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Article 41 [Third party claims in general]

The seller must deliver goods which are free from any right [2] or claim [4] of a third party [1] unless the buyer agreed [3] to take the goods subject [5] to that right or claim. However, if such right or claim is based on industrial property or other intellectual property, the seller's obligation is governed by article 42 [6].

[WORDS AND PHRASES, CONCEPTS

[COMMENTARY]

[1] [right to goods free from any right or claim of a third party: decisive time for existence of such rights or claims]

The buyer has the right to claim that the goods be free from third party rights or claims. This regards above all rights relating to title (c. note 2) because separate provisions are laid down for intellectual and industrial property (c. Article 42). [page 164]

The decisive time for the existence of third party rights or claims is the time of the delivery of the goods. This follows indirectly from the fact that the seller must deliver goods that are free from such rights or claims and that the buyer may agree to take goods that are not free from such rights or claims (c. also note 5). If the seller delivers goods in regard to which third party claims exist, the buyer can invoke all the rights under Article 45 fol concerning fundamental breach of contract and also the right to avoid the contract pursuant to Article 49.

[2] [the rights and claims included]

The rights and claims under Article 41 include rights of title (reservation of title), rights to possession and possessory and non-possessory pledges. To what extent a third party can exercise its right in title is not regulated by the CISG but by domestic law to be applied according to the Lex rei sitae. It is also domestic law which stipulates whether a buyer may purchase property in good faith because Article 4 excludes property issues from the scope of the Convention. (See also the draft Convention on the Protection of the Bona Fide Purchaser, UNIDROIT 1974, Study XLV - Doc. 55, and the Hague Convention of 15 April 1958.)

The rights of a third party must be able to affect the buyer and infringe upon his property the goods. Therefore, the rights and claims of a third party may also extend to obligatory claims which procure a third party possession of goods, e.g. rent or lease.

Third party rights and claims often include public law restrictions on the use of the goods (see Huber, 501; Welser/Doralt, 114). Honnold (241) counts exports duties and taxes, which must be born by the seller, among such rights and claims. Schlechtriem (63), who attributes legal restrictions, e.g. environmental protection, to Article 35, believes otherwise.

[3] [agreement (waiver) by buyer, express or implied]

The agreement need not be given expressly by the buyer, but it could also be construed if the buyer knows of the rights or claims of the third party, and nevertheless takes the goods without reserving his rights. In this case and in contrast to the buyer's awareness of a lack of conformity relating to quality (Article 35, note 20) and to intellectual property rights of a third party (Article 42, note 9), the buyer must have positive knowledge of such claims.

The buyer may express his consent already at the conclusion of the contract, but he may do so also retroactively, in particular when third party claims on goods become effective only after the conclusion of the contract. Acceptance with knowledge of the defects in title requires an implied agreement (Schlechtriem, 62 fol). Also a notice by the seller of the third party claims and a failure to protest [page 165] by the buyer are to, be considered as implied acceptance (Lüderitz/Freiburg, 187). (Silence is regarded here as agreement.)

The buyer will agree to take goods which are subject to third party rights of title whenever he can foresee that those rights will soon disappear or lapse (e.g. a pledge of the carrier which disappears when the cost of freight is paid).

[4] [third party claims as well as third party rights]

While usually only third parties rights are referred to, i.e. existing rights, the CISG also includes claims by third parties, and supposed claims for which there is no legal basis in reality. (Frivolous or vexatious claims would not be sufficient in the view of Schlechtriem, 63 fol). Unjustified claims may hinder the buyer in exercising his rights, and even unjustified third party claims can be asserted before a court (even if the third party claimant has no chance of winning); which may cost the buyer time and cause him expenses. Therefore, the seller has the duty to refuse and contest such claims and/or, if the buyer had to incur expenses, reimburse the latter (see Honnold, 287 fol; disagreeing Prager, 150).

[5] [right or claim must exist at time when contract concluded]

Third party rights or claims need not exist at the time when the contract is concluded, but definitely at the time of the delivery of the goods. The seller will not be responsible for claims that arise only later. (As to the obligation to give notice compare Article 43.)

[6] [differences between Arts. 41 (third party claims in general) and 42 (third party claims based on industrial or intellectual property)]

6. The differences between Articles 41 and 42 are the following:

	Article 41	Article 42
(a) Existence of a third party right required at the conclusion of the contract	No	Yes
(b) Knowledge of the seller required at the conclusion of the contract	No	Yes
(c) Third party rights	No territorial limits	In the country of destination
(d) Existence or non-existence of third party rights	Seller's responsibility even though rights do not exist (in the case of unjustified claims)	No responsibility of the seller even though rights exist (if the seller has no knowledge or the buyer is aware) [page 166]
(e) Exclusion of seller's responsibility	If buyer agrees	If buyer knows or could not have been unaware

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