CISG Advisory Council

b) Interpretation of the term "materials necessary for such manufacture or production"

To be cited as: CISG-AC Opinion no 4, Contracts for the Sale of Goods to Be Manufactured or Produced and Mixed Contracts (Article 3 CISG), 24 October 2004. Rapporteur: Professor Pilar Perales Viscasillas, Universidad Carlos III de Madrid.

Adopted by the CISG-AC on the 7^th meeting held in Madrid with no dissent. Reproduction of this opinion is authorized.

Eric E. Bergsten, Michael Joachim Bonell, Alejandro M. Garro, Roy M.Goode, Sergei N. Lebedev, Pilar Perales Viscasillas, Jan Ramberg, Ingeborg Schwenzer, Hiroo Sono, Claude Witz, Members

Opinion

1. Paragraphs (1) and (2) of Article 3 CISG govern different matters, though in complex transactions there may be some reciprocal influence in their interpretation and application.

Article 3(1) CISG: Contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture.

2. In interpreting the words "substantial part" under Article 3(1) CISG, primarily an "economic value" criterion should be used. An "essential" criterion should only be considered where the "economic value" is impossible or inappropriate to apply taking into account the circumstances of the case.

3. "Substantial" should not be quantified by predetermined percentages of value; it should be determined on the basis of an overall assessment.

4. The supply of labour or other services necessary for the manufacture or production of the goods is covered by the words "manufactured or produced" of Article 3(1) CISG and is not governed by Article 3(2) CISG.

5. The words "materials necessary for such manufacture" in Article 3(1) CISG do not cover drawings, technical specifications, technology or formulas, unless they enhance the value of the materials supplied by the parties.

6. In the interpretation of Article 3(1) CISG, it is irrelevant whether the goods are fungible or non-fungible, standard or custom-made.

Article 3(2): This Convention does not apply to contracts in which the preponderant part of the obligations of the party who furnishes the goods consists in the supply of labour or other services.

7. Article 3(2) CISG governs mixed contracts. Whether the different obligations as to goods and services are agreed upon in one mixed contract or in several contracts is a matter of contract interpretation.

8. In the interpretation of the parties' agreements relevant factors include, inter alia, the denomination and entire content of the contract, the structure of the price, and the weight given by the parties to the different obligations under the contract.

9. In interpreting the words "preponderant part" under Article 3(2) CISG, primarily an "economic value" criterion should be used. An "essential" criterion should only be considered where the "economic value" is impossible or inappropriate to apply taking into account the circumstances of the case.

10. "Preponderant" should not be quantified by predetermined percentages of value; it should be determined on the basis of an overall assessment.

11. The plural form of the word "obligations" in Article 3(2) CISG should prevail, despite the use of the singular in the Arabic and French text of the Convention.

1. INTRODUCTION

1.1. Article 3 CISG is one of the provisions that define the field of application of the Convention. It considers contracts for the supply of goods to be manufactured or produced to be contracts for the sale of goods, unless the buyer undertakes to supply a substantial part of the materials necessary for the manufacture or production (Article 3(1) CISG). Under Article 3(2) CISG the Convention does not apply to mixed contracts in which labour or other services are involved if the labour or other services form the preponderant part of the obligations of the party who furnishes the goods.

1.2. Paragraphs (1) and (2) of Article 3 CISG govern different matters, though in complex transactions there may be some reciprocal influence in their interpretation and application. For example, where the materials supplied by the buyer are not themselves the substantial part of the materials necessary to manufacture the goods (and therefore, under Article 3(1), the CISG would apply), and the services to be provided by the seller evaluated alone are not the preponderant part of the services part of the mixed contracts (so that, under Article 3(2), CISG would also apply to this part), nevertheless, under exceptional circumstances, both contributions combined might change the character of the transaction as a whole so much that it cannot be qualified as a sale governed by the CISG. However, in these situations, not only the entire transaction has to be considered and characterized, but also the policy that in case of doubt application of the Convention is to be preferred.

