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Reproduced with permission of the author

45th UIA Congress Torino 29 August - 2 September 2001 [*]
Working Session of the International Sale of Goods Commission
Thursday 30 August 2001 [Revised 22 October 2001]

Sales-Related Issues Not Covered by the CISG:
Assignment, Set-off, Statute of Limitations, etc., under Italian Law

Avv. Carlo H. Mastellone
Studio Legale Mastellone, Florence

I.   Article 4 of the CISG

II.  Rules of Italian Private International Law Relating to Contracts for the Sale of Goods

III. Identifying Matters Not Covered by the CISG According to Foreign and Italian Decisions

(a) Validity of the contract and effect on property
(b) Other matters implicitly excluded
(c) Product liability
(d) Calculating interest for late payment

IV. Examination of Sales-related Issues Not Covered by the CISG under Italian Law
      1. The validity of the contract or of any of its provisions: issues relating to the capacity of the parties

-    Legal capacity, consent, cause, object, form
-    Void contract
-    Voidable contract (for lack of capacity or defect of consent)
-    Mistake, duress, fraud
-    Action for declaration of void contract or annulment
-    Rescission
-    Conversion, rectification, validation
      2. Sales of goods and transfer of property
-    Generic goods, goods owned by third party, alternative goods,
     future goods, goods subject to test, sale on approval, sale by sample
-    Validity of a retention of title clause
-    Reservation of title and bankruptcy
-    Reservation of title and rules of private international law
-    Sale with buy-back clause
      3. Validity of standard terms of contract
      4. Validity of a choice of forum clause
      5. The existence of an agency relationship
      6. The right to set-off against the other party's claim
      7. The validity of an assignment of receivables
      8. Prescription (i.e., limitation period)
-    Suspension and interruption
-    Presumptive prescriptions
-    Prescription and forfeiture
      9. The validity of a penalty clause
     10. The validity of a settlement agreement
     11. Assumption of debt
     12. Burden of proof in case of defective goods
     13. Novation
     14. Liability of the seller for death or personal injury caused by the goods to any person
     15. Interest for late payment


I. ARTICLE 4 OF THE CISG

Article 4 of the CISG states that:

"This Convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract"; and that

"in particular, except as otherwise expressly provided in this Convention, it is not concerned with: (a) the validity of the contract or of any of its provisions or of any usage; (b) the effect which the contract may have on the property in the goods sold."

According to Franco Ferrari, "at first sight, this part of the provision does not seem to pose any problems."[1] One author even considers this provision to be superfluous since it only states the obvious.[2] However, quite the contrary is true. The insertion of the expression "in particular" and of the phrase "except as otherwise expressly provided in this Convention" leads to the delimitation between the matters governed by the Convention and those excluded from its sphere of application not being very clear.

The insertion of the aforementioned phrase, for instance, leads to the conclusion that, even when a litigation concerns a dispute which is apparently excluded from the CISG's sphere of application, the Convention's applicability should not be excluded a priori. Instead, one has to examine whether the CISG (expressly) provides for a solution."

Ferrari goes on to state that "there are a lot of matters which, even though they are not explicitly excluded, are not governed by the CISG. This also causes questions concerning the delimitation of the Convention's sphere of application. For this reason, it is not very surprising that the question as to the exact determination of the CISG's material sphere of application (i.e., the question of the identification of the issues governed by the Sales Convention) has already led to litigation."

Generally speaking, the question of how to fill the "gaps" left open by the CISG can be answered by referring to the principle (laid down in Article 7(2)) according to which "questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law. Accordingly, all "questions which are not governed" by the CISG, are to be settled by applying the law designated by the private international law of the forum State.

According to Jacob S. Ziegel:

" 'Validity' is not defined in art. 4 or elsewhere in CISG. Presumably it includes any defence that may vitiate the contract under the proper law or laws of the contract because, for example, of lack of capacity, misrepresentation, duress, mistake, unconscionability, and contracts contrary to public policy. The exclusion will be of particular importance where the contract contains a disclaimer clause restricting or excluding liability for breach of warranty or other obligation imposed on the seller under the Convention and the buyer invokes the doctrine of 'fundamental breach' or impeaches the clause on grounds of unconscionability. The exclusion of questions of validity from the reach of CISG is therefore a debilitating if unavoidable weakness.

"The exclusion from CISG of the property effects of the contract is much less serious. Under the Convention, unlike [the] provincial sales law [of Canada], the parties' rights and obligations do not turn on the locus of title. In this respect CISG adopts the same approach as the American Uniform Commercial Code (see UCC 2-401) and is greatly superior to existing provincial law. Property questions will of course remain very important but only for the purpose of determining the rights of buyer and seller vis-à-vis third parties, and vice versa."[2a]

II. RULES OF ITALIAN PRIVATE INTERNATIONAL LAW RELATING TO CONTRACTS FOR THE SALE OF GOODS

It is useful to point out that at present the rules of private international law applicable to contracts for the international sale of goods are those of the 1955 Hague Convention on the Law Applicable to International Sales of Movable Corporeal Objects (ratified by Italy by Law Number 50 of 4 February 1958, and in force internationally since 1 September 1964) that prevail over the rules of the 1980 Rome Convention.[3]

Under the 1955 Hague Convention, a valid choice-of-law relating to a contract of sale of goods requires an express clause or to result without doubt from the terms of the contract, whilst absent a choice-of-law clause, an international sales contract will be governed by the law of the state of habitual residence of the seller at the time of receiving the order; however, the law of the state of habitual residence of the buyer will apply if the order is received in such state by the seller or by an agent of the seller.

Therefore, Italian domestic law will apply as the gap-filling law, absent a choice-of-law clause in the contract, in addition to the case of:

- Contracts between a party whose place of business is in Italy and a party whose place of business is in another Contracting State of the CISG;

- Contracts between a seller whose place of business is in Italy and a buyer whose place of business is in a non-Contracting State of the CISG; as well as to

- Contracts between a buyer whose place of business is in Italy if the purchase order is received in Italy by the seller or by an agent of the seller (whose place of business is in a non-Contracting State).

The governing law according to the 1955 Hague Convention will govern all the aspects of the contract, from formation to performance, requirements and defects of consent, effects of the contract, assessment of damages and interest, validity of clauses limiting or excluding either party's liability, force majeure and limitation periods: however, it does not determine the applicable law as regards the capacity of the parties, the form, the transfer of ownership rights and the effects of the sale contract vis-à-vis third parties (Art. 5, Hague Convention). The capacity to conclude contracts will be governed by the law of the nationality for individuals, and by the law of the place of incorporation for a body corporate, unless the place of business of a foreign body corporate is located in Italy or has its principal object in Italy, in which case Italian law shall govern,[4] while the proprietary aspects will be governed by the lex rei sitae.

Furthermore, unless there is an express clause to the contrary, the domestic law of the country where the examination of the goods delivered is to take place determines the terms and conditions for the examination of the goods and for the relevant notifications (for example notice of defects) as well as the measures to be taken in case of refusal of the buyer to take delivery of the goods (for example, formal offer to take delivery and depositing the goods in a warehouse),[5] while the remedies available to the buyer in case of non-conformity of the goods are governed by the law which governs the sale contract.[6]

III. IDENTIFYING THE MATTERS NOT COVERED BY THE CISG ACCORDING TO FOREIGN AND ITALIAN COURT DECISIONS [7]

(a) Validity of the contract and effect on property

With reference to the effect of a sales contract on the property in the goods sold, there is a German court judgment stating that the Convention does not cover the question of the validity of a retention of title clause,[8] and an Australian court judgment which, while applying CISG to determine whether a retention of title clause had actually been agreed by the parties and if so what its content was, ruled that the effect of such a clause on the property in the goods was to be determined according to the law applicable by virtue of the rules of private international law.[9]

A German court has held that the question of the validity of the standard terms of contract falls outside the scope of the CISG under Article 4(a) and is to be determined according to the law governing the contract.[10]

Finally, an Argentine court decided that the issue relating to the validity of a choice of forum clause contained in the standard terms printed on the invoice forms sent by the buyer was excluded from the scope of the Convention under Article 4(a) and was governed by the applicable domestic law.[11]

(b) Other matters implicitly excluded

Since the list provided in Article 4 is not exhaustive, the problem arises of determining what other matters are excluded from the scope of the Convention and as such governed by the applicable domestic law, and how they can be distinguished from other matters which, although not expressly settled in the Convention, fall within its scope and must therefore be settled whenever possible in conformity with the general principles underlying the Convention (Article 7(2)).

According to the courts, the CISG does not cover issues relating to the capacity of the parties,[12] the existence of an agency relationship,[13] the right to set-off against the other party's claim,[14] the validity of the assignment of receivables,[15] prescription (i.e., statute of limitations),[16] the validity of a penalty clause,[17] the recovery of damages arising from mandating an agent to collect debts,[18] the validity of a settlement agreement,[19] defects in consent,[20] and the assumption of debt.[21]

Furthermore, the Convention deals with the modification of the contract (see Article 29), but is silent as to novation. An award of the I.C.C. Court of Arbitration rightly referred to domestic law to clarify that novation requires the proof by the party alleging it that the original parties to the contract shared an "animus novandi." The same court, however, applied Article 8 CISG - as a generally accepted rule of interpretation - to ascertain whether the parties actually had an "animus novandi".[22]

According to a Dutch court,[23] the CISG does not cover issues relating to estoppel. However, in the opinion of Ferrari, to the contrary, estoppel should be derived from the CISG's general principle of good faith. Pursuant to Article 7(2), this principle, as all general principles of the CISG, are to be referred to when a matter, although not explicitly settled in the CISG, is not excluded from its sphere of application.

Finally, another issue discussed is whether the matter of burden of proof in case of defective goods is covered by the Convention. An award rendered by the I.C.C. Court of Arbitration held that, since the CISG does not expressly determine who should prove non-conformity, the issue must be determined on the basis of domestic law.[24] According to a Swiss court, however, the principle according to which the buyer has to provide evidence of the defect and give notice thereof is implicit in Articles 38 and 39 and reflects a general principle underlying the Convention.[25] According to Bonell and Liguori, the argument seems convincing, although it should be clear that the further questions as to the admissibility of such evidence and the limits thereof must be settled in accordance with the applicable substantive and procedural domestic law.

Reference should be made here to a remarkable judgment of the Tribunale di Vigevano [26] that, to use the words of commentator Charles Sant 'Elia, "exhibited a willingness to employ the very means which so many jurists and scholars have exhorted courts and arbitral panels to use. Judge Rizzieri cited American, Austrian, Dutch, French, German, Italian, and Swiss court cases contained in national reporters, ICC arbitral awards, as well as two CISG websites and UNILEX. Conspicuously absent are references to civilian commentaries and treatises. For the most part, the judge firmly followed the majority and prevalent views announced by the above-mentioned tribunals."[27]

The Court addressed the problem of determining the burden of proof by finding that buyer bore such a burden with respect to its notice claims. The Court took note of the minority jurisprudence which holds that the allocation of the burden of proof is not governed by the CISG, as it is not listed in Art. 4, and must consequently be determined by national law.[28] However, it decided to follow the majority view, accepting what it termed as "the better doctrine", which relies on the fact that Art. 79(1), by way of example, in referring to a party's failure to perform, makes express mention of the burden of proof. Thus the allocation of the burden of proof is to be determined pursuant to Art. 7(2), in accordance with the general principles of the CISG itself.[29] Judge Rizzieri identified the general principle regarding the allocation of the burden of proof to be such that ei incumbit probatio qui dicit, non qui negat, that is, the party which invokes its right to assert a claim is required to demonstrate the facts which support the claim. The Judge further stated that the corollary of this principle is that objections or defenses are to be proven by the party which raises them.[30] Similarly, if a party asserts that the CISG is inapplicable because the sales contract is not "international" or because the parties have contractually derogated from its applicability pursuant to Art. 6, that proponent party must prove the inapplicability of the CISG. The Court firmly announced that "there can thus be no doubt" that the party to the contract which asserts non-performance of the other party and thereby seeks damages must prove both the non-performance as well as the damages it suffered, in addition to the causal nexus between the breach and the damages, which must be recoverable damages within the meaning of Art. 74.[31]

(c) Product liability

Under art. 5 of the CISG, the Convention does not apply to the liability of the seller for death or personal injury caused by the goods to any person.

