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UN Convention on Contracts for the International Sale of Goods (CISG)

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Kroll / Mistelis / Perales Viscasillas

UN Convention on Contractsfor the International Sale of Goods (CISG)

UN Convention onContracts for

the InternationalSale of Goods (CISG)

A Commentary

edited by

Stefan KrollLoukas Mistelis

Pilar Perales Viscasillas

Second Edition

2018

C. H. BECK � HART � NOMOS

Published byVerlag C. H. Beck oHG, Wilhelmstraße 9, 80801 Munchen, Germany,email: [email protected]

Co-published byHart Publishing, Kemp House, Chawley Park, Cumnor Hill, Oxford, OX2 9PH, United Kingdom,online at: www.hartpub.co.uk

and

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Recommended citation:’[Author’s name], Article [#], mn[#]’ in:

Kroll / Mistelis / Perales Viscasillas, CISG,2nd edition 2018

ISBN 978 3 406 71455 9 (C.H. BECK)ISBN 978 1 50992 361 8 (HART)

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C. H. Beck at the address above.

Foreword

This is the second edition of this commentary. In the first edition we stated that thereis hardly any need to provide a justification for a new commentary on such animportant topic as the United Nations Convention on Contracts for the InternationalSales of Goods (“Vienna Convention” or “CISG”). The Convention was signed in 1980,currently has 89 Contracting States and is potentially applicable to up to two thirds ofinternational trade in goods; sales contracts are a daily occurrence and the fundamentalagreement in international commerce.

There are many good publications on the topic, predominately in continental Europeor the United States, but we do hope that this commentary offers some new dimensions.First, this commentary aims to be an international approach to the CISG: it bringstogether 22 authors from sixteen countries in four continents with a wide range ofprofound academic and practical expertise. They include some very well establishednames in the field and few very promising newcomers. Second, the coverage isconsistent in addressing the general principles and drafting history of each article beforeproviding a detailed commentary and discussion of comparable rules in other instru-ments, namely the UNIDROIT Principles of International Commercial Contracts(“PICC”), and various regional instruments such as the Principles of European ContractLaw (“PECL”), as well as Incoterms where necessary. Finally, this commentary high-lights all the main commercial law aspects of international sales as well as covering civillaw dimensions. Private international law and “procedural” aspects, such as burden ofproof, are also consistently addressed. While we reflect on the doctrinal discussion onthe CISG, we have made every effort to also be practical and give due regard to case lawwith the hope to make this a book useful for both academics and practitioners.

We have considered all reviews of the first edition and various comments andrecommendations we have received formally and informally. We hope that the secondedition not only receives the same positive response as the first one, but also proves tobe an improvement rather than a mere update. Not only the text but also the indiceshave been thoroughly updated.

The three editors got to know each other and became friends through the Willem CVis International Commercial Arbitration Moot. It has been a great experience to workwith one another and solidify a long-standing academic friendship. The editors have astrong interest in international sales ignited and supported by a number of mentors andfriends; these include Professor Eric Bergsten, Professor Norbert Horn, Professor RafaelIllescas, the late Professor Albert Kritzer and the late Professor Oskar Hartwieg. Warmthanks and appreciation are due to them for the enthusiastic and professional way inwhich they inspired us to work in this area of international commercial law.

Thanks are also due to all contributors for their submissions and embracing theproject with great motivation, drive and the necessary regard to the internationalapplication of the CISG and the need to promote uniformity in the application of theConvention. They have all worked to keep the project alive and bring it to fruition.Friendships were enhanced and strengthened through this project. Deadlines are noteasy to keep in such large-scale projects but the gestation of the book remained withinset targets and every effort was made to state the law as of October 2017.

We also want to extend our thanks to our publisher and in particular, Dr WilhelmWarth who worked with us on the first edition and Thomas Klich who supported us in

V

the second edition who patiently encouraged us through deadlines and spared no effortto ensure the quality of editing and publishing one would expect from Beck.

The editing co-ordination and the lion share of language and consistency editing fellon Dr Metka Potocnik, at the School of International Arbitration Queen MaryUniversity of London. We thank her for the dedication, commitment and contributionto this publication.

We hope you find this commentary useful and we are happy to receive any feedback.A book is almost never perfect, even in its second edition, so any suggestions forimprovement in future editions are welcome and may be sent to any of three editors orto the following email address: [email protected].

