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Also available at Pace Review of the Convention on Contracts for the International Sale of Goods (CISG), Kluwer Law International (2000-2001) 59-81

Britain and the CISG: The Case for Ratification -
A Comparative Analysis with Special Reference to German Law

Anette Gärtner [†]

I. Introduction
II. Selected Features of the Vienna Convention

A. Reduction of Price
     1. Background and ratio legis of Article 50
     2. Importance in International Sales Law
          a. Comparison with German law: A Different Starting Point
          b. An Alternative to Damages
               (1) Force majeure
               (2) Falling Market
     3. Comparison with English Law
          a. Quantitative Defective Performance b. Qualitative Defective Performance
     4. Evaluation
B. Granting of Additional Time ("Nachfrist")
     1. Articles 47, 63 and Their Function
     2. Comparison with German Law: The Alleged Background of Articles 47, 63
     3. The Position under English Law
     4. Evaluation
C. Right to Cure
     1. Articles 37 and 48 and Their Background
     2. The Position under English Law
     3. Evaluation
III. Conclusion

I. INTRODUCTION

Contrary to its predecessor, the Uniform Law on the International Sale of Goods,[1] the United Nations Convention on Contracts for the International Sale of Goods,[2] which was concluded at Vienna in 1980 and came into force in 1988,[3] enjoys wide-spread acceptance. Up to now almost sixty states have ratified the CISG, including most Member States of the European Union, the USA, Canada, Australia and a number of the so-called third world countries.[4] Despite this international trend, the United Kingdom has so far been reluctant to adopt the Vienna Convention.[5] It is true that, more than two years ago, the Department of Trade and Industry issued a paper in favour of accession to the CISG,[6] but to this day no formal steps have been taken.[7]

Since the Convention was drawn up by representatives from various states with different legal backgrounds, several compromises had to be made which lead to some well-known inconsistencies, such as the alleged contradiction between the second sentence of Article 14(1) and Article 55 of the CISG.[8] Nevertheless, it is in this writer's opinion that the Vienna Convention contains many sensible provisions, some of which may even serve as a model for future amendments to the British Sale of Goods Act 1979 (SOGA).[9] In order to show the va-lidity of this thesis, some exemplary Articles of the CISG will, in the following, be examined and compared with the solutions provided by English and German sales law.

II. SELECTED FEATURES OF THE VIENNA CONVENTION

A. Reduction of Price

1. Background and ratio legis of Article 50

According to Article 35 of the CISG, the seller must deliver goods which are of the quantity, quality and description of the contract. If, however, he does not fulfil this obligation, Article 50 of the CISG allows the buyer to "reduce the price in the same proportion as the value that the goods actually delivered had at the time of the delivery bears to the value that conforming goods would have had at that time."[10]

Article 50 represents one of several CISG provisions with a civil law background.[11] Whereas the civil codes of, for example, France and Germany contain codified versions of the actio quanti minoris [12] of Roman law,[13] the right to reduce the price of defective goods is unknown in common law countries.[14] As a result, during the deliberations of the Draft Convention some common law participants appear to have confused this remedy with the right to deduct damages from the price [15] under, for example, section 2-717 of the Uniform Commercial Code (UCC) or section 53(1)(a) of the SOGA. However, the right to reduce the price is a remedy separate from that of damages and the right to set-off [16] because it does not have anything to do with compensation for an actual loss suffered by the buyer.[17] Instead, Article 50 of the CISG has the same ratio legis as the provisions of the German Civil Code it was modelled upon, namely paragraphs 462 and 472 of the Bürgerliches Gesetzbuch (BGB).[18] The buyer is given the opportunity to retain non-conforming goods and bring the contract in line with the changed circumstances through proportionate reduction of the purchase price.[19]

2. Importance in International Sales Law

a. Comparison with German law: A Different Starting Point

Despite the background of Article 50 of the CISG, the price-reduction remedy does not play the same role within the context of the Vienna Convention as in German law. Under paragraphs 459 to 493 of the BGB, which deal with defective performance, the buyer can choose from a range of remedies. According to paragraph 462 of the BGB, for example, the buyer may either treat the contract as discharged and reclaim the purchase price [20] or keep the goods and reduce the price.[21] However, under paragraphs 463 and 480(2) of the BGB, the buyer is only entitled to damages, if the seller has given an express warranty or is guilty of fraudulent concealment of a defect. As a consequence, it is rather difficult to claim damages under German sales law, so the price-reduction remedy is particularly useful for those buyers who decide not to reject defective goods. It may well be that they do not have a right to damages, but paragraph 462 of the BGB enables them to restore the parity of performances by reducing the price payable.