1.3. Distinguishing contracts for the sale of goods from services contracts is a highly controversial issue under many domestic legal systems where a sub-category of the latter is often found: work contracts in which one of the parties provides the necessary materials for the construction by the other party (contracts for works and materials). Although the different legal systems would almost unanimously consider a contract to be a work contract when the buyer (owner) provides all or a substantial part of the materials, when the seller (contractor) provides them, different solutions are considered: sales contracts, work contracts, or even mixed or sui generis contracts.

1.4. Domestic legal systems differ as to the criteria and factors to be applied in order to characterize a contract as a sales contract. The criteria to be followed include, among others, the comparison between the obligation to do and the obligation to give; the character of the object/goods (fungible/nonfungible; standard/custom-made); the possible alteration of the object (whether or not an item with its own individuality is created); whether the production of the goods was done before the contract, or if the goods belong to the kind of goods that are usually produced by the seller; the skill of the person who is to produce the goods; and, finally, the need to transfer property in the goods.[3]

1.5. As compared to the diversity of approaches encountered in domestic law, the Convention adopts two criteria of distinction, "substantial part" (Article 3(1) CISG) and "preponderant part" (Article 3(2) CISG). Therefore, the Convention considers as sales contracts, contracts for the supply of goods to be manufactured or produced by the seller with materials provided by him or by the buyer if the buyer undertakes to provide some but not a substantial part of the materials necessary for the manufacture or production (Article 3(1) CISG).[4] However, under many domestic laws such contracts would not be considered to be sales of goods contracts. On the other hand, the Convention is not applicable if the preponderant part of the obligations of the party who furnishes the goods consists in the supply of labour or other services.

1.6. The terms "substantial" and "preponderant" have been subject to conflicting views by legal writers and the case law. Many of these interpretations are derived from and reflect national doctrines applied to the analysis of Article 3 CISG. An autonomous, international and uniform interpretation of Article 3 CISG is needed (Article 7(1) CISG).

1.7. The analysis of Article 3 CISG becomes even more complex due to four other factors:

2.1. The Convention uses a vague term, "substantial part", as one of the key elements in the interpretation of Article 3(1) CISG. There are differences among the authentic texts of the Convention ("substantial part", "parte sustancial", and "part essentielle"), which seem to denote different standards of interpretation. Scholars have also used different undefined terms to delimit "substantial part" which does not help clarify its meaning. For example, "substantial part" has been defined as "considerable part",[6] or as "parte cuantiosa".[7]

2.2. Two different criteria of interpretation of the term substantial are found: economic value and essential. Also, it would be necessary to assess the need to quantify the term "substantial".

2.3. Several scholars have considered that "substantial part" means economic value:[8] the materials provided by the buyer ought to be higher in value (price) as compared to those provided by the seller in order to exclude the CISG.[9] This criterion has also been followed by some cases.[10]

2.4. Other scholars, as supported by some case law, consider that the standard of interpretation of the term "substantial part" should be based in the essentiality of the goods, i.e., in the quality/functionality of the materials provided by the parties, as the French version seems to suggest using the term "essential part".[11] There have also been cases that have followed this approach.[12]

2.5. The legislative history of the Convention supports the conclusion that the essential criterion was rejected. Both Article 6 of the 1964 Uniform Law on International Sale of Goods (ULIS) and Article 1(7) of the 1964 Uniform Law on Formation (ULF) state that the Uniform Law is excluded if the party who orders the goods provides an essential and substantial part of the materials. The word "essential" was deleted suggesting that the essential criteria was rejected by the drafters of the CISG. However, despite the fact that "essential" was there "thrown out the door", it re-entered "through the window" via the French text of the Convention, and the interpretation made by some legal writers and in some of the case law.

