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Reproduced with permission from 27 American Journal of Comparative Law (1979) 255-277

[This is a commentary on the remedy of reduction of price under Article 46 of the 1978 Draft Convention. For comparison of Article 46 of the 1978 Draft with CISG Article 50, see the match-up of CISG Article 50 and Article 46 of the 1978 Draft.]

The Remedy of Reduction of Price

Eric E. Bergsten & Anthony J. Miller

[Introduction]

Among the provisions in the Draft Convention on Contracts for the International Sale of Goods which were the most difficult to formulate and are among the most likely to generate controversy are those dealing with the remedies of buyer and seller for breach of contract by the other party. Many aspects of the law of sales reflect merchant practice, and to the extent that this practice is standardized in international sales transactions, the problems in formulating the text of the Draft Convention were reduced. However the provisions in respect of breach of contract do not reflect merchant practice. They reflect the efforts of lawyers from many legal systems to reconcile their views on the appropriate actions to be taken by the parties and by a tribunal in case of breach. The result has been a series of provisions which, in our view, are in general harmony with one another but which will often be unfamiliar to lawyers from any given legal system.

Among the provisions which will be unfamiliar for most Common lawyers is art. 46 [of the 1978 Draft], which provides the buyer with the right to reduce the price under certain circumstances. Because the remedy of reduction of price is similar to the remedy of damages in that both grant relief to the buyer measured in money, it is easy to confuse the two. Indeed at several stages of the drafting history of the provision, Common law participants saw the provision as a type of set-off whereby the buyer was authorized to deduct damages from the price.[1] Furthermore, in a recent article on the Draft Convention, one Common law scholar has recommended that the article be redrafted "so as to provide that a buyer may deduct all or any part of the damages resulting from breach from any part of the price due under the contract." [2] On the other side of the doctrinal fence, one Civil law commentator treated the American and English law rule which allows the buyer to set-off against the price any damages arising [page 255] out of a breach of the contract of sale [3] in conjunction with the Civil law remedy of reduction of price.[4]

Nevertheless, reduction of the price is a remedy separate from that of damages, both under the Civil law and the Draft Convention, and should not be confused with the right to set-off. This article (a) explains the nature of the remedy and how it operates, (b) sets forth its drafting history, (c) evaluates the remedy of reduction of price and (d) comments on procedures for the unification of law.

Nature of Remedy of Price Reduction

Article 46 [of the 1978 Draft]

"If the goods do not conform with the contract and whether or not the price has already been paid, the buyer may declare the price to be reduced in the same proportion as the value that the goods actually delivered would have had at the time of the conclusion of the contract bears to the value that conforming goods would have had at that time. However, if the seller remedies any failure to perform his obligations in accordance with article 44 or if he is not allowed by the buyer to remedy that failure in accordance with that article, the buyer's declaration of reduction of the price is of no effect.

Civil law origins

The remedy of reduction of price for the purchaser of defective goods derives from the actio quanti minoris in Roman Law. At the risk of considerable over-simplification, this action originated from an Edict of the Aediles which sought to "repress the sharp practices of sellers of slaves and cattle in the City markets."[5] If a buyer became aware, after delivery, of certain specified defects which the vendor did not declare and which, had the buyer been aware of [page 256] them at the time of sale would have led him to pay a lesser price, he could bring an action for reduction of price or for recission of contract.[6] Defects which were evident at the time of conclusion of the contract were excluded from this remedy since the buyer should have taken them into account when calculating the price he was willing to pay.[7]

The Roman law origins of the remedy are reflected in contemporary provisions in Civil law countries. For example, if the goods contain hidden defects, art. 1644 of the French Civil Code enables a buyer to recover part of the purchase price, the amount to be determined by experts, or to rescind the contract and recover the total purchase price.[8] In the Federal Republic of Germany, § 459 BGB provides that if the goods lack promised qualities or contain defects which diminish the ordinary use of the goods or the use provided for in the contract, the buyer has the option of rescinding the contract or of reducing the price according to a formula set out in § 472.[9]

It has been pointed out that in the Civil law, rescission and reduction of price are the normal remedies for a buyer who has been delivered non-conforming goods, and damages are, in principle, the exception.[10] In large measure this is because damages can be recovered in the Civil law only if the non-performing party was at fault. Contractual fault can, of course, be understood in ways that lead to a blurring of the distinction between fault and no-fault liability.[11] [page 257] However, to the extent that contractual fault requires more than the mere showing that the goods delivered were non-conforming, reduction of price provides a remedy by way of monetary relief even though damages are not available for that non-conformity.

The Civil law also offers a remedy similar in effect, though not in theory, to reduction of price for delivery of an insufficient quantity of goods. The theory is that there has been a partial non-execution of the contractual obligation to deliver.[12] Therefore, if the price has not been paid and the buyer is faced with a partial non-delivery, he can rely upon the exceptio non adimpleti contractus to withhold that part of the purchase price related to the non-performance.[13] This remedy also finds a place in art. 46.

Under the Draft Convention

The buyer can reduce the price under art. 46 "if the goods do not conform with the contract." As would be expected, under art. 33 the goods do not conform with the contract if they are not of the quality or description required by the contract. However, in addition art. 33 provides that the goods do not conform if they are not of the requisite quantity or are not contained or packaged in the manner required by the contract. On the other hand, the fact that the goods are subject to a right or claim of a third party, including a right or claim based on industrial or intellectual property, does not make them non-conforming goods as that term is used in the Draft Convention.[14]

The remedies of reduction of price and of damages overlap to a greater extent under the Draft Convention than they do in the Civil law because the Draft Convention accepts the Common law rule [page 258] that damages are available for any defective performance even if the non-performing party was not at fault.[15] The two remedies differ in several specifics, however. The most important distinction is that the date at which the buyer's monetary relief is calculated and the means by which it is calculated are different.

In comparing the time at which and the means by which the monetary relief is calculated under the two remedies, we are referring only to the direct damages which the buyer could recover for delivery of non-conforming goods. Under art. 41(2), exercise of the right to reduce the price does not preclude the buyer from claiming any further damages he has suffered which would not be compensated by a reduction of price, such as extra expenses in preparing for the goods or losses caused by spoilage of other goods caused by delivery of the non-conforming goods.

The differences in calculating the monetary compensation under the two remedies can be summarized as follows: damages are measured as of the time of delivery;[16] reduction of price is measured as of the time of conclusion of the contract. Damages are calculated as the absolute sum of money necessary to reimburse the loss suffered by the buyer; reduction of price is calculated in terms of an amount proportional to the difference in value of the goods as contracted and the goods delivered.

