Software Technology in CISG contracts

It is often said that law lags behind technology. Indeed, legal gaps may occur due to the difficulties that laws have in keeping up with social change brought by technology advances. New legal problems arise more rapidly because technology improvements have always come very fast, and, as a consequence, law lacunas widen every day in both statutory and court-made rules. In some legal fields, such as privacy law and intellectual property, the gaps have grown exponentially with the advent of digital social media, smart phones, dating sites, drones, computer search engines, Internet government surveillance, and so on. But the same advances in technology also demand a faster evolution of the more traditional legal institutions such as contracts. Today, technology affects everyone, everywhere. If the law on the sale of goods before the Second World War was the product of a slow evolution of the roman law actio empti in civil law jurisdictions or of the old writs of covenant and assumpsit in the common law tradition, changes of a magnitude that once took centuries are now happening in decades or even years.

Technology, and, in particular, software technology, has changed the way businesses operate as well as the items traded in the international arena. Software includes not only computer programmes that run on traditional personal computers, such as operating systems software and software applications but also other ‘operating information’. The United Nations Convention on Contracts for the International Sale of Goods (CISG) has been ratified by 89 contracting States. The CISG plays an important role in governing international sales, and, accordingly, it is not exempted from the need to address new situations created by technology improvements. The CISG was drafted in the 1970s when the commercial and technology innovations of the 1990s could not have been anticipated by most lawyers or in many trades.4 The drafters may not have foreseen the new type of goods that were to be sold just a few years ahead in CISG contracts, which is a reason why they may have wilfully avoided a definition of goods in the Convention’s text. The drafters wished to impose few impediments to the conclusion of CISG contracts—for example, an ‘in written form’ requirement, which explains the primary rule under the CISG that the existence of the contract ‘may be proven by any means’. And this has turned out to be a positive feature to incorporate newer means for contract formation. The drafters were also unable to forecast how new technologies might affect the understanding of ‘conformity’of goods under the CISG and, therefore, decided to favour a contractbased system supported by broad default warranties. The drafters were not capable of knowing how technology imbalances among countries would affect the manner and time within which a buyer would be able to examine the goods or give notice of non-conformity. Nevertheless, they knew that the time for examination and notice would and should vary from country to country and, hence, decided to oblige the parties to do so ‘within a short a period as is practicable under the circumstances’ or in ‘a reasonable time’, instead of fixing a strict deadline.

The drafters’ conscious choices and the similar provisions that they wrote, and that many regard as shortcomings in the Convention, have proven to be appropriate legal solutions that address the new realities of the international sale of goods. This article supports the view that the CISG is equipped with the rules and principles needed to tackle changes in software technology that are necessary to achieve a fair and uniform sale of goods law. Article 7 of the CISG is the key to this end. The article requires that, in the interpretation of the CISG, regard is to be given to its international character and to the need to promote the observance of good faith in international trade. It also requires that questions concerning matters governed by the CISG, but which are not expressly settled by its provisions, be solved in conformity with the general principles on which it is based.

These gap-filling rules are instrumental for developing the Convention and adjusting to the new needs. They should be used to meet the unforeseen challenges from issues of software technologies that were not foreseen by the Convention’s drafters. The appropriateness of such self-contained rules of interpretation and gap-filling for uniform law has been recognized by the adoption of the same wording, or at least very similar provisions, in subsequent conventions, model laws, and uniform projects.

In my full article published this month at the Uniform Law Review, I demonstrate how Article 7 of the CISG serves to address recent changes in software technology that have an impact on four matters governed by the CISG: the notion of goods; contract formation; conformity of the goodsnand examination; and notice of non-conformity. In Part II, of such article, Isubmit that the notion of goods under the Convention includes software technology and that the CISG provisions are suitable to govern this type of sales. In Part III, I advocate for a modern understanding of some CISG terms in order to adapt the rules on contract formation to the new software technology realities. In Part IV, I highlight some conformity issues that may arise in the sale of software and provide solutions based on the rules and principles of the CISG. In Part V, I explore how software technologies deserve specific methods of examination and of giving notice of any lack of conformity by the buyer.

Edgardo Mu?oz, Software technology in CISG contracts, Uniform Law Review, Volume 24, Issue 2, June 2019, Pages 281–301, https://doi.org/10.1093/ulr/unz016