In legal writings it is widely accepted that the Convention governs liability for damage caused by defective goods to other goods, and that such damage should be compensated in conformity with Article 74.[32] A first decision in this sense has been handed down by a Swiss court in a case relating to the sale and installation of a fitness device (an isolation tank containing water with a high salt concentration) on the buyer's premises. The Court pointed out that while death and personal injury are excluded from the scope of the Convention, damage caused by the fitness device to the buyer's premises (leaking salt water) is a matter governed by the Convention.[33]

On the contrary, doubts may be expressed concerning a German judgment in a case concerning an accident, which had occurred on account of a defect in the machine component sold, causing the death of a worker as well as some damage to the buyer's machinery. The buyer brought an action against the seller not only to recover the costs it had sustained in repairing the machine, but also to have him held liable in general for all consequences of the accident, including the death of the worker. Nevertheless, the court referred to CISG to ascertain whether it had jurisdiction, without making a distinction between the two claims.[34] This solution appears subject to criticism since, as correctly observed, Article 5 is worded in such a way as to lead one to understand that "l'action récursoire, susceptible d'être intentée par l'acheteur contre le vendeur à la suite d'une action en responsabilité formée contre le premier par une tierce personne blessée ou par les héritiers d'une victime tuée par le bien doit également échapper à la Convention".[35]

(d) Calculating interest for late payment

Under art. 78 of the CISG, if a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it; but the CISG does not establish the applicable rate of interest. The absence of such guidance raises the question of whether the issue of determining the rate of interest has to be dealt with as a matter governed by the Convention, but not expressly settled in it (lacuna praeter legem), or as one excluded from the sphere of application of the Convention (lacuna intra legem).[36]

Ferrari reports that "some authors believe that the issue of determining the rate of interest is not dealt with by the Vienna Sales Convention and it is, therefore, governed by the applicable domestic law, which is, in general, the subsidiary law applicable to the sales contract, since no special connecting points seem to have developed for the entitlement to interest; others suggest that the applicable domestic law should be the law of the creditor. According to several German courts, the rate of interest should be calculated on the basis of the domestic law, and there seems to be a tendency to apply the law which would be applicable to the sales contract if it were not subject to the Vienna Sales Convention.[37]

The limit of the conflicts approach is that it does not guarantee uniformity in the application of the Convention. It also leaves open the question of what interest (if any) is payable if the seller's law does not allow interest.[38]

IV. EXAMINATION OF SALES-RELATED ISSUES NOT COVERED BY THE CISG, UNDER ITALIAN LAW

The list of "matters not covered by the CISG" according to foreign and Italian court decisions and identified in Section III above, is not purported to be exhaustive.

Furthermore, where different views have been expressed as to whether a given matter is or is not governed by the CISG (for example, burden of proof), I do not intend in this article to give my personal opinion on such views: all of the matters identified by the courts as matters not covered by the CISG will be examined, in this Section IV, under Italian internal law, regardless of such different views.

Finally, the matters listed in each of the subsections to this Section IV may be entirely "not covered by the CISG"; hence, by virtue of article 4, they would be governed by the otherwise applicable law (in our case, by Italian internal law), or one or more of such matters may be covered only in part by internal law. For example, there is controversy as to whether and, if so, to what extent, mistake is left entirely to the internal law of a country. This article does not purport to resolve this question.

1. The validity of the contract or of any of its provisions: issues relating to the capacity of the parties

- Legal capacity, consent, cause, object, form

The parties to a contract must satisfy certain requisites in order that the contract may come into existence, namely, the parties must have legal capacity (capacità giuridica), the capacity to act (capacità d'agire), and the necessary locus standi (legittimazione) to be party to the type of contract in question. The essential elements of a valid contract are: consent of the parties, cause (causa), object and (when applicable) compliance with a certain form.[39]

Cause. Cause relates to the economic and social function objectively pursued by the contract and which the law considers of relevance for the purpose of the protection granted by the legal system.[40] The causa in a sales contract is the exchange of goods in return for a price. The causa of a contract is unlawful when it is in conflict with imperative provisions of the law, public policy, or morality.[41]

A contract is considered having been made for the purpose of defrauding the law when it is a means for avoiding the application of an imperative provision of the law, for example, article 2744 Civil Code prohibits a foreclosure agreement (patto commissorio): any agreement establishing that, upon failure to pay the claim within the fixed time limit, ownership of property mortgaged or given in pledge passes to the creditor, is void. The Corte di Cassazione has held that a sale with a redemption or a re-sale clause (patto di riscatto o di retrovendita) stipulated between a debtor and a creditor for the purpose of establishing a guarantee in favor of the creditor in case of non performance by the debtor (ownership over the property to become irrevocable in favour of the creditor only in case of the debtor's breach), is null for illegitimacy of the causa under art. 1344 Civil Code, even if it involves an effective transfer of ownership to the creditor, since it constitutes a means for avoiding the prohibition of a foreclosure agreement.[42]

Object. The law requires that the object (oggetto) of the contract will be "possible, lawful, determined, or determinable."[43] The oggetto of a sale is represented by the goods and the price.

Form. As a consequence of the principle of contractual autonomy, the law does not generally require any particular form and therefore most contracts may even be created orally. Only exceptionally does the law specify formal requisites essential to the validity of the contract in question. A written contract is not required as an essential condition for the formation of a valid contract of sale of goods. However, the written form is essential ad substantiam for the conclusion of a valid contract of sale with reservation of title, for the sale of ships,[44] and aircraft,[45] for the validity of a clause fixing interest higher than the legal rate under the Civil Code,[46] and for the validity of particularly restrictive clauses (clausole vessatorie) in general terms of contract or standard form contracts. Furthermore, a written document is required for the valid assignment of a credit or of a contract.[47]

Written documents also are important in the event of litigation for the purpose of providing proof of the contract in judicial proceedings, in consideration of the restrictive rules for the submission of evidence before the Italian courts.[48]

In line with commercial practice, the courts have held that a telex is to be considered as a written document, although communication by telex or telefax does not constitute absolute proof of the identity of the author of the declarations.[49] If a written form is required for the validity of a contract, if the parties communicate by telex or telefax, their correspondence should be confirmed by letter. If no written form is required, a contract may be concluded by exchange of telefaxes.[50]

- Void contract

A contract is void when it is in conflict with an imperative provision of the law or if one of the essential requirements for a valid contract is missing,[51] if the causa is illegal, or if one of the requirements of the object is missing. If a contract is void only in part, the contract as a whole will be void if the parties would not have concluded the contract without the void part.[52]

- Voidable contract (for lack of capacity or defect of consent)

A voidable contract is one concluded by a party who is legally incapable of making the contract or whose consent is defective for the reason that it is affected by an external vitiating factor, i.e., if his consent is given by mistake, is extorted with duress, or is obtained with fraud. A voidable contract is not totally void but is valid and effective until the interested party institutes proceedings for the annulment within the prescribed limitation period.

Mistake. Mistake is a defect of a party's consent which makes a contract voidable if it is "essential" and "recognizable by the other party."[53] A mistake is considered essential when:

(1) It concerns the nature or the object of the contract;

(2) It concerns the identity or quality of the object of the contract, which must be considered determinative of the consent of a party, according to the common appreciation or in relation to the circumstances;

(3) It concerns the identity of the other contracting party or the personal qualities of the other contracting party, provided that either has been determinative of the consent; and

(4) In the event of mistake concerning the law, it has been the only or main reason for making the contract.[54]

A mistake in calculation is not a cause for annulment,[55] but the contract will have to be rectified, unless the mistake in calculation produces such a mistake as to quantities which were determinative of the consent. A mistake is considered recognizable when, having regard to the contents, the circumstances of the contract or the qualities of the contracting parties, a person with normal diligence would have been able to detect it.

Furthermore, an important provision for cross-border contracts is that the so-called errore ostativo and error in the transmission are causes for annulment of a contract.[56] If there is a discrepancy between what the party stipulated in a contract and what he intended to bind himself to in the contract, the resulting mistake in the declaration renders the contract voidable.

Duress. While a contract signed by a party under physical violence is void, a contract signed by a party as an effect of duress is voidable.[57] Duress as a vitiating factor of a party's consent is a threat of such nature as to impress a sensible person and to cause him to fear exposing himself or his property, or his spouse or close relatives and their property to an unjust and substantial injury.[58]

Fraud. The fraudulent action of a party (or of a third party whose action was known to the party who took advantage of it) is a cause for annulment of the contract when the deceived party would not have made the contract in the absence of the fraud.[59] A contract is valid if the fraud is not determinative of the party's consent although, in the absence of the deceit, the parties would have concluded the contract on different terms.[60]

- Action for declaration of void contract or annulment

Any person who has a legitimate interest to obtain a judgment declaring that a given contract is void, including a third person, has the right to institute the relevant proceedings [61] and there is no limitation period.[62] The party whose consent is defective may institute proceedings to obtain a judgment declaring that the contract is annulled; there is a five-year limitation period to institute the proceedings from the date when the duress has ceased or the mistake or the fraud has been discovered.[63]

The decision of the court which declares the annulment of a contract is retroactive, i.e., it cancels the contract from the beginning so that the parties are restored to the position they had before the contract was concluded. However, any rights acquired by third parties in good faith in return for a price will not be affected.[64]

- Rescission

Rescission of a contract is a remedy available in two circumstances:

(1) If one contracting party has accepted obligations under the contract at unfair conditions due to the necessity, known to the other contracting party, to protect himself or other persons from suffering serious personal injuries;[65] and

(2) If an objective disproportion between the respective obligations of the parties under the contract results from taking undue advantage whereby the value of the performance of the party in necessity is twice the value of the counter-performance.[66]

The law fixes a one-year limitation period to bring a suit for rescission. The effect of the rescission is retroactive; however, any rights acquired by third parties in good faith will not be affected.[67]

- Conversion, rectification, validation

Conversion. A void contract may not be validated,[68] but it may be converted into a different contract if the parties would have concluded such a different contract had they been aware that the contract was void, having regard to the objectives pursued by the parties.[69]

Rectification. The party whose consent was given by mistake loses his right to bring suit for the annulment of the contract if the other party offers to perform the contract in conformity with the terms and conditions of the contract which the former had intended to conclude.[70] The defendant in an action for rescission of a contract is entitled to avoid rescission if he offers to modify the contract in a manner which is sufficient to restore equitable terms.[71]

Validation. A voidable contract may be validated by the party who has the right to bring a suit for annulment,[72] while a contract which is subject to rescission may not be validated.[73]

2. Sales of goods and transfer of property

Article 1470 of the Civil Code defines a contract of sale as one having as its object the transfer of the property of goods or of real property or of another right, in return for a price. When the contract is for the sale of specific goods (which at the time of the contract are existing and identified and owned by the seller), property passes to the buyer at the making of the contract, as an effect of the consent expressed by the parties, without and before delivery of the goods; delivery is not an essential element for the conclusion of the contract.

