Cite as Knapp, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 442-450. Reproduced with permission of Dott. A Giuffrè Editore, S.p.A.
1. History of the provision
2. Meaning and purpose of the provision
3. Problems concerning the provision
(1) If the buyer fails to perform any of his obligations under the contract
or this Convention, the seller may:
(a) exercise the rights provided in articles 62 to 65;
(b) claim damages as provided in articles 74 to 77.
(2) The seller is not deprived of any right he may have to claim damages by exercising his right to other remedies.
(3) No period of grace may be granted to the buyer by a court or arbitral tribunal when the seller resorts to a remedy for breach of contract.
1. History of the provision
1.1. - A fundamental question concerning remedies for the breach of contract is whether the law should treat the buyer's non-performance of different kinds of obligations separately, or whether it should adopt one general notion of the buyer's failure to perform obligations under the contract.
The Convention completely rejected the solution to this question previously adopted by ULIS and replaced it with a new approach. The corresponding UNCITRAL text (Article 57 of the Draft Convention) was adopted without amendment.
1.2. - Since ULIS strictly distinguished between the different kinds of breach by the buyer, the antecedents of Article 61 are several articles of ULIS under two headings: Articles 61 to 63 under the headings «Remedies for non-payment» and Articles 66 to 68 under the heading «Taking delivery». [page 442]
1.3. - Consequently, ULIS had no provision comparable to Article 61(1) of the Convention, which serves as a general introduction to the rules governing the rights of the seller in case of the buyer's breach of contract. ULIS contained, however, two parallel provisions corresponding to Article 61(2) of the Convention, namely Article 63 and 68 of ULIS, which read respectively:
1. Where the contract is avoided because of failure to pay the price, the seller shall have the right to claim damages in accordance with Articles 84 to 87.
2. Where the contract is not avoided, the seller shall have the right to claim damages in accordance with Articles 82 and 83.
1. Where the contract is avoided because of the failure of the buyer of accept delivery of the goods or to make specification, the seller shall have the right to claim damages in accordance with Articles 84 to 87.
2. Where the contract is not avoided, the seller shall have the right to claim damages in accordance with Article 82.
In addition, in ULIS there was a provision analogous to Article 61(3) of the Convention, although it was limited to the buyer's failure to pay the price. It was Article 64 which read as follows: «In no case shall the buyer be entitled to apply to a court or arbitral tribunal to grant him a period of grace for the payment of the price».
1.4. - Despite the basic difference in logical organization, the Convention did not introduce material changes concerning the essential kinds of remedies available to the seller in the case of the buyer's breach of contract.
1.5. - As already mentioned, ULIS grouped the remedies for breach of contract by the buyer separately according to the kind of breach concerned and distinguished remedies for non-payment (Article 61 et seq.), for the failure to take delivery (Article 66 and 67), and for the failure to perform other obligations (Article 70). In contrast, this Convention concentrates all the rules concerning such remedies for breach of contract by the buyer in one section only, namely in Part III, Chapter III, Section III. [page 443]
1.6. - The adoption of a single consolidated set of remedial provisions for the buyer's breach of contract provides important advantages. First, all the buyer's obligations are brought together in one place without the confusion generated by the complexities of repetitive remedial provisions. This makes it easier to understand the rules for what the buyer must do, the provisions of primary interest to merchants. Second, problems of classification are reduced with a single set of remedies. Third, the need for complex cross-referencing is lessened.
1.7. - In theory, every legal rule regarding a contract is simultaneously addressed to all parties to the contract and to the courts authorized to enforce the rule. That means, concretely, that, if international sales of goods are concerned, the respective rules create rights and duties between the seller and the buyer and at the same time the right of any one of them, if injured, to the judgment of the court or of another competent organ. These rules can however be drafted in different ways. In some countries legislative texts are formally addressed to the parties in order to constitute their mutual rights and duties while other countries draft legal rules as instruction directing how a court should resolve a controversy. Thus, under Section 52 of the 1893 United Kingdom Sale of Goods Act, or under § 2-716(1) of the United States Uniform Commercial Code, the remedies available to one party on the other party's failure to perform are stated in terms of the injured party's right to the judgment of a court granting the required relief. On the contrary, the style of Section III of this Convention conforms to the first approach. It states the rights and obligations of the parties instead of instructions directing how a court should resolve a controversy. However, the two styles of legislative drafting are intended to achieve the same result. Thus, when Article 62 provides that the«seller may require the buyer to pay the price, take delivery, or perform his other obligations», it anticipates that, if the buyer does not perform, a court will order such performance and will enforce that order by the means available to it under its procedural law.