In contrast, the importance of the price-reduction remedy in international sales law is somewhat limited because, by virtue of Article 45(1)(b) of the CISG, damages are, in principle, readily available for every breach of contract on a no-fault basis. On top of that, the remedy of damages often serves the buyer better since the amount recoverable under Articles 45(1)(b) and 74 is usually higher than the sum by which the price can be reduced according to Article 50 of the CISG.[22] Nonetheless, from this it cannot be inferred that, concerning contracts which are governed by the Vienna Convention, the price-reduction remedy is superfluous because under certain circumstances it is advantageous or even necessary to rely on this right instead of damages.

b. An Alternative to Damages

(1) Force majeure

First, it is of some importance in cases where the vendor can excuse the failure to perform his obligations under the force majeure exemption provided by Article 79(1) of the CISG.[23] For example, if the parties to a contract agreed upon the sale of perishable goods but an impediment beyond the control of the seller, such as labour action, prevented him from performing in due time, the goods may, at the time of delivery, no longer have exactly the quality required by the contract. In situations like this, the vendor comes under the protective scope of Article 79(1) of the CISG.

Since the force majeure exemption does not affect the buyer's rights other than damages,[24] he may reject the goods and declare the contract avoided if the seller's failure amounts to a fundamental breach [25] in terms of Article 25 of the CISG. However, in case he has a particular interest in the goods and thus decides to accept them, the buyer cannot claim damages under Article 45(1)(b) because, according to Article 79(1) of the CISG, the seller is free from liability. Under these circumstances, reduction of the purchase price is the only remedy to which the buyer can resort.[26]

(2) Falling Market

Secondly, in the case of a falling market, where the market price of conforming goods has substantially decreased between the time of contracting and delivery, the buyer is well advised to opt for the reduction of the purchase price instead of damages.[27] This results from the different methods of calculating the price reduction and damages, respectively, which may best be illustrated by means of the following example: The contract price of a quantity of shirts is £ 100,000; however, the shirts supplied are non-conforming, so their value amounts to £40,000 as opposed to £ 80,000 for conforming goods; in addition, by the due delivery date, the market price has fallen to £ 60,000.

Under the circumstances of this example, two remedies are available to a buyer who does not intend to declare the contract avoided because he wants to keep the goods. First of all, Article 45(1)(b) of the CISG entitles the buyer to damages for breach of contract. These will be determined in accordance with Article 74, under which he may recover "a sum equal to the loss . . . suffered . . . as a consequence of the breach."[28] Since the ratio legis of this provision is to place the injured party in the same economic position he would have been in if the other party had fulfilled his obligations,[29] in case of defective performance, this sum equals the difference between the value of the supplied goods and the market price.[30] The damages a buyer could claim in the above sketched situation would therefore amount to £ 60,000 - £ 40,000 = £ 20,000. Hence, on the whole, he would have to pay £ 100,000 - 20,000 = £ 80,000 for the shirts. However, the buyer may also reduce the price according to the formula laid down in Article 50 of the CISG: reduced price / contract price = value of supplied goods / value of conforming goods. As a result, he would only incur expenses of £ 50,000. Thus, from this example it may be inferred that whenever the market falls the price-reduction remedy represents an economically sensible alternative to damages.

3. Comparison with English Law

Under English law, the price-reduction remedy is not available to buyers. Nonetheless, the SOGA contains two provisions which are worthwhile to examine in this context because they can lead to similar results as Article 50 of the CISG. These provisions are found in sections 30(1) and 53(1)(a) of the SOGA.

a. Quantitative Defective Performance

According to Articles 35(1) and 50 of the CISG, the buyer has the right to reduce the purchase price if the supplied goods are not of the quality required by the contract. He may also resort to this remedy in case of short-delivery. In contrast, section 30(1) of the SOGA does not allow the buyer to reduce the price. However, this provision makes clear that, if the buyer accepts delivery of a quantity of goods less than he contracted to buy, he must "pay for them at the contract rate."[31]

Thus, under English sales law, the buyer is also given the opportunity to decide whether he wants to reject the goods or buy them for a proportionately reduced price. It is true that the methods of calculating the reduced price under Article 50 of the CISG and section 30(1) of the SOGA differ because the latter does not refer to the actual value of the goods, but only the contract rate. Still, unless the parties have agreed upon a contract price which does not correspond to the value at all, both provisions are likely to lead to a more or less identical reduction of the purchase price.[32]

b. Qualitative Defective Performance

With regard to qualitative defective performance, the SOGA does not recognise the principle of price reduction. Instead, the buyer is allowed to deduct damages to which he is entitled by reason of the defect from the price under section 53(1)(a).[33] At first sight, this right appears to resemble the remedy of price-reduction.[34] However, one should not fail to note a number of significant differences between section 53(1)(a) of the SOGA and Article 50 of the CISG.First of all, section 53(1)(a) of the SOGA does not confer a genuine right on the buyer to reduce the price payable, but merely allows him to set up his warranty entitlement against a vendor suing for the price.[35] It may well be that, eventually, this leads to a lowering of the purchase price. Still, the buyer cannot bring the contract in line with the changed situation on his own, but instead has to resort to a court.

Moreover, since section 53(1)(a) of the SOGA belongs to the provisions concerning damages for breach of warranty, the calculation method also differs from the one laid down in Article 50 of the CISG. First of all, instead of allowing proportionate reduction, under section 53(1)(a) damages may be deducted from the price. In addition, the buyer can only make use of the right to set-off if he has actually suffered a loss and is therefore entitled to damages.[36] Finally, it may be pointed out that under English sales law the loss is to be determined according to section 53(3) of the SOGA, under which the buyer's loss equals the difference between the value of the supplied goods and the market price. Consequently, setting up a warranty entitlement against a seller's action for the price can lead to the same results as claiming damages, rather than reducing the price as under the Vienna Convention. However, as shown above with respect to the CISG, this is disadvantageous for the buyer if the market price falls.