In contracts for the sale of generic goods,[74] alternative goods,[75] goods to be acquired from a third party,[76] future goods,[77] and in sales contracts subject to a condition [78] or with reservation of title,[79] the passing of property to the buyer is deferred ex nunc to a later date. In these types of contracts, a further event is necessary before property in the goods passes to the buyer but, when the event occurs, the property passes to the buyer automatically, without the need for further action.[80] In all of these cases, the passage of the risk to the purchaser for a fortuitous loss of the object of the sale is delayed to coincide with the passage of title.[81]

Where the CISG has rules on passage of risk and the contract is governed by Italian law (Italy's CISG law), considering the prevailing effect of the CISG, the CISG rules would govern passage of risk.

- Generic goods

This is probably the most common kind of commercial sale contract. The sale of generic goods is the sale of goods (generally fungible) which are unascertained at the time of the contract and are identified only with reference to a given genus or class and as having certain characteristics of quality or quantity. The passing of property in the sale of generic goods takes place ex nunc when the goods are ascertained which, in the case of goods to be shipped from one place to another, will occur when the goods are delivered to the carrier or freight forwarder.[82]

However, if generic goods are delivered to the carrier for onward transmission to a number of buyers without being materially separated in lots, the goods are ascertained at destination at the time of the effective delivery to each buyer when they are separated in lots; therefore, the passing of the property is deferred to such date.[83] The sale of generic goods is not to be confused with the sale of goods in bulk, which is a sale of ascertained goods with property passing at conclusion of the contract.[84]

- Goods owned by third party

In the sale of goods which, at the time of the contract, are not owned by the seller, the buyer acquires the property in the goods at the moment in which the seller acquires the goods from the existing owner.[85] However, if the buyer is not aware that the goods do not belong to the seller at the time of the contract, the buyer has the right to institute proceedings for dissolution of the contract.[86] The sale of goods owned by a third party refers to ascertained goods and not to generic goods,[87] and the sale of generic goods of which the seller is temporarily out of stock is not a sale of third-party goods.[88]

- Alternative goods

The sale of alternative goods is the sale of goods to be chosen between two or more goods, which may be generic or specific. The parties may agree that the seller, the buyer or a third party has the right to make the choice. If the contract is silent, the choice will be effected by the seller.[89] With regard to the issue of the effect of a contract of sale of alternative goods on the property in the goods sold, the property will pass to the buyer when the choice is made.

- Future goods

Looking at the effect of a contract of sale of future goods on the property in the goods sold, the property will pass to the buyer when the goods come into existence.[90] The contract will be void if the goods do not come into existence, unless the buyer accepts unconditionally the risk of having to pay a given price even if the goods fail to come into existence.[91] Future goods are goods in existence but which do not belong to anyone or goods not yet in existence. Usually, the object of a sale of future goods is specific goods. However, the goods may be generic. In the latter case, the property will pass only when the generic goods are ascertained.[92] If the seller is a manufacturer selling goods not in existence at the conclusion of the contract, but it is certain that the manufacturer will produce them in the normal course of his business and production, this would not be a sale of future goods; therefore, should the goods not come into existence, the contract would not be void.[93] A sale of future goods occurs when this is clearly what the parties agreed in their contract.[94]

- Goods subject to test, sale on approval, sale by sample

With regard to the issue of the effect of a contract of sale of goods subject to test, sale on approval and of sale by sample, on the property in the goods sold, the property will pass as follows. If the goods are sold subject to test, the effects of the contract are conditional on the buyer being satisfied that the goods have the agreed qualities or are fit for their purpose.[95] The sale's effects are suspended until the test is carried out with a positive result.[96] Once the condition has occurred, the property in the goods passes with effect ex tunc, i.e., not from the date when the condition occurs but from the date of the conclusion of the contract.[97] If the test is negative, the contract will remain ineffective.[98] The condition will be satisfied if the buyer (in whose interest the test was agreed) fails to carry out the test.[99] A sale of goods on approval [100] amounts to a sale contract in itinere which is not concluded until the buyer informs the seller that the goods are approved, i.e., the seller unilaterally grants an option to the buyer to examine the goods and to conclude the contract only if he finds them suitable, at his total discretion.[101]

If the goods are delivered to the buyer for approval and the buyer fails to inform the seller of his acceptance within the term agreed by the parties or determined by usage (or within the term determined by the seller), the goods are considered approved, and the sales contract is concluded; however, if it is agreed that the buyer shall inspect the goods at the seller's warehouse, the option will be lost if the buyer fails to inspect the goods within the term.

In a sale by sample, the quality of the goods must comply with the sample. In case of non-conformity, the buyer will have the right to terminate the contract.[102] The sample must be agreed at conclusion of the contract, and the courts require that the sample be delivered to a custodian (who may be a third person or either of the parties) so that it may be used effectively as an element of proof of the object of the contract and compliance with regard to quality.[103] If the sample is lost by accident and cannot be rebuilt, the contract may be terminated for supervening impossibility of performance.[104] In a loss due to gross negligence or wilful misconduct by either party, the other party will have the right to terminate the contract and may sue for damages.[105] If, according to the contract or usage, the sample is to serve only as an approximate indication of quality, the buyer will have the right to terminate the contract only if the non-conforming goods differ substantially from the sample.[106]

- Validity of a retention of title clause

Under a sale of goods by instalments with a reservation of title clause, the passing of property in the goods is deferred until the payment of the final instalment, while all risk of loss passes from the date of delivery of the goods. Although the Civil Code refers to instalment payments, a sale with reservation of title may also be concluded in the case of a deferred payment in one lump sum.[107]

A reservation-of-title clause is enforceable against the buyer's creditors on condition that: (1) it was agreed in writing; (2) the date of the agreement is certified as being prior to the date of any attachment proceedings;[108] and (3) the clause was agreed at the same time of the sale contract.[109] In the sale of machinery, the reservation-of-title clause may be enforceable against a third purchaser only if it is recorded in a special register at the Tribunal. A reservation-of-title clause will not be enforceable against a third purchaser with a valid contract who acted in good faith at the time of delivery.[110] The original seller intending to recover the goods would have the burden of proving the absence of good faith of the third purchaser.[111]

The general framework is not reassuring for the seller, especially in the sale of moveables that do not have to be recorded in special registries. Thus, in practice, the seller with a reservation-of-title clause will attempt to obtain additional security, such as promissory notes guaranteed by a third party. The non-payment of one instalment not in excess of an eighth of the aggregate price will not allow the contract to be terminated, and the debtor will not lose his right to continue to pay at the agreed terms.[112] In the event of continued non-payments for two or more instalments, although these may not exceed an eighth of the price, it is argued that this would not be covered by Civil Code, article 1525, and the seller has the remedy of terminating the contract and requiring restitution of the goods.[113]

If the contract is terminated, the buyer has the duty to return the goods and pay damages,[114] and the seller will return instalments received but will have the right to receive a reasonable indemnity for the use of the goods, in addition to the payment of damages (generally loss of value of the goods in addition to a consideration for the use of the goods).[115]

- Reservation of title and bankruptcy

The issue of the enforceability of the reservation of title clause against the buyer's creditors is relevant particularly in relation to bankruptcy proceedings. When the sale price is payable in instalments, the buyer's bankruptcy does not cause the dissolution ex lege of the contract, and the receiver of the bankruptcy, with the authorization of the judge, may choose to succeed to the contract and pay the outstanding instalments. However the seller may ask for a deposit, unless the receiver agrees to pay the price immediately, but without interest.[116]

A written reservation-of-title clause will remain effective in the event of the buyer's bankruptcy if the date of the agreement is certified as prior to the bankruptcy order.[117] If the seller has delivered the goods at the time of the bankruptcy, the seller will have the right to make an application to obtain restitution of the goods, since the property in the goods passes to the buyer only with the payment of the final instalment.[118] A reservation of title clause inserted in a distributorship agreement, being a framework agreement which does not specifically identify the goods supplied, is not effective in case of bankruptcy of the distributor: in several cases involving the bankruptcy of car dealers, the Corte stated that the principal (car manufacturer) will succeed in obtaining the restitution of the good supplied only if: (a) the reservation of title clause is inserted in the subsequent underlying sale contract which identifies the goods supplied, and (b) the sales contract carries a date which is certified as being prior to the date of the distributor's bankruptcy.[119]

In case of dissolution of the contract, the goods will be returned to the seller who will have to reimburse the instalments received. However, the seller will have the right to deduct from such amount the reasonable indemnity for the use of the goods.[120]

- Reservation of title and rules of private international law

Under the Italian rules of private international law, proprietary aspects are governed by the lex rei sitae, i.e., the law of the place where the goods are situated at the time of the contract.[121] Compliance with the provisions of the Civil Code is a condition for the enforceability in Italy of a reservation-of-title clause agreed in an international sales contract, notwithstanding that the sale is governed by foreign law.

The traditional approach of the Italian courts with regard to ownership rights in cross-border sales of goods, is that reference is to be made to the law of the place in which the goods are located at the time when the transfer from one country to another takes place.[122] The same principle will apply with regard to the case in which the goods are transferred from a country -- the laws of which provide that with shipment the transfer of ownership rights has not taken place -- to another country the laws of which provide that the transfer would have taken place: for example, with regard to goods imported from Germany into Italy, at the time of shipment from Germany and importation into Italy, the goods, under German law, are still owned by the seller and ownership rights pass to the buyer upon delivery to the buyer at the place of destination; upon entering into Italian territory, Italian law on ownership rights will become applicable.[123]

It has been held that a reservation-of-title clause concluded in a territory not under the Italian legal system is valid and effective vis-à-vis third parties only when it has been made public in a manner equivalent to the formalities required under Italian law.[124] It also has been held that, if the reservation-of-title clause was concluded abroad and did not have a certified date, the seller does not have the right to claim vis-à-vis third parties that he is the owner of the goods, for the reason that the validity and effect of the clause is governed by Italian law and, in any case, the discipline of the reservation of title, being an exception to the free movement of goods, is a matter of public policy and must be governed by Italian law.[125]

- Sale with buy-back clause

The seller may reserve for himself the right to re-obtain the property in the goods sold [126] within a maximum term of two years from the transfer of the goods [127] in return for the restitution of the sale price and the reimbursement of certain costs, i.e., expenses, other payments lawfully made for the sale, necessary repair costs, and costs which have increased the value of the goods.[128] An agreement to return a price higher than the sale price is void.

A sale with buy-back clause is valid on condition that it is agreed at the time of the sale contract,[129] although it may be written in a separate document.[130] To enforce his right to buy the goods back, the seller is required to notify the buyer of his intention.[131] The seller's right is not enforceable in the case of a resale against a buyer in good faith,[132] and in the case of registered moveables (aircraft, ships, and vehicles) if the clause has not been recorded in the special registries.[133] The property in the goods sold under a buy-back clause passes to the buyer at the time of the sale. The courts are strict in requiring that the buy-back clause does not conceal an agreement irrevocably allowing the creditor to become the owner of the debtor's pledged property if the debtor fails to pay his debt within the agreed term. The prohibition was introduced to protect the weaker party who obtains a loan.[134]

3. Validity of standard terms of contract

The general terms of contract prepared by either contracting party are binding on the other party if, at the time of making the contract, the latter was aware of their contents or should have been aware of them, using the normal diligence.

