SALE OF GOODS (UNITED NATIONS CONVENTION) ACT 1995

• Published date: 01 December 1996
• Date: 01 December 1996
• Author: CHAN LENG SUN

The Sale of Goods (United Nations Convention) Act 1995 came into force on 1 March 1996, making the United Nations Convention on Contracts for the International Sale of Goods part of Singapore law. This article takes a bird’s eye view of the Convention. Due to constraints of both space and precedents, the article highlights some provisions which may be traps for the common law lawyer rather than attempts an in-depth interpretation of the Convention.

I. INTRODUCTION

Singapore ratified the United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980) (“the Convention”) on 16 February 1995. The Sale of Goods (United Nations Convention) Act 1995 was passed on 23 March 1995 and came into effect on 1 March 1996.

The purpose of the Convention is to provide uniform rules to govern contracts for the international sale of goods. In adopting the Convention, the effect of the 1995 Act is far-reaching in that, unlike INCOTERMS, which provide merely for the interpretation of common trade terms e.g. c.i.f., f.o.b. and ex works, the 1995 Act actually alters the law of contract to some extent.

The scope of the Convention is explained in Article 4:

This Convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. In particular, except as otherwise expressly provided in this Convention, it is not concerned with:

1. (a) The validity of the contract or of any of its provisions or of any usage;

2. (b) The effect which the contract may have on the property in the goods sold.

The Convention does not apply to liability of seller for death or personal injury caused by the goods.1

The Sale of Goods Act (Cap. 393) is not replaced and should continue to apply where there is lacunae.2 As will be seen below, the question is when is there a lacuna and when is there inconsistency between the Sale of Goods Act and the Convention. Likewise, there does not appear to be anything in the Convention which prevents the application of the Unfair

Contract Terms Act (Cap. 396) (“UCTA”), although one must remember that section 26 of UCTA excludes some international sale contracts from its operation.

A. The 1995 Act takes effect from 1 March 1996

Contracts made before 1 March 1996 will not be affected. The Convention applies only to contracts concluded on or after 1 March 1996.3 Where the Convention affects the law governing formation of contracts, it applies to the formation of a contract only when the proposal for concluding the contract is made on or after 1 March 1996.4

B. Application of the Convention

The provisions of the Convention shall have the force of law, except for Article 1(1)(b).5 This means that the Convention will apply to contracts of sale of goods only between those parties whose places of business are in different Contracting States. A list of Contracting States is gazetted under section 5 of the Act.6 The place of business is determined by reference to Articles 10 and 1(2) & (3).

Therefore, the Convention applies once there is a sale of goods between parties in two Contracting States. However, certain sales are not covered by the Convention.7 Parties are free to exclude the application of the Convention, i.e. it applies unless they opt out.8 Parties may also vary the effect of any of its provisions. However, attention must be paid to Article 96 — if a party is from a State that has made a declaration under Article 96, parties must effect any modification only in writing.9

A similar question to that in relation to the Carriage of Goods by Sea Act, 1972 (Cap. 33) may arise under this Act. If parties are both in Contracting States but the proper law of the contract is in a non-contracting state, i.e. not Singapore law, the Act and the Convention would arguably not be of relevance at all.

II. SOME GENERAL PROVISIONS OF THE CONVENTION

The Convention is to be interpreted having regard to its international character and the need to promote uniformity in its application.10

Article 8 emphasises the need to interpret statements and conduct of a party according to his intent. Article 8(3) provides that due consideration must be given to all relevant circumstances including any subsequent conduct of the parties. In the Singapore context, this provision deviates from the rule of evidence that subsequent conduct is not relevant to construction of a contract and the parol evidence rule.

Article 9 appears to allow the incorporation of INCOTERMS by recognizing that parties are bound by any usages which they have agreed to or established between themselves, or, unless they agree otherwise, which are widely known.

III. FORMATION OF CONTRACT

Articles 14—24 provide detailed provisions on offer, acceptance and withdrawal. The following are the effect of some of these provisions:

1. (a) A proposal other than one addressed to specific persons is merely an invitation to make offers, unless the contrary is clearly indicated by proposer — Article 14(2);11

2. (b) The concept of an irrevocable offer. An offer may be irrevocable in the sense that it cannot be revoked once it reaches the offeree and it is valid until the time fixed for its acceptance has passed;12

3. (c) An offer is accepted when indication of assent actually reaches the offerer; — Articles 18(2) and 24 — cf. the common law rule that a postal acceptance takes place when the letter is posted.13 Acceptance may also be by performance of an action without notice to the offerer;14

4. (d) Article 19 deals with the problem of counter-offers and “battle of forms” which have tormented common law lawyers. The inclusion of non-material variations or additions in an acceptance does not amount to a counter-offer unless there is immediate objection. If there is no objection, the variations or additions are deemed part of the terms of the contract; and

5. (e) There is a potential conflict between Article 14 and Article 55. Article 14 requires an offer to be sufficiently definite, and a proposal is sufficiently definite if it indicates the goods and fixes

or makes provision for determining the quantity and price. Article 55, on the other hand, implies a price based on “the price generally charged” in “comparable circumstances” where none is provided for in the contract. In United Technologies International Inc v Magyar Legi Kozlekedesi Vallalat, the Hungarian Supreme Court held that there was no valid contract concluded as the offer and acceptance were vague and failed to fix or make provision for determining the price of the goods.15

IV. OBLIGATIONS OF SELLER

A. Delivery

One of the main problems of interpretation concerns the provisions on delivery of the goods and documents. While Article 30 provides merely that the seller must deliver the goods and documents...