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Document information Chapter 1: Genereal Provisions

Legislative History (key documents)
Publication In preparation of the 1994 Principles – Rapporteur Michael Joachim Bonell:
UNIDROIT Principles of StL-Doc. 2, pp. 7-17 (1st outline of the problems associated with interpretation of the
International Commercial Principles in 1971); StL-Doc. 50, pp. 6-22 (1st draft in 1991); P.C.-Misc. 18, pp. 1,
Contracts: An Article-by-
Article Commentary 43-106 (1st discussion in 1992); StL-Doc. 51, pp. 7-24 (2nd draft in 1992); P.C.-Misc. 19,
(Second Edition) pp. 1, 26-123 (2nd discussion in 1992);
In preparation of the 2004 Principles (introducing Art. 1.8; change to Art. 1.2, 1.12; change
to Official Comments on Art. 1.3. 1.7, 1.10) – Rapporteur Paul Finn:
Organization StL-Misc. 20, pp. 54-55 (1st discussion on electronic commerce in1998); StL-Doc. 60
International Institute for
the Unification of Private (position paper on electronic commerce in 1999); StL-Doc. 77, StL-Doc. 77 rev.
Law (questionnaire and replies on electronic commerce in 2002); StL-Doc. 78 (position paper
on unilateral acts and inconsistent behaviour in 2002); StL-Misc. 24, pp. 45-49 (2nd
discussion on electronic commerce in 2002), StL-Doc. 84 (1st draft on inconsistent
behaviour in 2003); StL-Doc. 88 (1st draft on abuse of rights in 2003); StL-Doc. 95 (2nd draft
Promulgation on inconsistent behaviour in 2003);
2016 In preparation of the 2010 Principles (change to Official Comments on Art. 1.4, 1.7):
StL-WP. 24 (revised draft on Art. 1.4 in 2009); StL-Doc. 115 (1st revised comments in
Link(s) to Related 2010); StL-Doc. 121 (2nd revised comments in 2010); StL-Misc. 30, p. 4 (1st revised
comments in 2010);
Legislation
Unidroit PRINCIPLES OF In preparation of the 2016 Principles (change to Art. 1.11) – Rapporteurs Michael Joachim
INTERNATIONAL Bonell, Neil Cohen:
COMMERCIAL CONTRACTS StL-Doc. 126 (position paper in 2014); StL-Misc. 31 rev., pp. 2, 30-31 (1st discussion in 2015);
2016 StL-Doc. 128 rev., pp. 3-4 (1st draft on long-term contracts to be included in Art. 1.11 in
2016); StL-Misc. 32, p. 2 (2nd discussion in 2016); UNIDROIT 2016, C.D. (95) 15,
pp. 6-18; UNIDROIT 2016, C.D. (95) 3, Annex 1, pp. 3-4 (final draft in 2016)
Bibliographic Article 1.1 (Freedom of contract)
reference The parties are free to enter into a contract and to determine its content.
'Chapter 1: Genereal
Provisions', in Eckart
Brödermann , UNIDROIT A. The First of a Series of Fundamental Principles
Principles of International 1 The Unidroit Principles start with an explicit commitment to freedom of contract, (1) a
Commercial Contracts: An prerequisite for international commercial contracting, (2) which is largely recognised
Article-by-Article around the globe although often only inherently. (3) For the Working Group, the
Commentary (Second commitment was necessary as a reminder (4) with political (5) and even philosophical (6)
Edition), 2nd edition dimensions with regard to (varying) limits to such freedom in different parts of the world.
(© Kluwer Law (7) Art. 1.1 is the first of a series of fundamental principles which not only include (i)
International; Kluwer Law notably Art. 1.2, 1.3, 1.7 and 1.8, (8) but also (ii) the approach to mandatory law in Art. 1.4
International 2023) pp. 75 - (9) and the concept of a few mandatory principles in Art. 1.5. When “selling” the Unidroit
102 Principles to business people, it can be helpful to highlight these fundamental principles
with Art. 1.1 at their outset. Art. 1.1 has been well received in recent literature (10) and
often been referred to by national courts. (11)

B. Freedom of Contract
2 The freedom of contract includes first the freedom to contract or not to contract (12) (as
further recognised in the principles regarding the factors which are required to consent
to an agreement, e.g. Art. 2.1.1 and Art. 2.1.6 (1) (2)). (13) Such contractual freedom is
limited in rare cases because of prior behaviour (→ Art. 1.8). The freedom to contract
includes secondly the freedom to determine the content of the contract. That includes
the choice of the type of contract and the individual terms such as the exclusion of
individual principles pursuant to Art. 1.5. It also includes the freedom to modify a
contract by mutual consent. (14)

C. Limits
3 The limits to the freedom of contract deriving from mandatory law (→ Art. 1.4) or
mandatory principles (→ Art. 1.5) are described elsewhere in the Unidroit Principles. (15)
Article 1.2 (No form required)
Nothing in these Principles requires a contract, statement or any other act to be made in
or evidenced by a particular form. It may be proved by any means, including witnesses.

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 A. Principle of Informality
1 Art. 1.2 (inspired inter alia by Art. 11 CISG) (1) states freedom from form as a fundamental
principle of international trade. (2) It relates to all acts governed by contract law (3) and
includes both contract conclusions and modifications (4) (argumentum Art. 3.1.2). With
respect to form, Art. 1.2 is more specific and thereby trumps Art. 3.1.2. (5) Proving “by any
means” in sentence 2 includes a fortiori electronic exchanges. (6)

B. Limits
2 The principle encounters a first limitation in derogating agreements of the parties (7)
(possibly restricted to the form of proof, e.g. requiring documentation such as by a
change order form, see Art. 2.1.13, or by merger clauses → Art. 2.1.17). It then encounters a
second limitation by mandatory (international or national) rules (→ Art. 1.4). In cases
where the Unidroit Principles have been merely incorporated into a contract (→
Preamble no. 15-16), it is possible that domestically mandatory law imposes a certain
form. (8) Further, as the choice of the dispute resolution mechanism trumps the choice of
law (→ Preamble no. 2-3), the law on choice of court or on choice of arbitration
agreements may also require a certain form if the dispute resolution clause is integrated
into the contract (for example, if the form requirements in Art. II NYC are not respected,
the award may not be enforceable under the New York Convention). (9)

C. Options
3 The parties are free to agree that a contract or certain kinds of declarations to be made
during the execution of a contract depend(s) on the observation of a certain form (→ Art.
2.1.13); or that a modification or termination requires to be in writing (→ Art. 2.1.18).
Article 1.3 (Binding character of contract)
A contract validly entered into is binding upon the parties. It can only be modified or
terminated in accordance with its terms or by agreement or as otherwise provided in
these Principles.

A. Pacta sunt servanda

1 Art. 1.3 enshrines one of the fundamental contractual principles – “binding character of
contractual agreement” (1) (pacta sunt servanda) – which is common or inherent to most
contract laws around the globe, (2) although the cultural understanding of the binding
character may vary. (3) This principle provides the basis for the regime for violations in
Chapter 7 (Art. 7.1.1 et seq.). Art. 6.2.1 (1) reminds this principle at the outset of the
provisions on hardship. The principle describes the relationship between the parties of a
contract (privity of contract); it does not prejudice “any effect which that contract may
have vis-à-vis third persons under the applicable law”. (4) Finally, jointly with Art. 3.1.2,
the principle encapsulates in sentence 2 also the freedom from contract, i.e. the right to
provide for termination of a contract by convenience, e.g. at pre-agreed terms (→ Art.
7.3.1 no. 9a and Art. 7.3.5 no. 4).

B. Limits
2 The principle finds its limits in derogating agreements of the parties and in other 2
principles. (5) Such agreements can be concluded later (Art. 1.1, 5.1.9) or already in the
contract itself by granting unilateral rights which may, however, not be exercised in an
unreasonable fashion (see the example for price determination in Art. 5.1.7 (2)). (6)
Relevant principles permitting contract modification include the principles sanctioning
‘excessive’ and thereby unfair advantages (Art. 3.2.7), coping with the consequences of
‘mistakes’ (Art. 3.2.10) and with ‘hardship’ (Art. 6.2.3 (4) (b)). (7) Other principles permit
contract avoidance, due to ‘act’ of state (notably an ‘omission’ to grant a (public)
permission in time (Art. 6.1.16 (1)), hardship (Art. 6.2.3 (4) (a)) or (extreme, often
unreasonable) behaviour of the other party (Art. 7.3.1 and 7.3.3). The Working Group had
further in mind an exception of termination for contracts with an indefinite duration (8)
which, in the end, was not included into the released Principles, neither in 1994 nor in
2010 or in 2016, when the right to terminate contracts concluded for an indefinite time
was re-proposed by the Working Group but voted down by the Governing Council. (9)

C. Options
3 In light of the absence of a rule on termination for contracts with an indefinite 3
duration (→ no. 2 above), an agreement on termination for convenience, including the
consequences (like e.g. payment for costs not yet amortised) becomes important in
practice.
Article 1.4 (Mandatory rules)
Nothing in these Principles shall restrict the application of mandatory rules, whether of
national, international or supranational origin, which are applicable in accordance with
the relevant rules of private international law.

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 A. Priority of Private International Law with Respect to Mandatory Law
1 The Unidroit Principles recognise the general duality in international contract law (as
set forth already in 1840 by v. Savigny) (1) between (i) on the one hand the contractual
regime itself, as determined by the applicable private international law regime of the
state court or arbitration tribunal, and (ii) on the other hand mandatory law which thrives
to intervene out of its own self-understanding and wording (lois de police). (2) By referring
to the “relevant rules of private international law”, the Un idroit Principles leave it to the
dispute resolving forum (a state court or an arbitration tribunal, Art. 1.11 1st hyphen) to
apply mandatory law which is applicable under the proper private international law
under the circumstances (usually this is the private international law of the forum,
whereby state courts and arbitration tribunals, even if they are located in the same state,
apply often different private international law because, for arbitration tribunals, it is
often contained in the arbitration law). (3) The Working Group understood Art. 1.4 as a
“warning” that the Unidroit Principles could be “overridden” by mandatory law, (4)
whereby the Unidroit Principles operate with a ‘broad notion’ of mandatory rules
including e.g. prohibition of commission agreements (5) (e.g. with certain state
employees) or corruption, inducement of crime or collusive bidding. (6) When preparing a
contract under the Unidroit Principles regime it is therefore always important to
determine the ultimate applicable private international law (which will vary with the
competent dispute resolution body). (7) This has an impact on applicable mandatory
laws (below B.).