The following clauses inserted in general conditions of contract [135] or in contracts concluded by means of printed forms prepared by one party to govern a number of contracts [136] are considered particularly restrictive (clausole vessatorie) and are not binding unless specifically approved in writing:

(1) Limitation of liability for benefit of the party who prepared the contract;
(2) Termination of the contract or suspension of performance;
(3) Cancellation of rights;
(4) Limitations of the right to make objections;
(5) Restrictions on contractual relationships with third parties;
(6) Automatic prorogation or renewal of the contract;
(7) Arbitration clauses, and
(8) Derogation of the jurisdiction of the courts.[137]

A contract is considered per adesione when it is drafted unilaterally by one party on the basis of a scheme to be used for an indefinite number of contracts, so that its formation is not the result of a negotiation process and the other contracting party only has the option of accepting or rejecting the contract.[138]

A clause in the seller's general conditions whereby the buyer expressly exonerates the seller from any liability in case of non-delivery or late delivery of the goods for any reason, including the seller's wilful misconduct or gross negligence, is void; even if expressly approved in writing by the buyer.[139]

4. Validity of a choice of forum clause

Article 4 of the Italian statute on conflicts of laws [140] provides:

"[…]

"2. The jurisdiction of the Italian courts may be derogated by an agreement in favor of a foreign court or of a foreign arbitrator if the derogation is proven in writing and the proceedings relate to rights which the parties are entitled to dispose of.

"3. The derogation shall have no legal force if the court or the arbitrator chosen have declined the jurisdiction or in any event cannot adjudicate on the proceedings."

Therefore a valid choice of forum does not have to be agreed in writing, but must be evidenced in writing: in other words, a choice of forum clause agreed orally is valid and effective, however a written clause is required for the purposes of submitting proof (a written clause is recommended since proof of the choice of forum clause may not be given by means of witnesses and a request for the interrogation of witnesses would be rejected for non-admissibility).[141]

The prorogation of jurisdiction as between member States of the EU is governed by Art. 17 of the 1968 Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters (as amended). An almost identical provision is laid down in the Lugano Convention of 16 September 1998 as between the EU Member States and the EFTA countries, art. 17. Interestingly, art. 23 of the Council Regulation (EC) No 44/2001 of 22 December 2000 (on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters), that will enter into force on 1 March 2002, specifies that "Any communication by electronic means which provides a durable record of the agreement shall be equivalent to 'writing'."[142]

5. The existence of an agency relationship

By the contract of agency. one party permanently undertakes, in return for a remuneration, to promote the making of contracts for the account of another person within a specified territory.[143]

The Italian legislation implementing Council Directive 86/653/EEC for the co-ordination of the laws of Member States related to Self-employed Commercial Agents [144] has added a second paragraph to Civil Code art. 1742 that reads as follows: "Each party has the right to obtain from the other party a copy of the contract that he has subscribed."

While prior to 1991 there was no question that a valid agency contract did not require to be concluded in writing neither for substantive purposes (ad substantiam) nor for evidentiary purposes (ad probationem), the second paragraph added to art.1742 in 1991 has prompted a debate as to whether the written form is necessary for evidentiary purposes;[145] the Supreme Court has reversed its previous jurisprudence and has held that while an agency contract may be validly stipulated orally, the written form is necessary for evidentiary purposes. It follows that evidence of the existence of a valid agency contract may not be given by means of witnesses (except for the purpose of proving that the loss of the written document was not due to the party's negligence) nor by means of "presumptions".[146]

6. The right to set-off against the other party's claim

The Italian internal law on set-off,[147] and an interesting comparison with German law are dealt with by a German court decision:

"The set-off against [buyer's] further counterclaims, set forth during the appeal, does not have to be denied because of the German courts' possible lack of international jurisdiction.[148] [Seller] accepted the set-off without argument so that the set-off is permissible according to EuGV Art. 18. The question until when a jurisdiction defense must be pleaded is determined by the lex fori.[149] According to ZPO 282(3), which must be applied analogously, plaintiff had to plead the jurisdictional defense prior to the trial of the case, as soon as the set-offs were identifiably introduced into the trial.

"The set-off is, however, not permissible under C.c. Art. 1243,[150] because [buyer's] claims, that were not granted by the trial court and still set forth on appeal, are not adequately determined as to their amount and legal basis.

"The set-off itself is subject to the law of the claim against which it is set-off.[151] Here, that is Italian law according to EGBGB Art. 28.[152] Codice civile Art. 1241 et seq. are determinative. The requirement is that two persons owe each other performance of the same kind, each certain and due; then the set-off voids the mutual claims from the day of their mutual existence on. Contrary to German law, C.c. Art. 1243 requires that both claims be certain; the set-off against a claim in dispute is not permissible. That is not the case if the other party agrees to the set-off,[153] but this does not apply to plaintiff, who expressly opposed the set-off. Uncertain claims can be set forth in the case of C.c. Art. 1243(2) by cross-claim.[154] Within the framework of the German civil procedure, which is subject to the lex fori, there is no such possibility of a set-off in court proceedings as defined by C.c. Art. 1243(2); the possibility of a set-off depends solely on the substantive requirements of Italian law.[155]

"All claims marked for set-off by [buyer] on appeal are in dispute and uncertain regarding their legal basis and amount. Claims in dispute are only considered "liquid" as defined by C.c. Art. 1243 if a denial is evidently unfounded."[156]

Set-off extinguishes both debts from the date on which they co-exist. The court cannot apply it ex officio. Set-off is not barred by prescription unless such prescription was completed on the date on which the two debts began to co-exist.[157] When set-off cannot be claimed: a debtor who has accepted, purely and simply, the assignment of the rights of the creditor to a third party cannot claim against the assignee the set-off that he could have claimed against the assignor.[158] An assignment not accepted by the debtor, but of which he is notified, bars the set-off of claim arising after such notice.[159]

7. The validity of an assignment of receivables

A creditor can assign his receivables even without the debtor's consent, provided that they do not have a strictly personal character or that the transfer is not forbidden by law. The parties can exclude the assignability of receivables, however, the agreement is not effective against the assignee unless it is proved that he knew of it at the time of the assignment.[160] The assignor is required to deliver to the assignee the documents evidencing the receivables that are in his possession. If the receivable is assigned only in part, the assignor is bound to give the assignee an authenticated copy of the documents.[161] By effect of the assignment, the receivables are transferred to the assignee with any privileges, guarantees, and other accessories.[162]

With respect to the assigned debtor, the assignment is effective when he has accepted it or when he has been notified of it. However, even before such notice, a debtor who pays the assignor is not discharged if the assignee proves that the debtor had knowledge that the assignment had taken place.[163] If the receivables have been the subject of more than one assignment to different persons, the first assignment of which the debtor has been notified or that has first been accepted by him, by an instrument having a certain date, prevails, even if it is of a later date.[164] When the assignment is a non-gratuitous transaction, the assignor is bound to guarantee the existence of the receivables at the time of the assignment. Such guarantee can be excluded by agreement, but the assignor always remains liable for his own act.[165]

A special statute lays down rules on the assignment of business receivables [166] when the assignor is a business enterprise, the assigned receivables derive from business contracts and the assignee is a bank or financial intermediary governed by the Consolidated Law on banking activities and whose corporate objective includes the purchase of business receivables. Any other assignments are governed by standard civil law provisions on assignment examined above.

The assignor shall guarantee within the limits of the agreed consideration, the solvency of the debtor, unless the assignee renounces in full or in part to the guarantee.

As for the effects of the assignment vis-à-vis third parties, if the assignee has paid in full or in part the consideration of the assignment and the payment is made on a certified date, the assignment can be validly opposed: (a) to the assignor's purchasers; (b) to the assignor's creditors who have attached the credit after the date of the payment; (c) to the assignor's bankruptcy declared after the date of payment, except for the provision of art. 7 par. 1 hereunder (art. 5).

Bankruptcy revocation of payments by assigned debtor - The payments made by the assigned debtor to the assignee shall not be subject to the revocation action under art. 67 Bankruptcy Statute. Nevertheless, such an action may be instituted by the receiver of the bankruptcy against the assignor if the receiver proves that the assignor was aware of the state of insolvency of the assigned debtor at the date of payment to the assignee.

Assignor's bankruptcy - The effectiveness of the assignment vis-à-vis third parties shall not be opposable to the assignor's bankruptcy if the receiver proves that the assignee was aware of the state of insolvency of the assignor when it performed the payment of the consideration if the payment was made by assignee to assignor during the year prior to the bankruptcy judgment and prior to the due date of the assigned receivables. The receiver of the assignor's bankruptcy may terminate the assignment contract concluded by the assignor with regard to the assignments which are not yet in existence at the date of the judgement of bankruptcy. In case of termination, the receiver shall reimburse the assignor the consideration paid by the assignee to the assignor for the receivables assigned.

8. Prescription (i.e., limitation period)

Italy is not a party to the United Nations Convention on the Limitation Period in the International Sale of Goods (New York, 14 June 1974) as amended by the Vienna Protocol (11 April 1980). Therefore reference has to be made to the domestic law rules contained in the Civil Code. The ordinary prescriptive or limitation period (which is applicable to the sale of goods) is ten years. There are various specific limitation periods which are shorter, that include: five years for claims in damages arising out of an illicit act (tort or crime), five years in the case of claims concerning periodical payments.

- Suspension and interruption

A limitation period may be either suspended or interrupted. It is suspended where the inertia of the holder of a right is due to circumstances expressly defined by law. In such cases, the period during which a cause for suspension exists is not taken into account in determining the limitation of period. On the other hand, a limitation period is interrupted where the owner of the right performs an act in exercise of his right (e.g., by putting the debtor in "delay") or where the right itself is acknowledged by the passive subject of the legal relationship (e.g., by the acknowledgement or part payment of a debt). In such cases, because the very cause of the institution is lacking (that is, inertia), the whole limitation period must run again before the right can be extinguished. Interruptory acts, however, may have either an instantaneous effect, in which event the new limitation period will immediately commence to run, or a prolonged effect in which event the new limitation period will not commence to run until after some time, e.g., the initiation of an action will prevent the commencement of the new limitation period until the judgment in the action becomes res judicata.

- Presumptive prescriptions

Italian law also contains the concept of so-called presumptive prescriptions which, however, do not give rise to limitation periods in a strict sense. They, instead, give rise to a rebuttable presumption that the obligations arising from everyday informal transactions are extinguished after the lapse of a defined period. The prescriptive presumption does not operate to extinguish the right, but merely gives rise to a presumption that the debt was paid and thus extinguished: it goes to questions of proof only and not to substantive rights. The presumptive limitation periods are six months, one year or three years, depending upon the relationship in question (Civil Code, Arts. 2954 - 2956). The only way in which a creditor may rebut the presumption is by issuing a challenge to the debtor to take a decisory oath, that is, to challenge the debtor to swear that the debt was paid. If the debtor takes the oath, the matter is closed, subject to any action for perjury; if the debtor refuses to swear the oath, then the presumption is rebutted and the creditor acquires the right to prove that the debt is unpaid.

- Prescription and forfeiture

Italian law draws a distinction between prescription and forfeiture (decadenza). There are two basic differences between these two institutions. First, although prescription is based upon a subjective element, that is, the inertia of the holder of a right, forfeiture concerns the loss of a possibility of exercising a right because of an objective element, that is, the failure to perform a given act within the peremptory term prescribed by law. All subjective elements are irrelevant to forfeiture which depends upon a sole objective factor: the lapse of the prescribed time. Therefore, unlike prescription, there can be no suspension or interruption of the defined time. Second, while prescription concerns the loss of an existing right, forfeiture impedes the acquisition of a new right. As the two notions are different, it is clear that a right may be subject to both forfeiture and prescription, e.g, in the case of domestic sales, article 1495 par. 1 Civil Code provides that an action for the breach of warranty against latent defects is forfeited if the purchaser fails to notify the vendor of a latent defect within eight days of its discovery; yet, in accordance with article 1495 par. 3 Civil Code the limitation period for the action is one year from the consignment of the article.

Forfeiture may be prescribed by law or by agreement, but in the latter case it must relate to a disposable right and must not render the exercise of the right too burdensome.