4. Evaluation

Concerning compensation for breaches of contract, the CISG follows the common law approach according to which damages are readily available on a no-fault basis.[37] Nevertheless, the price-reduction remedy represents a valid alternative to damages if the seller invokes the force majeure exemption or the market falls.

Interestingly, an examination of German case law on Article 50 of the CISG reveals that, so far, neither Article 79(1) nor falling markets seem to have induced buyers to resort to this remedy.[38] According to the facts of most cases,[39] the buyers in question decided to reduce the price under circumstances where, theoretically speaking, claiming damages could have brought in greater monetary relief.[40] From this it can be inferred that the price-reduction remedy does not only serve a useful purpose in the above mentioned situations. Instead, it may be presumed that merchants prefer to make use of this self-help remedy because it enables them to immediately restore the parity of performances without having to resort to a court.[41]

Indeed, it appears sensible to assume that this advantage is also the reason why many international contracts for the sale of generic goods provide for price-reduction in cases of non-conforming goods.[42] With regard to this particular problem, one can therefore draw the conclusion that, in contrast to section 53(1)(a) of the SOGA, Article 50 of the CISG reflects commercial practice which indicates that it provides for an economically sensible solution. Accordingly, a price-reduction remedy, which was obviously modelled upon Article 50 of the CISG, has also been included in article 9:401 of the Principles of European Contract Law (PECL).[43]

B. Granting of Additional Time ("Nachfrist")

1. Articles 47, 63 and Their Function

Another feature of the Vienna Convention that may be unfamiliar to common lawyers [44] consists of the provisions according to which, in case of delayed performance, the buyer as well as the seller may fix an additional period of time for performance.[45] Under the CISG, the serving of a notice which grants additional time has two effects. First of all, during the set period, the aggrieved party is barred from resorting to any remedy for breach of contract.[46] Hence the other party gets another chance at performance. Secondly, if he does not make use of this opportunity prior to the expiring of the additional period, the party serving the notice is entitled to declare the contract avoided.[47]

Thus, in contrast to the general rule contained in Articles 49(1)(a) and 64(1)(a) of the CISG, the requirements of Article 25 need not be fulfilled, so the innocent party is spared the probably difficult decision of whether the failure to perform in due time amounts to a fundamental breach.[48] By granting an additional period of time, that party can therefore relieve himself of the risk that, eventually, the breach might be held not to have been fundamental.[49] On top of that, under certain circumstances, the buyer may also consider fixing a period according to Article 47(1), although the seller's failure to perform his obligations undoubtedly amounts to a fundamental breach.

For example, if the seller supplies seriously defective and therefore useless goods, but the buyer urgently needs what he contracted for, he may resort to the right to require delivery of substitute goods.[50] However, the vendor might not comply with the buyer's request and, while he waits for the delivery of substitute goods, the period for avoidance laid down by Article 49(2)(b)(i) of the CISG may expire. As a result, the buyer loses his right to terminate the contract under Article 49(1)(a). Under these circumstances, he is therefore well-advised to fix a period for the delivery of substitute goods so as to be able to declare the contract avoided, in case the seller eventually lets him down.

2. Comparison with German Law: The Alleged Background of Articles 47, 63

As Articles 47 and 63 of the CISG, allegedly, belong to the provisions which originate from German law,[51] the granting of additional time is often referred to in the literature as the "Nachfrist".[52] Indeed, the BGB contains a provision which deals with the fixing of an additional period for performance, namely paragraph 326. Loosely translated, this section reads:

In case of delayed performance as defined in paragraph 284 [Schuldnerverzug], the creditor may set a period of reasonable length for performance and declare that, outside this period, he will not accept delivery. After the expiration of the fixed period, the creditor is entitled to claim damages for non-delivery or to terminate the contract, unless the debtor has fulfilled his obligations in time . . . .[53]

At first sight, paragraph 326 of the BGB appears to show a striking resemblance to the above examined CISG Articles. However, one should not fail to notice that the procedural device of granting additional time does not have the same function under German and international sales law, respectively. Partly, this is due to the fact that, unlike the Vienna Convention, the Bürgerliches Gesetzbuch does not differentiate between simple and fundamental breaches of contract.

More importantly, one must also bear in mind that according to German law, the right to terminate a contract only arises in a rather limited number of situations. Whereas the Convention allows the creditor to avoid the contract for any fundamental breach,[54] the BGB starts from the notion that, in principle, a contract may only be unilaterally terminated if the agreement provides for a contractual right to avoidance.[55] As one of the exceptions to this general rule, paragraph 326 of the BGB therefore does not have anything to do with reducing the risk of wrongful termination or securing the right to avoidance. Instead, in many cases, this provision enables the aggrieved party to declare the contract avoided.

In view of the significant differences as regards the function of the Nachfrist, it is therefore submitted that paragraph 326 of the BGB may, at the very most, have served as an inspiration for the CISG.[56] However, it certainly does not represent the provision upon which Articles 47 and 63 of the CISG were modelled.

