A trade usage may be defined as a general or at least widespread regular observance of a particular line of conduct amongst those engaged in a particular branch of international trade. It has always played an important role in international sales. Traders and business people around the world constantly rely upon trade usages across avariety of industries.
“The United Nations Convention on Contracts for the International Sale of Goods (CISG) expressly deals with trade usages and business practices under Article 9. It allows for the application of usages to which the parties have agreed as well as those that the parties merely “ought to” have known would apply. The CISG addresses only their applicability(Art. 4 a); thus the validity of usages is governed by applicable domestic law.
Under Art. 9(1), the parties are bound by any usage to which they have agreed and by practices that the parties have established. The CISG does not define ‘usage’ and ‘practice’. Art. 9(1) unlike Art. 9(2) does not require that a usage be internationally accepted in order to be binding; thus the parties are bound by local usages to which they have agreed as much as by international usages. Practice is established by a course of dealing that creates an expectation that this conduct will be continued By virtue of Art. 9(2), parties to an international sales contract may be bound by a trade usage even in the absence of an affirmative agreement thereto, provided the parties “knew or ought to have known” of the usage and the usage is one that, in international trade, “is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.” The purpose of this paper is to study the value and scope of the usages and practices as a regulatory source of contracts for the international sale of goods under the framework of the 1980 United Nations Convention.