B. Applicability of Different Kinds of Mandatory Law Depending on the

Dispute Resolution Forum
1. Restriction of the Scope of Mandatory Laws in Case of Combination of the
Unidroit Principles with an Arbitration Clause
2 Because of their legal nature as ‘rules of law’, it is often wise to use the Unidroit
Principles in combination with an arbitration clause. Arbitration regimes widely accept
the choice of rules of law like the Unidroit Principles albeit via different approaches (→
Preamble no. 2-3). In contrast to many private international law regimes which are
applicable in national courts, (8) these arbitration regimes contain presently no general
regime for the approach to mandatory law. (9) Special regard will often be given to the
places where the award is likely to be enforced under the circumstances, (10) in
particular at the place of business of the defendant. In some circumstances the
arbitrators may take guidance from otherwise inapplicable (11) private international law
like Art. 9 Rome I Regulation to determine the applicability of certain mandatory law
under the circumstances, e.g. consider the mandatory law at the place of performance of
a contract. (12) The arbitration tribunal will often rely on the authorisation contained in
the specialised private international law rule for arbitration granting full discretion to
the arbitration tribunal to determine the applicable law (voie directe, → Preamble no. 8).
(13) Such authorisation may also include a basis to apply internationally mandatory law
which the arbitration tribunal determines as applicable on that basis in light of its close
connection with the case, the purpose of the mandatory rule and the consequences of an
application. (14) Any law applied by the arbitrators to determine the application of
mandatory law in arbitration should be understood in a large sense as “private
international law” in the sense of Art. 1.4. (15) In addition, the Official Comments invite
arbitral tribunals to consider applying ‘overriding mandatory rules that reflect principles
widely accepted as fundamental in legal systems throughout the world (so-called
“transnational public policy” […]). (16) In light of the modern mind-set towards
compliance, the arbitration tribunal might also consider if the parties themselves
intended, by their contract, that certain overriding mandatory law is applied (e.g. at the
place of the fulfilment of their contract). (17)
3 The wording of Art. 1.4 (“Nothing”) expresses a desire of the Unidroit Principles to
generally avoid the determination of the applicable mandatory law, except for one
structural exception which is clearly expressed in the Official Comments. It suggests that
(in addition to international and transnational mandatory law, (18) e.g. on anti-
corruption, drug trafficking or sanctions) (19) only ‘internationally’ overriding mandatory
(national) law, i.e. domestic mandatory law with an international focus, as distinguished
from ordinary national (domestic) mandatory law (including an act of state (20) ), will be
considered (21) when the parties have agreed that their contract be governed by the
Unidroit Principles by a true “choice of the Unidroit Principles clause” (→ Introduction no.
9a and Preamble no. 3). The combination of the Unidroit Principles with an arbitration
clause thereby reduces the range of mandatory laws which may be applicable under the
circumstances (22) because it excludes domestic mandatory law with a mere national
focus (which a state court would apply → no. 5 below). (23)
4 An example from practice: (24) In evaluating the validity of contract terms under
German law it can make a difference if they are ‘standard terms’ or ‘individually
negotiated’. The German (domestic) mandatory law regime for standard terms includes
extreme requirements on information which are simply impracticable if not impossible
to always meet in cross-border contexts, e.g. long-distance over the phone, a video-
conference or via email. A simple email exchange on the appropriate amount of

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 limitation of liability will not suffice to qualify such an agreement as ‘individually
negotiated’. (25) However, with respect to B2B contracts (for which German law goes
beyond the requirements of European law) the German law on standard terms is not
considered as ‘internationally mandatory’ (this is only the case with respect to contracts
with consumers). (26) Therefore, the choice of the Un idroit Principles in combination
with an arbitration clause legitimately (and in the interest of an international B2B
business) avoids the application of German national mandatory law on standard terms.
The question if limitation of liability clauses of German lawyers with their business clients
have been ‘individually negotiated’ will be subjected to the pragmatic and internationally
acceptable regime on standard clauses in Art. 2.1.19 to 2.1.21 Unidroit Principles
(supposing a fair content respecting the requirements of Art. 1.5 and 7.1.6, and in
particular the principle of fair dealing in Art. 1.7 (2)). In contrast, a German court would
have to apply also the domestically mandatory German law on standard terms to the
international B2B contract between the German lawyer and his foreign client. (27) For
foreign clients, e.g. from the USA or China, the choice of the Unidroit Principles also has
advantages because (i) they do not have to research (or blindly accept) German law, and
(ii), to the extent that they wish to discuss the reasons for choosing the Unidroit Principles
(which is very rare) they may also prefer the pragmatic approach of the Unidroit
Principles (e.g. in Art. 2.1.19 (1); → Art. 2.1.19 no. 1) as compared to receiving detailed
information about the risks of certain standard clauses (like a limitation of liability)
which would be required under German law. (28)

2. More Mandatory Law in Case of Combination of the Unidroit Principles with a

Choice of Court Clause
5 In case of combining the choice of Unidroit Principles with the competence of a
national court, the scope of applicable mandatory laws is wider (→ Art. 1.4 no. 3 above). A
national court would consider a choice of the Unidroit Principles as incorporation (→
Preamble no. 5-6 and 15-16). It must apply all mandatory law prevailing at its seat
including domestically mandatory law. (29) Thus, as a matter of practice, the choice of
the dispute resolution regime has an impact on the scope of applicable mandatory law
and thereby on the surrounding set-up of the Unidroit Principles.

C. Effects
6 Art. 3.3.1-3.3.2 cope with the effects of infringing mandatory rules. Already at the level of
contract formation, mandatory law may have an impact on contract conclusion (sham
contracts, simulation; → Art. 2.1.1 no. 5).
Article 1.5 (Exclusion or modification by the parties)
The parties may exclude the application of these Principles or derogate from or vary the
effect of any of their provisions, except as otherwise provided in the Principles.

A. Party Autonomy Emphasised

1 Art. 1.5 emphasises an important aspect of the freedom of contract (Art. 1.1): the right to
work (or not to work) freely with the Unidroit Principles, (1) including adaptations,
variations or deviations (2) which do not require a particular form (3) (Art. 1.2). Many
provisions in the Unidroit Principles, including e.g. the default rules in Chapter 5 or the
hardship provisions in Section 6.1, are meant to assist identifying issues (4) , serve as a
reminder (5) or are of a “stimulative nature” (6) to consider issues and to adapt the rules
“to their special requirements and needs” (7) while providing a fallback position if there
is not the time nor the budget to regulate the issue more specifically in a contract, or if
the parties forget to regulate an issue. Sometimes, the circumstances of the case require
an adaptation of the contractual regime (which is the reason for the emphasis of the
background character of the Unidroit Principles in the descriptive choice of the Unidroit
Principles clause proposed at → Introduction no. 9a). For example, the Unidroit
Principles do not contain a possibility to interrupt a limitation period through mere
negotiations. When representing German businesses used to such a possibility, the author
tends to integrate an additional clause on the basis of the § 203 BGB (which contains such
a rule on interrupting a limitation period by negotiation) and thereby deviate from the
scheme of limitation in Chapter 10 (→ Art. 10.5 no. 5). (8) In other contexts, when
representing a party for which, by its background, such a possibility to interrupt a
limitation period is not important, the author does not negotiate such a change to the
scheme of limitation rules in the Unidroit Principles.

B. Limits of Mandatory Principles

2 If the Unidroit Principles are chosen in their entirety as the applicable contractual
regime (either in an unrestricted direct way on the basis of the applicable private
international (arbitration) law (→ Preamble no. 3) or by way of incorporation on the basis
of a private international law (such as Art. 3 Rome I Regulation as read in conjunction with
Recital 13; → Preamble no. 16), there are some core principles which must be ‘swallowed’
as part of the choice, (9) quasi as ‘inside limits’ of the Unidroit Principles. (10) They relate
to core aspects of ‘fair dealing’ in international trade, notably Art. 1.7, 1.8 (implicitly), (11)
3.1.4, 5.1.7 (2), 7.1.6 (implicitly), (12) 7.4.13 (2), 10.3 (2). Usually, no business man or woman

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 will feel offended by such mandatory principles (if the counterpart feels offended by
such principles in the negotiation, the other party might reconsider if it wants to
conclude a contract with such a business man or woman).
Article 1.6 (Interpretation and supplementation of the Principles)
(1) In the interpretation of these Principles, regard is to be had to their international
character and to their purposes including the need to promote uniformity in their
application.
(2) Issues within the scope of these Principles but not expressly settled by them are as
far as possible to be settled in accordance with their underlying general principles.

A. A Modern Standard Rule on Interpretation (Para. 1)

1. A Global Approach to Interpretation
1 Art. 1.6 concerns the interpretation of the Unidroit Principles (as opposed to the 4.3-4.7).
(1) Para. 1 reflects a modern standard of autonomous interpretation (2) for international
instruments which was inspired by Art. 7 CISG. (3) This requires an open-minded approach
with due regard (i) to the international character (4) as well as the unifying purpose of the
Unidroit Principles (5) and (ii) therefore to solutions found by courts and arbitration
tribunals around the world (6) (see the database at [Link]). Comparative
national background may provide guidance where the Unidroit Principles aim to ‘restate’
common ground, but will not be binding. (7) It can also help to determine where the
Unidroit Principles intend to emulate a new rule deviating from the existing solutions. (8)
Yet, in light of slight variations between different language versions (9) and the lack of a
body providing general interpretations with a binding effect, the goal of uniformity will
always remain ‘aspirational’. (10)

2. On Interpretation
2 In addition to the criteria set forth in Art. 1.6 (which “‘flags up’ some particularly
important aspects”) (11) , interpretations of the Unidroit Principles will have to generally
consider (i) the wording, (12) (ii) the purpose (13) (which is explicitly mentioned in para. 1
and therefore particularly relevant), (14) (iii) the public policy to generally promote
international trade and fair dealing (argumentum Art. 1.7) (15) as well as (iv) the context
(16) and (v) the drafting history. (17) Although the publication of the materials at the
website of Unidroit in 2016 (records of meetings, travaux préparatoires) was initially not
intended, (18) the drafting history has now become largely accessible. (19) As a matter of
practice, the English version is likely to often trump other language versions by analogy
to Art. 4.7; (20) and black letter rules are likely to precede conflicting illustrations. (21)
Other sources of interpretation are international instruments, comparative legislation
(e.g. when states integrate parts of the Unidroit Principles verbatim into their national
legislation, → Preamble no. 13) and comparative jurisprudence as well as published
arbitral awards. (22)

B. Supplementation of the Unidroit Principles with Due Regard to the

Underlying General Principles (Para. 2)
1. On Supplementation
3 Para. 2 provides an ‘opening’ clause to resolve issues not explicitly covered by the
Unidroit Principles (duly interpreted) (23) but ‘within the scope of these Principles’. (24)
Possible examples include the burden of proof, which is within the scope of the Unidroit
Principles, (25) or the application of Section 5.3 to options which shall substantiate only
under certain conditions (→ Art. 5.3.1 no. 4).With a reservation to mandatory law at the
seat of an arbitration tribunal (Art. 1.4), this can include issues regarding an arbitration
clause, especially if a question like ‘consent’ is relevant both to determine the
jurisdiction of an arbitration tribunal and the substance of the issue. (26) In contrast, Art.
1.6 cannot be used to overcome issues which are beyond ‘international commercial
contracts’ (Preamble para. 1) or which are explicitly excluded (Art. 3.1.1, 2.1.2 (3), 9.1.2,
9.2.2, 9.3.2). If it is not possible to rely on Art. 1.6, the adjudicator may determine, with due
regard to the applicable arbitration rules, (27) the applicable law for the issues with the
help of applicable private international law. (28)

2. The Underlying General Principles

4 The underlying (internal (29) ) general principles of the Unidroit Principles referred to in
para. 2 include freedom of contract (Art. 1.1); (30) binding character of contracts (pacta
sunt servanda) (Art. 1.3), party autonomy (Art. 1.5), the observance of good faith and fair
dealing (Art. 1.7; (31) as manifested e.g. in a liability for breaking off pre-contractual
negotiations in bad faith (Art. 2.1.15) or to invoke a “grossly unfair” clause (Art. 7.1.6)), the
prohibition of inconsistent behavior (Art. 1.8) (32) , a duty of cooperation (Art. 5.1.3),
informality (Art. 1.2 and 3.1.2), openness to commercial usages (Art. 1.9), and the policy to
keep contracts alive whenever possible (favor contractus, e.g. Art. 4.5, 6.2.3 (1) and (4) lit.
b (33) ). (34)

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 Article 1.7 (Good faith and fair dealing)
(1) Each party must act in accordance with good faith and fair dealing in international
trade.
(2) The parties may not exclude or limit this duty.