Stefan Kroll, Loukas Mistelis, Pilar Perales ViscasillasCologne, London and MadridFebruary 2018

Foreword

VI

Table of Contents

Foreword .............................................................................................................................. VHow to use this Commentary ................................................................................................ VIIList of Contributors ............................................................................................................... XXVIITable of Cases ....................................................................................................................... XXXIAbbreviations ........................................................................................................................ LXXIAbbreviated bibliography ....................................................................................................... LXXVStatus of the CISG ................................................................................................................. LXXXI

Introduction to the CISG ............................................................................................................. 1I. General Remarks .................................................................................................................. 1

II. Legislative History ................................................................................................................ 21. The search for an international sales law: driving forces and objectives ............................. 22. From the UNIDROIT Initiative to the Hague Uniform Laws ............................................ 23. The drafting process and the adoption of the CISG ........................................................... 4

III. Content and Legal Nature ..................................................................................................... 51. Legal nature of the CISG .................................................................................................. 52. Structure and content at a glance ...................................................................................... 63. Main Principles ................................................................................................................ 7

IV. The CISG’s Global Reach and Grounds for Success ............................................................... 8V. Impact on International and Regional Harmonization and National Modernization .............. 9

VI. Application in Practice ......................................................................................................... 121. The original scepticism ..................................................................................................... 122. Increasing role in practice ................................................................................................. 133. Commodity Trade ............................................................................................................ 14

VII. Advantages of the CISG ........................................................................................................ 15VIII. Working with the CISG ........................................................................................................ 16

IX. Contract Drafting ................................................................................................................. 16X. Electronic Commerce ........................................................................................................... 17

Preamble ...................................................................................................................................... 19

Part I. Sphere of Application and General Provisions

Chapter I. Sphere of Application .................................................................................................. 21

Article 1 ........................................................................................................................................ 21I. Importance and Role of the Provision ................................................................................... 22

1. General ............................................................................................................................ 222. Drafting history ................................................................................................................ 273. Importance of provision ................................................................................................... 27

II. Detailed Commentary ........................................................................................................... 281. Sales contracts .................................................................................................................. 282. Goods .............................................................................................................................. 313. Internationality ................................................................................................................. 334. Automatic application if international sales contract ......................................................... 355. Territorial application – Contracting States ....................................................................... 366. Application by operation of conflict of laws ...................................................................... 37

III. Comparable Rules ................................................................................................................. 38


II. Detailed Commentary ........................................................................................................... 411. Consumer sales ................................................................................................................ 412. Sales by auction ................................................................................................................ 473. Sales on execution or otherwise by authority of law .......................................................... 494. Sales of stocks, shares, investment securities, negotiable instruments or money ................. 495. Sales of ships, vessels, hovercraft or aircraft ....................................................................... 50

IX

6. Sales of electricity ............................................................................................................. 527. Burden of proof ................................................................................................................ 53



1. General ............................................................................................................................. 542. Drafting history ................................................................................................................ 55

II. Detailed Commentary ........................................................................................................... 551. Contracts for the sale of goods to be manufactured or produced ....................................... 552. Service Contracts .............................................................................................................. 583. Software ........................................................................................................................... 604. Burden of proof ................................................................................................................ 61




II. Detailed Commentary ........................................................................................................... 661. Matters explicitly governed by the Convention .................................................................. 662. Matters explicitly excluded from the Convention .............................................................. 693. Other (non)contentious matters ........................................................................................ 78



1. General ............................................................................................................................. 912. Drafting History ............................................................................................................... 92

II. Detailed Commentary ........................................................................................................... 921. Death or personal injury caused by the goods ................................................................... 922. Death or personal injury caused by other means ............................................................... 933. Death or personal injury of third parties ........................................................................... 934. Liability for property damage ............................................................................................ 955. Concurrent remedies ........................................................................................................ 97




II. Detailed Commentary ........................................................................................................... 1031. Party autonomy ................................................................................................................ 1032. Methods of opting out ...................................................................................................... 1043. Derogation from or modification or exclusion of the CISG ............................................... 1054. Opting in – agreements to apply the CISG ........................................................................ 110


Chapter II. General Provisions ..................................................................................................... 112


II. Detailed Commentary ........................................................................................................... 1141. Interpretation of the Convention (Art. 7(1)) ...................................................................... 1142. Gap-filling within the CISG (Art. 7.2) ............................................................................... 134


Article 8 ........................................................................................................................................ 146I. Importance and Role of Provision ......................................................................................... 147

1. Introduction ..................................................................................................................... 1472. Legislative history ............................................................................................................. 149

II. Detailed Commentary ........................................................................................................... 1491. First Paragraph ................................................................................................................. 1492. The second paragraph: The reasonable understanding ....................................................... 1553. The third paragraph ......................................................................................................... 157

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1. Introduction ..................................................................................................................... 1622. Art. 9 in the context of the CISG: Hierarchy of rules ......................................................... 1633. Validity ............................................................................................................................ 164

II. Detailed Commentary ........................................................................................................... 1651. Practices established between the parties: Art. 9(1) ............................................................ 1652. Agreed usages (Art. 9(1)) .................................................................................................. 1673. International usages of trade: Art. 9(2) .............................................................................. 1684. Conflict between usages .................................................................................................... 1765. Procedural aspects/burden of proof ................................................................................... 1776. Extended application of Art. 9 .......................................................................................... 1787. CISG and other instruments as usages of trade ................................................................. 178


Article 10 ...................................................................................................................................... 182I. Importance and Role of the Provision ................................................................................... 182