2.6. The "economic value" criterion should prevail in the interpretation of the words "substantial part" in Article 3.1 CISG. Absent any other indication in the contract, the price of the materials to be considered is that of the buyer's market at the time of the conclusion of the contract.[13]

2.7. An "essential" criterion should only be considered where the "economic value" is impossible or inappropiate to apply, i.e., when the comparison of the materials provided for by both parties amounts to nearly the same value.

2.8. Legal writers who follow the economic value criterion have generally quantified the term "substantial part" by comparing Article 3(1) CISG (substantial) with Article 3(2) CISG (preponderant): substantial being less than preponderant. In this way, legal writers have used the following percentages to quantify substantial: 15%,[14] between 40% and 50%,[15] or more generally 50%.[16] At the same time, other authors, although they have not fixed any numbers in regard to the quantification of the term "substantial" have declared that "preponderant" means "considerably more than 50% of the price" or "clearly in excess of 50%".[17] Thus it seems that for the latter authors, the quantification of the term "substantial" is placed above the 50% figure. Also, some Courts have followed this approach.[18]

2.9. To consider a fixed percentage might be arbitrary due to the fact that the particularities of each case ought to be taken into account; that the scholars are in disagreement; and that the origin of those figures is not clear.[19]

Therefore, it does not seem to be advisable to quantify the word "substantial" a priori in percentages. A case-by-case analysis is preferable and thus it should be determined on the basis of an overall assessment.

2.10. Even if one were to use a percentage, the 50% figure may be too low to justify exclusion of the Convention, particularly in the view of the aim of the CISG (Article 3(1)), which states a "pro Convention principle". An approach that favors the application of the Convention is preferred because Article 3(1) CISG is drafted expressing a general rule (applicability of the Convention) and an exception (exclusion of the CISG). Furthermore, an approach based on the principles of international and uniform interpretation and application of the Convention should be sought (Article 7 CISG). Besides, the modern legal and economic approach to contracts for the sale of goods is even wider than the approach embodied in Article 3(1) CISG.[20]

b) Interpretation of term "materials necessary for such manufacture or production"

2.11. Another key element in the interpretation of paragraph (1) of Article 3 CISG is the analysis of the phrase "materials necessary for the manufacture or production" of the goods. It is clear that raw materials are included, and also that so-called accessory elements such as materials needed for the packaging and transportation of the goods, or materials needed for an acceptance test are excluded. Moreover, materials that are not strictly speaking needed for the manufacture or production of the goods cannot be considered materials in this sense. An example would be the printing film provided by the buyer in a contract of sale under which the seller was to print and deliver books, since in this case the film provided is needed for the process of production of the goods and its requirements, but does not become part of the goods themselves.[21]

2.12. More problematic within the meaning of the term "materials" is the inclusion or exclusion of the technology, technical specifications, drawings, formulas and designs necessary for the production of the goods. Case law and legal writers are in disagreement. The controversy began with a French decision (Cour d´appel de Chambéry, 25 May 1993) that did not consider the CISG applicable on the basis that the production of the goods had to be made following the designs provided by the buyer. In the opinion of the French court, the designs amounted to a substantial part of the materials in the sense of Article 3(1) CISG. It appears from the report of the case that the It appears from the report of the case that the only "material" provided by the buyer were the designs.

2.13. This decision has been criticized because the designs are not within the concept of materials and because contracts in which know-how is transferred are governed by the CISG.[22] The legislative history of the Convention supports this criticism. There was a proposal, that was opposed and finally withdrawn, by the UK delegation aimed at excluding the Convention when the buyer supplied the know-how, e.g, when "the party who orders the goods undertakes to supply: a) a substantial part of the materials; or b) the information or expertise necessary for such manufacture or production".[23] The CISG-AC considers that contracts in which the buyer supplies only designs (or drawings, technical specifications, technology or formulas) are covered by the Convention [24] as shown by the legislative history of the Convention and impliedly by Article 42(2)(b) CISG.