A. Good Faith and Fair Dealing as a Mandatory Core of the Unidroit

Principles pursuant to Art. 1.5 and 1.6 (2)
1 Reinforcing an emerging and already widely existing international consensus (1) – a
“clear comparative trend, which cuts across the traditional civil law – common law
divide” (2) –, the Unidroit Principles only support contracts which are driven by a
commercial spirit of ‘good faith and fair dealing’. (3) Even if it is not enshrined around the
globe in general and abstract legal rules (as in civil law countries (4) or in some common
law (5) or common law based jurisdictions (6) ), most legal systems sanction actions taken
in bad faith (7) to the detriment of the contracting partner in one way or another. (8) The
wording of para. 1 reflects a compromise which embraces both the continental European
legal systems’ approach to subjective and objective aspects of good faith, and the
common law’s distinction between good faith and fair dealing, (9) with particular regard
to the US American legal system. (10) It refers to an objectively determined standard of
conduct and not to a subjective state of mind. (11) Thereby, the Unidroit Principles –
contrary to Art. 7 (1) CISG – unequivocally establish the good faith principle as a
substantive principle rather than one of interpretation. (12)
2 Following the PECL formulation (13) , para. 2 expressly declares the principle in para. 1
as mandatory (14) (→ Art. 1.5 no.2). The commitment to ‘good faith and fair dealing’ is also
an underlying general principle in the sense of Art. 1.6. (15) It relates to all phases of a
contractual relationship (→ no. 3 below) and in a general way. In addition, it is reinforced
through the Unidroit Principles by at least 82 references to ‘reasonableness’ (16) and
numerous specific principles (→ no. 4 at C. below). When using the Unidroit Principles, it
is therefore not necessary to incorporate a clause on ‘commercial loyalty’ (17) as often
witnessed in practice in Japanese-German contracts. The notion of reasonableness,
historically rooted in the common law tradition (18) , encapsulates the ‘idea of fair terms
of interaction’ (19) which presupposes action in good faith (as summarized in Art. 1:302
PECL). (20)

B. Standard and Options

3 The standard referred to in para. 1 applies to all phases in the life of a contract, (21)
from negotiations (22) (→ Art. 2.1.15 (2)) to its interpretation (23) to enforcement e.g. by
invoking a withholding (→ Art. 7.1.3) or a contractual suspension right. (24) It is both
objective (25) and global (26) , with regard to the special conditions of international trade
(27) and with variations by trade sector and due regard to the ‘socio-economic
environment’. (28) Excluding abuse of rights, (29) it also comprises a subjective element
aiming at honesty and fairness. (30)
3a The assessment of good faith and fair dealing depends on the court (→ Art. 1.11, 1st
hyphen), i.e. the arbitrator in many cross-border scenarios under the Unidroit Principles
(→ Preamble no. 6) and the applicable dispute resolution regime which may consider
issues of fair dealing as issues of fact (31) or law (32) . As noted by Jan Peter Schmidt in the
seminal compendium of Jansen/Zimmermann (Eds.), comparing the PECL inter alia with
the Unidroit Principles, with regard to “[u]nfounded criticism” of para. 2: “As the duty of
good faith is very wide, but at the same time not clearly defined, many commentators
have feared that the parties to a contract are insufficiently protected against judicial
interventionism. (33) How-ever, this concern is arguably […] based on a misguided
understanding of how a general duty of good faith operates. [….] [I]t does not entitle the
judge to second-guess the parties’ agreements and intentions. Instead, the judge has to
take these agreements and intentions into account when determining what good faith
means for the contractual relationship in question. While parties can therefore not
exclude the duty in good faith, they can influence the applicable standard, and that
should give them sufficient protection of their expectations.” (34)
3b In other words: By shaping their contract, the parties can influence the factors to be
considered when interpreting the wording to determine if, from an objective perspective,
a course of action under the contract meets the agreed standard of conduct. Especially in
long-term contracts (Art. 1.11 3rd hyphen), for instance when negotiating an exemption
clause (→ Art. 7.1.6) on limitation of liability in the automotive or aviation industry, the
parties can agree in the contract on reasonable steps to take in order to reduce the
liability exposure. The factors, steps or clusters of action which they mention in the
contract will then serve as a starting point to determine if a course of dealing is
reasonable and in good faith under the given circumstances.

C. Limited Practical Relevance

4 When the Unidroit Principles are fully read and applied, the practical need for Art. 1.7 is
limited because most practical issues are covered by special principles (35) (Art. 1.8,
2.1.4 (2), 2.1.15, 2.1.16, 2.1.18 sentence 2, 2.1.20, 3.2.7, 4.8, 5.1.2, 5.1.3, 5.3.3, 5.3.4, 6.1.3 (1), 6.1.5

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 (1), 7.1.2, 7.1.3 and 7.4.8) (36) or within details of over 80 rules containing the word
‘reasonableness’ (37) (e.g. the condition “could not have been reasonably taken into
account at contract conclusion” in Art. 7.1.7 (1); (38) restriction of agreed payments for
non-performance in grossly excessive amounts to a “reasonable amount” in Art. 7.4.13 (2)).
From an academic perspective, the requirement of ‘reasonableness’ is distinct and less
broad than the ‘good faith’-concept. (39) From a practical perspective it is submitted
that reasonable action, as assessed from an objectivised perspective with regard to what
persons in the same situation as the parties would consider reasonable with regard to the
nature and purpose of the contract and other relevant circumstances – as set forth for
contract interpretation in Art. 4.3 (40) (argumentum Art. 1.6 (2)) –, will usually (in the
absence of bad faith) also meet the benchmark of a ‘good faith and fair dealing’-test.
4a In total, the Unidroit Principles contain so many concrete rules calling for reasonable
behaviour that most standard situations are explicitly covered in which a contract
partner from a jurisdiction embracing a general concept of good faith and fair dealing
would expect good faith behaviour from its counter-part. (41) By including these specific
rules and references to reasonableness for most scenarios which may occur during the
life of a (long-term) contract, the Unidroit Principles also cover the need for specifics,
and piecemeal solutions in response to demonstrated problems of unfairness (42) of
English lawyers who prefer concrete rules and are generally skeptical with regard to a
general principle of good faith and fair dealing. (43) In this context, it may be noted that
overcoming this difference of approach to contracting may be qualified as one of the
biggest achievements in the making of the Unidroit Principles which did include eminent
English lawyers. (44)
5 Examples for the required application of Art. 1.7 are the de minimis non curat praetor-
cases (45) and the extreme example developed by P. Schlechtriem of a timely delivery at
1 a.m. of the agreed day which may be rejected even if the obligee (Art. 1.11) has no
legitimate interest under Art. 6.1.5 (1) (other than his need for rest). (46) A possible
consequence of applying Art. 1.7 is the non-application of a specific principle under the
special circumstances of the case. (47) The burden of proof lies on the party which alleges
bad faith. (48) Despite the limitation of its scope of applicability through the myriad of
more specific rules reflecting the commercial need for specifics, in practice, Art. 1.7 has a
high symbolic relevance in negotiations under the Unidroit Principles. In different ways,
it is possible to argue, without deeper digging into the Unidroit Principles, that a certain
cause of action feared by either side at the negotiated table would be against the
principle of good faith and fair dealing (so there is nothing to worry about, and the
negotiation can move on to other topics). Arbitral tribunals often refer to Art. 1.7 on a
general level (→ Annex to Preamble no. 21-23).
Article 1.8 (Inconsistent behaviour)
A party cannot act inconsistently with an understanding it has caused the other party to
have and upon which that other party reasonably has acted in reliance to its detriment.

A. Part of the Mandatory Core of the Unidroit Principles Pursuant to Art. 1.5
1 Art. 1.8, introduced in 2004, (1) provides a specific concretisation of the general
principle of good faith and fair dealing (Art. 1.7) (2) and is therefore also part of the
mandatory core provisions of the Unidroit Principles. (3) The principle protects
reasonable reliance (4) and can be classified as a symbiosis of the venire contra factum
proprium doctrine (“self-contradictory conduct”) (5) in civil and the estoppel doctrine in
common law jurisdictions (6) with due regard to similar principles in transnational
contexts, e.g. the lex mercatoria. (7) The principle applies if the inconsistent behaviour
causes a detriment. (8)

B. Priority of More Detailed Principles

2 A number of even more specific principles take priority over Art. 1.8, namely Art. 2.1.4 (2)
(b), 2.1.18, 2.2.5 (2) and 5.3.3. (9)

C. Examples
3 Examples include cases where one party tolerates silently for a long period of time a
behaviour of the other party which contravenes the letter of a contract and thereby
reasonably causes the other party to think that its actions are being tolerated. (10)

D. Remedies: Art. 1.8 as a Sword (11)

4 A violation of the principle in Art. 1.8 can result not only in the “loss, suspension or
modification of rights”, but also in the “creation of rights” (e.g. with respect to payment of
costs incurred in reliance on the original behaviour). (12) Thereby, this principle shapes
the approach to good faith violations beyond what is recognised in many common and
civil laws. (13) Art. 1.8 can serve as “a basis for course of action for damages” (14) when the
other party caused reasonable reliance to a party by indicating that a contract is legal
while, as readily discoverable to that other party, it is illegal. (15)

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 E. Options
5 A ‘non-reliance clause’ or ‘without prejudice’ letter (an express declaration that a
certain understanding is not intended to be caused) can avoid the effects of Art. 1.8. (16)
Article 1.9 (Usages and practices)
(1) The parties are bound by any usage to which they have agreed and by any practices
which they have established between themselves.
(2) The parties are bound by a usage that is widely known to and regularly observed in
international trade by parties in the particular trade concerned except where the
application of such a usage would be unreasonable.

A. Two Kinds of Usages and a Limit

1 Art. 1.9 sets forth two widely recognised principles, (1) requiring both the respect of
usages and practices established between the parties (2) (→ Art. 1.1 e.g. on agreed
Incoterms®) and of general trade usages (such as Incoterms® as such, or the UCP 600) (3)
subject to a self-explanatory limit of reasonableness, including the respect of mandatory
law (Art. 1.4). For the first kind of usage (para. 1) the test is if “both parties may reasonably
expect that the practice represents a common understanding and that the other party
feels bound by it”. (4) For the second kind of usage (para. 2) the test is trifold: (i) Is the
usage widely known? (5) (whereby, distinctly (6) differently from Art. 9 (2) CISG, concrete
knowledge of the parties is not required) (7) (ii) Is it regularly observed in international
trade by parties in the ‘particular trade’ which permits regard to regional distinctions
and which may thus include restrictions with respect to regions or particular jurisdictions
(8) ? (iii) Is the application reasonable under the circumstances? (9) Under some
circumstances, the reasonableness test can protect an ignorant party from the
application of a surprising usage. The combination of “usages” and “practices” in para. 1
reflects an international compromise with roots in the history of Art. 9 (1) ULIS when the
US delegation proposed to include analogous wording to the ‘course of dealing’ concept
in the UCC. (10)

B. Hierarchy
2 (i) Express terms (Art. 1.1, except for Art. 1.8 cases), (ii) mandatory provisions of the
Unidroit Principles (11) (→ Art. 1.5 no. 2) which may restrict the impact of express terms
(e.g. → Art. 7.1.6), (iii) agreed usages (para. 1), (iv) agreed practices, (12) (v) general usages
(para. 2), (vi) other provisions of the Unidroit Principles. (13)

C. Proof and Options

3 The party invoking a usage needs to prove it (e.g. by a statement of a Chamber of
Commerce). (14) Pursuant to Art. 1.5, the parties are also free to agree to deviate from or
exclude the effect of any usage. (15)
Article 1.10 (Notice)
(1) Where notice is required it may be given by any means appropriate to the
circumstances.
(2) A notice is effective when it reaches the person to whom it is given.
(3) For the purpose of paragraph (2) a notice “reaches” a person when given to that
person orally or delivered at that person’s place of business or mailing address.
(4) For the purpose of this Article “notice” includes a declaration, demand, request or
any other communication of intention.