II. Detailed Commentary ........................................................................................................... 1831. Autonomous versus domestic meaning of “place of business” ........................................... 1832. Essential elements of the term “place of business” ............................................................. 1843. Place of business that has the “closest relationship to the contract and its performance” ... 1874. Crucial factors for the determination of “the place of business that has the closest to the

contract relationship” ....................................................................................................... 1885. “Having regard to the circumstances known to or contemplated by the parties at any time

before or at the conclusion of the contract” ...................................................................... 1896. Art. 10(b) ......................................................................................................................... 190



II. Detailed Commentary ........................................................................................................... 1931. Freedom of form .............................................................................................................. 1932. Freedom of evidence ......................................................................................................... 1963. Agreement of the parties requiring writing or evidence in writing ..................................... 1984. Electronic form and evidence ............................................................................................ 199



1. Introduction ..................................................................................................................... 2012. Drafting history ................................................................................................................ 201

II. Detailed Commentary ........................................................................................................... 2021. Scope of Art. 12 ................................................................................................................ 2022. Art. 96 reservation ............................................................................................................ 203



II. Detailed Commentary ........................................................................................................... 2081. Scope of Art. 13 ................................................................................................................ 2082. Expansive interpretation of Art. 13: fax and electronic means ............................................ 2083. Interpretation of Art. 13 in light of other international uniform law instruments ............... 210


Part II. Formation of the Contract

Introduction to Articles 14–24 ....................................................................................................... 213I. Sphere of application and possibility of reservation according to Article 92 ........................... 213

1. Possibility of Reservation .................................................................................................. 2132. Temporal sphere of application ......................................................................................... 215

II. Scope of application .............................................................................................................. 2151. Introduction ..................................................................................................................... 2152. Standard Contract Terms .................................................................................................. 216

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3. Other modes of contract conclusion .................................................................................. 2184. Commercial letter of confirmation .................................................................................... 219

III. Exclusion of Part II ............................................................................................................... 220


II. Detailed Commentary ........................................................................................................... 2251. Proposal addressed to specific persons; invitation to make an offer ................................... 2252. Intention to be bound ....................................................................................................... 2273. The specificity requirement ............................................................................................... 2304. The requirement of indication of the purchase price and price determination absent such

indication ......................................................................................................................... 2355. Offer containing a clause excluding Part II ........................................................................ 2376. Incorporation of standard contract terms .......................................................................... 238



II. Detailed Commentary ........................................................................................................... 2461. Withdrawal ...................................................................................................................... 2462. Death, insolvency and lack of legal capacity of the offeror ................................................. 249



II. Detailed commentary ............................................................................................................ 2531. Revocation (para. 1) .......................................................................................................... 2532. The end of the offeror’s right to revoke ............................................................................. 2543. The Irrevocability of the offer (para. 2) as per the offer itself ............................................. 2564. Irrevocability of the offer (para. 2) due to the offeree’s justified reliance and the prohibition

of venire contra factum proprium ..................................................................................... 2595. Damages in case of revocation .......................................................................................... 261



II. Detailed Commentary ........................................................................................................... 2641. Rejection .......................................................................................................................... 2642. Legal effects of the rejection .............................................................................................. 266



II. Detailed Commentary ........................................................................................................... 2711. Acceptance by express declaration, acceptance by conduct, silence and inactivity .............. 2712. Effectiveness of the declaration of acceptance .................................................................... 2753. Time for acceptance (para. 2) ............................................................................................ 2794. Burden of proof ................................................................................................................ 282



II. Detailed commentary ............................................................................................................ 2871. Reply containing additions or different terms .................................................................... 2872. Objection .......................................................................................................................... 2963. Burden of proof ................................................................................................................ 298



II. Detailed Commentary ........................................................................................................... 3011. Beginning of the period for acceptance (para. 1) ............................................................... 3012. Calculation and expiry of the period of time (para. 2) ....................................................... 3033. The rule in Art. 20(2) as general principle upon which the CISG is based ......................... 305


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XII


II. Detailed Commentary ........................................................................................................... 3081. Late acceptance and approval by the offeror ...................................................................... 3082. Lateness due to delays in transmission (Art. 21(2)) ........................................................... 3113. Opportunity for speculation .............................................................................................. 3144. Burden of proof ................................................................................................................ 315



II. Detailed Commentary ........................................................................................................... 3181. Withdrawal ...................................................................................................................... 3182. Effects of a withdrawal ..................................................................................................... 320



II. Detailed Commentary ........................................................................................................... 3231. Time of contract conclusion ............................................................................................. 3232. Place of contract conclusion ............................................................................................. 324



II. Detailed Commentary ........................................................................................................... 3281. “Oral” declarations ........................................................................................................... 3282. Declarations by “other means” ......................................................................................... 3303. Preventing declarations from reaching the addressee ......................................................... 3334. Burden of proof ................................................................................................................ 334


Part III. Sale of Goods

Chapter I. General Provisions ...................................................................................................... 337


II. Detailed Commentary ........................................................................................................... 3381. Departure from domestic laws .......................................................................................... 3392. Requirements for fundamental breach ............................................................................... 3403. Examples of fundamental breach ...................................................................................... 345