9. The validity of a penalty clause

The seller's right to damages can be reinforced with a clause whereby it is agreed that, in a breach or late performance (including the buyer's late payment to the seller), the party in breach will pay a penalty.[167] The purpose of this clause is to limit and to liquidate the damages to the promised penalty, unless set-off was agreed on for additional damages, and the creditor does not have to submit to the courts proof of the damages. The fixed penalty sum may be cumulated with additional damages, however, the right to additional damages must be agreed between the parties: in this case the penalty clause is simply an early liquidation of the damages which will remain absorbed, in the event of proof of further and additional damages, within the total amount of damages liquidated by the court.[168]

The courts may reduce a penalty which is grossly excessive. The existence of a penalty clause cannot constitute a means for permitting to a debtor to avoid his responsibilities in the sense that notwithstanding the presence of the penalty limiting the reimbursable damages, the debtor will be held responsible without limitations if he acts with wilful misconduct or gross negligence.[169]

10. The validity of a settlement agreement

A settlement agreement may be validly concluded orally, however a written document is required for the purpose of submitting evidence.[170] Therefore a written document is recommended since proof of the settlement may not be given by means of witnesses and a request for the interrogation of witnesses would be rejected for non-admissibility.

The burden of proof of the existence of a settlement falls upon the party who invokes its effects (in the case that the debt for which the recovery action had been instituted has been extinguished): the necessity of the written form "ad probationem" excludes the possibility to furnish proof by means of witnesses or of "presumptions," although it does not preclude resorting to other means of evidence and to request the court to order a third party to exhibit documents (art. 210 c.c.p.).[171]

The Civil Code defines a settlements as the contract whereby the parties, by making mutual concessions, bring to an end pending litigation or prevent litigation that could arise as between them.[172] Clearly in order to settle, the parties must have the capacity to dispose of the rights which are the subject matter of litigation,[173] and a settlement will be void if such rights, either by their nature or by express provision of the law, cannot be disposed of by the parties.

A settlement in a civil action involving questions of falsity of documents is not effective unless approved by the tribunal after hearing the public prosecutor.[174] A settlement concerning an unlawful contract is void even if the parties have made provision for its nullity. In other cases in which the settlement involves a void transaction, annulment of the settlement can be demanded only by the party who was unaware of the cause of nullity of the transaction.[175] A settlement is voidable if it was made, wholly or in part, on the basis of documents which have subsequently been discovered to be false.[176] A settlement by the parties generally concerning all of the business which they might have had with one another, cannot be attacked because one of the parties subsequently becomes aware of documents which were unknown to him at the time of the settlement; unless such documents had been concealed by the other party the settlement is voidable when it concerns only a specified piece of business and documents discovered at a subsequent time prove that one of the parties could not claim any right.[177]

Finally, dissolution of a settlement on grounds of non-performance cannot be demanded if the pre-existing relationship was extinguished by novation, unless such right of dissolution has been expressly agreed upon.[178]

11. Assumption of debt

The Civil Code distinguishes between delegation, expromission, and assumption of debt as means, other than performance, for extinguishing legal obligations.

- Delegation

If the debtor assigns a new debtor to the creditor, and the new debtor binds himself to the creditor, the original debtor is not discharged from his obligation, unless the creditor expressly declares that he discharges him. However, the creditor who has accepted the obligation of the third person has no remedy against the delegor unless he has previously requested payment from the delegee.[179]

If the debtor has delegated a third person to make payment, such person can bind himself to the creditor, unless the debtor has forbidden it. The third person delegated to make payment is not bound to accept the obligation, even if he is a debtor of the delegor. Usage to the contrary is excepted.[180] The delegor can revoke the delegation until the time when the delegee has assumed the obligation to the creditor or has made payment to him. The delegee can assume the obligation or make payment to the creditor even after the death or the supervening incapacity of the delegor.[181]

The defenses available to delegee against the creditor are those connected with his relationships with him. Unless the parties have otherwise agreed, the delegee cannot interpose against the creditor the defenses which the former might have set up against the delegor even if the creditor had knowledge of them, unless the relationship between the delegor and delegee is void. Neither can the delegee set up defenses connected with the relationship between the delegor and the creditor, if the parties did not make express reference to such relationship.[182]

- Expromission

Expromission occurs when a third person, without being delegated by the debtor, voluntarily assumes the obligation of the debtor towards the creditor: in the case the said person is bound in solido with the original debtor, unless the creditor expressly releases the latter. Unless otherwise agreed, the third person cannot set up against the creditor the defenses connected with the third person's relationships with the original debtor. However, he can set up the defenses which the original debtor could have set up against the original creditor, unless such defenses are personal to the original debtor or are derived from acts subsequent to the expromission. The third person cannot set up against the creditor the set-off which might have been set up by the original debtor, even if such set-off occurred before the expromission.[183]

- Assumption of debt

An assumption of debt occurs if the debtor and a third person agree that the latter shall assume the former's debt, in which case the creditor can adhere to the agreement, thus making the stipulation irrevocable as to him. The creditor's adhering imports the release of the original debtor only if this constitutes an express condition of the stipulation or if the creditor expressly releases him. If the debtor is not released, he remains bound in solido with the third person. In every case, the third person is bound to the creditor who adhered to the stipulation up to the limits within which he assumed the debt, and he can set up against the creditor the defenses founded on the contract on the basis of which the assumption took place.[184]

- Rules common to the above

A creditor who, in pursuance of a delegation, has released the original debtor, has no action against him if the delegee becomes insolvent, unless he made a specific reservation of it. However, if the delegee was insolvent at the time he assumed the obligation toward the creditor, the original debtor is not discharged. The same provisions apply when the creditor has adhered to the assumption of the debt stipulated in his favor and the release of the original debtor was an express condition of such stipulation.[185] In all cases in which the creditor releases the original debtor, all guarantees attached to the claim are extinguished unless the person who furnished them agrees specifically to continue them.[186] If the obligation assumed by the new debtor toward the creditor is declared void or is annulled, and the creditor had released the original debtor, the latter's obligation revives, but the creditor cannot avail himself of the guarantees furnished by third persons.[187]

12. Burden of proof in case of defective goods

The general principle under Italian internal law regarding the allocation of the burden of proof is that the party that invokes its right to assert a claim is required to demonstrate the facts, which support the claim. In an action for a claim for non-conformity of the goods sold, the burden of proof of the defects and of any damaging effects, as well as of the existence of a relationship of cause and effect between the former and the latter, falls upon the purchaser who asserts the claim, while the seller is required to submit proof of his absence of negligence only if the purchaser has first successfully proven the effective existence of the seller's breach of contract.[188]

The burden of proof that notice of non conformity has been made within the period from discovery laid down by the law (in Italian domestic law: eight days) falls upon the purchaser since this notice constitutes a condition precedent for bringing an action for avoidance or price reduction.[189] Considering that the notice of lack of conformity and the circumstance that it has been given in due time constitute conditions precedent for the admissibility of the action, the burden of proof in respect of both lies upon the purchaser.[190]

13. Novation

An obligation is extinguished when the parties substitute a new obligation having a different object or a different source for the old obligation. The intent to extinguish the preceding obligation must appear in an unequivocal manner.[191] The issuance or renewal of a document, the insertion or elimination of a time limit and any other accessory modification of the obligation constitute a conduct that does not imply novation.[192]

If the seller acknowledges the existence of non-conformities in the goods sold and undertakes to carry out the necessary repairs, this shall constitute a novation only with regard to the seller's obligation to warrant the lack of defects, while the initial contract of sale as between the parties shall stand.[193] The recognition of defects of conformity in the goods and the sellers' undertaking to eliminate the defects is only one of the manners available to the seller to ensure and implement his duty to deliver goods which are in conformity [194] and does not constitute a novation unless proof is submitted of the effective intention of the parties to replace the original contract with a new contract having a different object and title, as required for novation under Civil Code articles 1230 and 1231 (the latter expressly clarifies in fact that there shall be no novation in case of a mere modification of accessory elements of the contract).[195] The protest of a cheque issued in payment of the price does not constitute novation of the debt arising from the sale contract.[196] Unlike the simple recognition of vices or defects of quality, that make the buyer's notice of defect of conformity useless, the recognition made by the seller, after that the buyer's right to give notice is forfeited, of the existence of lack of conformity and the seller's undertaking to eliminate them, gives life to a new obligation, and extinguishes the original obligation by way of novation, when the said undertaking is made in replacement of the original obligation to warrant defects of conformity falling within the contents of the original contract.[197]

The novation is without effect if the original obligation did not exist. When the original obligation arose from a voidable (1425) transaction, the novation is valid if the debtor validly assumed the new debt knowing of the defect in the original transaction.[198] There shall be a subjective novation when a new debtor is substituted for the original one.[199]

14. Liability of the seller for death or personal injury caused by the goods to any person

The Italian statute. (Presidential Decree 24 May 1988 No. 224) implementing the EU product liability directive,[200] does not provide for any limitations as to the existence and calculation of damages.[201] Damages are payable to any person who has suffered personal injuries or to the heirs in case of death; the person entitled to damages is not only the consumer or user of the product, but includes any person who comes into contact with the product for reasons of hospitality or service, including so-called bystanders. The damaged persons can include the entrepreneur who uses the product within the production process of his enterprise, and his employee.

In the absence of any special criteria laid down by the Italian statute, damages are to be calculated pursuant to the usual methods and criteria for calculating damages caused by death or by personal injuries, including non-material damage (danno morale).[202] Non-material damages are payable if the circumstances that have caused the injuries or death constitute a criminal offence (reato), pursuant to art. 185 penal code and art. 2059 Civil Code. Furthermore, the Italian implementing statute has not introduced the total liability cap provided for under Article 16 of the Directive.[203]

- Types of damages and how to calculate damages caused by death or personal injuries under Italian law

According to the Italian jurisprudence, damages caused by death or by personal injuries include:

- biological damage (danno biologico), e.g., the compensation of the impairment of the psycho-physical integrity of the individual;

- patrimonial damage (danno patrimoniale), e.g., compensation of the economic prejudice directly connected to the personal injuries; patrimonial damages comprise the effective loss and the loss of profits;

- non-patrimonial damages, or moral damages (danno morale), e.g., the compensation of the suffering caused by the injuries and the illness suffered, that may only be compensated in the cases expressly defined by law (Civil Code, art. 2059 which primarily restricts compensation of moral damages connected with commission of a crime).

Patrimonial damages are liquidated on the basis of criteria that are substantially rigid, and rarely the courts will refer to the "court's equitable appreciation" (equo apprezzamento del giudice), while biological damages and moral damages are liquidated primarily on the basis of subjective evaluations.

The liquidation of biological damages is based upon tables of liquidation adopted by individual courts. The percentage value of the injuries is determined by a medical expert (medico legale). For example: Total bilateral blindness: 85%; Loss of both hands: 80%; Amputation of one leg 32-40%; Loss of both legs: 70%.

The tables for the liquidation of biological damages from permanent invalidity (invalidità permanente) adopted by the Tribunal of Milan (1997), for example, work as follows: the percentage of invalidity corresponds to a value of point (valore del punto), expressed in thousands of Lira - from a minimum of 1,600 for 1% of invalidity to a maximum of 1,100,000 for 100% of invalidity - and to the age of the injured person at the time of the accident. The calculation of biological damages from permanent invalidity is a simple operation of arithmetic: the percentage of invalidity assigned by the medical specialist corresponds to the damages expressed in thousands of Lira, that is multiplied by the coefficient relating to the age of the individual. The result is the total compensation for damages. Example:

- percentage of invalidity: 12%
- corresponds to 39,300
- age of the injured person: 25
- coefficient 0.880; therefore
- 39,300 x 0.880 = 34,584,000 Lira

As for the total temporary invalidity (invalidità temporanea totale), the compensation is fixed in an amount for each day of invalidity, proportionate to the seriousness of the injuries (from a minimum of 50,000 Lira to a maximum of 100,000 Lira per day). Relative temporary inability (invalidità temporanea relativa) is 25,000 Lira per day.