2.14. Nevertheless, the French decision introduces a very important ramification in the interpretation of the term "materials" under the Convention. Know-how, or designs provided by either of the parties are taken into account only if they are enhancing the value of the materials. However, if the drawings, technical specifications or designs are accessory, they are not to be considered as materials.[25] First, the legislative history shows that within the concept of materials not only raw materials are included [26] and thus, at least, the only components of the final object - wholly manufactured or not - would be included. Second, the withdrawn UK proposal did not suggest that, within the concept of materials, know-how is always excluded, but that a contract will not be considered a sales contract in a situation in which the buyer only supplied the expertise necesary for the manufacture or production of the goods, as is shown by the fact that the proposal consisted in two separate choices (a/b), as well as from the use of the conjunctive "or".

2.15. However, not all designs or drawings would be included within the concept of materials, only those necessary for the manufacture and production of the goods and therefore that contribute originality, speciality or exclusivity to the goods. This will usually imply that where the buyer or the seller contributes material that embodies industrial or intellectual property rights (e.g., a patent or other industrial property rights), these rights should be included in the idea of enhancing the value of the goods in the sense of Article 3(1) CISG.[27]

3.1. A seller often has to perform services ancillary to delivery such as packaging, dispatching the goods, concluding contracts with carriers, etc. These services do not alter the qualification of the contractual relations between the parties as a sale. However, frequently the seller undertakes more, i.e. services that could also be the subject of an independent contract such as the installation of the assembly line sold,[28] installation of modular wall partitions,[29] assembly of the parts of a plant to manufacture windows,[30] training of the employees of the buyer in the operating of a machine sold, marketing of the goods to be produced by a plant sold, etc. If such services are undertaken in the same contract that contains the obligation to deliver goods and transfer property, the question arises whether such a mixed contract is governed by the Convention. Article 3(2) CISG is meant to solve this question. It excludes from the scope of the Convention contracts in which the preponderant part of the obligations of the party who furnishes the goods consists in the supply of labour or other services. Therefore, a comparison between the obligations related to the goods and the obligations of labour or services is needed in order to see whether the Convention applies. The Convention presupposes a single unified contract, but it has to be analyzed first whether the different obligations are indeed part of a single, albeit mixed contract. This is an issue of contract interpretation. If there is one contract for the supply of goods and services, the Convention applies to the contract as a whole (Article 3(2) CISG).[31] However, if the parties intended to conclude two separate contracts, the Convention would be applicable to the sales contract, so long as the other requirements for its application were met.

3.2. There are several issues of interpretation in regard to Article 3(2) CISG. The first one is the interpretation of the words "preponderant part" ("principal", "prépondérante"). The interpretation is difficult due to three factors: the standard to be applied ( economic value or essential criterion); the mixing up of the interpretation of the words "preponderant" and "substantial" by legal writers; and the quantification in percentages.

3.3. Although, there are certain doubts as to the application of the economic value criterion since a proposal from the UK, that was finally withdrawn, tried to substitute the term "preponderant" for "major part in value",[32] the economic value approach is correct. The UK proposal did not find support among the delegates because of the change of the word "preponderant" for "major part",[33] not because it adopted the economic value criterion.[34] An "economic value" [35] criterion prevails, and the relevant time to assess the value would be the conclusion of the contract. The essential criterion should only be considered where the economic value is impossible or inappropiate to apply taking into account the circumstances of the case.

3.4. The word "preponderant" should not be quantified by predetermined percentages of values but on the basis of an overall assessment. In its interpretation, as well as in the interpretation of the parties' agreements, the intention of the parties as expressed in the documents and the formation of the contract should be taken into account as well. Among the relevant factors to be considered by courts and arbitral tribunals are: the denomination and entire content of the contract,[36] the structure of the price,[37] and the weight given by the parties to the different obligations under the contract.[38] If, however, a fixed percentage of value is used, a percentage of 50% or below should be disregarded in order to exclude the Convention. Furthermore, a percentage slightly above 50% would not be generally decisive to exclude the CISG. The value of the services rendered ought to be preponderant.