A. Risk Allocation to the Sender

1 Art. 1.10 (inspired by “an almost universal principle of law”) (1) – but contrary to Art. 27
CISG (2) – governs all kinds of notices under the Unidroit Principles (3) (or under a
contract governed by the Unidroit Principles). The notice is not subject to any specific
form (4) (unless agreed in the contract, (5) or unless applicable mandatory law in the
sense of Art. 1.4 (→ Art. 1.4 no. 3) requires otherwise (6) ), but the sender bears the risk of
receipt. (7) To become effective the sender needs to choose “means appropriate to the
circumstances”, with due regard to the reasonable expectations of the parties (8) (e.g. an
established practice in the sense of Art. 1.9 (1)). For example, repetition in writing (→ Art.
1.11, 5th hyphen) may be required if an oral notice is given at a place with so much
background noise that it is not clear if the recipient does understand the notice. (9) An
electronic message is deemed “appropriate to the circumstances” if the recipient has
expressed its willingness to receive electronic communication in the way it was sent by
the sender. (10) It reaches the recipient “when it becomes capable of being retrieved by
the addressee at an electronic address designated by the addressee.” (11) In case of
email communication, it is recommended in light of the burden of proof that the sender
either insists on a confirmation of receipt or checks by telephone if the notice has arrived
and makes a note of it in the presence of a person who can serve as a witness in case of
dispute. The appropriateness test applies also to the language of the communication –

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 and generally to the comprehensibility of the statement, duly interpreted (Art. 4.2) –
whereby general usages in the sense of Art. 1.9 (2) may have an impact. (12) According to
para. 4, a notice comprises all “communications of intention” (13) , including offers and
statements of acceptance. (14) The definition is to be interpreted widely (argumentum
Art. 1.6 (2)), if necessary, as an “over-arching category for all kind of legally relevant
statements or declarations that are communicated to another party.” (15)

B. Abusive Prevention of Giving Notice

2 If the destined recipient abusively prevents the notice from being given or delivered,
this does not affect its effectiveness (Art. 1.8). (16) Courts (→ Art. 1.11, 1st hyphen) will have
to take into account the particular circumstances and develop flexible responses which
might include using Art. 1.7 to backdate the moment of receipt. (17)

C. Withdrawal of a Notice
3 In analogy to Art. 2.1.3 and 2.1.10, a withdrawal of a notice must reach the addressee at
the latest at the same time as the notice. (18)
Article 1.11 (Definitions)
In these Principles
– “court” includes an arbitral tribunal;
– where a party has more than one place of business the relevant “place of business” is
that which has the closest relationship to the contract and its performance, having
regard to the circumstances known to or contemplated by the parties at any time before
or at the conclusion of the contract;
– “long-term contract” refers to a contract which is to be performed over a period of
time and which normally involves, to a varying degree, complexity of the transaction and
an ongoing relationship between the parties;
– “obligor” refers to the party who is to perform an obligation and “obligee” refers to the
party who is entitled to performance of that obligation.
– “writing” means any mode of communication that preserves a record of the
information contained therein and is capable of being reproduced in tangible form.

A. A Few Key Definitions

1 Art. 1.11 contains five self-explanatory definitions. The equation of arbitral tribunals
with state courts in the 1 st hyphen correlates with the principle that an arbitral award is
similarly – and even better (1) – recognisable and enforceable as state court decisions. (2)
“Place of business” in the 2 nd hyphen refers to a “place reasonably installed, equipped,
and staffed for the party’s commercial operations and transactions”. (3) The descriptive
(4) definition for “long-term contracts” in the 3 rd hyphen was introduced by the 2016
edition. It emphasises the duration of the contract as the core characterising element. (5)
Examples include “contracts involving commercial agency, distributorship, outsourcing,
franchising, leases (e.g. equipment leases), framework agreements, investment or
concession agreements, contracts for professional services, operation and maintenance
agreements, supply agreements (e.g. raw materials), construction/civil works contracts,
industrial cooperation, contractual joint-ventures, etc.” (6) The terms “obligor” and
“obligee” in the 4 th hyphen are used “irrespective of whether the obligation is non-
monetary or monetary.” (7) Example: In a contract of sales the seller is the obligor for the
good to be delivered and the obligee for the purchase price. The word “writing” in the 5
th hyphen is adapted to modern (electronic) communication but still more formal than
the flexible instrument of a ‘notice’ under Art. 1.10 (1) (8) which may or may not be given
in writing, as appropriate under the circumstances. Pursuant to Art. 1.5, parties are free to
amend a definition for the purposes of their contract (e.g. of a ‘writing’, → Art. 2.1.1 no. 4).

B. Further Definitions in the Unidroit Principles

2 ‘agent’ (Art. 2.2.1 (1)), ‘reaches’ (Art. 1.10 (3)), ‘standard terms’ (Art. 2.1.19 2 (2)), ‘mistake’
(Art. 3.2.1), ‘beneficiary’, ‘principal’ (Art. 2.2.1 (1)), ‘promisor’ and ‘promisee’ (Art. 5.2.1 (1)),
‘suspensive condition’ and ‘resolutive condition’ (Art. 5.3.1), ‘hardship’ (Art. 6.2.2), ‘non-
performance’ (Art. 7.1.1), ‘assignor’ and ‘assignee’ (Art. 9.1.1 and 9.3.1). (9)
Article 1.12 (Computation of time set by parties)
(1) Official holidays or non-business days occurring during a period set by parties for an
act to be performed are included in calculating the period.
(2) However, if the last day of the period is an official holiday or a non-business day at
the place of business of the party to perform the act, the period is extended until the
first business day which follows, unless the circumstances indicate otherwise.
(3) The relevant time zone is that of the place of business of the party setting the time,
unless the circumstances indicate otherwise.

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 A. Impact of Holidays etc.
1 In line with other international instruments including Art. 20 (2) CISG (1) and many legal
systems around the globe (2) , para. 2 provides for an exception to the computation of
time because of a holiday or a non-business day “at the place of business of the party to
perform the act” only if it correlates with the last day of the period (paras. 1–2).
Circumstances indicating otherwise pursuant to para. 2 might include the provisions on
the place of fulfilment (which is often not identical with the ‘place of business of the
party to perform the act’); or a short time period set in hours. (3)

B. Relevant Time Zone

2 With respect to any time set, it is best to specify the time zone in the contract for the
sake of clarity. Often, contracts do not reach that level of detail. As a default rule, para. 3
refers to the time zone of the party setting the time as the default rule. (4)

C. Options and Interpretation

3 The parties are free to alter the application of the principle (Art. 1.5). They should take
care to be precise in their wording and keep in mind the understanding of a reasonable
person in such circumstances (Art. 4.2 (2)). (5) Art. 1:304 (3) PECL and Art. 4-5 of the 1972
European Convention on the Calculation of Time Limits (6) may provide guidance in the
interpretation. (7) Especially when integrating short notice periods (like 48 hours or two
working days) (8) into a contract, regard should be given also to extreme circumstances
like long weekends. If performance by the obligor (→ Art. 1.11, 4th hyphen) requires
cooperation of the obligee (→ Art. 5.1.3), and that “first business day which follows” is a
public holiday at its place of business, a further extension may be reasonable (in global
contracting it is remarkable how often within a year different public holidays in different
jurisdictions are displaced by just a day or two). For cases in which international
negotiations do not reach that level of detail, Art. 1.12 provides a sound basis for
reasonable solutions with due regard to the circumstances and the reasons for setting the
particular time period.

References
1) Official Comments, Art. 1.1 no. 1, p. 7; M. Á. Pendón Meléndez in Morán Bovio, Art. 1.1 no.
1, p. 55. For ‘historical perspectives’ which explain the rise of symbolic provisions on
freedom of contract see in depth E. Hosemann in Jansen/Zimmermann, Art. 1:102
[PECL]: Freedom of Contract, no. 6-20 (pp. 37-49).
2) P.C.-Misc. 18 (1992), pp. 40, 42 (Bonell); P.C.-Misc. 19 (1994), p. 38 (Furmston).
3) Overview at S. Vogenauer in Vogenauer, Art. 1.1. no. 3; see e.g. the explicit recognition
since 1 October 2016 in Art. 1102 (1) French Civil Code (version as entered into force on
1 October 2016, French Ordonnance n°2016-131 of 10 February 2016, modifying the
French Civil Code provisions on contract law and the general regime and proof of
obligations).
4) See the report on the detailed discussion of the Working Group at StL-Misc. 18 (1992),
pp. 37-42 (with a vote on the final wording), which was confirmed at P.C.-Misc. 19
(1994), p. 28.
5) P.C.-Misc. 18 (1992), p. 38 (Drobnig); p. 41 (Di Majo: critical).
6) P.C.-Misc. 18 (1992), p. 40 (Fontaine).
7) See in particular at P.C.-Misc. 18 (1992), pp. 39-42 (“The Japanese civil code did not
have a provision on freedom of contract and they had difficulties as a result.”
(Hirose)), Komarov (Russia), Sono (Japan), Hartkamp (Netherlands): “even in case
where a party was not free to enter into a contract without governmental approval,
after having obtained this approval this party may be quite free to determine the
contents of the contract.”
8) S. Vogenauer in Vogenauer, Introduction to Chapter 1 no. 6.
9) Mandatory law is the counter-part to freedom of contract, see P.C.-Misc. 18 (1992), p.
38 (Drobnig).
10) E. Hosemann in Jansen/Zimmermann, Art. 1:102 [PECL]: Freedom of Contract, no. 22, at
p. 50 (“On the basis of a moderately liberal perspective, PICC and CESL provide the
best solutions for a codification of European law” (whereby this comment includes
Art. 1.1, 1.4 and 1.5 Unidroit Principles, argumentum note 12 at p. 32)).
11) In particular the Russian Arbitrazh Court of Appeal, with 14 of 17 cases reported for
Art. 1.1, see [Link] [last
visited on 9 January 2023].
12) P.C.-Misc. 18 (1992), p. 37 (“therefore by implication also not to do so …”).
13) S. Vogenauer in Vogenauer, Art. 1.1 no. 6 (“freedom from contract”).

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 14) See S. Martens in Jansen/Zimmermann, Introduction before Art. 7:101 [PECL], no. 8 (p.
999) on ‘Performance as agreement’ and no. 13 (at p. 1001) on the Roman and
comparative law background that “the debtor could not give one thing in discharge
for another [i.e. even if it is more valuable] without the creditor’s consent.” In
practice, in complex long-term contracts, it is sometimes helpful to explicitly
provide for an opening phrase on contract adaptation with regard to specific issues
(such as pricing in case of change of prices of certain raw materials), preferably
combined with an obligation to negotiate such change in good faith and selecting a
time when such negotiations are bound to take place (e.g. in which month of a
calendar year).
15) Official Comments, Art. 1.1 no. 3, p. 8; P.C.-Misc. 19 (1994), p. 26.
1) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.2 no. 2.b, p. 62; S. Vogenauer in
Vogenauer Art. 1.2 no. 3; H. Gabriel, no. 2.144 (p. 75); while some national laws do
deliberately not contain such a statement explicitly because it is self-evident (see
e.g. E. Hosemann in Jansen/Zimmermann, Art. 2:101 (2) [PECL]: Conditions for the
Conclusion of a Contract (Freedom of Form), no. 4 (at p. 253 and note 29) for the
German example of the development of the German Civil Code of 1900).
2) See e.g. for Europe E. Hosemann in Jansen/Zimmermann, Art. 2:101 (2) [PECL]:
Conditions for the Conclusion of a Contract (Freedom of Form), no. 4 (p. 252) et seq.
with reference to (i) explicit rules on freedom of form (with always some exceptions
ibid., no. 6 (p. 255)), e.g. in Austria, France, Netherlands, Portugal, Spain or
Switzerland, or (ii) undisputed recognition of the principle e.g. in England. For the
historic evolution of that principle from initially strong form requirements in Roman
law (“ex nudo pacto non oritur actio”) and in common law until the XVIth / XVIIth
century, see ibid., no. 7-10 (pp. 255-258).
3) E. Hosemann in Jansen/Zimmermann, Art. 2:101 (2) [PECL]: Conditions for the
Conclusion of a Contract (Freedom of Form), no. 17 (p. 265).
4) Official Comments, Art. 1.2 no. 1, p. 8, see also Art. 2.1.18.
5) P. Huber in Vogenauer, Art. 3.1.2 no. 2, 12.
6) StL-Doc. 77 (2002), p. 3 (Ginsburg).
7) Official Comments, Art. 1.2 no. 4, p. 9; M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.2
no. 2.b, p. 64.
8) Official Comments, Art. 1.2 no. 3, p. 9; M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.2
no. 2.b, p. 63; For a detailed comparative analysis of national form requirements see
A. T. von Mehren, pp. 3-140; E. Hosemann in Jansen/Zimmermann, Art. 2:101 (2) [PECL]:
Conditions for the Conclusion of a Contract (Freedom of Form), no. 12-13 (pp. 259-262)
for contracts above certain values in some jurisdictions (e.g. Italy, Spain), or for sale
of land, gifts, suretyship.
9) In some cases, in particular in the transportation industry, international treaties may
require to specify additional aspects such as an instruction for the arbitral tribunal
to apply the international treaty (with room for the application of the Unidroit
Principles only as background law to supplement issues not covered by the treaty);
see Art. 33 of the Convention on the Contract for the International Carriage of Goods
by Road (CMR); Art. 29 of the Convention on the International Carriage by Rail (COTIF);
Art. 34 (4) of the Convention for the Unification of Certain Rules for International
Carriage by Air (Montreal Convention, 1999)).
1) Official Comments, Art. 1.3 no. 1, pp. 9-10; M. Á. Pendón Meléndez in Morán/Bovio, Art.
1.3 no. 1, p. 65.
2) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.3 no. 1, p. 65.; see e.g. S. Vogenauer in
Vogenauer, Art. 1.2 no. 3 with an analysis of the inherent importance of the principle
within the CISG system. The famous “Le contrat est la loi des parties” (formerly Art.
1134 (1) French Civil Code) is now found in Art. 1103 (1) French Civil Code (2016 version),
s. A. Pietrancosta/A. M. des Grottes/ É. Boursican/H. Kensicher/A. Feydau/M.
Lallemand/C. Mou Si Yan, Le droit des contrats réformé (2016), p. 11 and Table de
Concordance, p. 10.
3) See e.g. K. Fan, p. 184; E. Brödermann, FS Elsing (2015), pp. 53, 55-58; both explaining
the Chinese approach to contracts in light of the general approach to “Fa” – 法 (law).
4) Official Comments, Art. 1.3 no. 3, p. 10; see the record on the discussion of the Working
Group at P.C.-Misc. 18 (1992), pp. 43-44, as well as P.C.-Misc. 19 (1994), p. 30 (Crépeau).
5) Official Comments, Art. 1.3 no. 2, p. 10; P.C.-Misc. 18 (1992), p. 49 with a vote on the
final version, implicitly confirmed at P.C.-Misc. 18 (1992), p. 30.
6) S. Vogenauer in Vogenauer Art. 1.3 no. 8.
7) S. Vogenauer in Vogenauer, Art. 1.3 no. 9.
8) P.C.-Misc. 18 (1992), pp. 44-47 with a vote (documented at p. 46) to include a principle
along the lines of Art. 2.109 PECL as suggested by Lando and Tallon (at p. 45): “A
contract for an indefinite period may be ended by either party by giving notice of
reasonable length”.
9) Report of the 95th session of the Governing Council of Unidroit (Rome, 18-20 May
2016), Unidroit 2016, C.D. (95) 15, no. 82-118, 122, available at:
[Link] rning-council/95th-session-rome-18-20-
may-2016/ [last visited on 9 January 2023].