In illustrating the differences between damages and reduction of price it is helpful first to compare reduction of the price with the effect of a partial or complete avoidance of the contract. Art. 47 provides that if the seller delivers only part of the goods or if only part of the goods is in conformity with the contract, all of the remedies of the buyer, including the right to declare the contract avoided, apply to the part which is missing or which does not conform. As a result, in case of partial non-delivery of the goods, reduction of price under art. 46 and partial avoidance of contract under art. 47 would lead to the same measure of monetary relief for the buyer.[17]

Thus, if the seller fails to deliver 10% of the goods called for under the contract, the buyer could either declare the price reduced by 10% under art. 46 or he could declare 10% of the contract [page 259] avoided. Furthermore, if the partial non-delivery was so serious as to constitute a fundamental breach of the entire contract, the buyer could declare the whole contract avoided and, in effect, reduce the price by 100%. The same relationship exists between avoidance of contract and reduction of price where the non-conformity relates to the quality of the goods rather than quantity. If the non-conformity is so serious as to constitute a fundamental breach of the entire contract, the buyer can declare the contract avoided, and, in effect, reduce the price by 100%. If the non-conformity renders 10% of the goods worthless, the buyer could reduce the price by 10% or declare that portion of the contract avoided. Similarly, if the non-conformity as to quality existed in all the goods and reduced their value by 10%, the buyer could reduce the price by that amount.

If the contract price is equal to the value of the goods at the time of conclusion of the contract and there is no price change between that time and the time of delivery (and no "consequential" damages such as a plant shut-down), there would be no difference in the amount of monetary relief to the buyer whether he reduced the price or claimed damages. However, if there has been a change in the price of the goods, the amount of monetary relief would be different. These differences can be illustrated by the following examples:[18]

Example A

Seller contracted to deliver 10 tons of first quality corn at the market price of $200 a ton for a total of $2,000. Seller delivered 10 tons of second quality corn, the market price of which at the time of contracting was $150 a ton. Therefore, if Buyer declared a reduction of price, the price would be $1,500. Buyer would in effect receive monetary relief of $500.

However, if the market price had fallen by half by the time of delivery of the non-conforming goods so that first quality corn sold for $100 and second quality for $75, Buyer's damages would be only $25 a ton or $250. In this case it would be more advantageous for Buyer to reduce the price than to claim damages.

Example B

If the reverse were to happen so that at the time of delivery of the non-conforming goods the market price of first quality corn had doubled to $400 a ton and second quality to $300, Buyer's damages [page 260] would be $100 a ton or $1,000. In this case it would be more advantageous to Buyer to claim damages than to reduce the price.

Example C

If the delivery of second quality corn in Example A amounted to a fundamental breach of contract and Buyer avoided the contract, he could purchase in replacement 10 tons of first quality corn for $1,000, i.e., for an amount $1,000 less than the contract price, or purchase 10 tons of second quality corn for $750. If he chose to do the latter, which might be unlikely from a commercial point of view,[19] he would acquire second quality corn for $1,250 less than the contract price in comparison to the $250 he could receive in damages or the $500 by which he could reduce the price.

The preceding examples were based on three assumptions that will not always be present. One assumption was that the goods ordered were a fungible commodity for which substitute goods were freely available, making it feasible for the buyer to avoid the contract and purchase replacement goods, thereby providing a ready market price as a means of measuring value, and reducing the likelihood of any additional damages by way of lost profits or otherwise. If there is no such ready market for the goods, the problems of evaluation are more difficult, but the mechanism by which reduction of the price operates does not change.

A second assumption was that the proportionate relationship between the value of the goods as actually delivered and the goods as ordered was the same at the time of contracting and at the time of delivery. That is, it was assumed that second quality corn was always worth 75 per cent of first quality corn. This may not be the case of course. What must be remembered therefore is that the price could be reduced under art. 46 by an amount proportionate to the difference in value between the corn at the time of contracting, even though damages would be calculated as of the time of delivery.

Example D

If the price of first quality corn had doubled to $400 a ton, as in Example B, but the price of second quality corn had more than doubled to $360 a ton, damages would amount to only $400, not $1,000 as in Example B, but the price could still be reduced by $500, as in Example A.

A third and important assumption was that the contract price [page 261] was equal to the value of the goods at the time of contracting. This will normally be the case where the sale is a commercial sale of goods, such as commodities which have a recognized market price. However it is less likely to be the case where the sale is not commercial -- a situation which does not normally arise under the Draft Convention [20] -- or where the goods do not have a recognized market price.

Nevertheless, the price in a commercial contract is not always equal to the value of the goods at the time of contracting. The advantage of reducing price rather than awarding damages is that it preserves the balance of the bargain struck between the two parties.[21] As this point was illustrated at one stage of the drafting history.[22]

Example E

"If . . . the ordinary value of the goods in a non-defective condition is £100 at the time the contract is concluded and if the ordinary value [at that time] of the defective goods delivered is £50, the agreed sale price of £80 may be reduced to £40," whereas a claim for damages would in effect reduce the price to £30, by allowing £50 in damages to be subtracted from the sale price of £80.

Given this illustration, it is easy to see the significance of the traditional Civil law rule that the buyer could claim damages only when the non-conformity of the goods was due to the seller's fault; it was only when the seller was at fault that the buyer could disturb the balance of the bargain by claiming damages. [page 262]

On the other hand, where fault is established by the mere fact of delivery of non-conforming goods by a commercial seller or, as in the Draft Convention, damages can be claimed without demonstrating fault, reduction of price is not the buyer's exclusive remedy by way of monetary allowance. In Example E where reduction of price would give a smaller measure of monetary relief than would damages, the buyer can claim damages under the Draft Convention and the balance of the bargain will not be maintained. Where the buyer has made a bad bargain, reduction of the price gives the buyer a larger measure of monetary relief than does a claim for damages.

Example F

The facts are the same as in Example E except that the contract price was £120 for goods worth £100 at the time of contracting. Since the defective goods as delivered would have been worth £50 at the time of contracting, the buyer can reduce the price by one half or £60.

Other Aspects of Price Reduction

Although the most obvious difference between damages and reduction of price is the time at which and the means by which the monetary allowance will be calculated for defective performance, there are a number of other differences between the two.

One difference (more formalistic than substantive) is that, under the Draft Convention, the remedy of price reduction is effectuated by the unilateral declaration of the buyer. No further action by the seller, such as acquiescing to the reduction of price, or by a tribunal in confirming the reduction, is necessary. This can be compared with the remedy of damages in which the buyer may "claim" the damages from the seller but his claim is not liquidated until the seller or a tribunal has agreed to it. Interestingly enough, this aspect of the remedy appears to be unique to the Draft Convention since in at least French and German law something more than the unilateral declaration of the buyer is necessary to change the juridical situation.[23]

Although the only other remedy under the Draft Convention which is effectuated by the unilateral act of a party, i.e., a declaration of avoidance of contract, is required to be made by notice to the other party,[24] no such requirement is placed on the declaration of reduction of price. Presumably it must be done by means appropriate in the circumstances,[25] but it may well be that one such means would be the statement of claim or defense in a law suit.