3.5. Whether the so-called turnkey contract (contratos llave en mano, clé en main, Lieferverträge mit Montagverplichtung) falls under Article 3(2) CISG is highly controversial. Although some authors have stated that Article 3(2) was introduced in order to exclude those types of contracts from the Convention,[39] a case-by-case analysis is needed, and thus, disregarding the denomination, each situation would require an special examination to see whether or not the test of Article 3(2) CISG is satisfied.[40]

4.1. Paragraphs (1) and (2) of Article 3 CISG govern different matters. A relationship between them might be derived from the use of the singular of the word "obligation" in some of the authentic texts of the Convention. The French text and the Arabic text use the singular, while the other official languages, except for the Chinese text which is linguistically neutral on this point, use the plural form. The impact of the use of the word "obligation" in singular has clear implications in the interpretation of the text. The singular might invite an interpretation that labour and other services have to be compared instead of labour and services on the one hand and furnishing of goods on the other hand. Or even worse, it might be that the use of the singular might create a relationship between paragraphs (1) and (2) of Article 3 CISG in the sense that the work obligation in manufacturing the goods would be compared with the delivery obligations. The intention of the drafters was to refer to the plural form, and therefore the use of the singular should be rejected.[41]

4.2. Also an incorrect relationship has been created by legal writers and case law [42] in contracts for goods to be manufactured or produced by the seller: the weight of the interpretation is on the term "materials" and not on the obligation of manufacturing the goods. However, the process of manufacturing or producing the goods requires some kind of work/labour obligations that might be and has been wrongfully included in the analysis of paragraph (2) of Article 3 CISG.[43] Some cases have also drawn a link between paragraph (1) and paragraph (2) of Article 3 CISG on the basis of the distinction between standard goods and custom-made goods.[44] If the goods are standard, no activity of production is made by the seller and therefore there is no performance of services or work.[45] However, such a distinction is not adopted by the Convention.

4.3. The work, labour or other services obligations ought to be considered as part of the obligations to manufacture or produce the goods referred to in Article 3(1) CISG. This position is confirmed by scholars [46] and the majority of the case law.[47] However, when interpreting a situation in which there is no work or services obligations involved in the manufacture or production of the goods (Article 3(1) CISG), the services prior to, concurrent with and after delivery of the goods would be analyzed under Article 3(2) CISG.

4.4. Finally, as it has been already pointed out,[48] an autonomous interpretation of paragraphs (1) and (2) of Article 3 CISG is advisable. However, it might be that in complex transactions there may be some reciprocal
influence in their interpretation and application. In those situations, the transaction as a whole should be analyzed taking into account the "pro Convention" principle.

[Unless otherwise indicated, full-text original-language texts of all cases cited are available online at the CISG Autonomous Network Website for the country reported [For the URLs of these websites, go to <http://cisgw3.law.pace.edu/network.html>]. Full-text original-language case texts and English abstracts of most of the cases cited are also available online at Unilex <http://www.unilex.info>. Where, in addition, a full-text English translation of a case is available online, the URL is presented below.]

Cour d'appel de Chambéry, 25 May 1993 Cour d'appel de Grenoble, 26 April 1995, English translation available online at <http://cisgw3.law.pace.edu/cases/950426f2.html> Cour d'appel de Grenoble, 21 October 1999, English translation available online at <http://cisgw3.law.pace.edu/cases/991021f1.html> Cour d'appel de Paris, 14 June 2001, English translation available online at <http://cisgw3.law.pace.edu/cases/010614f1.html> Cour de Cassation, 24 September 2003, English translation available online at <http://cisgw3.law.pace.edu/cases/030924f1.html>

