IV. Interpretation of Party Statements

The interpretation of statements made by parties follow different rules than the interpretation of the provisions of the CISG. Art. 8(1) sets out the primary standard of interpretation of party statements:

(1) For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.

If the other party knows or could not have been unaware of the intent of the party making a statement, the statement is thus to be interpreted in accordance with this intent. The phrase could not have been unaware sets a rather high standard and requires significant carelessness. Consequently, the requirements of Art. 8(1) are rarely fulfilled in practice.

For cases in which the other party did not and did not have to know the intent of the party making the statement Art. 8(2) gives an objective standard:

(2) If the preceding paragraph is not applicable, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.

By relying on the understanding of a reasonable person of the same kind as the statement’s addressee Art. 8(2) favors protection of the reasonable expectations of the addressee over protection of the unmanifested intention of the party making the statement. Discrepancies between the unmanifested intention and understanding of a reasonable person, i.e. primarily issues of mistake, are not governed by the CISG but by domestic law. Acknowledged methods of determining the understanding of a reasonable third person in terms of Art. 8(2) include interpretation

  • according to the usual meaning of the words,
  • against the party that drafted a non-negotiated clause (contra proferentem),
  • favoring effective over ineffective interpretation of a clause (favor negotii).

Art. 8(3) lists a number of factors to be regarded to determine the intent of a party under Art. 8(1) as well as the understanding of a reasonable third person:

(3) In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties.

Pursuant to this provision, interpretation is not limited to the four corners of the contract. Rather, all relevant circumstances are to be considered, including those before and even subsequent to making the statement. Furthermore, practices established between the parties and usages relevant for the respective party have to be considered. Particularly, the usages relevant here do not have to live up to the high standards set by Art. 9 but also usages that are observed only on a national, regional or local level have to be considered if they affect the determination of the intent or the understanding of a reasonable third person.

Art. 8 applies to all statements or conduct of parties under the CISG, including the contractual agreement or notices. Art. 8 furthermore governs the interpretation of statements concerning matters outside of the scope of the CISG that are contained in or connected to an international sales contract governed by the CISG like choice of forum or arbitration clauses (disputed).

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Last modified: Thursday, 22 October 2015, 4:42 PM