From the point of view of the final adjustment of the financial obligations of the parties, it is of no consequence that the price is reduced by the buyer's unilateral declaration. If the price has not yet been paid, he will offer to discharge his obligation by paying the [page 263] reduced sum. If the price has been paid he will claim the amount of the reduction back from the seller. However the same result would occur if the buyer were to make a claim for damages. And in either case, if the seller disagrees with the buyer as to the existence of a non-conformity in the goods -- or other failure of performance -- or as to the monetary consequences of that non-conformity, the issue must ultimately be settled in court.[26]

On the other hand, some consequences may attach to the fact that the price is reduced by the unilateral act of the buyer. A declaration would probably constitute a binding election of remedies. It may affect the running of a period of limitation [27] and it may have procedural consequences under the law of the forum.[28] None of these matters, however, is governed by the Draft Convention itself.

Three rules which restrict the amount of damages that can be awarded do not apply to reduction of price. Similar to the Common law rule in Hadley v. Baxendale, [29] damages are limited by art. 70 to those which were foreseen or ought to have been foreseen by the party in breach. They are further limited by the requirement in art. 73 that the party not in breach mitigate the loss. Finally, the party in breach may be discharged from damages in accordance with the Draft Convention's version of relief for impossibility of performance or force majeure as found in art. 65.

It may be doubted whether it is of great significance that the remedy of reduction of price is not subject to the test of foreseeability. It would always appear to be foreseeable that non-conformity in respect of quantity or quality would lead to a reduction in value of the goods, although the amount of that reduction might not be foreseeable. This assumption is so strong that under the UCC the requirement that the loss be foreseeable explicitly applies only to the [page 264] buyer's consequential damages, but not to his direct or incidental damages.[30]

Although the mitigation principle of art. 73 does not apply to reduction of price, the same result is achieved by art. 46 itself. According to the second sentence of art. 46, even if the buyer has already declared the price reduced, if the buyer does not permit the seller to remedy the non-conformity of the goods in accordance with art. 44, e.g., by sending the missing goods, by repairing the defect or by sending replacement goods, his declaration of reduction of price will be of no effect.[31].

On the other hand, the fact that "exemption" from damages under Art. 65 is not applicable to reduction of price [32] has real consequences in the overall remedy scheme of the Draft Convention. Art. 65 provides that if the seller was impeded from performing any of his obligations, including the obligation to deliver all of the goods and to deliver them in the required condition, by an "impediment beyond his control . . . that he could not reasonably be expected to have taken . . . into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences," the seller is exempted from damages.

As a result, if the seller is unable to deliver all of the required goods or to deliver them in the required condition because of an impediment which meets the requirements of art. 65, he would nevertheless have to stand ready to deliver all that he could in the best possible condition. The buyer would have a choice whether to accept the goods offered or, if the extent of the non-delivery or the non-conformity as to quality was great enough, to avoid the contract. If the buyer accepted the goods delivered by the seller, he would be liable to pay for them at the contract price as reduced under art. 46. However the buyer could not claim damages, whether direct, incidental or consequential, as a result of the missing or non-conforming goods.

In some of the cases in which the buyer could reduce the price, but not claim damages because of "exemption" under art. 65, he could achieve the same result by declaring a portion of the contract avoided under art. 47. He could do so in case of a partial non-delivery of the goods or if some of the goods were so non-conforming in quality as to amount to a fundamental breach of the contract as to [page 265] those goods. However if the defect in the goods did not amount to a fundamental breach even as to the individual goods that were defective, or if the buyer wished to keep the defective goods at an appropriately reduced price, art. 46 is the only provision under the Draft Convention by which this could be achieved.

Drafting History

The drafting history of art. 46 of the Draft Convention is an unusually good example of the difficulties inherent in the process of preparing a provision which seeks to introduce into all legal systems a concept known only to some. Not only were there the conceptual difficulties suggested above arising out of differences in the domestic legal systems, but mistakes in translation (probably caused in part by these difficulties) exacerbated the problem.

The 1939 Draft

The 1939 Draft Uniform Law on Intentional Sale of Goods (Corporeal Movables) approved by the International Institute for the Unification of Private Law (UNIDROIT) [33] adopted the traditional Civil law distinction between delivery of an insufficient quantity of goods and delivery of goods which failed to meet the requisite quality standards.

In the case of partial delivery, art. 32 of the 1939 Draft enabled the buyer to "avoid the contract for the whole, if the delivery of the whole is an essential condition of the contract." Art. 33 went on to provide that "even though the buyer may not be entitled to avoid the whole of the contract, he may avoid it in part, and only pay so much of the price as is proportionate to the value of the part which has been duly delivered to him."

On the other hand, art. 47 of the Draft provided that when the quality of the goods was defective,[34] the buyer who had duly notified the seller of the existence of the defects could elect:

"(a) either to avoid the contract and claim damages as provided by Articles 87 to 91, or

"(b) to demand reduction of the price in proportion to the diminution, by the defect, of the value of the goods as of the time of the conclusion of the contract, or

"(c) to demand compensation for the loss caused by the [page 266] defect according to Article 85." [35]

In consequence, the buyer could reduce the price for delivery of an insufficient quantity (art. 33) or for delivery of defective goods (art. 47(b)). Since the drafters realized that at times it would be difficult to distinguish partial delivery of conforming goods from delivery of goods a portion of which were defective,[36] art. 38 provided that in cases of doubt the rules on defect of quality would apply. Needless to say such distinctions were too subtle for a text intended for adoption by a large number of different legal systems. As a result, when work on the unification of the law of sales was resumed after World War II at the 1951 Hague Conference relative to a Uniform Law on the International Sale of Goods, the Conference recommended that as "a matter of general principle . . . it would be appropriate to unify the rules governing non-delivery with those relating to the delivery of defective goods." [37]

The 1956 Draft

This recommendation was carried out in the 1956 Draft.[38] Art. 40 provided that the seller had not delivered goods in conformity with the contract where, inter alia, he had delivered only part of the goods sold or where he had delivered a larger or smaller quantity of the goods than that which he had contracted to sell. Therefore, since art. 50(b) authorized the buyer to reduce the price when the goods delivered were not in conformity with the contract, the remedy was available both for defects in quantity and in quality, subject to the proviso in art. 40 that no excess or deficiency in quantity, lack of part of the goods or absence of any quality or characteristic was to be taken into consideration where it was not material to the interests of the buyer or where it was permitted by usage.