Oberlandesgericht Frankfurt a.M., 17 September 1991, English translation available online at <http://cisgw3.law.pace.edu/cases/910917g1.html> Oberlandesgericht Köln, 16 October 1992 Oberlandesgericht Köln, 26 August 1994, English translation available at <http://cisgw3.law.pace.edu/cases/940826g1.html> Landgericht München, 8 February 1995, English translation available online at <http://cisgw3.law.pace.edu/cases/950208g4.html> Landgericht Berlin, 24 March 1998 Landgericht Mainz, 26 November 1998, English translation available online at <http://cisgw3.law.pace.edu/cases/981126g1.html> Oberlandesgericht München, 3 December 1999, English translation available online at <http://cisgw3.law.pace.edu/cases/991203g1.html> Landgericht München, 16 November 2000, English translation available online at <http://cisgw3.law.pace.edu/cases/001116g1.html>

St. Gallen Gerichtskommission Oberrheintal, 30 June 1995 Kreisgericht Bern-Laupen, 29 January 1999 Handelsgericht Zürich, 10 February 1999, English translation available online at <http://cisgw3.law.pace.edu/cases/990210s1.html> Kantonsgericht Zug, 25 February 1999 Handelsgericht Zürich, 8 April 1999, English translation available online at <http://cisgw3.law.pace.edu/cases/990408s1.html> Handelsgericht Zürich, 17 February 2000 Bundesgericht, 17 October 2000, English translation available online at <http://cisgw3.law.pace.edu/cases/001017s1.html> Kantonsgericht Schaffhausen, 25 February 2002, English translation available at <http://cisgw3.law.pace.edu/cases/020225s1.html> Handelsgericht Zürich, 9 July 2002, English translation available online at <http://cisgw3.law.pace.edu/cases/020709s1.html> Handelsgericht Kanton Aargau, 5 November 2002, English translation available at <http://cisgw3.law.pace.edu/cases/021105s1.html> Cour of Appeal of Lugano, 29 October 2003, English translation available at <http://cisgw3.law.pace.edu/cases/031029s1.html>

[1.] The Advisory Council of the United Nations Convention on Contracts for the International Sale of Goods (CISG-AC) is a private initiative supported by the Institute of International Commercial Law at Pace University School of Law and the Centre for Commercial Law Studies, Queen Mary, PDF Created with deskPDF PDF Writer - Trial :: http://www.docudesk.com University of London. The CISG-AC is in place to support understanding of the United Nations Convention on Contracts for the International Sale of Goods (CISG) and the promotion and assistance in the uniform interpretation of the CISG. At its formative meeting in Paris in June 2001, Prof. Peter Schlechtriem of Freiburg University, Germany, was elected Chair of the CISG-AC for a three-year term. Dr. Loukas A. Mistelis of the Centre for Commercial Studies, Queen Mary, University of London, was elected Secretary. The CISG-AC has consisted of: Prof. Emeritus Eric E. Bergsten, Pace University; Prof. Michael Joachim Bonell, University of Rome La Sapienza; Prof. E. Allan Farnsworth, Columbia University School of Law; Prof. Alejandro M. Garro, Columbia University School of Law; Prof. Sir Roy M. Goode, Oxford; Prof. Sergei N. Lebedev, Maritime Arbitration Commission of the Chamber of Commerce and Industry of the Russian Federation; Prof. Jan Ramberg, University of Stockholm, Faculty of Law; Prof. Peter Schlechtriem, Freiburg University; Prof. Hiroo Sono, Faculty of Law, Hokkaido University; Prof. Claude Witz, Universität des Saarlandes and Strasbourg University. Members of the Council are elected by the Council. At its meeting in Rome in June 2003, the CISG-AC elected as additional members, Prof. Pilar Perales Viscasillas, Universidad Carlos III de Madrid, and Prof. Ingeborg Schwenzer, University of Basel.