3. The Position under English Law

In contrast to the BGB, the SOGA does not provide for anything even remotely similar to Articles 47 and 63. With regard to delay in performance and, in particular, the risk of wrongful avoidance, one may therefore wonder how English law protects the interests of the aggrieved party.

Generally speaking, the rules on when the right to terminate arises under English law are rather complicated.[57] However, owing to the House of Lords' ruling in Bunge Corporation, New York v Tradax Export S.A., Panama,[58] it has become clear that, in the context of mercantile sales contracts, breaches of time obligations only ought to be assessed in accordance with the doctrine of conditions and warranties, as codified in the SOGA.[59] Thus, in case of delay, the innocent party can treat the contract as discharged, if time is of the essence, so prompt performance is a condition of the contract.[60]

If the contract is silent as to the date of performance, which then must take place within a reasonable time,[61] it is unlikely that prompt performance will be regarded as of the essence of the contract.[62] However, if the parties have set a date or period for performance, it must be determined whether this stipulation is a condition or merely a warranty. Concerning this question, the SOGA provides for two basic interpretation rules. First of all, the time of payment is presumptively not of the essence.[63] Secondly, whether any other term is of the essence depends upon the construction of the contract.[64]

With regard to a party considering avoidance, the second rule prima facie appears to lead to similar problems as Article 25 of the CISG. As already mentioned, it may sometimes be difficult to decide whether a delay in performance equals a fundamental breach. Likewise, unless the contract expressly states that time is of the essence, it may seem doubtful whether a time clause is intended to be a condition. If the innocent party, nevertheless, decides to terminate the contract, he appears to take a risk because later on the stipulation could be held to be a warranty.

Having said that, one must not fail to recognise that, for the sake of certainty in commercial relationships,[65] the courts usually construe stipulations as to time in mercantile contracts as conditions.[66] As long as the contract contains a time clause, the parties can therefore assume that a delay in performance will most likely give rise to a right to avoidance. On the whole, it can thus be concluded that, under English law, the risk of wrongful avoidance is almost non-existent. Hence, there is no need to provide the aggrieved party with a procedural device such as the setting of a Nachfrist.

4. Evaluation

As regards contracts governed by international sales law, the granting of additional time can be advantageous since, in case of delayed performance, the innocent party may, inter alia, employ this device in order to relieve himself of the risk of wrongful termination. One must not forget that this risk results from a peculiarity of the Vienna Convention, namely the fact that it can be difficult to determine when the failure to promptly perform amounts to a fundamental breach. Furthermore, this problem may arise concerning contracts which are governed by the PECL because the definition of a fundamental non-performance according to article 8:103 (b) of the PECL is almost identical with Article 25 of the CISG. As a consequence, article 8:106 of the PECL provides for the fixing of an additional period for performance.[67]

In sharp contrast to the CISG and PECL, the situation under English law is completely different and far less complicated. It is therefore submitted that Articles 47 and 63 of the CISG should not serve as models for future amendments to the SOGA.

C. Right to Cure

1. Articles 37 and 48 and Their Background

In many cases of defective performance the breach may easily be redressed, for example by delivering a missing part. Thus, contracts for the sale of goods often provide for the seller's right to cure.[68] In accordance with commercial practice, Articles 37 and 48 of the CISG therefore allow the vendor to remedy defects both before and after the stipulated date for delivery.

With regard to Article 37 of the CISG, it is submitted that this regulation should neither be unfamiliar for common nor civil lawyers, as most legal systems recognise the principle of liberty to cure prior to the set date for performance. It may well be that only a few codes, such as the UCC,[69] expressly provide for this right. Nevertheless, under both English [70] and German law for example,[71] the seller is unquestionably entitled to cure a defective tender by substituting it with a tender of conforming goods within the time limit fixed by the contract.

However, to some extent, Article 48 of the CISG is an uncommon provision because, in principle, European legal systems do not give the vendor the opportunity to remedy defective performance if the due date for delivery has already passed.[72] In contrast, under Article 48 of the CISG,[73] and its predecessor Article 44(1) of the ULIS,[74] international sales law follows the American rule of section 2-508(2) of the UCC. Indeed, under section 2-508(2) of the UCC, the seller may even cure a non-conforming tender outside the contract period.

One should not fail to notice, though, that by virtue of Article 48(1) of the CISG, the right to cure is subject to several limitations. First of all, the vendor must be able to remedy the breach without unreasonable delay and without causing the buyer unreasonable inconvenience or uncertainty of reimbursement of his expenses.[75] Moreover, the seller's liberty to cure is subject to Article 49 of the CISG so that, in case of a fundamental breach, he cannot deprive the buyer of his right to avoid the contract by curing the defect.[76] Thus, Article 48 of the CISG makes clear that, although the drafters of the Convention took the policy decision to accommodate the seller's interests by permitting cure outside the contract period,[77] the vendor cannot rely on this unique right to the detriment of the buyer.