Whatever difficulties might have been encountered by Common lawyers in understanding the nature of the remedy of price reduction were increased by the unsatisfactory drafting in French. The French version of art. 50(b) of the 1956 Draft provided that the disappointed buyer could:

"(b) réduire le prix d'un montant correspondent à la diminution que, par rapport au prix de vente, le défaut de conformité fait subir à la valeur de la chose appréciée [page 267] lors de la conclusion du contrat, sans préjudice, s'il y a lieu, des dommages-intérêts prévus à l'article 94."

The text of art. 50(b) was undoubtedly sufficient for most Civil lawyers who understood the mechanism by which the price reduction would be effectuated. It was certainly much clearer in these respects than, e.g., the equivalent provision in the French Civil Code, art. 1644, which provides that in the case of latent defects in the goods

"l'acheteur a le choix de rendre la chose et de se faire restituer le prix, ou de garder la chose et de se faire rendre une partie du prix, telle qu'elle sera arbitrée par experts."

However, the text of art. 50(b) was not clear to those who translated it into English.[39] The phrase "par rapport au prix de vente" was omitted and the English translation provided that the buyer could reduce the price "by an amount corresponding to the diminution which the lack of conformity has caused in the value of the goods as of the time of the conclusion of the contract."

This discrepancy between the French and the English versions of art. 50(b) was noted in the written comments submitted by the Federal Republic of Germany on the 1956 Draft.[40] The German comments queried whether the French text of art. 50(b) was sufficiently clear as to the proportionate nature of the price reduction to be effected. Moreover, it was pointed out that the English text seemed to say that art. 50(b) provided for subtracting from the contract price the difference between the ordinary value of non-defective goods at the moment of the conclusion of the contract and the value that the defective goods would have had at that time. [page 268]

The 1963 Draft and 1964 Hague Conference

The Special Commission redrafted art. 50(b) in light of these comments.[41] The French text of the 1963 Draft clearly indicated that a proportionate reduction of the price was to be made.[42] However, the nature of the remedy continued to elude the English translator and the English version of art. 50(b) still appeared to call for a deduction from the price of the absolute amount of the loss in the value of the goods by reason of the defect rather than to call for a proportionate reduction of price.[43] On the other hand, both the French and the English versions of the comments of the Special Commission indicated that the drafters intended a proportionate reduction of price.[44]

Given the fact that the English version of the article on price reduction seemed to say that a sum in the nature of damages was to be deducted from the price, it was not surprising that some Common law delegates to the 1964 Hague Conference were disturbed that the time of calculation of these particular damages differed from that used in the calculation of other damages.[45] When this objection was referred to a Working Group at the Conference, the Working Group replied that

"article 50(b) does not contain an error; the proportional reduction of the price must in fact be calculated on the basis of the value of the goods as of the time of the conclusion of the contract. On the other hand, it should be stressed that in the case provided for in article 50(b), the buyer is entitled to damages, which will be determined on the basis of the actual position." [46]

It is not surprising that this explanation did not resolve the matter, especially in view of the fact that none of the English language versions of the various proposals for the price reduction provision submitted to the Conference correctly set forth the means by which the price was to be reduced.[47]

It is not clear by what mechanism the English version of the [page 269] price reduction provision was finally translated correctly. The report of the Drafting Committee to the Plenary Session of the Conference contained the incorrect text.[48] The records show that the text as adopted was that contained in a proposal by France, which proposal was said to contain purely drafting amendments.[49] However, that particular document was not reproduced in the Official Records of the Conference.[50] It may even be that the English text was corrected after the end of the Conference.[51] Be that as it may, art. 46 of ULIS [52] as finally adopted provided:

"Where the buyer has neither obtained performance of the contract by the seller nor declared the contract avoided, the buyer may reduce the price in the same proportion as the value of the goods at the time of the conclusion of the contract has been diminished because of their lack of conformity with the contract."

UNCITRAL

The difficulties experienced by UNIROIT and at the Hague Conference in attempting to draft an unambiguous text of art. 46 of ULIS were to some degree repeated during the revision by UNCITRAL.

The subject was discussed for the first time at the third session of the Working Group on the International Sale of Goods. A number of conflicting views were expressed in respect of the value of the provision and of the clarity of its drafting.[53] No action was taken however, pending the receipt of a study on the price reduction remedy requested from the Secretariat.[54]

This study was submitted to the Working Group at its next [page 270] session.[55] It reflected a Common law approach to the interpretation of art. 46. The most important criticism was that art. 46 did not measure the monetary compensation for non-conformity of the goods in accordance with the principles underlying the provisions for damages, namely "that, to the extent practicable, the injured party should be placed in the same position as would have resulted from performance of the contract." [56] Since the study assumed that the buyer could reduce the price under art. 46 only if it was still unpaid at the time the goods were examined, a result which was later stated by the Working Group not to be intended,[57] the conclusion was reached that "significant differences in the parties' rights depend on whether or not the buyer has paid before he learns of the defect." [58]

In order to remedy these objections, the study recommended that there be only one standard for measuring the buyer's claim arising out of non-conformity of the goods, namely that of damages, and that art. 46 be redrafted so as to authorize the buyer to "deduct all or any part of the damages resulting from any breach of the contract from any part of the price due under the same contract." [59]

The Working Group was more influenced by the Civil law origins of the remedy of price reduction [60] and accordingly retained the separate remedy of reduction of price as contained in ULIS with a [page 271] drafting change not relevant to this discussion. The text adopted by the Working Group at its fourth session provided that:

"Where the goods do not conform with the contract, the buyer may declare the price to be reduced in the same proportion as the value of the goods at the time of contracting has been diminished because of such non-conformity." [61]

This text, with the minor amendment indicated in n. 57 above, which was added at the Working Group's seventh session, was submitted to UNCITRAL.

By the tenth session of UNCITRAL at which the current text of art. 46 was adopted, all the problems of the past had been isolated and identified. The Common law participants recognized and accepted that reduction of price was, and was intended to be, a remedy separate from that of damages. The Civil law participants recognized that the nature of the remedy and the mechanism by which it worked could be difficult for Common lawyers to understand from the wording of the text alone. Therefore, the provision was redrafted to make it as self-explanatory as possible.[62] Unfortunately, the result is a text which -- with all its merits -- is awkward to read.