[2] This opinion is a response to a request by the Study Group on a European Civil Code and its Steering Committee for the Council to reflect on the interpretation of Art. 3 CISG and provide answers to the following questions:

(1) If both parties supply materials to be used in the manufacture of goods for one of the parties, what are the relevant factors under Art. 3(1) to draw the line between a sales contract governed by the Convention and a service contract governed by domestic law?

10. Arbitration Court of the Chamber of Commerce and Industry of Budapest, 5 December 1995 (VB/94131) (Hungary): supply of waste containers to be produced by the seller, the value of the materials supplied by the buyer only amounted to approximately 10% of the total value of the containers to be produced, hence the CISG was applicable by virtue of Art. 3(1); HG Zürich, 8 April 1999 (Switzerland); and ICC 8855/1997, JDI, 2000, 4, p. 1070, with J. Arnaldez observations, stating that Art. 3(1) refers to "la part prépondérante, c'est-à-dire la valeur essentielle".

11. There are case law and legal commentaries that have considered that the French term "part essentielle" implies an interpretation based upon the quality/functionality of the materials provided by the parties. For example: Bernard AUDIT, La vente internationale de marchandises (Convention des Nations-Unies du 11 Avril 1980), Droit des Affaires. Paris: L.G.D.J., 1990, nº 25, pp. 25-26. And OLG München, 3 December 1999 (Germany), where the Court considered the essential criterion on the basis of the French text: "The few tools which were to be supplied by the [buyer] are neither with respect to their value nor their function essential ones -the French text of the Convention speaks of "part essentielle" -not "substantial parts "-- as stated in the English text -- of the plant to be delivered".

The "essential" criterion has been used as complementary to the economic value criterion by some legal writers, although others consider the essential criterion to be at the same level as the economic criterion: See among the most recent commentaries: Francisco OLIVA BLAZQUEZ, Compraventa internacional de mercaderías (Ambito de aplicación del Convenio de Viena de 1980, Valencia: Tirant lo blanch, 2002, p. 194. The essential criterion is rejected by: KHOO, Article 3, nº 2.2: ("The materials supplied need not be essential for the manufacture or production. Nor is it sufficient to take the transaction out of the Convention that the material supplied is an essential part").

12. ICC 11256/ESR/MS, 15 September 2003 (Los Angeles) (unpublished) (on file with the rapporteur) considered the CISG inapplicable on the basis of Art. 3(1). It concluded that the motors provided by the buyer were a substantial part of the materials necessary for the manufacture of the trucks, because they were necessary for the product to be considered a "vehicle".

In Cour d'appel de Grenoble, 21 October 1999 (France), the tribunal analyzed a case in which the seller had to manufacture shoes with some elements supplied by the buyer: the soles and a characteristic metal decoration of the brand Pierre Cardin, and stated that "having as its object a sale of goods to be made for which the essential material elements -- other than soles and a characteristic metal decoration of the brand Pierre Cardin -- necessary for the manufacture, were supplied by the seller".

14. HONNOLD, Uniform Law, nº 59. See example 3B, in which the value of the chromium -- an essential ingredient for the manufacture of stainless steel -- comprised 15% of the total value of the materials used in manufacturing the goods. Prof. Honnold states that "a tribunal might well conclude that 15% is 'substantial' but the evaluation of such questions of degree is difficult to predict". As will be shown, the 15% standard as well as any other standard below 50% should be considered too low in the interpretation of the words "substantial part" (see, infra 2.10).

CISG Advisory Council Opinion No. 4 ^[1]

Contracts for the Sale of Goods to Be Manufactured or Produced and Mixed Contracts (Article 3 CISG) ^[2]

Opinion

CISG Advisory Council Opinion No. 4 [1]

Contracts for the Sale of Goods to Be Manufactured or Produced and Mixed Contracts (Article 3 CISG) [2]

Opinion

CISG Advisory Council Opinion No. 4 ^[1]

Contracts for the Sale of Goods to Be Manufactured or Produced and Mixed Contracts (Article 3 CISG) ^[2]