Published by Manz, Vienna: 1986. Reproduced with their permission.

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d) Reduction of the Price (Article 50)

Where the goods do not conform with the contract, Article 50, like ULIS Article 46, grants the buyer the right to reduce the price. In order to invoke the reduction, the buyer need only dispatch notice thereof. Of course, a price reduction is unavailable if the seller completely performs his obligation by curing or if the buyer unjustifiably declines to accept the cure (Article 50 sentence 2).

It became clear in the discussions that many representatives believed that price reduction constitutes a kind of damages but is merely based on a lesser showing.[309] Thus the Norwegian proposal [310] to calculate the reduction with reference to the (lower) value of the goods at the time delivery was favorably received.[311] Article 50 thereby differs both from the German Civil Code and from ULIS Article 46. Consequently. the buyer loses the advantages of a profitable purchase if, between the conclusion of the contract and the date of delivery, the price of the delivered but non-conforming goods increases more than the price of conforming goods.[312]

According to Article 50, a reduction in price is available only when the goods do not conform to the contract. No decision was reached as to whether the price may be reduced for defects in title or third-party claims based on industrial or other intellectual property rights.[313] The general similarity of the prejudice caused by these defects with that caused by other defects justifies the availability of price reduction in these cases as well. But the formula for calculating the decrease in value due to such defects surely would have required thorough deliberations for which no time remained at the Conference. [page 79]

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FOOTNOTES

* The author of this book participated at the Conference as a member of the delegation from the Federal Republic of Germany. The views expressed here are personal to the author and do not necessarily represent the position of the F.R.G. or its delegation.

309. See also Bergsten/Miller at 255; 266 et seq. (for the historical development).

310. A/Conf. 97/C.1/L.167 (= O.R. 118).

311. The issue was also raised about which market should serve as a basis for determining the comparable value. The question was not decided. See A/Conf. 97/C.1/SR.23 at 6-7 (= O.R. 359). According to the sense and purpose of the price-reduction provision, the place of the seller's performance would determine the comparable market price. In a sale involving carriage, the destination would provide the appropriate basis of comparison.

312. Cf. Bergsten/Miller at 260 et seq., 274-275. German courts decide the same way in cases of price reduction in construction and similar contracts. See Judgment of Oct. 29, 1964, BGH, 42 BGHZ 232; Judgment of Feb. 24, 1972, BGH, 58 BGHZ 181; the decision referred to in 1979 Z.f.B.R.239.

313. See A/Conf. 97/C.1/SR.23 at 9-10 (= O.R. 359 et seq.) (discussion on defects in title).

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