Moral damages from permanent inability are liquidated in an amount that varies from ¼ to ½ of the biological damages from permanent inability as determined based on the tables, whilst temporary moral damages are 1 to ½ the amount liquidated for biological damages from absolute temporary inability. Moral damages to survivors for death of the relative are calculated in different manners depending on the kind of relationship (parents, spouse, children, brother and sister), but taking as a basis the moral damages that the deceased would have been entitled to, had he/she survived with a permanent invalidity of 100%. Examples of damages for permanent invalidity:

Percentage of invalidity    Age               
18
45
60
  5%     9,150,000     7,800,000     7,050,000
30% 157,838,000 134,550,000 121,613,000
80% 788,218,000 671,923,000 607,315.000

15. Interest for late payment

Under Italian domestic law, the rate of legal interest as from 1 January 2001 is 3.5%. In previous years the rates were as follows: until 15 December 1990, 5%; from 16 December 1990 through 31 December 1996, 10%; from 1 January 1997 through 31 December 1998, 5%; from 1 January 1999 through 31 December 2000, 2.5%.

The rate of legal interest may be varied annually by the Ministry for the Treasury with a decree to be published in the Official Gazette by 15 December of the year preceding the year to which the new rate refers, based upon the gross average annual revenue of Government bonds having a duration of over twelve months and taking into account the rate of inflation recorded in the year. The rate will remain unchanged for the following calendar year if the new rate is not fixed by 15 December.[204] Interest at a higher rate than the legal rate must be agreed in writing, otherwise it will be due at the legal rate.


FOOTNOTES

* The paper, in its original version, won the "Monique Raynaud-Contamine Award" as the best report submitted to the 45th Congress of the Union Internationale des Avocats - UIA, Turin (Italy), 29 August - 2 September 2001.

1. Franco Ferrari, Assumption of Debts as a Subject Matter Excluded from the UN Sales Convention, Commentary on OGH, 24 April 1997.

2. See Bianca/Bonell-Khoo, Comment on Article 4, in Bianca/Bonell (editors), Commentary on the International Sales Law, Giuffré (Milan 1987) p. 45.

2a. Jacob S. Ziegel, Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods (July 1981) <http://www.cisg.law.pace.edu/cisg/text/ziegel4.html>.

3. Treves, Vendita e altri contratti del commercio internazionale, in Pocar, Treves, Clerici et al., Codice delle convenzioni di diritto internazionale privato e processuale, Giuffré (Milan 1999), pag. 507-508: "Art. 57 Law No. 218/1995, confirms the applicability to contractual obligations of the 1980 Rome Convention, without prejudice for the other international conventions, insofar as applicable. In light of the said recent provision, all doubts concerning the prevailing effect of the 1955 Convention are definitely set aside"; id., Art. 57, in Riforma del sistema di diritto internazionale privato - Commentario, Riv. dir. internaz. priv. proc. 1995, at p. 1184; Luzzatto, Vendita (diritto internazionale privato), in Encicl. dir., Giuffrè (Milan 1993), vol. XLVI, pag. 502 et seq., at pag. 513: the Hague Convention has a universal character (erga omnes) and replaces the domestic rules of private international law with regard to the sale of movables goods; thus it is applicable even if the law designated by the Convention as the applicable law is the law of a non-Contracting State; see also Ballarino, Diritto internazionale privato, Cedam (Padova 1996), at p. 636.

4. Art. 25.1(d) Law No. 218/1995.

5. Art. 4, 1955 Hague Convention.

6. Ballarino, op. cit. 639.

7. The judgements mentioned in paragraphs (a) to (c), except for the Tribunale di Vigevano judgement, are mentioned and discussed by Michael Joachim Bonell and Fabio Liguori in The U.N. Convention on the International Sale of Goods: A Critical Analysis of Current International Case Law - 1997 (Part 1), Revue de droit uniforme/Uniform Law Review (1997) 385-395.

8. Oberlandesgericht Koblenz, 16 January 1992, n. 5 U 534/91, in Recht der Internationalen winschaft (1992) 1019; IPRax 46 (1994).

9. Federal Court, South Australia District Adelaide, 28 April l995, in 57 Federal Court Report (1995) 216.

10. Amtsgericht Nordhorn, 14 June 1994, n. 3 C 75/94, in UNILEX 1996.

11. Cámara Nacional en lo Comercial, 14 October 1993, n. 45626, in El Derecho (25 April 1996) 4.

12. Cf. Landgericht Hamburg, 26 September 1990, n. 5 O 543/88, in IPRax: Praxis des Intemationalen Privat- und Verfahrensrechts (1991) 400.

13. Cf. Landgericht Hamburg, 26 September 1990, cit.; Landgericht Berlin, 24 January 1994, n. 2 U 7418/92, in Recht der Internationalen Wirtschaft (1994) 683; Amtsgericht Alsfeld, 12 May 1995, n. 31 C 534/94, in Neue Juristische Wochenschrift Rechtsprechungs-Report (1996) 120.

14. Cf. Arrondissementsrechtbank Arnhem, 25 February 1993, n. 1992/182, in Nederlands Internationaal Privaatrecht (1993) nr.445, Arrondissementsrechtbank Roermond, 6 May 1993, n. 920159, in UNILEX 1996; Oberlandesgericht Koblenz, 17 September 1993, n.2 U 1230/91, in Recht der Internationalen Wirtschaft (1993) 934; Oberlandesgericht Hamm, 9 June l995, n.11 U 191/94, in IPRax: Praxis des Internationalen Privat- und Verfahrensrechts (1996) 269; Oberlandesgericht Stuttgart, 21 August 1995 n. 5 U 195/94, in Recht der Internationalen Wirtschaft (1995) 943; Oberlandesgericht Düsseldorf, 11 July 1996, n.6 U 152/95, in Recht der Internationalen Wirtschaft (1996) 958. A different opinion seems to be found in the judgment rendered by the Arrondissementsrechtbank Middelburg, 25 January 1995, n.300/94, in Nederlands Internationaal Privaatrecht(1996) nr. 127, which held that set-off is a matter not expressly settled by the Convention.

15. Cf. Bezirksgericht Arbon, 9 December 1994, n. BG 9341/94, in UNILEX 1996; Oberlandesgericht Hamm, 8 February 1995, n. 11 U 206/93, in IPRax: Praxis des Internationalen Privat- und Verfahrensrechts (1995) 197.

16. ICC Court of Arbitration, 23 August 1994, n. 7660/JK, in ICC International Court of Arbitration Bulletin (1995) n. 6, 69; Oberlandesgericht Hamm, 9 June 1995, n. 11 U 191/94, in IPRax: Praxis des Internationalen Privat- und Verfahrensrechts (1996) 269.

17. ICC Court of Arbitration, n. 7197/1992, in Journal du droit international (1993) 1028; Gerechtshof Arnhem, 22 August 1995, n. 94/305, in Nederlands Intemationaal Privaatrecht (1995) nr. 514.

18. Oberlandesgericht Rostock 27 July 1995, n. 1 U 247/94, in OLG-Report (1996) 50.

19. Landgericht Aachen, 14 May 1993, n. 43 O 136/92, in Recht der Internationalen Wirtschaft (1993) 760.

20. Handelsgericht St. Gallen, 24 August 1995, n. HG48/1994, in UNILEX 1996. On the other hand, application of the Convention precludes recourse to domestic laws regarding defects in the quality of the goods and "Wegfall der Geschäftsgrundlage", as these matters are exhaustively covered by the Vienna Convention, as rightly pointed out by Landgericht Aachen, 14 May 1993, n. 43 O 136/92, in Recht der Internationalen Wirtschaft (1993) 760.

21. OGH, April 24, 1997.

22. ICC Court of Arbitration, n. 7331/1994, in ICC International Court of Arbitration Bulletin (1995) n.6, 73.

23. Rb Amsterdam, 5 October 1994, NIPR no. 231 (1995).

24. ICC Court of Arbitration, n. 6653/1993, in Journal du droit international (1993) 1040.

25. Handelsgericht Zürich, 9 September 1993, n. HG930138 U/H93, in UNILEX 1996. See also Handelsgericht Zürich, 26 April 1995, n. HG920670, in UNILEX 1996.

26. Judge Alessandro Rizzieri, 12 July 2000, Rheinland Versicherungen v. Atlarex S.r.l.

27. See Charles Sant 'Elia in Pace University website.

28. Arbitral Panel of the ICC, award no. 6653 of 1993; Repubblica e Cantone del Ticino, Corte d'Appello, seconda camera civile, 15 January 1998.

29. LG Frankfurt 6 July 1994.

30. HG Zürich 30 November 1998.

31. HG Zürich 26 April 1995. According to the Vigevano court:

"La questione della ripartizione dell'onere della prova non può quindi considerarsi esclusa dall'ambito della disciplina della Convenzione, a differenza ad esempio della compensazione (così anche OLG München, 9 luglio 1997, pubblicata nella banca dati dell'Università di Friburgo, Germania, dedicata alla Convenzione delle Nazioni Unite, rinvenibile al seguente sito internet: www.jura.uni-freiburg.de/ipr1/cisg; OLG Koblenz, 31 gennaio 1997, in OLG-Report Koblenz, 1997, 37 ss.), della prescrizione (in questo senso si vedano LG Düsseldorf, 11 ottobre 1995, pubblicata nella banca dati dell'Università di Friburgo sopra menzionata; OLG Hamm, 9 giugno 1995, in Neue Juristische Wochenschrift Rechtsprechungs-Report, 1996, 179; Corte Arbitrale della Camera di Commercio Internazionale, lodo arbitrale no. 7660, in ICC International Court of Arbitration Bulletin, novembre 1995, 69 ss.), della cessione del credito derivante dal contratto (cf. OLG Hamm, 8 febbraio 1995, in Praxis des internationalen Privat- und Verfahrensrechts, 1996, 197), della rappresentanza (Corte Suprema austriaca, 20 giugno 1997, in österreichische Juristenzeitung, 1997, 829 ss.; AG Alsfeld, in Neue Juristische Wochenschrift Rechtsprechungs-Report, 1996, 120), e della validità di una clausola penale apposta dalle parti (Corte Arbitrale della Camera di Commercio Internazionale, lodo arbitrale no. 7331, in Journal du droit international, 1995, 1001 ss.; OLG München, 8 febbraio 1995, pubblicata nella banca dati dell'Università di Friburgo sopra indicata). A differenza di queste ultime questioni che - non essendo disciplinate dalla Convenzione delle Nazioni Unite - vanno risolte sulla base del diritto applicabile in virtù delle norme di diritto internazionale privato del foro, la questione della ripartizione dell'onere della prova deve - come tutte le questioni riguardanti materie disciplinate, anche se non espressamente, dalla Convenzione - essere risolta in virtù dell'art. 7, 2° comma, in conformità con i principi generali posti dalla medesima Convenzione (così espressamente LG Frankfurt, 6 luglio 1994, pubblicata nella banca dati dell'Università di Friburgo sopra indicata)."

32. Cf. P. Schlechtriem, Uniform Sales Law, cit., 34-35.

33. Handelsgericht Zürich, 26 April 1995, n. HG 920670, in UNILEX 1996.

34. Oberlandesgericht Düsseldorf, 2 July 1993, n.17 U 73193, in Recht der International Wirtschaft (1993) 845. Published in English in A.H. KRITZER, Guide to Practical Applications of the United Nations Convention on Contracts for the International Sale of Goods (Deventer), vol. 2, Suppl. 9 (1994).

