Fitting the “Situation”: The CISG and the Regulated Market

Abstract

This paper examines the types of "circumstances" generally used as the basis of decision in controversies under the Convention on Contracts for the International Sale of Goods and finds that a regulated market, not an idealized, perfect information market, is the usual "circumstance" of the decisions. This fits the "situation" of international trade, in which markets are recognized to be politically regulated. This fit between the code provision for "circumstances" and the economic, social and political "situation" fosters effective decisions. Furthermore, the decisions are made under standards, rather than rules, which allows for flexibility in the decisions and reliance by parties on fair decisions, rather than on planning around rigid rules. These findings have both theoretical and law practice significance. The theoretical significance is, generally, as set out above. The law practice significance is that strategically made market arguments appear to drive the decisions.