2. The Position under English Law

Unlike the CISG, the SOGA does not contain any provisions concerning the seller's liberty to cure. But, as already mentioned, according to English case law the vendor has the right to retender prior to the due date for performance. In regard to the time after the passing of the delivery date, however, the position is less clear.[78]

It is true that, referring to a dictum contained in the controversial decision Bernstein v Pamson Motors (Golders Green) Ltd.,[79] one commentator put forward the thesis that English sales law possibly also grants the liberty to cure outside the contract time.[80] Still, it is in this writer's opinion that the cited statement, "nowadays the buyer . . . must put up with a certain amount of teething troubles and have them rectified,"[81] only supports this assumption at first sight. Taking into consideration that the decision primarily deals with loss of the right to reject through retention of the goods [82] and, in particular, the question when a "reasonable time" can be said to have elapsed, it appears rather far fetched to presume that, in addition, the judge intended to assert the seller's right to cure. Therefore, it may be concluded that a comment made as long ago as 1983 is still accurate: "There is great uncertainty, at least in English law, as to the existence and extent of the seller's right to repair or replace defective goods."[83]

3. Evaluation

With regard to delivery of non-conforming goods and short-delivery, national sales law usually leads to clear-cut solutions because it only provides for a limited number of remedies which are available to the buyer after the set date for delivery has passed. By and large, the buyer is left to decide whether he wants to reject the goods and treat the contract as discharged or retain them and reduce the price/claim damages. In contrast to this, the existence of a right to cure may, generally speaking, give rise to uncertainty. Especially if such a right can be exercised outside the period designated for performance, the buyer may, at first, wonder whether and when the vendor will resort to it. However, if the buyer did not purchase the goods for his own use, but for resale, this is not particularly satisfactory.[84]

Although such general problems may exist, Article 48 of the CISG provides for several safeguards. First of all, the seller is only allowed to remedy the breach if he is able to do so without causing unreasonable delay.[85] Moreover, according to Article 49(1) of the CISG, if the failure amounts to a fundamental breach, the buyer may terminate the contract and make a cover purchase. On top of that, even if the requirements of this provision are not met, the buyer can take the initiative by asking the vendor to remedy the lack of conformity and fixing a period of time for repair.[86] If, under these circumstances, the seller declares that he will not deliver repaired goods or does not do so within the fixed period, Article 49(1)(b) of the CISG permits the buyer to declare the contract avoided.[87] Hence, it is concluded that, although the seller's liberty to cure may give rise to an element of uncertainty, the Vienna Convention balances the interests of both parties by granting the buyer the opportunity to either induce the seller to make up his mind or to terminate the contract.

Apart from the fact that Article 48 does not unduly tilt the balance in favour of the vendor, it may, on a more general note, also be submitted that the right to cure is probably more in tune with commercial reality than, for example, the solutions provided by English sales law. As one writer put it, where defective goods are tendered, the "typical buyer" does not want to choose between the alternative courses of action referred to above.[88] Instead, he will reject the supplied goods and, at the same time, tell the seller to repair or replace them, thereby holding the contract open for performance.[89] From this it can be inferred that, in general, buyers appear to be willing to give the seller a second chance.

With regard to the availability of the right to terminate the contract on the one hand, and the liberty to cure on the other, it may furthermore be added that the balancing of interests according to the Convention also leads to economically sensible results. As mentioned above, the right to cure is subject to Article 49 of the CISG, so in case of a fundamental breach the seller cannot prevent the buyer from declaring the contract avoided. However, if the seller's failure does not amount to a fundamental breach, the buyer is well-advised to set an additional period for repair. During this time, the contract is kept on foot [90] so the seller may exercise his right to remedy the breach. If he decides to do so, the economic waste which would follow avoidance of the contract is minimized [91] because the buyer will get the goods for which he contracted and the seller does not lose the benefits expected from the performance of the buyer's obligations.[92]

At the close of the evaluation of Article 48, interesting developments in German sales law should be noted. The members of the committee which drew up the BGB thought that there was no practical need for a right to cure and, consequently, did not include it in the provisions governing the sale of goods.[93] Nevertheless, in full knowledge of the drafters' reasoning, courts and academics soon took the view that, under certain circumstances, vendors must be entitled to remedy minor defects.[94] Resorting to the principle of good faith [95] as the legal basis, sellers are therefore granted the liberty to cure after the due date for performance - albeit in a very limited number of situations.[96]

The group of experts working on the so-called Schuldrechtsreform [97] have recently recommended the adoption of a set of rules under which the seller must, inter alia, be given a chance to remedy the lack of conformity before damages can be claimed.[98] Although this solution is not entirely identical with Article 48 of the CISG, which does not preclude the buyer from claiming incidental damages,[99] it can be inferred that it was inspired by this Article, because one of the aims of the reform project is to bring the BGB into line with the Convention.[100] It therefore seems reasonable to assume that the contributors to the Schuldrechtsreform regard Article 48 as a provision which leads to sensible results. Likewise, the Lando Commission appears to share this opinion, because the PECL contains a section that summarizes Articles 37 and 48 of the CISG in a single rule.[101]

Taking all these aspects into account, it is concluded that, in contrast to European legal systems, the Vienna Convention provides for a valid solution concerning the seller's liberty to remedy a breach after the expiration of the contract period. Furthermore, in view of the uncertainties concerning the extent of the right to cure under English law, one can only agree with a prominent commentator who described it as regrettable that "opportunity has not been taken to modernize the Sale of Goods Act by including express provisions" dealing with this question.[102] However, in case the Law Commission reconsidered its abandoned plan to introduce a statutory cure regime,[103] Articles 37 and 48 of the CISG could very well serve as a starting point for the discussion.

