Art 3(1) Contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production.
What does the term “materials” refer to?
does it include specifications and design? See page 205. probably not
Plain English meaning of “substantial” is somewhere less than 50%. So buyer does not have to supply a majority of materials, just substantial part.
but do we measure subjectively or objectively? might it depend on the particular situation?
French language version might suggest test uses term “une parte essentiale.” Thus if buyer provides the components essential to the manufacture of a product – regardless of their size or value – CISG would not apply. page 178
Whether you measure based on essentiality (subjective) or value (objectively measurable, though can use either price or cost), title not issue.
Italian Supreme court said test for “substantial part” is whether materials provided were for an essential purpose or not?
“a contract is a works contract when the materials are merely a means for manufacturing the goods, and the essential purpose of the contract is the production of the goods.” See page 204