35. C. Witz, Les premières application jurisprudentielles du droit uniforme de la vente internationale (Convention des Nations Unies du 11 avril 1980) (Paris, 1995) 40.

36. For a summary cf. Franco Ferrari Uniform Application and Interest Rates Under the 1980 Vienna Sales Convention, Cornell Review of the Convention on Contracts for the International Sale of Goods (1995) 3-19.

37. For decisions dealing with the calculation of the rate of interest by applying domestic law, see, e.g., Judgment of 3 March 1994, Oberlandesgericht (OLG) München [Appeals Court], Neue Juristische Wochenschrift Rechtsprechungs-Report 1075 (1994); Judgment of 19 September 1991, Landgericht (LG) Frankfurt, Recht der Internationalen Wirtschaft 952 (1991); Judgment of 13 June 1991, OLG Frankfurt, Recht der Internationalen Wirtschaft 591 (1991); Judgment of 26 September 1990, LG Hamburg, Europäische Zeitschrift für Wirtschaftsrecht 188 (1991); Judgment of 24 April 1990, Amtsgericht (AG) Oldenburg, Praxis des Internationalen Privat- und Verfahrensrechts 336 (1990); Judgment of 6 September 1989, LG Stuttgart, Recht der Internationalen Wirtschaft 984 (1990); Judgment of 31 August 1989, LG Stuttgart, Praxis des Internationalen Privat-und Verfahrensrechts 317 (1990).

38. See Vienna Arbitral Tribunal 15 June 1994 (Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft) SCH-4318 arbitrator: Michael J. Bonell: "Article 78 of the CISG, while granting the right to interest, is silent on the question of the applicable rate. In international writings and case law to date it is disputed whether the question is outside the scope of the Convention - with the result that the interest rate is to be determined according to the domestic law applicable on the basis of the relevant conflict-of-laws rules (in this sense see, among others, HERBER/CZERWENKA, loc. cit., 1991, 347; Oberlandesgericht Frankfurt, 13 June 1991, Recht der Internationalen Wirtschaft 1991, 591) - or whether there is a true gap in the Convention within the meaning of Article 7(2) so that the applicable interest rate should possibly be determined autonomously in conformity with the general prinicples underlying the Convention (see in this sense, for example, J.O. HONNOLD, Uniform Sales Law, 2nd edition, Deventer, Boston 1991, 525-526; ICC Arbitral Award No. 6653 (1993), Clunet 1993, 1040). This second view is to be preferred, not least because the immediate recourse to a particular domestic law may lead to results which are incompatible with the principle embodied in Art. 78 of the CISG, at least in the cases where the law in question expressly prohibits the payment of interest. One of the general principles underlying the CISG is that of "full set-off" of the loss caused (cf. Art. 74 of the CISG). It follows that, in the event of failure by the debtor to pay a monetary debt, the creditor, who as a business person must be expected to resort to bank credit as a result of the delay in payment, should therefore be entitled to interest at the rate commonly practised in its country with respect to the currency of payment, i.e. the currency agreed upon by the parties (cf. Art. 7.4.9 of the Principles of International Commercial Contracts prepared by the International Institute of the Unification of Private Law (UNIDROIT), on which see M.J. Bonell, An International Restatement of Contract Law. The UNIDROIT Principles of International Commercial Contracts, Transnational Juris Publications, Irvington - N.Y., 1994, 114-115). The information received from the Deutsche Bundesbank is that the average "prime borrowing rate" for US dollars in Germany in the period in question was 6.25%. The interest due from the [seller] should be calculated at that rate".

39. Civil Code, article 1326.

40. Corte di Cassazione July 15, 1993, Number 7844, Torresin v. Torresin.

41. Civil Code, article 1343.

42. Corte di Cassazione 13 December 1994, Number 10648, Fumo + 1 v. Jannone; Corte di Cassazione 28 September 1994, Number 7890 Cantù + 1 v. Arnoldi; Corte di Cassazione 3 April 1989 Number 1611, Lodigiani v. Berriga.

43. Civil Code, article 1346.

44. Navigation Code, article 249.

45. Navigation Code article 846.

46. Article 1284, last paragraph.

47. Civil Code, articles 1264, 1407.

48. The parties to court proceedings are not competent to give evidence.

49. Transmission of a document by telefax does not grant certainty of the date of the same under art. 2704 civil code, Corte di Appello di Milano, 2 February 1996. Soc. C.B.I. Factor v. Soc. Conavi Coltiva + 1, Dir. Fall., 1996, II, at p. 1091.

50. Bonfante, Il contratto di vendita, in Cottino, Contratti Commerciali, Trattato di diritto commerciale e di diritto pubblico delI'economia (Padova, 1991), volume 16, at p. 48.

51. Civil Code, article 1325.

52. Civil Code, article 1419.

53. Civil Code, article 1428.

54. Civil Code, article 1429.

55. Civil Code, article 1439.

56. Civil Code, article 1433.

57. Civil Code, article 1434.

58. Civil Code, article 1436.

59. Civil Code, article 1439.

60. Civil Code, article 1440.

61. Civil Code, article 1421.

62. Civil Code, article 1422.

63. Civil Code, article 1442.

64. Civil Code, article 1445.

65. Civil Code, article 1447.

66. Civil Code, article 1448.

67. Civil Code, article 1452.

68. Civil Code, article 1423.

69. Civil Code, article 1424.

70. Civil Code, article 1432.

71. Civil Code, article 1450.

72. Civil Code, article 1444.

73. Civil Code, article 1451.

74. Civil Code, article 1378.

75. Civil Code, article 1285.

76. Civil Code, article 1478.

77. Civil Code, article 1472.

78. Civil Code, article 1353.

79. Civil Code, article 1523.

80. Greco and Cottino, Della vendita, in Scialoja and Branca, Commentario del codice civile, Delle obbligazioni, volume IV (Bologna-Roma, 1981), at pp. 7 et seq.; Mirabelli, La vendita, il riporto, la permuta, il contratto estimatorio, la somministrazione (Torino, 1988), at p. 12 et seq.; Rubino, La compravendita, in Cicu and Messineo, Trattato di diritto civile e commerciale (Milano, 1971), volume xxiii, at p. 309.

81. Civil Code, article 1476.

82. Civil Code, article 1378.

83. Corte di Cassazione 17 August 1990, Soc. salumificio Romentino v. VVE.

84. Civil Code, article 1377.

85. Civil Code, article 1479.

86. Civil Code, article 1479.

87. Greco and Cottino, Della vendita, cit. 164.

88. Rubino, La compravendita, in Cicu and Messineo, Trattato di diritto civile e commerciale (Milano, 1971), at p. 352; Bianca, La vendita e la permuta, in Vassalli, Trattato di diritto civile italiano (Torino, 1972), volume III, at p. 256; Bonfante, Il contratto di vendita, cit. 107.

89. Civil Code, article 1285.

90. Civil Code, article 1472, paragraph 1.

91. Civil Code, article 1472, paragraph 2.

92. Civil Code, article 1370.

93. Greco and Cottino, Della vendita, cit. 85; Corte di Cassazione 10 November 1989, Number 4772, Basile v. Summa; contra: Tribunale di Napoli 5 October 1974, Dir. e giur. 1974, at p. 947; Corte di Cassazione 29 October 1971, Number 3069, Drago v. Cergiul.

94. Bonfante, II contratto di vendita, cit. 113.

95. Civil Code, article 1521.

96. Civil Code, article 1353; Corte di Cassazione 7 June 1976, Number 2082, Soc. Clause Italia v. Acquaticci, Giur. It. 1978, I, 1, at p. 683; Corte di Cassazione 27 February 1986, Number 1270, Soc. Cipa v. Soc. Tacnofer.

97. Bonfante, Il contratto di vendita, cit. 123; Carpino, La vendita con patto di riscatto - la vendita di cose mobili - la vendita di cose immobili - La vendita di eredità, in Rescigno, Trattato di diritto privato (Torino, 1984), volume XI, at p. 311; contra: Bianca, La vendita e la permuta, cit. 296.

98. Corte di Cassazione 26 June 1971, Number 2041, Adamo v. La Lornia.

99. Civil Code, article 1359; Bonfante, Il contratto di vendita, cit. 123; Carpino, La vendita, cit. 310.

100. Civil Code, article 1520.

101. Corte di Cassazione 13 February 1970, Number 353, Guerrizio v. Casa del bottone; Bianca, La vendita e la permuta, cit. 311; Carpino, La vendita, cit. 306.

102. Civil Code, article 1522, paragraph 1; Corte di Cassazione 16 May 1975, Number 1909, Ditta Maggi v. Saviola.

103. Corte di Appello di Firenze 4 March 1987, Arch. civ. 1985, at p. 1005; Corte di Cassazione 30 May 1984, Number 3312, Manif. Colombo v. Soc. Leva, Giur. It. 1986, I, 1, at p. 157; contra: Carpino, La vendita, cit. 312; Corte di Cassazione 27 January 1979, Number 624, Borghi v. Soc. Textilia.

104. Civil Code, article 1463; Bonfante, Il contratto di vendita, cit. 127; Greco and Cottino, Della vendita, cit. 425; Carpino, La vendita, cit. 312.

105. Bonfante, Il contratto di vendita, cit. 127; Carpino, La vendita, cit. 312.

106. Civil Code, article 1522, paragraph 2.

107. Bonfante, Il contratto di vendita, cit. 144; Greco and Cottino, Della vendita, cit. 436; Mirabelli, La vendita, cit. 186.

108. Civil Code, article 1524.

109. Bonfante, Il contratto di vendita, cit. 146; Carpino, La vendita, cit. 318; Corte di Cassazione 16 January 1979, Number 318, Ragghianti v. Soc. Conti; Corte di Cassazione 15 October 1977, Number 4409, Soc. S.i.e.n.e.r. v. Fall. Soc. Dulciora; a reservation of title clause inserted in the sale invoice is not valid, Corte di Cassazione 30 August 1991, Number 9282, Soc. Peugeot Talbot automobili Italia v. Soc. Pavia auto.

110. Civil Code, article 1153.

111. Corte di Cassazione 12 June 1976, Number 2178, Soc. Berghinz v. Russo.

112. Civil Code, article 1525; a clause do the contrary will not be valid: Corte di Cassazione, Sezioni Unite 26 November 1993, Number 11718, Ablondi v. Banca svizzera Aargaujsche + 1.

113. Bonfante, Il contratto di vendita, cit. 145.

114. Civil Code, article 1526.

115. Greco and Cottino, Della vendita, cit. 147.

116. Royal Decree Number 267 of 16 March 1942, article 73.

117. Corte di Cassazione 15 May 1978, Number 2357, Soc. Simca v. Soc. coop. Ascia, Giur. It. 1978, I, 1, at p. 2304; Corte di Appello di Venezia 7 June 1990, Il fall. 1990, at p. 1158; Tribunale di Bologna 19 March 1988, D. fall. 1988, II, at p. 1029; Corte di Appello di Firenze 22 May 1982, Il faIl.1983, at p. 91. Corte di Cassazione 24 February 1998 Number 1999, Pizzuto v. Fall. soc. S. Bartolomeo di Bonura; Corte di Cassazione 5 May 1993, Number 5213, Soc. coop. Copestra v. Soc. Fiscella; Corte di Cassazione 13 May 1991, Number 5324, Fall. Sottosanti v. Soc. Cgm; Lipari, Vendita con riserva di proprietà, in Encicl. dir., Giuffrè, Milano, 1993, vol. XLVI, p. 526 et seq., at p. 543.