II. Detailed Commentary ........................................................................................................... 3571. Form of notice .................................................................................................................. 3572. The possibility of implicit notice ....................................................................................... 3593. Time period for notice to be given .................................................................................... 3614. Risk of non-delivery of notice ........................................................................................... 362



II. Detailed Commentary ........................................................................................................... 3651. Dispatch rule and allocation of risk ................................................................................... 3652. Effect of dispatch of notice ............................................................................................... 3663. Proof of dispatch .............................................................................................................. 3684. Applicability to telephonic communications ...................................................................... 3685. Applicability to email communications ............................................................................. 3696. Derogating from Art. 27 ................................................................................................... 3697. Appropriateness of the means of communication .............................................................. 370


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XIII


II. Detailed Commentary ........................................................................................................... 3741. Specific performance under municipal law ........................................................................ 3752. The provisions of the Convention ..................................................................................... 3783. Derogation from Art. 28 and party autonomy ................................................................... 3814. Seller’s right to require payment of the price ..................................................................... 382



II. Detailed Commentary ........................................................................................................... 3851. Contract modification ....................................................................................................... 3852. The “pre-existing duty rule” at common law ..................................................................... 3883. No-oral-modification clauses ............................................................................................ 389


Chapter II. Obligations of the Seller ............................................................................................. 393


1. Subject matter .................................................................................................................. 3932. Primary obligations of the seller ........................................................................................ 3943. National laws .................................................................................................................... 3954. Vienna Conference ........................................................................................................... 395

II. Detailed Commentary ........................................................................................................... 3961. Seller’s obligation to deliver .............................................................................................. 3962. Seller’s obligation to transfer property ............................................................................... 3963. Seller’s obligation to hand over documents ....................................................................... 3994. Party autonomy ................................................................................................................ 399

III. Comparable Rules ................................................................................................................. 4011. Incoterms ......................................................................................................................... 4012. PICC and PECL ............................................................................................................... 4063. DCFR ............................................................................................................................... 407

Section I. Delivery the goods and handing over of documents ..................................................... 409


1. Subject matter .................................................................................................................. 4102. Breach of contract ............................................................................................................ 4113. Further context ................................................................................................................. 4114. National laws .................................................................................................................... 4115. Vienna Conference ........................................................................................................... 411

II. Detailed Commentary ........................................................................................................... 4121. Obligation to deliver ......................................................................................................... 4122. Sales involving carriage of the goods ................................................................................. 4123. Kinds of acts of delivery ................................................................................................... 4164. Place of delivery ............................................................................................................... 4225. Further obligations of the seller ......................................................................................... 427




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XIV

II. Detailed Commentary ........................................................................................................... 4441. Notice of consignment ...................................................................................................... 4442. Carriage of the goods ........................................................................................................ 4473. Information regarding insurance ....................................................................................... 450

III. Comparable rules ................................................................................................................. 4521. Incoterms ......................................................................................................................... 4522. PICC and PECL ............................................................................................................... 4553. DCFR ............................................................................................................................... 455



II. Detailed Commentary ........................................................................................................... 4591. Party autonomy ................................................................................................................ 4592. Time for delivery .............................................................................................................. 4593. Art. 33(a), (b) and (c) ....................................................................................................... 4604. Part-deliveries ................................................................................................................... 467




II. Detailed Commentary ........................................................................................................... 4731. Handing over of documents .............................................................................................. 4732. Right to cure .................................................................................................................... 477


Section II. Conformity of the goods and third party claims ......................................................... 482

Introduction to Articles 35–44 ....................................................................................................... 482I. Importance of Section II in Practice ...................................................................................... 482

II. Structure of Section II ........................................................................................................... 482III. Differences Between the Liability Regimes for Non-conformity and Defects in Title .............. 483IV. Differences in the Remedial Systems for Other Breaches ....................................................... 483V. Relationship to the National Remedies .................................................................................. 484

Article 35 ...................................................................................................................................... 485I. Importance and Role of Provision ......................................................................................... 487

1. Overview on the content ................................................................................................... 4872. History ............................................................................................................................. 4883. Terminology ..................................................................................................................... 4884. Art. 35 as part of the CISG’s liability regime for non-conformity ....................................... 488

II. Detailed Commentary ........................................................................................................... 4891. The concept of non-conformity ........................................................................................ 4892. Art. 35(1) ......................................................................................................................... 4963. Art. 35(2) ......................................................................................................................... 5024. Art. 35(3) ......................................................................................................................... 5245. Exclusion of express and implied obligations as to conformity .......................................... 5276. Burden of proof ................................................................................................................ 5287. Relationship to the non-contractual remedies under national law ...................................... 536

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II. Detailed Commentary ........................................................................................................... 5401. Art. 36(1) ......................................................................................................................... 5402. Art. 36(2) ......................................................................................................................... 5413. Burden of proof ................................................................................................................ 543



II. Detailed Commentary ........................................................................................................... 5471. Prerequisites for the right to cure under Art. 37 ................................................................ 5472. Means of cure ................................................................................................................... 5493. Legal consequences ........................................................................................................... 5504. Burden of proof ................................................................................................................ 551