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 1) See v. Savigny, System des heutigen Römischen Rechts, vol. VIII, Reprint (1849), 1961,
in particular § 348, 23 et seq. and 108 as well as § 349, 32 et seq.: (i) On the one hand,
the connecting factor under the applicable private international law regime (e.g. a
choice of law if applicable) leads to the applicable law, (ii) on the other hand, the
mandatory law can impose limits to the application of the applicable (rules of) law.
2) Official Comments, Art. 1.4 no. 2, p. 11.
3) See Art. 28 UNCITRAL Model law which has been enacted in 72 states.
4) P.C.-Misc. 18 (1992), p. 51 (Bonell).
5) In practice, high caution is required if somebody offers as a service the mere access
to decision makers. Depending on the legal environment such contracts will often be
illegal.
6) Official Comments, Art. 1.4 no. 2, p. 11; see also e.g. S. Meier in Jansen/Zimmermann,
Art. 15:102 [PECL]: Contracts Infringing Mandatory Rules, no. 7-8 (pp. 1901-02).
7) Cf. Drobnig at P.C.-Misc. 18 (1992), p. 53 (feeling “that the last part of the rule was
useful to warn parties to ask for expert advice on this question”) and P.C.-Misc. 19
(1994), p. 33 (“these were difficult issues of conflict of laws and they were outside the
scope of the Principles”).
8) E.g. in the member states of the European Union Art. 9 of the Regulation No. 593/2008
of the European Parliament and of the Council of 17 June 2008 on the law applicable
to contractual obligations (“Rome I Regulation”).
9) See for a detailed presentation of different approaches A. Barraclough/J. Waincymer,
Melbourne J. Int’l L. 2005, pp. 205-244. Transposing the system of v. Savigny of 1840
(flagged at → Art. 1.4 no. 1) to today’s world with regard to an arbitration law
permitting the choice of rules of law, the choice of the parties leads to the soft law
regime “Unidroit Principles” (reflected at → Preamble no. 2), which finds its limits in
mandatory law (as reflected in the Unidroit Principles at Art. 1.4).
10) Official Comments, Art. 1.4 no. 4, pp. 12-13 (pointing, by way of example, to Art. 41 of
the 2012 ICC Arbitration Rules which correlates with Art. 42 in the 2021 ICC Arbitration
Rules); E. Brödermann in Brödermann/Rosengarten, IPR/IZVR, no. 811; cf. also A.
Barraclough/J. Waincymer, Melbourne J. Int’l L. 2005, pp. 205, 215-216; A. S. Rau in
Bermann/Mistelis, pp. 114-124 (in particular p. 118).
11) For the majority opinion which considers § 1051 ZPO and other arbitration laws based
on Art. 28 UNCITRAL Model law as lex specialis and which therefore interprets Art. 1 (2)
lit. e) Rome I Regulation in a large sense to argue the inapplicability of Rome I
Regulation to arbitration, see E. Brödermann, Unif. Law Rev. 2011, pp. 589, 598-602
and § 6 IPR MünchAnwaltshandb. IntWirtschR, no. 66, 292; contra P. Mankowski, Recht
der Internationalen Wirtschaft (RIW) 2011, pp. 30-44, arguing inter alia with the
supremacy of EU law in Rome I Regulation over national arbitration law.
12) Art. 9 (3) Rome I Regulation; S. Meier in Jansen/Zimmermann, Art. 15:102 [PECL]:
Contracts Infringing Mandatory Rules, no. 5 (pp. 1900-01).
13) G. Cuniberti in Vogenauer, Art. 1.4 no. 10.
14) See G. Cuniberti in Vogenauer Art. 1.4 no. 17 distilling these three criteria for a test on
the applicability of overriding mandatory law.
15) In the same sense G. Cuniberti in Vogenauer Art. 1.4 no. 6 (“the relevant rules of
private international law for the purpose of Art. 1.4 are those of the adjudicator”).
16) Official Comments, Art. 1.4 no. 4, at p. 13 (emphasis added); S. Meier in
Jansen/Zimmermann, Art. 15:101 [PECL]: Contracts Contrary to Fundamental
Principles, no. 10 (p. 1895): ‘noteworthy’. For further guidance on the notion of
overriding mandatory law see UNCITRAL et al., Tripartite Legal Guide, no. 93-102 (pp.
23-25).
17) E. Brödermann, § 6 IPR MünchAnwaltshandb. IntWirtschR no. 368; M. J. Bonell, An
International Restatement, pp. 225-226.
18) Official Comments, Art. 1.4 no. 1, p. 11; on the explicit integration of supranational and
international mandatory law see P.C.-Misc. 18 (1992), pp. 50-54 (especially Drobnig,
Lando, Tallon) and the vote at p. 54. As noted by Bonell ibid. at p. 53: “In most cases
parties would only think of the mandatory rules of their own legal system, whereas
this was not sufficient at [the] international level.” Drobnig ibid. at p. 54 describes the
“pedagogical purpose” of the provision.
19) G. Cuniberti in Vogenauer Art. 1.4 no. 18.
20) P.C.-Misc. 18 (1992), p. 53 (Bonell, in reaction to Sono, ibid. at p. 51).
21) Official Comments, Art. 1.4 no. 4, p. 12; S. Meier in Jansen/Zimmermann, Art. 15:102
[PECL]: Contracts Infringing Mandatory Rules, no. 5 (at p. 1901). Early on, this
limitation of the applicable mandatory law in case of arbitration was considered by
the Working Group, see P.C.-Misc. 19 (1994), pp. 14, 18 (Bonell).
22) E. Brödermann in Eppur si muove: The Age of Uniform Law, pp. 1283, 1296; E.
Brödermann, § 6 IPR MünchAnwaltshandb. IntWirtschR, no. 372.
23) P.C.-Misc. 18 (1992), p. 19 (Lando), pp. 49-50 (Bonell); P.C.-Misc. 19 (1994), p. 18 (Bonell),
p. 31 (Farnsworth); and the conclusion of Furmston and Bonell at P.C.-Misc. 18 (1992), p.
19 that it would be better to use the Unidroit Principles in combination with
arbitration; cf. further M. J. Bonell, An International Restatement, pp. 219-220.
24) Example given by E. Brödermann, Hamb. Law Rev. 2016, pp. 21, 26-30.
25) E. Brödermann, Hamb. Law Rev. 2016, pp. 21, 28-29.
26) E. Brödermann, § 6 IPR MünchAnwaltshandb. IntWirtschR, no. 398.
27) Cf. Art. 9 (2) Rome I Regulation.
28) See L. Leuschner, AGB Recht für Verträge zwischen Unternehmen, pp. 44 et seq.