2. Meaning and purpose of the provision
2.1. - Article 61, as the introductory provision to this section, serves (similar to Article 45 on the remedies for breach of contract by the seller) as [page 444]
(a) an index to the remedies available to the seller in case of the breach of contract by the buyer;
(b) the source for the seller's right to claim damages as provided in Articles 74 to 77;
(c) an interpretation of the mutual relation between the remedies provided in Articles 62 to 65 and the right to claim damages as provided in Articles 74 to 77; and
(d) a prohibition against the granting of any period of grace to the buyer by the court or arbitral tribunal.
2.2. - The seller may resort to a remedy for the buyer's breach of contract when the buyer fails to perform any of his obligations (a) under the contract or (b) under this Convention, even if not stipulated in the contract, such as the obligation to examine the goods or cause them to be examined under Article 38(1).
2.3. - The buyer fails to perform an obligation if he does not perform it in due time or at the due place or if he performs it at variance with other conditions of performance laid down in the contract or in this Convention. For example, the buyer fails to perform the obligation to pay the price not only if he does not pay it at all but also if he does not pay it on the day it falls due, or at the due place.
2.4. - On the other hand there is no failure to perform the obligation of taking delivery if the buyer did not take the goods over because they were delivered before the due date (unless otherwise agreed in the contract or provided for in this Convention), or because they were offered for delivery at a wrong place, or if the seller himself prevented the buyer from taking over the goods.
2.5. - Article 61 distinguishes two principal remedies for breach of contract, corresponding to the remedies for the delay of the debtor (mora debitoris) and those for damages as understood in civil law systems. The remedies of the first kind are those provided in Article 61(1)(a) and in Articles 62 to 65. Remedies of the second kind are provided in Article 61(1)(b) and in Articles 74 to 77. [page 445]
2.6. - As to the first kind, of remedies Article 61(1)(a) provides that in case of the buyer's breach, the seller may «exercise the rights provided in Articles 62 to 65». Although Articles 62 to 65 on the seller's remedies are drafted in terms comparable to those of Articles 46 to 52 on the buyer's remedies, they are less complicated. This is so because the buyer has only two principal obligations, to pay the price and to take delivery of the goods, whereas the seller's obligations are more complex. The seller is liable both for defective and/or deficient performance and for delay, while the buyer is liable only for delay (in payment or in taking over the goods). Therefore, the seller has no remedies comparable to the following available to the buyer: reduction of the price because of non-conformity of the goods (Article 50); right to partially excercise his remedies in the case of partial delivery of the goods (Article 51); right to refuse to take delivery in case of delivery before the date fixed or of an excess quantity of goods (Article 52).
2.7. - The remedies available to the seller under Article 61(1)(a) are the following:
(a) the right to require performance according to the contract or to the Convention (Article 62);
(b) the right to declare the contract avoided (Article 64);
(c) the right to make the specification of goods to be delivered upon buyer's failure to do so (Article 65).
2.8. - The seller has a choice of remedies unless they are inconsistent (see §§ 3.2. and 3.3., infra). The remedies available to the seller depend on the quality of the buyer's breach. That means that, apart from the remedy provided in Article 65 which is not relevant in this respect, the seller may choose among:
|-||in case of a fundamental breach, the remedies provided in Articles 62 and 63;|
|-||in case of a breach not amounting to a fundamental breach, the remedies provided in Articles 62, 63 or 64.|
2.9. - Contrary to the law of several countries and some international instruments (see, e.g., the Conditions of Delivery of the Council for Mutual Economic Assistance), this Convention does not provide punitive damages for the delay. As to passing of [page 446] the risk to the buyer if he did not take over the goods in due time, see Article 69.
2.10. - Article 61(1)(b) provides that the seller may «claim damages as provided in Articles 74 to 77», «if the buyer fails to perform any of his obligations under the contract or this Convention». In order to claim damages it is not necessary to prove fault or a lack of good faith or the breach of an express promise, as is true in some legal systems. Damages are available for loss resulting from any objective failure by the buyer to fulfil his obligations.
2.11. - The Convention does not expressly settle whether the seller may resort to the remedies provided in Article 61 if he himself did not duly perform his obligations under the contract and this Convention. It follows however from the general principle (see Article 7(2)) that the mora debitoris cannot take place when and as long as the creditor himself is in mora, i.e., that the seller may not resort to remedies for the breach of contract by the buyer unless he himself has fulfilled his obligations; neither may he do so if he did not enable the buyer to perform his obligations or if he precluded him from doing so.