1. Content ............................................................................................................................ 5532. Purpose of the duty to examine ........................................................................................ 5533. Art. 38 as part of the CISG’s notification regime ............................................................... 5544. History of the provision and its character ......................................................................... 555

II. Detailed Commentary ........................................................................................................... 5551. General remarks ............................................................................................................... 5552. Prevailing contractual agreements, practices and usages .................................................... 5563. Scope of the examination duty .......................................................................................... 5584. Extent of the examination duty ......................................................................................... 5605. Place of examination ........................................................................................................ 5686. Time period for examination ............................................................................................ 5687. Examination in contract involving carriage: Art. 38(2) ...................................................... 5768. Art. 38(3) ......................................................................................................................... 5789. Costs of the examination duty .......................................................................................... 581

10. Sanctions .......................................................................................................................... 58111. Waiver of the examination duty ........................................................................................ 58312. Burden of proof ................................................................................................................ 583

III. Comparable Provisions ......................................................................................................... 584


1. General remarks ............................................................................................................... 5872. Drafting history ................................................................................................................ 5883. Purpose of the notice requirement .................................................................................... 5884. Art. 39 as part of the CISG’s examination and notification regime .................................... 589

II. Detailed Commentary ........................................................................................................... 5901. Introduction ..................................................................................................................... 5902. Prevailing contractual agreements, practices and usages .................................................... 5913. Scope of application .......................................................................................................... 5924. Notice .............................................................................................................................. 5935. The two years cut-off date in Art. 39 ................................................................................. 6096. Consequence of a failure to give notice ............................................................................. 6107. Exceptions ........................................................................................................................ 6108. Waiver and exclusions of the right to invoke belated notice .............................................. 6109. Relationship with statutes of limitation ............................................................................. 613

10. Acceptance of the goods as conforming ............................................................................ 61411. Burden of proof ................................................................................................................ 614



II. Detailed Commentary ........................................................................................................... 6191. General remarks ............................................................................................................... 619

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2. Prevailing contractual agreements, practices and usages .................................................... 6193. Scope of application .......................................................................................................... 6204. Seller’s actual or constructive knowledge ........................................................................... 6205. Disclosure to the buyer ..................................................................................................... 6236. Legal consequences and contractual modifications ............................................................ 6247. Burden of proof ................................................................................................................ 624



II. Detailed Commentary ........................................................................................................... 6271. General remarks ............................................................................................................... 6272. Third party rights and claims ........................................................................................... 6283. Time of the defects in title ................................................................................................ 6314. Exclusion of liability ......................................................................................................... 6325. Remedies for defects in title .............................................................................................. 6336. Art. 41 and domestic rules providing for nullity of the contract ......................................... 6357. Burden of proof ................................................................................................................ 635



II. Detailed Commentary ........................................................................................................... 6391. General remarks ............................................................................................................... 6392. Third party rights and claims ........................................................................................... 6403. Based on industrial property or other intellectual property ................................................ 6414. Territorial limitations ....................................................................................................... 6425. Relevant time ................................................................................................................... 6446. Seller’s actual or constructive knowledge ........................................................................... 6447. Exceptions from liability under Art. 42(2) ......................................................................... 6468. Remedies .......................................................................................................................... 6499. Burden of proof ................................................................................................................ 650



II. Detailed Commentary ........................................................................................................... 6531. General remarks ............................................................................................................... 6532. Notice .............................................................................................................................. 6533. Notice period ................................................................................................................... 6544. Legal consequences of a failure to give notice .................................................................... 6565. Exclusion of reliance on a failure to give notice in time: Art. 43(2) .................................... 6576. Burden of proof ................................................................................................................ 657



II. Detailed Commentary ........................................................................................................... 6591. General remarks ............................................................................................................... 6592. Scope of application .......................................................................................................... 6603. Reasonable excuse ............................................................................................................ 6614. Legal consequences ........................................................................................................... 6655. Burden of proof ................................................................................................................ 667


Section III. Remedies for breach of contract by the seller ............................................................ 668


II. Detailed Commentary ........................................................................................................... 6691. System of remedies (para. 1) ............................................................................................. 6692. Damages and other remedies (para. 2) .............................................................................. 6713. No period of grace (para. 3) .............................................................................................. 672


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1. Purpose ............................................................................................................................ 6742. Outline ............................................................................................................................. 6743. Distinction between Art. 46(1) and Art. 46(2), (3): The concept of non-conformity ........... 675

II. Detailed Commentary ........................................................................................................... 6761. General claim for performance (Art. 46(1)) ....................................................................... 6762. Substitute delivery (Art. 46(2)) .......................................................................................... 6803. Repair (Art. 46(3)) ............................................................................................................ 6854. Burden of proof ................................................................................................................ 687



II. Detailed Commentary ........................................................................................................... 6891. Requirements ................................................................................................................... 6892. Consequences ................................................................................................................... 6913. Burden of proof ................................................................................................................ 694