III. CONCLUSION

The analysis of three selected features of the CISG, which comprises a total of more than one hundred Articles, most likely does not suffice to convince those who persistently disapprove of the unification of international sales law and, in particular, the Vienna Convention [104] of its intrinsic merits. Yet, the above examination reveals that the Convention really provides for sensible solutions. It may well be that some of them, such as the granting of additional time under Articles 47 and 63, are tailor-made for problems which only arise under the CISG. However, as may be seen from this author's annotations concerning the price-reduction remedy and the liberty to cure, the Vienna Convention also contains provisions which undeniably better accord with commercial reality than the solutions provided by the Sale of Goods Act.

Taking furthermore into consideration that, for various other reasons, British traders would considerably benefit from the ratification of the CISG, which for example, tends to facilitate the conclusion of transactions with partners from developing countries,[105] it is this writer's opinion that the United Kingdom should at last overcome its reluctance and accede to the Vienna Convention. On top of that, it is strongly recommended that those features of the CISG, which have already proven to lead to economically sensible results, should be considered for introduction into domestic sales law.


FOOTNOTES

† LL.M. (Edin.),Wissenschaftliche Hilfskraft, Institut für Steuerrecht, Rheinische Friedrich-Wilhelms-Universität Bonn [Research Assistant, Institute for Tax Law, University of Bonn]. Many thanks to Dr. Parker Hood (Edinburgh) and Peter Gärtner (Bonn).

1. Convention Relating to a Uniform Law on the International Sale of Goods, July 1, 1964, 834 U.N.T.S. 107 [hereinafter ULIS].

2. United Nations Convention on Contracts for the International Sale of Goods, April 11, 1980, S. TREATY DOC. NO. 98-9 (1984), 1489 U.N.T.S. 3 [hereinafter CISG], reprinted as United Nations: Conference on Contracts for the International Sale of Goods, 19 I. L. M. 668 (1980).

3. See B. Nicholas, The Vienna Convention On International Sales Law, 105 LONDON. Q. REV. 201 (1989).

4. For an updated list of Contracting States see the Pace Database on the CISG and International Commercial Law, available at http://www.cisg.law.pace.edu/cisg/countries/cntries.html [hereinafter Pace Database].

5. See ROY M.GOODE, COMMERCIAL LAW 926 (2d ed. 1995).

6. See DEPARTMENT OF TRADE AND INDUS., UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (VIENNA SALES CONVENTION), A CONSULTATION DOCUMENT paras. 22-23 (Gr. Brit., 1997).

7. E-mail Confirmation by David Simpson, Business Law Unit, Department of Trade and Industry (April 27, 2000).

8. See, e.g., J.D. Feltham, The United Nations Convention on Contracts for the International Sale of Goods, 1981 J. BUS. L. 346,351; REPORT ON FORMATION OF CONTRACT: SCOTTISH LAW AND THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS, Scot. Law Com. 144 (1993) at para 3.3; Robert G. Lee, The UN Convention on Contracts for the International Sale of Goods: Ok for the UK?, 1993 J. BUS. L. 131,136.

9. British Sale of Goods Act, 1979 [hereinafter SOGA].

10. CISG, supra note 2, art. 50.

11. For an account of the relevant provisions in, inter alia, various European civil codes see PRINCIPLES OF EUROPEAN CONTRACT LAW, PARTS I AND II (Combined and Revised) art. 9:401, n.1(a), at 432 (Ole Lando & Hugh Beale eds., 2000) [hereinafter PECL].

12. See 4 THE DIGEST OF JUSTINIAN bk. 44, tit. 2, fragment 25, para. 1, at 626 (Theador Mommsen et al. eds., 1985).

13. See Eric E. Bergstein & Anthony J. Miller, The Remedy of Reduction of Price, 27 AM. J. COMP. L. 255, 257 (1979).

14. See PECL, supra note 11, n.2, at 432.

15. See Bergstein & Miller, supra note 13, at 255.

16. See Bergstein & Miller, supra note 13, at 256; Ulrich Huber, Article 50, in COMMENTARY ON THE UN CONVENTION ON THE INTERNATIONAL SALE OF GOODS (CISG) sec. I, para.1, at 437-38 (Peter Schlechtriem ed. & Geoffrey Thomas trans., 2d ed. 1998) (1995) [hereinafter COMMENTARY ON CISG].

17. See Peter A. Piliounis, Remedies of Specific Performance, Price Reduction and Additional Time (Nachfrist) Under CISG: Are these worthwhile changes or additions to English Sales Law?, 12 PACE INT'L L. REV. 1 (2000).