Evaluation of Article 46

It may be asked whether art. 46 is worth the difflculty it seems to have caused. Would it not be better to follow the suggestion raised on several occasions in the past and transform reduction of price into a set-off provision? [63]

Such an alternative is not open. Reduction of price is too well known to Civil law jurists as the ordinary form of monetary relief available to a buyer who has received non-conforming goods for there to be any question of deleting it from the Draft Convention.[64]

Furthermore, international contracts of sale of generic goods frequently provide for reduction of price in cases of non-conforming goods,[65] and art. 46 could be seen to reflect this commercial [page 272] practice.[66] In point of fact, however, art. 46 will serve only a secondary but somewhat useful function in the total scheme of remedies available to a buyer under the Draft Convention.[67]

Certainly, it is useful to have some procedure which relieves the buyer from paying the full contract price when the reason that the seller failed to deliver all of the goods or delivered them, or some of them, in a defective condition was the existence of an "impediment" which was beyond the seller's control and which met the other requirements of art. 65. The buyer cannot get monetary relief by claiming damages, since art. 65 exempts the seller from liability for damages in such a case. It is true that in cases of partial nondelivery art. 47 enables the buyer to get the same relief offered by art. 46 by declaring the avoidance of that portion of the contract which has not been performed. However, partial avoidance of the contract under art. 47 is not useful when there is a non-conformity of quality which does not justify even partial avoidance or when the buyer does not wish to avoid any portion of the contract. In such cases only art. 46 can give the needed monetary relief. In essence, art 46 gives the same result in most of these situations as would be reached under UCC 2-613 and 2-615,[68] but perhaps not always the same result as would be reached under the Sale of Goods Act 1893.[69]

As noted above, the most important aspect of art. 46 is the impact of the different method of calculating the buyer's monetary relief compared with damages. In this regard it should be said that [page 273] reduction of price does not have the same justification in the Draft Convention as it does in some Civil law systems. The justification for a reduction of price for defect in quality is a reformation of the original contract which retains the relative balance of the bargain made by the parties.[70] If the buyer made a bad bargain, in that he contracted to pay more than the value of the goods or the price went down between the conclusion of the contract and the delivery date the buyer has just as bad a bargain in percentage terms after the price has been reduced. If the buyer made a good bargain, after reduction of the price he has just as good a bargain in percentage terms as at the time of the original contract. Where the buyer made a good bargain and therefore would recover more in damages than by reducing the price, the Civil law allows him to claim the higher amount of damages, thereby breaking the original balance of bargain, only if he can show that the seller was at fault.[71] However, since the buyer does not need to show any fault on the part of the seller in order to claim damages under the Draft Convention, reduction of price loses one of its primary theoretical justifications and becomes an alternative form of monetary relief to the buyer.

It is a form of monetary relief which the buyer will not seek very often since the only occasion when it is to his advantage to reduce the price is when he has made a bad bargain. But these are the occasions when the seller, having made a good bargain, will strive with more than normal diligence to perform the contract.

Nevertheless, sellers do breach profitable contracts and it might be asked whether in these circumstances the buyer should be able to receive by way of reduction of price more than he would in damages. It would also be possible to ask the opposite question: should the Draft Convention permit a buyer who has made a good bargain to claim damages for his direct losses of an amount greater than he would receive from reduction of price even though there was no fault on the part of the seller. The question however must be asked by those who are more committed to fault as a prerequisite to a claim for damages than are the authors of this article.

Certainly, to allow the buyer to reduce the price where he has made a bad bargain would put him in a better position than he would be in if the seller were to perform the contract, a situation which cannot be justified by the usual explanation of the function of damages. Nor can this result be explained as a reformation of the original contract which maintains the balance of the bargain, the explanation often given by Civil law jurists for reduction of [page 274] price,[72] unless the buyer is limited to reduction of price when he has made a good bargain.

Nevertheless, reduction of price as it functions in art. 46 is justified if it is seen as a partial avoidance of the contract, a role which it shares in some situations under the Draft Convention with art. 47. When viewed this way, the monetary relief given under art. 46 can be compared not only with damages, but also with the monetary relief given the buyer when he declares the entire contract avoided. As seen in example C,[73] where the buyer has made an unfavorable contract, reduction of price gives the buyer more than he would get from claiming damages and less than he would get from declaring the entire contract avoided.

There is a practical side to this justification. Where the buyer has made a bad bargain, he is encouraged by the traditional measure of damages to seek avoidance of the entire contract in order to be able to purchase substitute goods at the lower prevailing price. Courts tend to be suspicious of the buyer's evaluation of the seriousness of the defect of the goods in such a situation, and well they might. Reduction of price goes part way towards meeting the buyer's desire to get out of the entire contract. By doing so it may cause some buyers to keep goods which they might otherwise reject, a policy greatly to be favored when it is remembered that the rejected goods in a case falling under the Draft Convention will be in a country other than that of the seller. To this extent art. 46 reinforces the policy which lies behind the rule in the Draft Convention that a party can declare the contract avoided only if the breach is fundamental.

Comments on Unification of Law

The history of art. 46 demonstrates many of the difficulties inherent in the international unification of law and suggests some of the steps which can be taken to overcome them.

Reduction of price was a remedy so well known to the drafters of the original versions of what became art. 46 that they felt no need to clearly specify the mechanism for calculating the price reduction. However, the remedy was to apply also in legal systems where it was hitherto unknown. For this reason, that which was clear to those who understood it had to be made clear to those who did not.

The history of art. 46 also shows that a provision which has one meaning or justification in the legal system from which it emanates may take on an entirely different meaning in a new context. Since the buyer does not have to show fault in order to claim damages [page 275] under the Draft Convention, the buyer can declare the price reduced and save the balance of the bargain when it is to his advantage to do so and claim damages, thereby breaking the balance of the bargain, when it is to his advantage to do that, a result not so easily available under the Civil law.[74]

The most obvious difficulty which arose during the history of art. 46 was its mistranslation from French to English. Much has been written about the difficulties of interpreting multilingual legal texts where the different language versions are not identical. Less has been written about the impact of such discrepancies on the negotiation process. It is obvious that much of the misunderstanding of art. 46 during its preparation arose out of its mistranslation.

There are many ways for divergences in the different language versions to occur. Sometimes the text in the original language does not permit precise translation. Sometimes the text is misunderstood by the translator. Sometimes typographical errors are not caught by proofreaders who do not know the subject matter.

These divergences must be isolated and corrected as early as possible so that in the subsequent stages of the drafting process all the participants are working with the same text. There is only one way in which this can be accomplished. The various language versions must be rigorously compared by persons who are concerned with the substance of the project. This is a tedious task, but ideally it should be done each time the text is revised. If it is not, the quality of the comments and proposals of the participants, and therefore of the legal solution on which they flnally agree, will be adversely affected.