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 29) Official Comments, Art. 1.4 no. 3, p. 12; P.C.-Misc. 18 (1992), p. 19 (Bonell) and p. 49
(Bonell: “In other words, the Principles may only occupy the space which was granted
to the freedom of contract by the applicable law.”); P.C.-Misc. 19 (1994), p. 13
(Farnsworth); G. Cuniberti in Vogenauer, Art. 1.4 no. 7. The Working Group considered
e.g. for England the doctrine of consideration, [Link]. 18 (1992), p. 51 (Lando); or for
Italy Art. 1341 (2) Code civil requiring written approval of certain kinds of general
conditions.
1) Official Comments, Art. 1.5 no. 1, pp. 13-14.
2) For a discussion of dépeçage between the PICC and another law see G. Cuniberti in
Vogenauer, Art. 1.5 no. 7 et seq.
3) Official Comments, Art. 1.5 no. 2, p. 14.
4) P.C.-Misc. 18 (1992), p. 58 (Brazil).
5) P.C.-Misc. 18 (1992), p. 57 (Bonell), p. 58 (Maskow).
6) P.C.-Misc. 18 (1992), p. 58 (Bonell).
7) P.C.-Misc. 18 (1992), p. 55 (Bonell).
8) E. Bröderman, § 6 IPR MünchAnwaltshandb. IntWirtschR, no. 382. interpretation of a
contract governed by the Unidroit Principles, Art. 4.1,
9) See P.C.-Misc. 18 (1992), p. 56 (Bonell): a “package deal” and the discussion ibid. at pp.
55-57. Generally debating if PICC can ever be mandatory: C. Larroumet, La valeur des
Principes d’Unidroit applicables aux contrats du commerce international, JCP, ed. G,
1997, I, 4011, para. 17.
10) P.C.-Misc. 18 (1992), p. 52 (Bonell); UNCITRAL et al., Tripartite Legal Guide, no. 103 (p.
25) with the following practice oriented observation: “It is true that, given the non-
binding nature of the UPICC, the non-observance of the mandatory provisions may
have no consequences. It is, however, considered an important guidance for
contracting parties and adjudicators, especially when the UPICC are chosen as the
governing law.”
11) Official Comments, Art. 1.5 no. 3, p. 14; G. Cuniberti in Vogenauer, Art. 1.5 no. 12.
Debated by S. Vogenauer in Vogenauer, Art. 1.5 no. 12 (his criticism is not followed
here because an unambiguous wording that there is no intention to create any
reliance would avoid reasonable reliance in the sense of Art. 1.8); M. J. Bonell, An
International Restatement, pp. 94-95.
12) Official Comments, Art. 1.5 no. 3, p. 14; M. J. Bonell, An International Restatement, pp.
94-95; M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.5 no. 1, p. 71; G. Cuniberti in
Vogenauer, Art. 1.5 no. 12.
1) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.6 no. 1, p. 74. On historic and
comparative background of interpretation of legal texts see O. Unger in
Jansen/Zimmermann, Art. 1:106 (1) [PECL]: Interpretation and Supplementation
(General Provision), no. 2-4 (pp. 65-67) as well as no. 5 at p. 68.
2) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.6 no. 2.b, p. 77; S. Vogenauer in
Vogenauer, Art. 1.6 no. 5, 7; O. Unger in Jansen/Zimmermann, Art. 1:106 (1) [PECL]:
Interpretation and Supplementation (General Provision), no. 9 (p. 70).
3) P.C.-Misc. 18 (1992), pp. 59-60 (Bonell), whereby the reference to “good faith in
international trade” in Art. 7 (1) CISG, initially also contained in the draft for Art. 1.6
Unidroit Principles (StLDoc. 50 (1991), p. 11) was omitted as “self evident” (Maskow)
after discussion in the Working Group at P.C.-Misc. 18 (1992), pp. 60-61; H. Gabriel, no.
2.98 (p. 59); P. Perales Viscasillas, Unif. Law Rev. 2017, pp. 4, 6; see also Art. 18 of the
Rome Convention on the Law Applicable to Contractual Obligations of 19 June 1980,
OJ 1980 L 266 p. 1 and the overview of other international instruments with similar
clauses by S. Vogenauer in Vogenauer, Art. 1.6 no. 2 note 2-4.
4) Official Comments, Art. 1.6 no. 2, pp. 15-16; see also M. Á. Pendón Meléndez in
Morán/Bovio, Art. 1.6 no. 2.b, p. 77 (requiring an open mind – lenguaje neutral).
5) For an analysis why PICC meets less obstacles in this respect as compared with
unifying treaties such as the CISG see S. Vogenauer in Vogenauer, Art. 1.6 no. 11; O.
Unger in Jansen/Zimmermann, Art. 1:106 (1) [PECL]: Interpretation and
Supplementation (General Provision), no. 9 (p. 70): “different ways of expressing the
goal of autonomous interpretation”.
6) S. Vogenauer in Vogenauer, Art. 1.6 no. 18-19.
7) S. Vogenauer in Vogenauer, Art. 1.6 no. 8.
8) S. Vogenauer in Vogenauer, Art. 1.6 no. 8.
9) S. Vogenauer in Vogenauer, Art. 1.6 no. 12, 17 and 22; R. Anderson in Vogenauer, Art.
2.1.9 no. 6 (on a deviation of the German version).
10) S. Vogenauer in Vogenauer, Art. 1.6 no. 12-42.
11) O. Unger in Jansen/Zimmermann, Art. 1:106 (1) [PECL]: Interpretation and
Supplementation (General Provision), no. 14 (p. 74) generally on “[t]he role of residual
interpretative criteria” in international instruments.
12) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.6 no. 2.b, p. 78 (highlighting the
importance of the English wording); O. Unger in Jansen/Zimmermann, Art. 1:106 (1)
[PECL]: Interpretation and Supplementation (General Provision), no. 14 (p. 74).
13) Official Comments, Art. 1.6 no. 3, p. 16; P.C.-Misc. 19 (1994), pp. 37-39 (incl. Lando
highlighting the emphasis on purpose in the group elaborating the European
Principles; and the decision of the Working Group at p. 38).
14) S. Vogenauer in Vogenauer, Art. 1.6 no. 42 (pointing to the ‘relative weight of the
purpose’).

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 15) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.6 no. 2.b, p. 78.
16) O. Unger in Jansen/Zimmermann, Art. 1:106 (1) [PECL]: Interpretation and
Supplementation (General Provision), no. 14 (p. 74): “the content of surrounding
provisions can certainly guide the interpretation.”
17) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.6 no. 2.b, p. 77; S. Vogenauer in
Vogenauer, Art. 1.6 no. 20-43.
18) P.C.-Misc. 19 (1994), p. 37 (Bonell, in reply to a suggestion of Furmston).
19) [Link]/instruments/commercial-contracts/unidroit-principles-
2016/preparatory-work/ [last visited on 9 January 2023]. The records of the
discussions in the Governing Council approving the Unidroit Principles are accessible
at [Link]/meetings/governing-council/ (currently accessible as of 2005)
[last visited on 9 January 2023]; see further the overview of relevant materials at the
beginning of each section in this book.
20) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.6 no. 2.b, p. 78; S. Vogenauer in
Vogenauer, Art. 1.6 no. 22.
21) S. Vogenauer in Vogenauer, Art. 1.6 no. 24.
22) O. Unger in Jansen/Zimmermann, Art. 1:106 (1) [PECL]: Interpretation and
Supplementation (General Provision), no. 14 (p. 74).
23) O. Unger in Jansen/Zimmermann, Art. 1:106 (2) [PECL]: Interpretation and
Supplementation (Issues not Expressly Settled), no. 4 (pp. 78-79), whereby
interpretation includes both regard to specific wording excluding issues from the
scope of the Unidroit Principles (such as Art. 9.1.2) and the determination of issues
with “a sufficiently close nexus [...] between the instrument’s content, ie its general
provisions and subject-specific rules, and the issues at question.” (ibid. p. 79,
footnotes omitted).
24) Official Comments, Art. 1.6 no. 4, pp. 16-17 with the helpful suggestion to take
guidance from the subject-matter index of the Unidroit Principles. On the historic
and comparative background of such a clause – back to the Roman jurist Julian in the
2nd century AD observing that “statutes ... can [not] be written in such a way that all
cases which might at any time occur are covered” – see O. Unger in
Jansen/Zimmermann, Art. 1:106 (2) [PECL]: Interpretation and Supplementation
(Issues not Expressly Settled), no. 1-2 (pp. 75-77).
25) S. Vogenauer in Vogenauer, Art. 1.6 no. 49, 55 (suggesting to also consider Art. 21.1 of
the ALI/ Unidroit Principles of Transnational Civil Procedure). For ALI/Unidroit
Principles of Transna-tional Civil Procedure see also F. Dessemontet in Eppur si muove:
The Age of Uniform Law, pp. 349-357.
26) M. Scherer in Vogenauer, Preamble II no. 84-90; S. Vogenauer in Vogenauer, Art. 1.6 no.
48.
27) See e.g. Art. 28 (2) UNCITRAL Model Law on International Commercial Arbitration.
28) Official Comments, Art. 1.6 no. 4, p. 17 (as emphasized by O. Unger in
Jansen/Zimmermann, Art. 1:106 (2) [PECL]: Interpretation and Supplementation
(Issues not Expressly Settled), no. 3 note 20 (p. 77) and no. 6 (p. 80)); see also
argumentum Art. 7 (2) CISG. In this sense also S. Vogenauer in Vogenauer, Art. 1.6 no.
59. The Working Group had left initially open the question what to apply if it was not
possible to settle an issue with underlying general principles, leaving it open if the
matter would be solved through a national legal system (P.C.-Misc. 18 (1992), pp. 61-
62).
29) O. Unger in Jansen/Zimmermann, Art. 1:106 (1) [PECL]: Interpretation and
Supplementation (General Provision), no. 12 (pp. 72-73): i.e. “inherent in the
instrument” as contrasted to “external principles”.
30) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.6 no. 2.b, p. 82.
31) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.6 no. 2.b, p. 82. See also P.C.-Misc. 19
(1994), p. 39 (Bonell “to promote good faith in international trade was a very good
purpose”; and Drobnig).
32) Explicitly mentioned, separately from Art. 1.7 and, with regard to the history of Art. 1.8
convincingly so, by O. Unger in Jansen/Zimmermann, Art. 1:106 (1) [PECL]:
Interpretation and Supplementation (General Provision), no. 12 (note 68 at p. 73).
33) See also e.g. Official Comments, Art. 7.1.4 no. 1, p. 231.
34) See for a detailed description of the concepts M. J. Bonell, An International
Restatement, Chapter 4, pp. 87-172; cf. also for the prominence of concepts S.
Vogenauer in: Gullifer/Vogenauer (Eds.), Essays in Honour of Hugh Beale, pp. 299-301;
S. Vogenauer in Vogenauer, Introduction no. 39, 43 and Art. 1.6. no. 25.
1) S. Vogenauer in Vogenauer, Art. 1.7 no. 1-4 with references to various national and
transnational sources (including Art. 7 (1) CISG); see also no. 42: ‘a general principle of
law’ (after due regard to ‘public policy’ considerations in US laws). On “historical
antecedents” since Roman law and for an in-depth comparative overview see J. P.
Schmidt in Jansen/Zimmermann, Art. 1:201 [PECL]: Good Faith and Fair Dealing, no. 24-
53 (pp. 112-130); on the inclusion of good faith in the 21st century “large-scale reform”
in the new French Civil Code (2016) see ibid. no. 38-39 (pp. 120-121). On “[n]otable
exceptions” in Austrian and English law, which, however, often use other reasoning to
arrive at similar results (e.g. “tacit waiver” in Austria, or English “piecemeal solutions
in response to demonstrated problems of unfairness”) see ibid. no. 43-46 (pp. 123-
126).
2) J. P. Schmidt in Jansen/Zimmermann, Art. 1:201 [PECL]: Good Faith and Fair Dealing,
no. 49 (p. 127).