18. See Huber, supra note 16, sec. II, para. 8, at 440.

19. See Ulrich Huber, 3 BÜRGERLICHES GESETZBUCH MIT EINFÜHRUNGSGESETZ UND NEBENGESETZEN, para. 472 (H. Th. Soergel et al. eds., 12th ed. 1991); Huber, supra note 16, paras. 1, 2, at 437-38.

20. See para. 467 BGB.

21. See para. 472 BGB.

22. See Huber, supra note 16, para. 3, at 438.

23. See Peter Schlechtriem, Some Observations on the United Nations Convention on Contracts for the International Sale of Goods, in 2 THE FRONTIERS OF LIABILITY 29, 45 (Peter Birks ed., 1994); Nicholas, supra note 3, at 226.

24. See CISG, supra note 2, art. 79 (5).

25. See CISG, supra note 2, art. 49(1)(a); Michael Bridge, THE INTERNATIONAL SALE OF GOODS, LAW AND PRACTICE para. 3.58, at 106-07 (1999).

26. See Bergstein & Miller, supra note 13, at 273.

27. See id. at 260; Huber, supra note 16, para. 3, at 438; Piliounis, supra note 17, at 22.

28. CISG, supra note 2, art. 74.

29. See Commentary on the Draft Convention on Contracts for the International Sale of Goods, U.N. Secretariat Commentary, art. 70, para. 3, U.N. Doc. A/Conf. 97/19 [1978], available at http://www.jura.uni-freiburg.de/ipr1/CISG/commentary.htm [hereinafter Draft Convention].

30. See id. para. 7.

31. SOGA, supra note 9, sec. 30(1).

32. See Piliounis, supra note 17, at 23-4.

33. See Guenter Heinz Treitel, REMEDIES FOR BREACH OF CONTRACT, A COMPARATIVE ACCOUNT 108-09 (1988).

34. See Bergstein & Miller, supra note 13, at 255.

35. See Piliounis, supra note 17, at 24.

36. See SOGA, supra note 9, sec. 53(1)(a).

37. See Piliounis, supra note 17, at 19.

38. See, e.g., LG Aachen (F.R.G), No. 41 O 198/89, UNILEX (3 April 1990), available at http://www.jura.uni-freiburg/de/ipr1/cisg/urteile.text/12.htm; AG Nordhorn (F.R.G), No. 3 C 75/94, UNILEX (14 June 1994), available at http://www.jura.uni-freiburg/de/ipr1/cisg/urteile.text/259.htm; LG Oldenburg (F.R.G), No. 12 O 2028/93, UNILEX (15 February 1995), available at http://www.jura.uni-freiburg/de/ipr1/cisg/urteile.text/197.htm.

39. Id.

40. Id.

41. See Nicholas, supra note 3, at 226.

42. See Bergstein & Miller, supra note 13, at 272.

43. See PECL, supra note 11, at 430-432.

44. See Nicholas, supra note 3, at 225.

45. See CISG, supra note 2, arts. 47(1), 63(1).

46. See id. arts. 47(2), 63(2).

47. See id. arts. 49(1)(b), 64(1)(b).

48. See Huber, Article 47, in COMMENTARY ON CISG, supra note 16, sec. I, para. 2, at 394; Huber, Article 63, in COMMENTARY ON CISG, supra note 16, sec. II, para. 2 at 487; Harry M. Flechtner, Remedies Under the New International Sales Convention: The Perspective from Article 2 of the U.C.C., 8 J. L. & COM. 53, 1988, available in Pace Database at http://www.cisg.law.pace.edu/cisg/text/flecht47,63.html.

49. See Nicholas, supra note 3, at 225; Schlechtriem, supra note 23, at 44.

50. See CISG, supra note 2, art. 46(2); Huber, Article 47, supra note 48, sec. I, para. 3, at 395.

51. See Maryellen DiPalma, Nachfrist under National Law, the CISG, and the UNIDROIT and European Principles: A Comparison, 5 INT'L CONT. ADVISER 28 (1999), available in Pace Database at http://www.cisg.law.pace.edu/cisg/biblio/DiPalma.html; Bridge, supra note 25, para. 3.26, at 87-8.

52 See Nicholas, supra note 3, at 225; Piliounis, supra note 17, at 13.

53. See para. 326 BGB.

54. See CISG, supra note 2, art. 49(1)(a).

55. See para. 346 BGB.

56. Compare Draft Convention, supra note 29, art. 43, with PECL, supra note 11, art. 8:106, n.2, at 377 (In contrast to those working on the Secretariat Commentary, the editors of the PECL misunderstood the concept of "Nachfrist.").

57. Hugh Beale, Remedies: Termination, in TOWARDS A EUROPEAN CIVIL CODE 348, 354 (Arthur Hartkamp, et al. eds., 1998).

58. Bunge Corporation, New York v. Tradax Export S.A., Panama, 1 W.L.R. 711 ( H.L. 1981).

59. See id. at 716; Michael G. Bridge, THE SALE OF GOODS 160-61 (1997).

60. See SOGA, supra note 9, sec. 11(3); Beale, supra note 57, at 354.

61. See SOGA, supra note 9, sec. 29(3). See also Hick v. Raymond & Reid, 1 App. Cas. 22 (1892) (Eng.); Monkland v. Jack Barclay Ltd., 2 K.B. 252 (C.A. 1951).