II. Detailed Commentary ........................................................................................................... 6971. Right to cure under Art. 48(1) .......................................................................................... 6972. Right to cure under Art. 48(2) .......................................................................................... 7013. Burden of proof ................................................................................................................ 704



II. Detailed Commentary ........................................................................................................... 7071. Outline of the requirements .............................................................................................. 7072. Avoidance for fundamental breach (Art. 49(1)(a)) ............................................................. 7073. Avoidance using the Nachfrist-procedure (Art. 49(1)(b)) ................................................... 7174. Declaration of avoidance and time limits .......................................................................... 7215. Burden of proof ................................................................................................................ 7266. Effects of avoidance .......................................................................................................... 727



1. History of the provision .................................................................................................... 7302. Importance of the provision .............................................................................................. 7313. Nature of the remedy ........................................................................................................ 7314. Position in the system of remedies .................................................................................... 732

II. Detailed Commentary ........................................................................................................... 7321. Requirements ................................................................................................................... 7322. Legal consequences ........................................................................................................... 7383. Burden of proof ................................................................................................................ 7444. Interaction with other remedies ........................................................................................ 745



1. The general rule: narrowing the view under Art. 51(1) ...................................................... 7472. The exception: re-expanding the view under Art. 51(2) ..................................................... 7483. Application to instalment contracts ................................................................................... 748

II. Detailed Commentary ........................................................................................................... 7491. Prerequisites ..................................................................................................................... 7492. Legal consequences ........................................................................................................... 7523. Burden of proof ................................................................................................................ 757


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II. Detailed Commentary ........................................................................................................... 7601. Early delivery ................................................................................................................... 7602. Excessive delivery ............................................................................................................. 764

III. Comparable Rules ................................................................................................................. 7701. Early delivery ................................................................................................................... 7702. Excessive delivery ............................................................................................................. 770

Chapter III. Obligations of the Buyer ........................................................................................... 771


II. Detailed Commentary ........................................................................................................... 7721. Overview .......................................................................................................................... 7722. Purchase price .................................................................................................................. 7723. Payment arrangements ..................................................................................................... 7734. Payment clauses ............................................................................................................... 7745. Duty to take delivery ........................................................................................................ 7766. Further duties ................................................................................................................... 7767. Choice of payment debt .................................................................................................... 7768. Practical considerations .................................................................................................... 777


Section I. Payment of the price .................................................................................................... 778


II. Detailed Commentary ........................................................................................................... 7791. Scope of the duty .............................................................................................................. 7792. Currency .......................................................................................................................... 7813. The buyer’s breach of his obligation(s) ............................................................................. 7844. Practical questions ............................................................................................................ 784



II. Detailed Commentary ........................................................................................................... 7871. When does it apply? ......................................................................................................... 7872. How does it apply? ........................................................................................................... 7893. Burden of proof ................................................................................................................ 790



II. Detailed Commentary ........................................................................................................... 7921. Overview .......................................................................................................................... 7922. Practical considerations .................................................................................................... 793

IV. Comparable Rules ................................................................................................................. 793


II. Detailed Commentary ........................................................................................................... 7961. Overview .......................................................................................................................... 7962. Party agreement (Art. 57(1) first sentence) ........................................................................ 7963. Payment at the seller’s place of business (Art 57(1)(a), (2)) ............................................... 7984. Payment against the handing over of the goods or of documents (Art. 57(1)(b)) ............... 8005. Place of payment of monetary claims other than the purchase price .................................. 8036. Practical considerations .................................................................................................... 804



II. Detailed Commentary ........................................................................................................... 8081. Buyer’s right to examine the goods (Art. 58(3)) ................................................................. 808

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2. Time the purchase price becomes due ............................................................................... 8103. Divergent agreements ....................................................................................................... 8144. Documents ....................................................................................................................... 8155. Rights of retention (Arts 58(1) second sentence and 58(2)) ............................................... 8166. Payment ahead of time, part payment ............................................................................... 8177. Application to other buyer’s obligations ............................................................................ 8178. Practical considerations .................................................................................................... 817



II. Detailed Commentary ........................................................................................................... 820III. Comparable Rules ................................................................................................................. 821

Section II. Taking delivery ............................................................................................................ 822


II. Detailed Commentary ........................................................................................................... 8221. Content of the duty to take delivery .................................................................................. 8222. Refusal to take delivery ..................................................................................................... 8243. Practical considerations .................................................................................................... 825


Section III. Remedies for breach of contract by the buyer ............................................................ 826

Introduction to Articles 61–65 ....................................................................................................... 826


II. Detailed Commentary ........................................................................................................... 8271. Remedies available to the seller (Art. 61(1)) ...................................................................... 8272. Damages can be cumulated with other remedies (Art. 61(2)) ............................................. 8283. Court may not grant a period of grace (Art. 61(3)) ........................................................... 829



II. Detailed Commentary ........................................................................................................... 8321. The right to specific performance ..................................................................................... 8322. Limitations on the right to specific performance ............................................................... 833