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 3) P.C.-Misc. 18 (992), p. 73 (vote), following the discussion as of p. 62, with regard to a
better comprehensibility to American lawyers (Farnsworth pp. 68-69, Furmston p. 73
and p. 75 with reference to the UCC). For the term of “good faith” see the definition of
the Chamber of Civil Cases of Tbilsi Court of Appeals, which states in an award
referencing to Art. 1.7 that good faith implies actions with proper responsibility and
respect of each other’s rights, Georgia, 04 December 2019, Case No. AS-559-2019.
4) E.g. German § 242 BGB, Art. 1104 French Civil Code (2016 version) (ex Art. 1134 (3)), Art.
6 and 60 (2) Contract Law of the People’s Republic of China, Art. 1061 des Código Civil
y Comercial argentine; Art. 1375 of the Québec Civil Code; see F. Ranieri, ‘Good Faith’
in: Basedow/Hopt/ Zimmermann (eds.) with Stier. (ed), The Max Planck Encyclopedia
of European Private Law, vol. 1 (2012), pp. 790-794.
5) § 205 of the US Restatement 2d Contracts. See an analysis by N. Andrews in Eppur si
muove: The Age of Uniform Law, pp. 953, 956 et seq. and 960 et seq. See also M.
Furmston and J.W. Carter in Eppur si muove: The Age of Uniform Law, pp. 988, 992: “All
commonwealth jurisdictions recognize a general requirement of co-operation in
performance, and also its converse: one party must not prevent performance by the
other.” The Working Group had considered e.g. good faith as principle of law in “the
common law of Australia” (P.C.-Misc. 19 (1994), p. 42 (Brazil)).
6) Art. 12, 39 Israelian Contracts (General Part) Law, 1973; see e.g. G. Shalev/S. Herman,
35(5) Louisiana Law Review 1975, pp. 1091, 1097 et seq. with reproduction of the cited
articles at pp. 1106, 1109.
7) The contrary to ‘good faith’: S. Vogenauer in Vogenauer, Art. 1.7 no. 35.
8) For common law jurisdictions see e.g. K. P. Berger/T. Arntz, Zeitschrift für
Vergleichende Rechtswissenschaft (ZVglRWiss) 115 2016, pp. 167-199; S. Vogenauer in
Vogenauer, Art. 1.7 no. 7. For an English perspective, see the analysis by N. Andrews in
Eppur si muove: The Age of Uniform Law, pp. 953, 956 et seq. (on “Three Meanings of
Good Faith”).
9) P.C.-Misc. 18 (1992), p. 75 (final vote), after discussion and an initial tie vote on
whether to integrate the words “and fair dealing” at pp. 73 et seq. (e.g. U. Drobnig at p.
74: “this would cover both the subjective and the objective elements”).
10) J. P. Schmidt in Jansen/Zimmermann, Art. 1:201 [PECL]: Good Faith and Fair Dealing,
no. 13 at p. 107 (summary) and no. 9-11 (pp. 105-107), with detailed explanation
through the history of the UCC (whereby it is noteworthy, as noted ibid. no. 34 at p. 118
note 179, that the Chief Reporter for the UCC Karl Llewellyn “had lived, studied and
even taught in Germany and was thus very familiar with its legal culture”).
11) J. P. Schmidt in Jansen/Zimmermann, Art. 1:201 [PECL]: Good Faith and Fair Dealing,
no. 13 at p. 107 (summary) and no. 4 (p. 103) emphasizing the double meaning of
“good faith” including both “a state of mind” (i.e. “a synonym for honesty and
sincerity”) and “a standard of conduct”, respecting “certain requirements of decency
and fairness”, whereby (ibid., no. 8 p. 105) “the standard of conduct is to be
determined objectively”.
12) P. Perales Viscasillas, Unif. Law Rev. 2017, pp. 4, 10.
13) P.C.-Misc. 18 (1992), p. 78 (vote, confirmed at p. 79) with regard to then Art. 1.106(2)
meanwhile Art. 1.201(2) – PECL.
14) Official Comments, Art. 1.7 no. 4, p. 20 with reference to specific interpretations of the
general prohibition to exclude or limit the Principle in Articles 3.1.4, 7.1.6, and 7.4.13;
Arbitral Award 25 January 2002, Arbitration Court of the Lausanne Chamber of
Commerce and Industry, Unilex No. 863; see for a critical view A. E. Farnsworth, Tulane
J. of Int.’l & Comp. Law 1995, 47, pp. 62-63.
15) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.7 no. 1, p. 85. Initially, the draft for Art.
1.6 contained an explicit reference to “good faith in international trade” (StL-Doc. 50
(1991), p. 11 and comment d. at pp. 12-13), which was deleted as “self-evident”
(Maskow, Fransworth, Fontaine, Hartkamp) after discussion of the Working Group (P.C.-
Misc. 18 (1992), pp. 60-61), as reiterated by Bonell at P.C.-Misc. 19 (1994), pp. 38-39
(referencing to good faith as an “underlying purpose”).
16) Counting of S. Vogenauer in Vogenauer, Art. 1.7 no. 10 (of the 2010 edition).
17) Official Comments, Art. 1.7 no. 1, p. 18.
18) J. P. Schmidt in Jansen/Zimmermann, Art. 1:302 [PECL]: Reasonableness, no. 3 (p. 174)
with further references.
19) J. P. Schmidt in Jansen/Zimmermann, Art. 1:302 [PECL]: Reasonableness, no. 3 (at p.
175) with reference to A. Ripstein, ‘Reasonable Persons in Private Law’, in: G.
Bongiovanni, G Sartor, and C Valentini (eds), Reasonableness and Law (2009), p. 255-
81, at p. 255.
20) On occasion, when the relationship between ‘good faith’ and ‘reasonableness’
becomes an issue in discussions between common and civil law lawyers, it is helpful
to argue with the definition of ‘reasonableness’ in Art. 1:302 PECL: “[…] reasonableness
is to be judged by what persons acting in good faith and in the same situation as the
parties would consider to be reasonable. In particular, in assessing what is
reasonable the nature and purpose of the contract, the circumstances of the case,
and the usages and practices of the trades or profession involved should be taken
into account.” For more in-depth analysis see J. P. Schmidt in Jansen/Zimmermann,
Art. 1:302 [PECL]: Reasonableness, no. 1-9 (p. 173-78).

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 21) Official Comments, Art. 1.7 no. 1, p. 18; see P.C.-Misc. 18 (1992), p. 73 (vote on the
wording proposed by Furmston); M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.7 no. 1,
p. 84; S. Vogenauer in Vogenauer, Art. 1.7 no. 8 and 9 (with an account of the drafting
history); M. J. Bonell, An International Restatement, p. 129; A. E. Farnsworth, Tulane J.
of Int.’l & Comp. Law 1995, 47, p. 63. See also P.C.-Misc. 19 (1994), pp. 40-41 (Bonell,
Komarov, Garro): Art. 1.7 being applicable “only to questions covered by the
Principles”, which includes e.g. restitution after termination (Drobnig, ibid. at p. 41).
22) Ibid.; P.C.-Misc. 18 (1992), p. 70 (vote, after discussion, to include formation and
substantive validity) and Lando at p. 72 pointing at the difference to the PECL
formula (not including the negotiation process).
23) P.C.-Misc. 18 (1992), p. 71 (vote, after discussion, see e.g. Furmston at p. 70: “He could
not see a bad faith interpretation which would survive the requirements which were
set out in Chapter 4”).
24) P.C.-Misc. 18 (1992), p. 67 (Farnsworth on self-help remedies), p. 72 (Furmston).
25) M. J. Bonell, An International Restatement, p. 131 (“reasonable commercial standards
of fair dealing”).
26) P.C.-Misc. 18 (1992), p. 63 (Bonell): “universally observed”, p. 66 (Komarov).
27) Official Comments, Art. 1.7 no. 3, at p. 20; P.C.-Misc. 18 (1992), p. 62 (Bonell), pp. 76-77
(vote).
28) Official Comments, Art. 1.7 no. 3, pp. 19-20; P.C.-Misc. 18 (1992), p. 63 (Fontaine), p. 67
(Bonell); S. Vogenauer in Vogenauer, Art. 1.7 no. 16-17.
29) Official Comments, Art. 1.7 no. 2, p. 19.
30) P.C.-Misc. 18 (1992), p. 63 (Lando), p. 64 (Bonell, Tallon). See also Bonell at p. 67 (“an
ethical standard in a broad sense”).
31) P.C.-Misc. 18 (1992), pp. 64 and 68 (both Farnsworth) from a US perspective with
diverging examples showing the range of approaches.
32) P.C.-Misc. 18 (1992), p. 68 (Tallon) from a French perspective, p. 69 (Drobnig leaving
also open the qualification).
33) See J. P. Schmidt in Jansen/Zimmermann, Art. 1:201 [PECL]: Good Faith and Fair
Dealing, no. 85-94 (pp. 148-154) discussing, inter alia, both (i) the risks of misusing
the concept of good faith by “lazy judicial reasoning”, “[e]specially in complicated
cases” (ibid. no. 88 at p. 150), or the misuse of the German rule on good faith in § 242
BGB which was used as a tool “to re-interpret German private law in accordance with
Nazi ideology” (ibid.) and (ii) the advantages, such as “to organize legal thinking, to
allow the formation of clusters of similar cases, to make the law manageable and
findable and to provide a language in which a meaningful discourse between lawyers
can take place” (ibid. no. 90 at p. 151 with reference to Kötz). See also ibid. no. 98 (p.
155): “The phenomenon of judicial law-making and its limits must be discussed as a
general problem every legal system is faced with, and not as one that comes up in
the context of good faith.”
34) J. P. Schmidt in Jansen/Zimmermann, Art. 1:201 [PECL]: Good Faith and Fair Dealing,
no. 96 (p. 154): footnotes omitted; emphasis added.
35) Official Comments, Art. 1.7 no. 1, p. 18; see also e.g. P.C.-Misc. 18 (1992), p. 71 (Drobnig)
(referring to “Bonell’s statement that 50% of all the rules were based on good faith”).
36) List of S. Vogenauer in Vogenauer, Art. 1.7 no. 10, 38 (supplemented by Art. 5.1.3).
37) Counting of S. Vogenauer in Vogenauer, Art. 1.7 no. 10 (of the 2010 edition).
38) Official Comments, Art. 1.7 no. 1, p. 18; P.C.-Misc. 18 (1992), p. 65 (Tallon giving the
example distinguishing between a small trader and a very large company); P.
Pichonnaz in Vogenauer, Art. 7.1.7 no. 33-34.
39) J. P. Schmidt in Jansen/Zimmermann, Art. 1:302 [PECL]: Reasonableness, no. 9 (p. 178)
arguing that, distinctly from the good faith principle, “reasonableness”, covered in
the PECL in a section on “Terminology and Other Provisions”, is not a “general” rule
but needs to be considered “within a specific context”.
40) See also the definition of “reasonableness” in the PECL at Art. 1:302 which mentions
several similar criteria set forth at Art. 4.3 (d), (f), (b) plus “circumstances of the case”
which may arguably include (a) and (c); while the criterion (e) in Art. 4.3 is arguable
integrated in the reference to “usages and practices”.
41) E. Brödermann, Tulane J. of Int.’l & Comp. Law 2020, pp. 193, 219 with four examples at
pp. 220-221 and 16 further examples set forth in Annex 1, reproduced in the electronic
version of the article.
42) R. See/D. Prasad, Hamb. Law Rev. 2018, pp. 83, 89 quoting Bingham L.J. in Interfoto
Picture Library Ltd. v Stilletto Visual Programmes Ltd [1989] 1 Q.B. 433, 439; J. P.
Schmidt in Jansen/ Zimmermann, Art. 1:201 [PECL]: Good Faith and Fair Dealing, no. 46
(pp. 125-126).
43) See Irish Court of Appeal, Flynn v. Breccia, 8 March 2017, Unilex No. 2200; R. See/D.
Prasad, Hamb. Law Rev. 2018, pp. 83, 89; J. P. Schmidt in Jansen/Zimmermann, Art.
1:201 [PECL]: Good Faith and Fair Dealing, no. 44 (pp. 124-125), pointing inter alia at
the foreword of the brochure “England and Wales: The jurisdiction of choice”,
published by the Law Society in 2007, which “highlights the ‘absence of any general
duty of good faith’ as one of the virtues of English law”; IBA Country Report 2016, pp.
127, 130.