62. See Bridge, supra note 59, at 213.

63. See SOGA, supra note 9, sec. 10(1).

64. See id. sec. 10(2).

65. See Piliounis, supra note 17, at 15-16; Goode, supra note 5, at 129.

66. See, e.g., Hartley v. Hyman, 3 K.B. 475 (1920); Compagnie Commerciale Sucres et Denrees v. C. Czarnikow, Ltd. 1 W.L.R. 1337 (H.L. 1990); Bunge Corp., N.Y., 1 W.L.R. at 716.

67. See PECL, supra note 11, art. 8:106, cmt. B, at 374.

68. See SALE AND SUPPLY OF GOODS, Law Com. 160, Scot. Law Com. 104 (1987) para 4.17; Huber, supra note 16, art. 48, sec.I, para.1, at 402; Helmut Köhler, Zur Nachbesserung beim Kauf, JURISTEN ZEITUNG 393 (1984).

69. See U.C.C. § 2-508(1) (1977).

71. See, e.g., Borrowman, Phillips & Co. v. Free & Hollis, 4 Q.B. 500 (1878); E.E. & Brian Smith (1928) Ltd. V. Wheatsheaf Mills Ltd., 2 K.B. 302, 315 (1939); Motor Oil Hellas (Corinth) Refineries S.A. v. Shipping Corp. Of India, (The Kanchenjunga), 1 Lloyd's Rep. 391, 399 (H.L. 1990).

71. See Köhler, supra note 68, at 393.

72. See Huber, Article 48, in COMMENTARY ON CISG, supra note 16, sec. I, para.1, at 402; Treitel, supra note 33, at 372.

73. See Treitel, supra note 33, at 373.

74. See Ernst Rabel, 2 DAS RECHT DES WARENKAUFS, EINE RECHTSVERGLEICHENDE DARSTELLUNG 254 (1958).

75. See CISG, supra note 2, art. 48(1).

76. See Huber, supra note 72, para. 2, at 402.

77. See Huber, supra note 72.

78. See Rex J. Ahdar, Seller Cure in the Sale of Goods, 1990 LLOYD'S MAR. COM. L. Q. 364, 364-365.

79. Bernstein v. Pamson Motors (Golders Green) Ltd., 2 All E.R. 220 (Q.B. 1986).

80. See Ahdar, supra note 78, at 365-6.

81. Bernstein, 2 All E.R. at 229.

82. See SOGA, supra note 9, sec. 35.

83. See SALE AND SUPPLY OF GOODS, Law Com. 85, Scot. Law Com. 58 (1983) para 2.38 . See also Ahdar, supra note 78, at 364.

84. See Treitel, supra note 33, at 374.

85. See Adhar, supra note 78, at 376; CISG, supra note 2, art. 48(1).

86. See CISG, supra note 2, art. 46(3); Huber, Article 46, in COMMENTARY ON CISG, supra note 16, sec. I, para. 5(b), at 377.

87. This option was overlooked in Ahmad H. Al-Rushoud, The Right to Cure Defects in Goods and Documents, 1999 LLOYD'S MAR. COM. L. Q. 456, 460-461.

88. See Goode, supra note 5, at 362.

89. Id.

90. See CISG, supra note 5, art. 47(2).

91. See Adhar, supra note 78, at 364, 381; GOODE, supra note 5, at 364.

92. Cf. Antonia Apps, The Right to Cure Defective Performance, 1994 LLOYD'S MAR. COM. L. Q. 525, 555.

93. See RGZ 61, 92 (93-4).

94. See, e.g., RGZ 61, 92 (92); RGZ 87, 337 (337); Ludwig Enneccerus & Heinrich Lehmann, 2 Recht der Schuldverhältnisse, Ein Lehrbuch, 440, 446 (14th ed. 1954).

95. See para. 242 BGB.

96. See PECL, supra note 11, art. 8:104, at 369.

97. Schuldrechtsreform is reform of the German law of breach of contract. See Werner Lorenz, Reform of the German Law of Breach of Contract 1 EDINBURGH L. REV. 317, 340 (1997).

98. Id.

99. Martin Karollus, UN - KAUFRECHT, EINE SYSTEMATISCHE DARSTELLUNG FÜR STUDIUM UND PRAXIS 144 (1991).

100. See Lorenz, supra note 97, at 326, 339.

101 See PECL, supra note 11, art. 8:104, at 368.

102. See Goode, supra note 5, at 364.

103. See SALE AND SUPPLY OF GOODS, supra note 83, para 4.33 (but only with respect to consumer transactions); SALE AND SUPPLY OF GOODS, supra note 68, para 4.9 (indicating a change of opinion in Law Commission/Scottish Law Commission).

104. See, e.g., J.S. Hobhouse, International Conventions and Commercial Law: The Pursuit of Conformity, 106 LONDON Q. REV. 530, 530 (1990).

105. See J. Steyn, A Kind of Esperanto? in 2 THE FRONTIERS OF LIABILITY 17 (Peter Birks, ed., 1994).


Pace Law School Institute of International Commercial Law - Last updated November 5, 2002
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