International Sale Of Goods: Are You Applying The Correct Law?

A Quebec company sells goods to a buyer in the U.S. The contract stipulates that Quebec law applies. A dispute arises between the parties, after the buyer complains about the poor quality of the delivered goods and refuses to pay the agreed-upon price, whereupon the seller sues.

What legislative provisions apply to the dispute? At first blush, the answer would appear to be articles 1726 and following of the Civil Code of Québec (the "Civil Code") dealing with the warranty of quality that the seller owes the buyer.

That, however, would probably be the wrong answer. For if the sale of goods is international, regard must be had for the United Nations Convention on Contracts for the International Sale of Goods (the "Convention") which is legally binding and has force of law in Canada, including Québec1.

In principle, the Convention - which has been ratified by most industrialized countries (the most notable exception being the U.K.) - governs the international sale of goods between parties whose respective places of business are in different States, where those States are Contracting States. Thus, in our example above, as both Canada and the U.S. have ratified the Convention, the provisions of the Convention, rather than those of the Civil Code, would in principle govern the resolution of the dispute (Article 1 (1) (a) of the Convention).

The provisions of the Convention can even apply where one of the parties to the sale has its place of business in a non-contracting State, provided that the applicable rules of private international law lead to the application of the law of a Contracting State. Thus, in our example, had the sale been to a buyer in the U.K., the provisions of the Convention would still apply, because pursuant to the governing-law clause in the contract, Quebec's private international law rules would have led to the application of the law of Quebec (Article 3111 of the Civil Code), a jurisdiction where the Convention is in force (Article 1 (1) (b) of the Convention).

The range of transactions covered by the Convention is very broad. It applies to all international sales of goods save for a few limited exceptions, including goods purchased for personal or household use, at auction or at a judicial sale. Also exempt are sales of securities, negotiable instruments or money, ships, other vessels and aircrafts (Article 2 of the Convention).

In terms of content, the Convention has over a hundred articles covering most aspects of...