The French and the Dutch law perspective

In most international commercial contracts for the sale of goods, the parties choose to exclude the Vienna Convention on the International Sale of Goods (‘CISG’). This is not always to their advantage. In this article, Mathijs van Riet, Lawyer at SPIEGELER International Attorneys-at-law & Mediators will highlight the CISG from a Dutch and French law perspective.

Background of CISG

The rules and obligations for commercial parties can differ materially in each jurisdiction. The CISG intends to uniform the legislation that applies to the international sale of goods, so that international companies are better aware of their obligations when they undertake their trading abroad. The aim is therefore to provide one legal system that applies in the jurisdictions of all the member states, to promote international commercial trade between the member states.

Exclusion of CISG’s applicability

Nevertheless, in most international commercial contracts the parties choose to exclude the applicability of CISG. This is probably because the parties are not completely aware about the provisions of the CISG and their advantages. In some situations, the CISG even provides for more favourable outcomes than the national legislation.

Annulment for breach of contracts under CISG, the Dutch and French Civil Code

In international commercial contracts it does occur that either party is not entirely satisfied with its contractor. If the other party breaches its obligations under the contract, one of the fundamental remedies is to annul the contract. Although almost every jurisdiction provides for a legal system that enables a party to annul an agreement if its counter party breaches its obligations, the requirements for this remedy seriously defer in each jurisdiction.

Under CISG, a party is entitled to annul its contract if the other party materially breaches its obligations under the contract. Under the French Civil Code, a party is entitled to annul its contract if the other party significantly breaches its obligations under the contract. Under the Dutch Civil Code, any breach of contract entitles the other party to annul the contract, unless the breach is not material enough.

Burden of proof

Even though it might seem that the legal systems under CISG, and the Dutch and French Civil Code are not so different as all systems require a certain extent of seriousness to the breach, from a burden of proof-perspective there is a substantial difference between these systems.

Under CISG and the French Civil Code it would be up to the claiming party to prove that the other party breached its obligations and that this breach was material enough to justify the annulment of the contract. Under the Dutch Civil Code, however, it would be up to the claiming party to prove that the other party breached its obligations under the contract, whereas the other party itself would have to prove that the breach is not material enough to justify the annulment.

Strategic decisions in commercial contracts

This difference in the legal systems regarding the burden of proof can have a serious impact on the outcome of a procedure. For this reason, it is very important to be aware about the potential risks to a contract and which legal system would be best to limit those risks.

Do you have a question regarding a commercial contract or are you involved in a commercial dispute? Our team at SPIEGELER International Attorneys-at-law & Mediators are happy to help.