Many contracts opt out of the applicability of the ‘Vienna Convention‘[1]. Most lawyers do this ‘because everyone does’ and many opt out even if it is not applicable. This blog post explains that an opt-out has to do with cold feet.
The scope of the Vienna Convention is well defined. It is limited to international sales contracts only. Accordingly, it is nonsense to exclude its applicability in licences, service contracts, manufacturing agreements or loans. Furthermore, the convention excludes certain sales contracts because of its purpose (i.e. consumer contracts), its particular nature (i.e. sales by auction, on execution or otherwise by operation of law) or because of the nature of the goods (i.e. shares, investment securities, negotiable instruments, money, ships, aircraft or electricity). Therefore, a share purchase agreement does not need to contain an exclusion of the Vienna Convention, simply because the convention would not be applicable anyway.
Considering the number of ratifications, the Vienna Convention is a great success. The convention is ratified by some 70 countries worldwide. Important countries that have not ratified the convention (yet) include: the UK, Brazil, India, Portugal, Turkey, South Africa and several countries in the Middle East[2]. An up-to-date map can be found on or via the websites of uncitral or legacarta.net/maps.
If you wish to exclude the convention, you may do so as follows:
The Convention on the International Sale of Goods (Vienna 1980) shall not apply.
Is it important to exclude its application? Probably not, the law on the (international) sale of goods is one of the bodies of law, which have become harmonised considerably over the past centuries. (Its being predictable has always been an important factor for trading companies to do business.) Even the legal concepts under sales contract law are similar or equal under the various legal systems. The Vienna Convention is not really different in this respect. A court will not likely answer important questions relating to ‘fitness for purpose,’ ‘conformity,’ ‘free from liens’ or ‘merchantability’ differently under the Vienna Convention as opposed to under the applicable national law. In many cases, the handbooks on the Vienna Convention provide more details on the case law developed in the various national courts than the national case law is reasonably capable of addressing. It is commonly considered that opting out of the applicability of the Vienna Convention has to do with getting ‘cold feet’.
[1] The Convention on the International Sale of Goods (Vienna 1980).
[2] Please note that in order to be applicable, it is sufficient that only one contracting party has its place of business in a contracting state and the rules of private international law lead to the application of the law of a contracting state (Art. 1).
