rights abuses
 Labour
 Principle 3: The freedom of association and the effective recognition of the right to
collective bargaining
 Principle 4: The elimination of all forms of forced and compulsory labor
 Principle 5: The effective abolition of child labor
 Principle 6: The elimination of discrimination in employment and occupation 8

9. Global Compact Cont’d
 Environment
 Principle 7: Support a precautionary approach to environmental challenges
 Principle 8: Undertake initiatives to promote environmental responsibility
 Principle 9: Encourage the development and diffusion of environmentally friendly
technologies
 Anti-Corruption
 Principle 10: Businesses should work against corruption in all its forms, including extortion
and bribery
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10. Global Compact Cont’d
 The Global Compact was established in 2000
 As of today it boast of membership of over 9000 corporate participants and
stakeholders making it the largest corporate citizenship initiative
 Global is not a regulatory instrument, rather it is a community self policing, ideas
sharing and networking between international companies with vast reources
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11. Why the success of the Global Compact
 Competition
 Positive press
 Increase in sales
 etc.
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12. Can a breach of a global compact principle be a contractual
breach for the purposes of Article 35?
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13. Issues
 Whether the contracting parties explicitly contracted for goods that comply with
Global Compact principles
 Whether the buyer is claiming a breach of an implied purpose
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14. Rule
 If the contracting parties explicitly contracted for goods that comply with Global
Compact principles and the seller fails to comply with this contractual term then
there is a breach of Article 35(1) of the CISG.
 If the quality of the goods does not comply on the principles of the global compact
such as the goods produced free of child labor, environmentally friendly processes,
then the buyer could still have redress under Article 35(2)(b)
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15. Problems
Where the buyer claims the breach of an implied purpose
 The buyer informed the seller they were a member of the Global Compact
 The buyer is widely known to distribute goods that are produced in consistency
with the Global Compact principles
 Many companies are at the varying stages of progress with their completion of
Global Compact Quotas
 Some critics cites that some companies do not comply with any of the principles
at all they simply wish to “blue-wash” their companies with the UN name.
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16. Solution under Article 35(2)
 Article 35(2)(b)
 Good do not conform with the contract unless they are fit for any particular
purpose expressly or impliedly made known to the seller at the time of the
conclusion of the contract, except where the circumstances show that the buyer
did not rely, or that it was unreasonable for him to rely, on the seller’s skill and
judgment
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17. What does it mean for the Global
Compact Initiative
 This in essence may mean that if a buyer informs a seller that his company is a global
compact company, then regardless of whether or not the company itself is complying
with the principles of the Global Compact, the seller will have to produce goods
consistent with all Global Compact principles.
 Therefore, non compliance with Global Compact principles can result to a breach
under Article 35 of the CISG
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18. GOING FORWARD
 Clive Schmitthoff:
 “International trade transactions relate to the exportation of goods and services
from one country to another”
 National/Municipal laws vs. International law
 Ethical considerations in business
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19. Conclusion
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Trade development through
harmonization of commercial
law

20. THANK YOU
Joyce Williams, Esq
Joycedwilliams@aol.com
Tel: +1602 505 5207
8/12/2015 20