II. Detailed Commentary ........................................................................................................... 8361. The fixing of an additional period of time of reasonable length (63(1)) ............................. 8362. The suspension of other remedies during the additional period of time (63(2)) ................. 838



II. Detailed Commentary ........................................................................................................... 8411. The right to declare the contract avoided (64(1)) .............................................................. 8412. Losing the right to declare the contract avoided (Art. 64(2)) .............................................. 842



II. Detailed Commentary ........................................................................................................... 8461. Purpose of Art. 65 and the mechanism it sets in place ....................................................... 8462. Criticism of Art. 65 – a cumbersome process which will not be used most of the time ...... 847


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Chapter IV. Passing of Risk .......................................................................................................... 850


II. Detailed Commentary ........................................................................................................... 8511. Price-risk .......................................................................................................................... 8512. The risk transferred but reduced through the use of a remedy for the buyer ...................... 8523. An act or omission by the seller – posterior alleviation of risk ........................................... 8534. Determining which risks are transferred to the buyer ........................................................ 8555. Contractual risk ................................................................................................................ 8596. Damage caused by the goods themselves ........................................................................... 859



II. Detailed Commentary ........................................................................................................... 8621. Handing over the goods .................................................................................................... 8622. Clearly identifying the goods ............................................................................................ 8643. Art. 67’s relationship with terms agreed by the parties ...................................................... 865

III. Comparable rules ................................................................................................................. 870


II. Detailed Commentary ........................................................................................................... 8711. Terminology ..................................................................................................................... 8712. Carrier and documents ..................................................................................................... 8723. Retroactive allocation of risk ............................................................................................. 8724. Loss or damage to the goods ............................................................................................. 872



II. Commentary ........................................................................................................................ 8761. Goods placed at buyer’s disposal – at the seller’s place of business .................................... 8762. Goods placed at buyer’s disposal – other than at the seller’s place of business ................... 8773. Identification .................................................................................................................... 8774. Incoterms ......................................................................................................................... 877




Chapter V. Provisions Common to the Obligations of the Seller and of the Buyer ...................... 882

Section I. Anticipatory breach and instalment contracts .............................................................. 882



II. Detailed Commentary ........................................................................................................... 8881. The exercise of the right of suspension ............................................................................. 8882. Stoppage in transit ............................................................................................................ 9073. Suspension and burden of proof ....................................................................................... 9094. Adequate assurance .......................................................................................................... 9105. Cessation of suspension .................................................................................................... 9136. Damages .......................................................................................................................... 915



II. Detailed Commentary ........................................................................................................... 9201. General ............................................................................................................................ 9202. The relationship between Art. 72 paras 1 and 3 ................................................................. 921

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3. The standard of prognosis ................................................................................................ 9224. The nature of events giving rise to the right to avoid ........................................................ 9235. Burden of proof ................................................................................................................ 9266. Notice under Art. 72(2); burden of proof .......................................................................... 9267. Adequate assurance; burden of proof ................................................................................ 9298. Refusal to perform (Art. 72(3)); burden of proof ............................................................... 9309. Damages and mitigation of loss ........................................................................................ 933



II. Detailed Commentary ........................................................................................................... 9381. Definition ......................................................................................................................... 9382. Art. 73(1) ......................................................................................................................... 9423. Art. 73(2) ......................................................................................................................... 9454. Art. 73(3) ......................................................................................................................... 952


Section II. Damages ...................................................................................................................... 956


1. General remarks ............................................................................................................... 9572. Drafting history ................................................................................................................ 959

II. Detailed Commentary ........................................................................................................... 9601. Specific requirements ........................................................................................................ 9602. Limitations on damages .................................................................................................... 9663. Calculation of damages ..................................................................................................... 9734. Specific cases .................................................................................................................... 9805. Other matters ................................................................................................................... 989




II. Detailed Commentary ........................................................................................................... 9941. Specific requirements ........................................................................................................ 9942. Calculating damages ......................................................................................................... 9993. Special considerations ....................................................................................................... 1001




II. Detailed Commentary ........................................................................................................... 10071. Specific requirements ........................................................................................................ 10072. Calculating damages ......................................................................................................... 10103. Special consideration; anticipatory breach ......................................................................... 1012




II. Detailed Commentary ........................................................................................................... 10161. Scope of application .......................................................................................................... 10162. Extent of a duty ................................................................................................................ 10183. Legal consequences ........................................................................................................... 1023


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Section III. Interest ....................................................................................................................... 1027

Article 78 ...................................................................................................................................... 1027I. Drafting History, Importance and Role of the Provision ........................................................ 1028

II. Detailed Commentary ........................................................................................................... 10291. Scope and Requirements ................................................................................................... 10292. Calculation ....................................................................................................................... 10323. Modalities of Payment ...................................................................................................... 10384. Cessation of an Interest Claim .......................................................................................... 1038


Section IV. Exemption .................................................................................................................. 1039


