In a sale contract, the place of performance is determined by the contractual stipulations, including incoterms such as FOB or CAF.

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The main idea being tested is that where performance must occur in a sale contract is set by what the contract says, especially any incoterms included. Incoterms outline the delivery point, who bears costs, and who bears risk at each stage of the shipment. Because of that, the place of performance isn’t fixed to the seller’s or the buyer’s location by itself; it follows the contract’s delivery terms. For example, with an incoterm like FOB, the seller’s obligation is fulfilled when the goods pass the ship’s rail at the named port, so the place of performance is the port of shipment. With another incoterm that covers delivery to a carrier or to a specific location, the delivery point shifts accordingly, and so does the place where performance occurs. When the contract explicitly states these terms, they govern the transaction; national law may fill in gaps only if the contract is silent, but the controlling factor remains the agreed terms. This is why the correct understanding is that the place of performance is determined by the contract terms, including incoterms, rather than being automatically tied to the seller’s location, the buyer’s location, or to national law alone.