2.12. - If in case of a contract for delivery of goods by instalments the buyer fails to pay the price of an instalment or to take over the partial delivery, Article 73 foresees the seller's remedies. The same rule should apply by analogy if in case of a contract providing that the goods will be delivered as a whole and the price will be paid in instalments, the buyer fails to pay an instalment.
3. Problems concerning the provision
3.1. - The preceding section has already discussed some problems concerning Article 61. Here some special problems concerning the same provision will be discussed: (1) the consistency of remedies; (2) the problems concerning the period of grace; and (3) the limitation of seller's rights. [page 447]
3.2. - The consistency of remedies for the buyer's breach has always been a controversial issue. It was discussed, for instance, at an important colloquium on the international and regional unifications of the law of sales held in New York in the 1960's. One of the reporters considered the question of whether there is a legislation tendency to prefer the remedy of a claim for damages to the remedy of avoiding the contract (TALLON, Unification of the Law, 132). He found that there was no such tendency and that there is no reason justifying the incompatibility of one remedy with the other.
The concept of Article 61 is analogous. Paragraph (2) declares the compatibility of remedies available to the seller under Articles 62 to 65 and his right to claim damages as provided in Articles 74 to 77. Thus the right to claim damages is at any time consistent with any other remedy available to the seller under Article 61(1)(a). Therefore, the seller who has resorted to any remedy under sub-paragraph (1)(a) is not thereby deprived of the right to claim damages which he may have suffered. Likewise, the right to claim damages may not be delayed.
3.3. - Another question is whether the remedies under Article 61(1)(a), i.e., the remedies under Articles 62 to 65, are consistent with each other. Indubitably the seller may not resort to several remedies simultaneously. As to whether he may resort to more remedies subsequently, it is necessary to distinguish the objective inconsistency of the remedies from the subjective inconsistency. The objective inconsistency exists when one remedy automatically excludes the application of another, as, for example, the avoidance of the contract automatically excludes the right to require performance of the avoided obligation. With avoidance of the contract, this obligation ceases to exist. As to the subjective inconsistency, the question is whether the seller's choice of one or more remedies available to him is binding on him and precludes him from subsequently resorting to another remedy (so long as it is not objectively inconsistent with the first). It seems that the Convention emphasizes the consistency of the remedies provided in Article 61 (see Articles 61(2) and 62) and therefore limits their inconsistency to objective inconsistency. Thus, the seller is not precluded from subsequently resorting to another remedy unless the latter remedy is objectively inconsistent with the one chosen initially. [page 448]
3.4. - Article 62(3) provides that no court or arbitral tribunal may delay the maturation of the buyer's obligations by granting him a period of grace. It follows that, as far as payment of the price is concerned, the court or the arbitral tribunal may not delay the payment as a whole, nor can it grant the buyer permission to pay the price by instalments. Similarly, it must not grant the buyer permission to take over the goods in parts, nor can it delay taking over of the goods. The reasons for this provision, which are analogous to the reasons for the provision of Article 45(3), are discussed in the commentary on Article 47, supra. The most important of them is that the application to a court for a grace period is particularly inappropriate in the context of international commerce, since this would subject the parties to the broad discretionary power of a judge or arbitrator who would usually be of the same nationality as one of the parties. The seller himself may of course grant a period of grace to the buyer without losing his right to claim damages (see Article 63).
3.5. - What is the meaning of the second half of paragraph (3), stating that neither the court nor the arbitral tribunal may grant to the buyer a period of grace «when the seller resorts to a remedy for breach of contract?». Does it mean that the court or the arbitral tribunal is authorized to do so when the seller did not resort to a remedy for breach of contract, for instance if the buyer himself demanded the court or arbitral tribunal to grant him the period of grace before the seller resorted to a remedy for breach of contract? It seems that such an interpretation would be contrary to the principles referred to in Article 7(2) and should therefore be rejected. That means that under Article 61(3) no court or arbitral tribunal may delay the exercise of any buyer's obligation by granting him a period of grace either before, at the same time as, or after the seller has resorted to a remedy for breach of contract by the buyer.
3.6. - Although the Convention limits the seller's right to declare the contract avoided (Article 64(2)), it contains no general provision limiting an action claiming damages provided in Articles 74 to 77. Such a provision would have exceeded the Convention's scope laid down in Article 4. Therefore, it is to be [page 449] assumed that the time limit for exercising the right to damages is governed by the appropriate municipal law as determined by the rules of private international law. [page 450]