Finally, a procedure should be devised whereby the knowledge and understanding of a provision or problem which is gained by the participants at one stage of the preparation of a text is not lost to participants at a later stage. It is somewhat distressing to see that a 1939 UNIDROIT report indicated the differences between the Civil law and the Common law in respect of the means of calculating monetary relief for non-conforming goods [75] and that this knowledge was not readily available to later participants in the drafting of art. 46.

A drafting history which consists of reports and proposals made over a number of years may be of great help to a scholar in a retrospective examination of the text, but is usually of little value to the participant at a meeting, particularly a participant who is new to the particular text. He would not have the time and would often not have the inclination to trace each provision through its evolution, [page 276] even assuming he had a complete set of records at his disposal. Nor, in most cases, would it be worth his effort when it is recognized that the participants' function at a meeting is to deal with the current text and try, if possible, to improve it. Nevertheless, old battles once settled satisfactorily should not have to be refought by new participants if there is a way to avoid it.

A possible approach is the preparation of a commentary to accompany the first draft text. The commentary should explain the draft provision, what it is intended to do and how it relates to other provisions. In addition, in some ways the most important point of all, the commentary should point out how the proposed text of the uniform law differs from any national law rules with which it could be confused. To serve its function properly, the commentary should be revised after each meeting of the preparatory body so as to reflect changes made in the text. Furthermore, as the discussions in the preparatory body bring out the difficulties in understanding and assimilating provisions new for some legal systems, the commentary should reflect those difficulties, explain how the draft text attempts to solve them and point out the remaining unresolved problems. Such a commentary kept current is no panacea, but it can serve to improve the product that finally emerges from the arduous process of the unification of law.[76] [page 277]


FOOTNOTES

1. See "Drafting History," text infra at n.33.

2. Sutton, "The Draft Convention on the International Sale of Goods," 4 Australian Bus. L. Rev. 269 (1976) and 5 Australian Bus. L. Rev. 28 & 92 at 100 (1977).

3. UCC 2-717 and United Kingdom, Sale of Goods Act 1893, s. 53(1)(a). The Sale of Goods Act is the basis of numerous Sale of Goods Acts in the Common law world. See Sutton, The Law of Sale of Goods in Australia and New Zealand 3 (2d ed. 1974).

4. Amaudruz, La garantie des défauts de la chose vendue et al non-conformité de la chose vendue 131-132 (1968). A little later the author notes that this price reduction is in reality an action for damages exercised as a defence (at 134). However the point is that the remedy was not analyzed under damages but under price reduction to make it more familiar to Civil law readers.

5. de Zulueta, The Roman Law of Sale 50 (1957). For an account of the evolution and operation of this edict in Roman Law and its role in modern Roman Dutch Law see Honoré, "The History of the Aedilitian Actions from Roman to Roman Dutch Law," in Daube, Studies in the Roman Law of Sale 132-159 (1959). For an excellent brief overview of the remedy and its impact on the Civil law see Morrow, "Warranty of Quality: A Comparative Survey," 14 Tul. L. Rev. 327 and 529 at 354-360 (1940). See also Bernini, "The Uniform Laws on International Sales, The Hague Conventions of 1964," 3 J. World Trade L. 689 (1969).

6. The manner in which reduction of the price was calculated under Roman Law is a matter of some controversy. See and contrast the views of Mulligan, "Quanti Minoris Than What?" 70 So. Af. L.J. 132 (1953) with those of Honoré, supra n.5 at 150-157. However, for the purposes of the present article it is only necessary to note that price reduction was a separate remedy for a specific problem. The Draft Convention supplies a formula for the calculation of the amount of the price reduction.

7. De Zulueta, supra n. 5.

8. See Répertoire de Droit Civil (Dalloz, 1976) vol. 7, Vente (obligations du vendeur) paras. 459-573 (hereafter "Répertoire"). Although the buyer has the option to rescind the contract, case law has established that the courts may, at their discretion, reduce the price (la réfraction de la vente) if the difference in quality does not surpass that recognized by usage and does not make the goods unfit for their contract use (see Répertoire, para. 31). See also Kahn, La vente commerciale internationale 148-155 (1961).

9. See Daniels, "The German Law of Sales," 6 Am. J. Comp. L. 489-495 (1957); Zweigert, "Aspects of the German Law of Sale," Int. & Comp. L.Q., Supp. Pub. No. 9 (1964) at 2-4; Amaudruz, supra n. 4 at 132-133; Rabel, "The Hague Conference on the Unification of Sales Law," 1 Am. J. Comp. L. 66 (1952) noted that the "old action, quanti minoris, for reduction of the price is presented in its best form under ‘relative calculation’."

10. Szakats, "The Influence of Common Law Principles on the Uniform Law on the International Sale of Good," 15 Int. & Comp. L.Q. 762-763 (1966).

11. See e.g., Riegert, "The West German Civil Code, Its Origins and Its Contractual Provisions," 45 Tul. L. Rev. 75-78 (1970); Lawson, "Fault and Contract -- A Few Comparisons," 49 Tul. L. Rev. 295 (1975); Nicholas, "Rules and Terms -- Civil Law and Common Law," 48 Tul. L. Rev. 952-954 (1974); Rabel noted that "the Roman sources led civil law to the conception that, as warranty does not require fault as normal liabilities do, it also does not include damages. Yet the practice in France, Germany, and other countries has riddled this idea with exceptions." Supra n. 9 at 65-66.

12. See Amaudruz, supra n. 4 at 38-40. The distinction becomes ill-defined in the operation of these rules in particular legal systems. E.g., in principle in French Law if the seller delivers only a portion of the goods art. 1184 and 1220 of the Civil Code would indicate the right to rescind the contract and claim damages. However case law has clearly established that it is for the trial judge (juge de fond) to decide whether to permit avoidance or to simply reduce the price, if the missing quantity is not essential (Répertoire, paras. 162-163). For a comparative analysis of the situation in French and German law see Treitel, "Remedies for Breach of Contract," in VII Int. Encyc. Comp. L. Ch. 16, para. 175 (1976).

13. See Weill & Terré, Droit Civil, les obligations, paras. 465-477 (2nd ed., 1975). The authors note that the French Civil Code, unlike the German, does not contain a general provision setting out this principle but merely contains provisions which are specific applications of it. Case law has however extended the principle to all bilateral contracts (paras. 470-473). As the exception reflects the idea that obligations in bilateral contracts must be performed reciprocally, it operates as a temporary form of self-help which does not require judicial intervention. Partial avoidance of the contract would require judicial intervention (paras. 475-6).