II. Detailed Commentary ........................................................................................................... 10421. Scope of application of the norm ...................................................................................... 10422. Prerequisites of exemption ................................................................................................ 10553. Exemption from liability for the conduct of third persons ................................................. 10624. Risk allocation in specific cases ......................................................................................... 10665. Contractual risk allocation ................................................................................................ 10756. Duty to notify ................................................................................................................... 10777. Burden of proof ................................................................................................................ 1077



II. Detailed Commentary ........................................................................................................... 10821. Prerequisites of exemption for non-performance ............................................................... 10822. Legal consequences ........................................................................................................... 10853. Burden of proof ................................................................................................................ 1088


Section V. Effects of avoidance ..................................................................................................... 1090


1. Drafting history ................................................................................................................ 10912. Basis of right of avoidance ................................................................................................ 10913. Release from performance obligations ............................................................................... 10924. Surviving provisions ......................................................................................................... 10925. New rights and duties ....................................................................................................... 10946. Related contracts .............................................................................................................. 10957. Agreements to avoid ......................................................................................................... 10968. Property ........................................................................................................................... 1096

II. Detailed Commentary ........................................................................................................... 10971. Restitution of performance ............................................................................................... 10972. Partial restitution .............................................................................................................. 10983. Concurrency and security ................................................................................................. 10994. Place of restitution of goods .............................................................................................. 10995. Place of restitution of price ............................................................................................... 11016. Costs connected with restitution ....................................................................................... 11017. Exempted parties .............................................................................................................. 11028. Time of restitution ............................................................................................................ 11029. Risk .................................................................................................................................. 1103



1. Drafting history ................................................................................................................ 11072. Time available for avoidance ............................................................................................. 11073. Availability of avoidance ................................................................................................... 11084. Substitute goods ............................................................................................................... 11085. Loss of avoidance right in other cases ............................................................................... 1109

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6. Avoidance and risk ........................................................................................................... 11097. Avoidance by the seller ..................................................................................................... 1112

II. Detailed Commentary ........................................................................................................... 11121. Comparison with ULIS ..................................................................................................... 11122. The condition of the goods: general .................................................................................. 11133. Partial avoidance .............................................................................................................. 11134. Deterioration of the goods ................................................................................................ 11145. Exceptions to restitutionary requirement for avoidance ..................................................... 1115



1. Drafting history ................................................................................................................ 11182. General ............................................................................................................................. 1118



1. Drafting history ................................................................................................................ 11212. General ............................................................................................................................. 1122

II. Detailed Commentary ........................................................................................................... 11221. Concurrency ..................................................................................................................... 11222. Set-off .............................................................................................................................. 11233. Payment of interest ........................................................................................................... 11244. Currency of interest .......................................................................................................... 11275. Accounting for benefits from the goods ............................................................................ 1127


Section VI. Preservation of Goods ................................................................................................ 1129



1. The function of Art. 85 ..................................................................................................... 11312. Legislative history ............................................................................................................. 1132

II. Detailed Commentary ........................................................................................................... 11331. Conditions ........................................................................................................................ 11332. Consequences ................................................................................................................... 1134




II. Detailed Commentary ........................................................................................................... 11421. Buyer’s duty to preserve the goods (Art. 86(1)) ................................................................. 11422. Buyer’s duty to take possession of the goods (Art. 86(2)) .................................................. 1144




II. Detailed Commentary ........................................................................................................... 11491. Condition ......................................................................................................................... 11492. Consequences ................................................................................................................... 1149




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II. Detailed Commentary ........................................................................................................... 11551. Right of self-help sale (Art. 88(1)) ..................................................................................... 11552. Duty of emergency sales (Art. 88(2)) ................................................................................. 11593. Use of proceeds of sale (Art. 88(3)) ................................................................................... 1162

III. Comparable Rules ................................................................................................................. 11641. Self-help and emergency sales ........................................................................................... 11642. Electronic notice ............................................................................................................... 1164

Part IV. Final Provisions


II. Comparable Rules ................................................................................................................. 1167




II. Comparable Rules ................................................................................................................. 1173


II. Detailed Commentary ........................................................................................................... 1175Illustration 1. ........................................................................................................................ 1175Illustration 2. ........................................................................................................................ 1175Illustration 3. ........................................................................................................................ 1176






II. Detailed Commentary ........................................................................................................... 1186Illustration 1. ........................................................................................................................ 1186Illustration 2. ........................................................................................................................ 1186Illustration 3. ........................................................................................................................ 1186Illustration 4. ........................................................................................................................ 1187Illustration 5. ........................................................................................................................ 1187Illustration 6. ........................................................................................................................ 1189Illustration 7. ........................................................................................................................ 1189




Article 97 ...................................................................................................................................... 1195Importance and Role of the Provision ................................................................................... 1195



Article 100 .................................................................................................................................... 1199Importance and Role of the Provision ................................................................................... 1199

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Article 101 .................................................................................................................................... 1200Importance and Role of the Provision ................................................................................... 1200Importance and Role of the Text .......................................................................................... 1201

Bibliography ................................................................................................................................. 1203

Index ............................................................................................................................................ 1235

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