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 44) E.g. James Richard Crawford (University of Cambridge) and Barry Nicholas (University
of Oxford) (1994); Sir Roy Goode — Professor of Law (emeritus), University of Oxford,
Honorary Member of the Unidroit Governing Council (2010); Sir Vivian Ramsey —
Former Judge, Technology and Construction Court, Royal Courts of Justice, London
(2016).
45) S. Vogenauer in Vogenauer, Art. 1.7 no. 37.
46) S. Vogenauer in Vogenauer, Art. 1.7 no. 37, 36.
47) S. Vogenauer in Vogenauer, Art. 1.7 no. 40. J. P. Schmidt in Jansen/Zimmermann, Art.
1:201 [PECL]: Good Faith and Fair Dealing, no. 78 (p. 144) explicitly describes this as an
option to the adjudicator.
48) S. Vogenauer in Vogenauer, Art. 1.7 no. 44.
1) See the initial proposal to consider a special provision on inconsistent behavior by
Finn at StL-Doc. 78 (2002), pp. 3-15; the first draft prepared by Finn at StL-Doc. 84
(2003), revised at StL-Doc. 95 (2003).
2) Official Comments, Art. 1.8 no. 1, p. 21; Finn at StL-Doc. 78 (2002), p. 13 (“necessarily a
derivative of Art. 1.7”); StL-Misc. 25 (2003), p. 47 (Finn, no. 451: “he had originally
thought simply adding a comment to the good faith provision”), p. 48 (Fontaine, no.
454: “an application of Article 1.7”).
3) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.8 no. 1, p. 87; debated by S. Vogenauer in
Vogenauer, Art. 1.5 no. 12 (his criticism is not followed here because an unambiguous
wording that there is no intention to create any reliance would avoid reasonable
reliance in the sense of Art. 1.8).
4) J. P. Schmidt in Jansen/Zimmermann, Art. 1:201 [PECL]: Good Faith and Fair Dealing,
no. 93 (p. 153 and note 535 referencing to von Bar, Beale, Clive and Schulte-Nölke).
5) See Tribunal de Apelación en lo Civil y Comercial de Asunción of Paraguay, Jose Luis
Andres Manzoni Wasmosy c/ Indert s/ Obligacion de Hacer Escritura Publica y Otros, 24
October 2014, Unilex No. 1866; U. Babusiaux in Jansen/Zimmermann, Art. 2:301 [PECL]:
Negotiations Contrary to Good Faith, no. 14 (p. 367 with reference to Storme): “If a
party has led the other to believe something, this mistaken belief will be protected,
and the inconsistent behaviour may not result in a benefit for the inconsistent party.”
6) E.g. Arbitral Award, ICC-FA-2020-003 (2011), Unilex No. 2275; M. J. Bonell, An
International Restatement, p. 134 (with further references).
7) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.8 no. 2.b, p. 90; S. Vogenauer in
Vogenauer, Art. 1.8 no. 1, 3.
8) S. Vogenauer in Vogenauer, Art. 1.8 no. 12 (with the history of the provision).
9) Official Comments, Art. 1.8 no. 1, p. 21.
10) Arbitral Award 4 March 2004 (ad hoc), Unilex No. 973; S. Vogenauer in Vogenauer, Art.
1.8 no. 6-7, 11 (with a reference to the German institution of Verwirkung).
11) S. Meier in Jansen/Zimmermann, Art. 15:105 [PECL]: Damages, no. 3 (at p. 1930).
12) Official Comments, Art. 1.8 no. 1, p. 21; S. Vogenauer in Vogenauer, Art. 1.8 no. 14.
13) S. Vogenauer in Vogenauer, Art. 1.8 no. 15 with national law examples.
14) Official Comments, Art. 1.8 no. 3, p. 23.
15) S. Meier in Jansen/Zimmermann, Art. 15:105 [PECL]: Damages, no. 3 (at p. 1930). In civil
law jurisdictions, this kind of claim is often covered by a claim for culpa in
contrahendo (i.e. negligence or intentional action at the conclusion of a contract to
the detriment of the other party), see the comparative overview ibid., no. 2 (pp. 1928-
29).
16) Arbitral Award March 2008, Camera Arbitrale Nazionale e Internazionale di Milano,
Unilex No. 41; S. Vogenauer in Vogenauer, Art. 1.8 no. 8, 16.
1) See e.g. for the respect of general international usages the references in S. Vogenauer
in Vogenauer, Art. 1.9 no. 18. For the historical background of considering usages in
civil law jurisdictions or ‘law merchant’ in common law see H. Dedek in
Jansen/Zimmermann, Art. 1:105 [PECL]: Usages and Practices, no. 3-6 (pp. 56-59).
2) Official Comments, Art. 1.9 no. 2, p. 24; for a discussion of the distinction between
usages and practice see L. Garma Jr. in Eppur si muove: The Age of Uniform Law, pp.
1412, 1418-1420.
3) S. Vogenauer in Vogenauer, Art. 1.9 no. 11.
4) S. Vogenauer in Vogenauer, Art. 1.9 no. 7 (with reference to § 1-303 (b) UCC (USA)).
5) Official Comments, Art. 1.9 no. 4, p. 25; M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.8
no. 2.b, p. 89.
6) P.C.-Misc. 18 (1992), p. 93 (vote on the final text), following (i) the discussion at pp. 79
et seq. with votes at pp. 86 and 92 deciding to make changes to the CISG text (Art. 9
(2) CISG); and (ii) subsequently, the consideration of five versions (ibid. pp. 86 et seq.).
7) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.8 no. 2.b, p. 90; S. Vogenauer in
Vogenauer, Art. 1.9 no. 16-18; S. Vogenauer in Vogenauer, Art. 4.3 no. 18; see also P.C.-
Misc. 18 (1992), p. 93. See the summary assessment by H. Dedek in
Jansen/Zimmermann, Art. 1:105 [PECL]: Usages and Practices, no. 13, 15 (pp. 62-63): “a
more ‘objective’ approach”, “deliberately abandoned the contractual language by
CISG 9 (2)”. Contrary the pragmatic observation of H. Gabriel, no. 2.131 (p. 71), that it is
“unlikely that any different result would be had under one or the other”.

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 8) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.8 no. 2.b, p. 90 (with reference to critical
voices from developing countries with respect to the definition of what is a trade
usage, which are, however, covered by the test at (ii)); S. Vogenauer in Vogenauer, Art.
1.9 no. 15 (giving the examples of distinctions between developing and developed
countries, and ‘silence as a response to commercial letters of confirmation’→ Art.
2.1.12). In its discussions, the Working Group was well conscious of the concern of
developing countries not to be bound by usages of which they had no knowledge,
[Link]. 18 (1992), p. 83 (Lando) and pp. 83-84 (Bonell with reference to the criticism
of the language in Art. 9 of the Uniform Law on the International Sale of Goods on
usages (1964)).
9) M. Á. Pendón Meléndez in Morán/Bovio, Art. 1.8 no. 2.b, p. 92; on the inclusion of the
reasonableness during the discussions of the Working Group see P.C.-Misc. 18 (1992), p.
83 (Furmston) and p. 85 (Lando referring to the CISG commentary of von Caemmerer
and Schlechtriem assuming that, although this was not provided in the CISG,
unreasonable usages would not be acceptable). Further, see P.C.-Misc. 19 (1994), pp.
59-60. (Furmston, Garro) and generally on the test S. Vogenauer in Vogenauer, Art. 1.9
no. 10-20.
10) H. Dedek in Jansen/Zimmermann, Art. 1:105 [PECL]: Usages and Practices, no. 8 (p. 60)
with reference to the § 1-205 (1) UCC, now § 1-303 (b) and (d).
11) Official Comments, Art. 1.9 no. 6, p. 26.
12) Official Comments, Art. 1.9 no. 3, p. 25.
13) Further developed from S. Vogenauer in Vogenauer, Art. 1.9 no. 21-22.
14) S. Vogenauer in Vogenauer, Art. 1.9 no. 23.
15) P.C.-Misc. 18 (1992), p. 90 (Hartkamp, Furmston).
1) [Correcting the footnote at this place in the 1st edition]: Hyland (USA) at P.C.-Misc. 18
(1992), p. 100, initiated a final debate in the Working Group which led to eventually
deviate from the dispatch theory upheld by Art. 1:110 PECL (i.e. today Art. 1:303 (4)
PECL; inspired itself by Art. 27 CISG; see Lando at P.C.–Misc. 18 (1992), p. 99) and
contained in the first draft Art. 1.9 (2) at StLDoc. 50 (1991), p. 20 with regard to notices
of non-performance. See (i) on the one hand Bonell at P.C.-Misc. 18 (1992), p. 93
referring to Art. 1:110 (draft) PECL “as a very useful model” and p. 101 where he
summarises the arguments for the PECL solution: “if there was non-performance it
was only fair to place the risk [of transmission] on the defaulting party”; and (ii) on
the other hand Bonell ibid. at p. 103 asking “for guidance to justify the departure from
CISG and the PECL as to the dispatch principle for the notices” (emphasis added); as
well as Hyland arguing ibid. at p. 101: “If one put the risk on the person who was
communicating he would take great pains to make sure that the notice would
actually arrive and that was what should be encouraged.”
2) See previous note.
3) S. Vogenauer in Vogenauer, Art. 1.10 no. 4-5 lists over 50 principles requiring a notice.
4) Official Comments, Art. 1.10 no. 1, p. 27.
5) See S. Vogenauer in Vogenauer, Art. 1.10 no. 17 with drafting recommendations.
6) P.C.-Misc. 19 (1994), p. 66 (Bonell: “either for the purpose of validity or for the purpose
of evidence”; Brazil referring to the English Statute of Frauds).
7) Official Comments, Art. 1.10 no. 2, p. 28, identifying a series of provisions reflecting
this Receipt Principle.
8) S. Vogenauer in Vogenauer, Art. 1.10 no. 9.
9) Example given by S. Vogenauer in Vogenauer, Art. 1.10 no. 8, see also no. 15 (defective
telephone line).
10) Official Comments, Art. 1.10 no. 1, p. 27; StL-Doc. 77 (2002), p. 4 (Ramberg).
11) Official Comments, Art. 1.10 no. 2, p. 29 with reference to Article 10 (2) of the 2005
United Nations (UNCITRAL) Convention on the Use of Electronic Communications in
International Contracts (“Electronic Communications Convention”). See the short
overview of UNCITRAL et al., Tripartite Legal Guide, no. 425-430 (pp. 94-95). It is a
convention to observe as major trade nations have shown an interest in the
convention, either by signature (China) or otherwise (Australia, Canada, USA).
12) For details see S. Vogenauer in Vogenauer, Art. 1.10 no. 16 and J. P. Schmidt in
Jansen/Zimmermann, Art. 1:303 [PECL]: Notice, no. 31 (p. 198): “A statement issued in
German vis-à-vis a party who resides in China, for example, will usually be
unintelligible from the perspective of the addressee and therefore be legally
irrelevant.”
13) P.C.-Misc. 19 (1994), p. 65 (Farnsworth, who proposed that wording).
14) P.C.-Misc. 19 (1994), p. 64 (Drobnig).
15) J. P. Schmidt in Jansen/Zimmermann, Art. 1:303 [PECL]: Notice, no. 10 (p. 185, emphasis
added), as well as no. 8 (pp. 184-185) and no. 14 (p. 188).
16) S. Vogenauer in Vogenauer, Art. 1.10 no. 14.
17) J. P. Schmidt in Jansen/Zimmermann, Art. 1:303 [PECL]: Notice, no. 30 (pp. 197-198).
18) S. Vogenauer in Vogenauer, Art. 1.10 no. 18.
1) Due to the 1958 New York Convention on the Recognition and Enforcement of Foreign
Arbitral Awards.
2) See e.g. Art. 35 UNCITRAL Model Law; Art III NYC.
3) Cf. Meléndez in Morán Bovio, Art. 1.10 no. 3.b, p. 105 and the summary by S. Vogenauer
in Vogenauer, Art. 1.11 no. 3, both with due regard to the definition given in Art. 10
CISG.

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 4) Unidroit 2016, C.D. (95) 15, no. 44 (Bonell): “a description rather than a definition” in
order to provide “the necessary flexibility for determining whether a particular
contract qualified as a longterm one”, and also at no. 45 (Mazzoni) for a typological
rather than syllogistic understanding of the definition.
5) Official Comments, Art. 1.11 no. 3. For a discussion of the definition see W. Doralt in
Jansen/ Zimmermann, Art. 6:112 [PECL]: Right to Terminate for Compelling Reason, no.
4 (pp. 913-914) with both criticism (“is bound to create uncertainty”) and support
arguing that “a better definition for long-term contracts is not apparent, and does
not appear to have been developed in the different national legal systems. […]
Adding a definition, even if it is kept very broad, aligns the Unidroit PICC more
closely with commercial reality than a set of rules which are geared primarily, or
even exclusively, towards ‘one-off’ sales contracts.”
6) Official Comments, Art. 1.11 no. 3, p. 31 (with a useful overview of provisions and
comments of particular importance to long-term contracts).
7) Official Comments, Art. 1.11 no. 4.
8) Official Comments, Art. 1.11 no. 5.
9) List compiled by S. Vogenauer in Vogenauer, Art. 1.11 no. 1.
1) H. Gabriel, no. 2.203 (p. 95): “a simplified version of the rule of the Convention”.
2) O. Unger in Jansen/Zimmermann, Art. 1:304 (2) [PECL]: Computation of Time (Official
Holiday and Non-working Days), no. 4 (p. 211) underlining that the rule is often not
stated expressly and exists only implicitly (with the exception of English substantive
law “which has never recognized such general rule”, see no. 5 at p. 211) and e contrario
to “the often expressly stipulated extension rule” (and, as noted by Unger ibid. at
note 29, a number of procedural codes, e.g. in Austria and Belgium, contain such a
rule explicitly; as well as English procedural law in Civil Procedure Rules 1998 2.8 (5)).
3) Official Comments, Art. 1.12, Illustration no. 3, p. 33 (24 hours set on a Saturday).
4) Official Comments, Art. 1.12, p. 33.
5) S. Vogenauer in Vogenauer, Art. 1.12 no. 9 (6h00 in Germany is distinct from 6 p.m. It
relates to 6 a.m.).
6) See [Link]
detail&treatynum=076 [last visited on 9 January 2023].
7) S. Vogenauer in Vogenauer, Art. 1.12 no. 9, 3-4.
8) See O. Unger in Jansen/Zimmermann, Art. 1:304 (2) [PECL]: Computation of Time
(Official Holiday and Non-working Days), no. 7 (p. 213).

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