14. Arts. 39 and 40.

15. For an exception, see art. 65 and Nicholas, "Force Majeure," supra at II-B.

16. Art. 70, which sets out the formula for measurement of damages where the contract has not been avoided, does not specify the date as of when damages are to be measured. However, for the purposes of comparing damages with reduction of price, it is sufficient to state that the damages are measured as of the time of delivery. Cf. UCC 2-714(2), "time and place of acceptance" and United Kingdom, Sale of Goods Act, s. 53(3), "time of delivery."

17. The most important difference between arts. 46 and 47 in this example is that if the contract has been partially avoided under art. 47, the seller loses his right to remedy the non-conformity whereas reduction of price under art. 46 does not terminate the seller’s right to remedy the non-conformity.

18. These examples are slight modifications of Examples 31E, 31F and 31G in the Commentary on the Draft Convention (A/CN.9/116, Annex II), VII Yearbook 117. These examples will appear in the Commentary to the UNCITRAL Draft Convention.

19. If the buyer were to purchase second quality corn in replacement, it might also show that the delivery of this corn rather than first quality corn did not amount to a fundamental breach of contract. Cf. Cehave N.V. v. Bremer Handelgesellschaft mbH; The Hansa Nord, [1976] Q.B. 44.

20. Art. 2(a) provides that the Convention does not apply to sales "of goods bought for personal, family or household use, unless the seller, at any time before or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for any such use."

21. Amaudruz, supra n. 4 at 132. See also Draft of a Uniform Law on International Sale of Goods (Corporeal movables) and Report, U.P.L. 1939 - - Draft I(2) (UNIDROIT, 1951) at 80, hereafter, "1939 UNIDROIT Report."

22. Infra n. 40. The German example assumed no price change between the time of contracting and the time of breach.

23. Art. 1644 of the French Civil Code provides that the amount of price reduction in cases of hidden defects is to be determined by experts. In cases of "réfaction," the Court will determine the amount of the price reduction. § 472 BGB provides a formula for reducing the price in the proportion that the value of conforming goods at the time of the sale bears to the value of the defective goods as of that time. Daniels, supra n. 9 at 491, notes that "if the parties cannot agree on the actual market value of the defective goods such value will be fixed by the Court."

24. The right of the buyer to declare the contract avoided is set out in art. 45, that of the seller is set out in art. 60. The requirement that the declaration be by notice to the other party is in art. 24.

25. Art. 25.

26. See UNCITRAL, Report on Tenth Session (1977) A/32/17, Annex I, paras. 301-302; VIII Yearbook 46-47.

27. Art. 20 of the Convention on the Limitation Period in the International Sale of Goods, U.N. doc. A/CONF.63/15, reprinted in 23 Am. J. Comp. L. 356 (1975), has the effect of making a new limitation period of four years run from the date of a written acknowledgement to a creditor or from partial performance of an obligation by the debtor if it can reasonably be inferred from that performance that the debtor acknowledges that obligation. Should seller challenge the amount of the price reduction, a Court might treat the buyer’s act of declaring a reduction in price as an acknowledgment that starts a new limitation period of four years for the buyer’s obligation.

28. Some Common law jurisdictions offer certain procedural advantages to claims for the recovery of liquidated debts as opposed to claims for damages. Thus if the buyer has paid the price and then declares it reduced and this reduction is judged reasonable, it might be treated as a claim for a liquidated debt just as claims based on quantum meruit or quantum valebant counts are treated as claims for a debt or a liquidated demand for money. For an extensive discussion of these matters see Alexander v. Ajax Insurance Co. Ltd., [1956] Vict.L.R. 436; also Lombard Australia Ltd. v. Smeaton, [1966] Vict. R. 272.

29.(1854) 9 Exch. 341.

30. Compare UCC 2-712, 2-713, 2-714 and 2-715(1) with 2-715(2).

31. According to art. 44(1), the buyer need not allow the seller to remedy the non-conformity unless "he can do so without such delay as will amount to a fundamental breach of contract and without causing the buyer unreasonable inconvenience or uncertainty of reimbursement by the seller of expenses advanced by the buyer." He also need not allow the seller to remedy the non-conformity if he has declared the contract avoided.

32. See Nicholas, "Force Majeure and Frustration," II-B supra.

33. The sequence of events leading to the preparation of this draft is succinctly described in UNIDROIT, Unification of Law 103 (1948). The English text of the draft is at page 105. See also Nadelmann, "The Uniform Law on the International Sale of Goods: A Conflict of Laws Imbroglio," 74 Yale L.J. 453 (1964-5).

34. Art. 36 provided that the seller undertook that the goods would be free from "defects." Arts. 37-42 defined the concept of "defects."

35. Art. 85 set forth the amount of damages which could be recovered if the contract was not avoided.

36. 1939 UNIDROIT Report, supra n. 21 at 74.

37. Part of Resolution IV of the Final Act of the Conference on a Draft Convention Relative to a Uniform Law on the Sale of Goods, held at the Hague (1-10 November 1951). The Final Act in the French original with an English translation is contained in Unification of Law 282-305 (1954).

38. The 1956 Draft may be found in I Unification of Law 70-115 (1956).

39. The original text of the 1939 and the 1956 Drafts was in French. The English text was indicated to be a translation. Supra n. 33 and 38. The 1963 Draft was original in both English and French, which were also the languages in which ULIS was adopted in 1964 with "both texts being equally authentic." Unofficial Russian and Spanish translations of ULIS were published in the Russian and Spanish language versions of I U.N. Register of Trade Law Texts (1971) (UN Sales Nos. R.71.V.3 and S.71.V.3 respectively). These unofficial translations served as the basis for the Russian and Spanish language versions of the text of the Draft Convention as adopted by UNCITRAL. In addition to the four language versions in which the Draft Convention was adopted by UNCITRAL, the U.N. translation service has translated the Draft into Arabic and Chinese as part of UNCITRAL, Report on Eleventh Session (1978), A/33/17.

The anticipated 1980 U.N. Diplomatic Conference will probably adopt a final text in all six official languages of the U.N. even though UNCITRAL did not consider the Arabic and Chinese versions.

40. Diplomatic Conference on the Unification of Law Governing the International Sale of Goods, The Hague, 2-25 April 1964 Vol. I: Records: Vol. II: Documents (1966), vol. II, p. 98. (These records will be referred to as "Hague Official Records" with citation to the appropriate volume and page.) See also text supra at n. 22.

41. Id. at 192. The establishment and activities of this Special Commission are described at 26-27.

42. The French text read: "(b) réduire le prix dans la proportion où la valeur que la chose avait au moment de la conclusion du contrat a été réduite du fait de défaut de conformité au contrat. . . ."