118. Corte di Cassazione 6 February 1986, Number 723, Fall. Bloch v. Soc. Luciani.

119. Corte di Cassazione 17 December 1990, Number 11960, Soc. Ford it. v. Fall. soc. Automarengo; Corte di Cassazione 20 May 1994, Number 4976, Fall. soc. Medioli + 1 v. Soc. Alfa Lancia; Corte di Cassazione 28 August 1995 Number 9035, Soc. Ford it. v. Fall. soc. Garbin.

120. Zanarone, Degli effetti del fallimento sui rapporti giuridici preesistenti, in Bricola, Galgano, and Santini, Commentario Scialoja-Branca - Legge fallimentare (Rome-Bologna, 1979), at p. 179; Corte di Cassazione 28 September 1979, Number 4998, Fall. soc. Borroni v. Soc. Bassetti; Corte di Cassazione 17 July 1974, Number 2142, Soc. Euromacchine v. Fall. Ruotolo, Foro It. 1975, I, at p. 392. Corte di Cassazione 29 May 1992, Number 6512, Cabassi v. Lloyd Centauro assicuraz.

121. Law Number 218 of 31 May 1995, Reform of the Italian system of private international law, Art. 51. The same law governs the acquisition and the loss of ownership rights. The rule of the lex rei sitae was to be found also under the previous private international law rules, Civil Code, article 22, preliminary provisions.

122. Corte di Cassazione 12 July 1952 Number 2169; Luzzatto, Art. 51, in Riforma del sistema di diritto internazionale privato - Commentario, Riv. dir. internaz. priv. proc. 1995, at p. 1157.

123. Bonomi, La riserva di proprietà nel diritto internazionale privato, Riv. dir. internaz. priv. proc. 1992, 777 et seq., at 789-790.

124. Tribunale di Latina 19 February 1973, Giur. It. 1974, I, 2, at p. 422.

125. Corte di Cassazione 21 June 1974, Number 1860, Soc. Dundendredit v. Aniministrazione delle finanze; Corte di Cassazione 21 December 1993 Number 12663, Tiller v. Dallabiras: with regard to private international law, for the purpose of determining the proprietary effects of a sale contract, reference must be made exclusively to the ownership rights; thus it is necessary to apply the law which governs ownership (i.e. the law of the place where the goods are located, under art. 22 preliminary provisions Civil Code) and not the law governing the obligations resulting from the contract.

126. Civil Code, article 1500.

127. Civil Code, article 1501.

128. Civil Code, article 1502.

129. Bonfante, Il contratto di vendita, cit. 142.

130. Greco and Cottino, Della vendita, cit. 339; Rubino, La compravendita, cit. 1034; Corte di Cassazione 3 July 1980, Number 4254, Bandiera v. Soc. Autoelite; contra: Carpino, La vendita, cit. 265.

131. Civil Code, article 1503.

132. Civil Code, article 1153.

133. Civil Code, article 2691.

134. Corte di Cassazione 18 April 1984, Number 2544, Nemni v. Banca Nazionale Lavoro.

135. Civil Code, article 1341, contratto per adesione.

136. Civil Code, article 1342.

137. Civil Code, article 1341, paragraph 2.

138. Civil Code, article 1341, paragraph 1; Corte di Cassazione 21 April 1988, Number 3091, Moschen v.Soc. Fortuna.

139. Civil Code, article 1229; Corte di Cassazione 16 May 1975, Number 1918.

140. Law No. 218 of 31 May 1995, Reform of the Italian system of private international law.

141. The Italian Constitutional Court has recently confirmed this reading of art. 4 by rejecting the claim that art. 4 violates the constitutional principles of equal treatment and access to justice (artt. 3 and 24 of the Italian Constitution), since art. 4, Law No. 218/1995, provides for a different, less strict rule with regard to choice of forum clauses (international jurisdiction agreements) than that provided for in artt. 1341-1342 of the Civil Code, which require inter alia that choice of venue clauses (internal jurisdiction agreements) be "expressly approved in writing", Corte Costituzionale, Order 18 October 2000, No. 428, Corriere Giuridico No. 4/2001, p. 506 (with note by M. Marinelli).

142. See consolidated version in OJ C 027, 26 January 1998. Prorogation of jurisdiction - Article 17(17) - If the parties, one or more of whom is domiciled in a Contracting State, have agreed that a court or the courts of a Contracting State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have exclusive jurisdiction. Such an agreement conferring jurisdiction shall be either:

(a) in writing or evidenced in writing; or
(b) in a form which accords with practices which the parties have established between themselves; or
(c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.

Where such an agreement is concluded by parties, none of whom is domiciled in a Contracting State, the courts of other Contracting States shall have no jurisdiction over their disputes unless the court or courts chosen have declined jurisdiction.

The court or courts of a Contracting State on which a trust instrument has conferred jurisdiction shall have exclusive jurisdiction in any proceedings brought against a settler, trustee or beneficiary, if relations between these persons or their rights or obligations under the trust are involved.

Agreements or provisions of a trust instrument conferring jurisdiction shall have no legal force if they are contrary to the provisions of Articles 12 or 15, or if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 16.

If an agreement conferring jurisdiction was concluded for the benefit of only one of the parties, that party shall retain the right to bring proceedings in any other court which has jurisdiction by virtue of this Convention.

In matters relating to individual contracts of employment an agreement conferring jurisdiction shall have legal force only if it is entered into after the dispute has arisen or if the employee invokes it to seise courts other than those for the defendant's domicile or those specified in Article 5(1).

143. Civil Code, article 1742 par. 1.

144. Legislative Decree 10 September 1991 No. 303.

145. Baldi, Il contratto di agenzia, Giuffré (Milan 1997), pag. 160: the contract of agency does not require the written form neither ad substantiam nor ad probationem, as held by the jurisprudence, including that of the Supreme Court.

146. Corte di Cassazione, labour section, 6 May 1996 No. 4167, Salza v. Soc. Berendsohn it., Giur. It., 1997, I, 2, 319; cf. also a contrario Corte di Cassazione labour section, 12 January 1998 No. 196, Soc. Danubio assicur. v. Fiumana: "Since the written form is not required, neither ad probationem nor ad substantiam, for a contract of agency concluded prior to the Legislative Decree No. 303 of 1991, the court competent for the merits may admit evidence by means of interrogation of witnesses with regard to circumstances that, having occurred subsequently, have amended the original clause of the written contract".

147. Civil Code, articles 1241-1252.

148. 21 August 1995 Oberlandesgericht Stuttgart (5 U 195/94). Cf. BGH NJW 1993, 2753.

149. Cf. Kropholler, Europäisches Zivilprozeßrecht (European Law of Civil Procedure) Art. 18 66 6, 16 (3d ed. 1991).

150. Civil Code, article 1243 - "Set-off by operation of law and by judicial declaration. Set-off takes place only between two debts whose object is a sum of money or a quantity of fungible things of the same kind and which are equally liquidated and collectable. If the debt claimed in set-off is not liquidated but is susceptible of easy and prompt liquidation, the court can declare set-off as to that part of the debt whose existence he recognises. and he may also suspend judgement with respect to the liquidated debt until the debt claimed in set-off is ascertained".

151. Palandt -Heinrichs, BGB, EGBGB Art. 32 6 6 (54th ed. 1995).

152. There are no provisions concerning the set-off of a claim in the CISG; consequently, the general conflict of laws provisions ("IPR") apply. Cf. Staudinger/Magnus, BGB, CISG Art. 4 6 47 (13th ed. 1995).

153. Civil Code, article 1252 - Voluntary set-off: Set-off can take place by agreement of the parties even though the conditions mentioned in the preceding articles do not occur. The parties can also establish in advance the conditions for such set-off.

154. Set-off in court proceedings, see generally Kindler, Einführung in das italienische Recht (Introduction to Italian Law) Ch. 14 6 15 (1993).

155. Cf. District Court (Landgericht) of Darmstadt, IPRspr.1991, page 105.

156. Kindler, supra, at 6 15.

157. Civil Code, article 1242.

158. Cf. Civil Code, article 1264.

159. Civil Code, article 1248.

160. Civil Code, article 1260.

161. Civil Code, article 1262.

162. Civil Code, article 1263.

163. Civil Code, article 1264.

164. Civil Code, article 1265.

165. Civil Code, article 1266.

166. Law No. 52 of 21 February 1991 No. 52.

167. Civil Code, article 1382.

168. Corte di Cassazione 13 July 1996, Number 6356, Pansini v. Dolce.

169. Corte di Cassazione 10 July 1996 Number 6298, Casa cura Villa Fulvia v. Usl n. 5 Roma.

170. Civil Code, article 1967.

171. Corte di Cassazione 26 April 2000, No. 5344 Magliani v. Mazzanti

172. Civil Code, article 1965.

173. Civil Code, article 1966.

174. Civil Code, article 1968.

175. Civil Code, article 1972.

176. Civil Code, article 1973.

177. Civil Code, article 1975.

178. Civil Code, article 1976.

179. Civil Code, article 1268 - Cumulative delegation.

180. Civil Code, article 1269 - Delegation of payment.

181. Civil Code, article 1270.

182. Civil Code, article 1271.

183. Civil Code, article 1272.

184. Civil Code, article 1273.

185. Civil Code, article 1274.

186. Civil Code, article 1275.

187. Civil Code, article 1276.

188. Corte di Cassazione, 10 September 1998 No. 8963, Van Kampen Hendrikus v. Beghello; Corte di Cassazione 18 July 1991 No. 7986, Soc. Traslemar v. Brignola.

189. Corte di Cassazione 28 January 1997 No. 844, Putignano + 1 v. Soc. Santa Margherita; 13 October 1999 No. 11519, Angelini v. Soc. Vai.

190. Corte di Cassazione, 29 January 2000 No. 1031, Europa legnami export-import v. Hmezad Impr. export-import.

191. Civil Code, article 1230, «objective novation».

192. Civil Code, article 1231.

193. Corte di Cassazione 27 November 1985, No. 5889, Cons. agr. Catania e Messina v. Pantano.

194. Civil Code, article 1490.

195. Corte di Cassazione 29 December 1994, No. 11281, Soc. Tavar v. Ditta Aindi et al.

196. Corte di Cassazione 8 February 1990, No. 859, Soc. Casa Lucente Rolf André v. Soc. Westamm design Italia.

197. Corte di Cassazione 13 January 1995 No. 381 Soc. Lanterna et al. v. Soc. Hoechst Italia.

198. Civil Code , article 1234.

199. Civil Code, article 1235. Article 29(1) may also be cross-referenced to article 4(a). Article 29(1) states, "A contract may be modified or terminated by the mere agreement of the parties." This conflicts with the common law validity doctrine of consideration. The relevant Secretariat Commentary states that article 29(1) "is intended to eliminate an important difference between the civil law and the common law in respect of the modification of existing contracts. In the civil law an agreement between the parties to modify the contract is sufficient cause even if the modification relates to the obligations of only one of the parties. In the common law a modification of the obligations of only one of the parties is in principle not effective because 'consideration' is lacking". The express language of article 29(1) overrides otherwise applicable domestic validity rules requiring consideration in such cases.

200. Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective product.

201. Damages recoverable: 1. Pursuant to the provision of this Decree the injured person shall be entitled to the following damages: (a) damage caused by death or by personal injuries; (b) damage to, or destruction of, any item of property other than the defective product itself, provided that the item of property is of a type ordinarily intended for private use or consumption, and was used by the injured person mainly for his own private use or consumption …

202. Cf. Article 9 Directive: "This Article shall be without prejudice to national provisions relating to non-material damage".

203. "Any Member State may provide that a producer's total liability for damage resulting from a death or personal injury and caused by identical items with the same defect shall be limited to an amount which may not be less than 70 million ECU".

204. Civil Code, article 1284.


Pace Law School Institute of International Commercial Law - Last updated October 30, 2001

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