43. The English text read: "(b) to reduce the price by the amount by which the value of the goods at the time of the conclusion of the contract has been diminished because of the lack of conformity. . . ."

44. Hague Official Records, supra n. 40, vol. II at 192.

45. E.g., the observation of the delegates from the U.S.A., Hague Official Records, Vol. I at 79 and 177.

46. Hague Official Records, supra n. 40, vol. II at 315.

47. 1963 Draft, art. 50(b), Hague Official Records, vol. II at 220; text of art. 56 prepared by the Drafting Committee of the 1964 Hague Conference Committee on Sales, (id. at 385); text of art. 56 prepared by Drafting Committee during Plenary Session (id. at 409).

48. Text of art. 56, Hague Official Records, vol. II at 409.

49. Hague Official Records, vol. I at 290-291.

50. In the Preface to the Official Records the Secretary-General of the Conference noted that some parts of the documentation "are still somewhat brief and incomplete; the excuse for this is the high pressure under which the records were made during the Conference." (Hague Official Records, vol. I at ix).

51. "The revision of the text was not completed when the final Act was signed on April 25, and a penultimate text was circulated to delegates on May 12, 1964, for their observations. The Secretariat, having received observations, examined them in consultation with the President of the Drafting Committee and corrected the text in so far as it appeared necessary, without finding it possible to comply with all observations." Ellwood, "The Hague Uniform Laws Governing the International Sale of Goods," in Some Comparative Aspects of the Law Relating to Sale of Goods, Int. & Comp. L.Q. Supp. Pub.No.9 (1964) at 42-3.

52. By coincidence, the price reduction provision is found in art. 46 of both ULIS and the current text of the Draft Convention revising ULIS.

53. See Working Group, Report on Third Session (1972) A/CN.9/62 and Adds. 1 and 2, Annex II, paras. 109 to 113; III Yearbook 89.

54. Id., para. 115 (and Annex I, para. 28).

55. A/CN.9/WG.2/WP.16, paras. 146-152, IV Yearbook 56-57.

56. Id., para. 150, IV Yearbook 57.

57. At its fourth session, the Working Group stated that it "was understood that the phrase ‘the buyer may declare the price to be reduced’ not only authorized the buyer to withhold the designated portion of the price but also served as a basis for the buyer to recover the designated portion of the price that had been paid." A/CN.9/75, para. 126; IV Yearbook 71. At its seventh session the Working Group elevated this statement of intent into the text of the article on price reduction (then renumbered as art. 31) by adding the words "and whether or not the price has already been paid." See Working Group, Report on Seventh Session (1976) A/CN.9/116, Annex I, art. 31, VII Yearbook 92.

58. A/CN.9/WG.2/WP.16, para. 148, IV Yearbook 57.

59. Id., para. 152, IV Yearbook 57.

60. Working Group, Report on Fourth Session (1973) A/CN.9/75, para. 119, IV Yearbook 71. The influence of the Civil law tradition was also made clear by the fact that one representative expressed the view that the right of the buyer to reduce the price should be limited to breaches of contract in respect of non-conformity of the goods, meaning, presumably, non-conformity as to quality rather than as to quantity (para. 120). Another representative also indicated a Civil law point of view when he pointed out "that an important difference between price reduction and damages was that for a reduction in price it was not necessary to prove fault while damages could only be recovered if fault was proven" (para. 121). One observer supported this view and added "that the right to reduce the price was not even subject to the conditions laid down in article 74 of ULIS" (ibid). (Art. 74 of ULIS exempts a party from liability for non-performance "if he can prove that it was due to circumstances which, according to the intention of the parties at the time of the conclusion of the contract, he was not bound to take into account or to avoid or to overcome. . . .")

61. Id. at para. 125.

62.The tenth session of UNCITRAL also added the second sentence of art. 46 of the Draft Convention to make it clear that the seller’s right to remedy any non-conformity in the goods comes ahead of the buyer’s right to reduce the price, A/32/17, Annex I, para. 299.

63. See text supra at n.2 and 59.

64. The Report of the Working Group’s fourth session notes that "most representatives who spoke on the issue agreed that the uniform law should provide for the remedy of reduction of the price because it was widely used, especially in civil law countries" A/CN.9/75, para. 119, IV Yearbook 71.

65. See Report of the Secretary-General on the feasibility of developing general conditions of sale embracing a wide scope of commodities, A/CN.9/78, paras. 154-160, IV Yearbook 94.

66. For judicial consideration of such provisions see, for example, R. Pagnan and Fratell v. Corbisa Industrial Agropacuaria Limitada, [1971] I W.L.R. 1306. See also judgment of Lord Denning M.R. in the Hansa Nord, supra n. 19 at p. 63.

67. See Godenhielm, "Some views on the System of Remedies in the Uniform Law on International Sales," 10 Scand. Stud. L. 29-30 (1966).

68. It is interesting to note that UCC 2-613(b) gives a limited but clear example of reduction of price for an excused defect in quality. 2-613(b) and 2-615 also give clear examples of reduction of price, or partial avoidance of contract, for an excused partial non-delivery.

69. S.30(1) of the Sale of Goods Act provides that where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them, but if the buyer accepts the goods so delivered he must pay for them at the contract rate. See Behrend and Co. v. Produce Brokers Ltd., [1920] 3 K.B. 530; Ebrahim Dawood Ltd. v. Heath (est. 1927) Ltd., [1961] 2 Ll. L.R. 512. In H.R. and S. Sainsbury v. Street [1972] 1 W.L.R. 834, seller agreed to sell about 275 tons of barley to be grown on his farm. Events beyond the seller’s control resulted in the production of only 140 tons which were sold to a third party at a higher price. The Court held that although seller was excused from failure to deliver the 135 tons because that part of the contract was frustrated, it was implicit in the contract that he was under an obligation to deliver the rest at the contract rate (at 835-6 and 839). In cases where the quality of goods has been affected the normal remedy is damages. If the contract has been frustrated by the "impediment," the incidence of losses will depend upon whether apportioning legislation such as the Law Reform (Frustrated Contracts) Act 1943 applies. See Chitty on Contracts (24th ed., 1977) at paras. 1448-1463; Sutton, supra n. 3, ch. 5; Benjamin’s Sale of Goods (1974) at paras. 442-446; McElroy, Impossibility of Performance (1941).

70. See supra n. 21.

71. See text supra at n. 11.

72. See text supra at n. 21.

73. Text supra at n.19.

74. Amaudruz, supra n. 4 at 135-136 and 145-158.

75. 1939 UNIDROIT Report at 80.

76. See further Miller, Liability in International Air Transport 361-64 (1977).


Pace Law School Institute of International Commercial Law - Last updated October 9, 2008
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