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Presented in Schelectriem ed., Einheitliches Kaufrecht und nationales Obligationenrecht, Baden-Baden: Nomes (1987) 343-357. Reproduced with permission of the author.

The New Scandinavian Codification on the Sale of Goods
and the 1980 United Nations Convention on Contracts
for the International Sale of Goods

Lief Sevón
Director of Legislation
Ministry of Justice, Helsinki

  1. The Background
  2. The Questions
  3. The Results
    3.1.    The Ratification
    3.2.    One or Two Acts?
    3.3.    Scope of Regulation
    3.4.    Structure of the Instruments
    3.5.    The Substance

1. The Background

On February 10, 1987, the Finnish Parliament adopted a new Sale of Goods Act.[1] The Act replaces the provisions on sale of goods in the Code of 1734. The action by the Parliament concludes preparatory work which was initiated in 1917 and after an interruption has been going on for 25 years.[2] The adoption of the new Act completed phase two of a three-phased scheme to modernize the legislation on sale of goods. The first phase was completed m November 1986 by the adoption of an Act authorizing the ratification of the 1980 United Nations Convention on Contracts for the International Sale of Goods, hereafter referred to as the UN-Convention or the Convention.[3] The third phase will consist in a revision of the provisions on consumer sales.

From a Nordic perspective the adoption of the new Finnish Sale of Goods Act signifies the beginning of the end of 25 years of preparation of new uniform [page 343] Nordic Sale of Goods Acts.[4] The Finnish Act and the proposals put forward in Denmark, Norway and Sweden will be referred to as the new Acts irrespective of the fact that only the Norwegian proposal has so far been submitted to the Parliament. It is expected that the final goal will be achieved by the replacement in 1987-89 of of the uniform Scandinavian Sale of Goods Acts of 1905-07 by new Sale of Goods Acts in Norway, Sweden and Denmark. Simultaneously the new Finnish Act indicates a revival of the Nordic cooperation in the field of legislation by providing proof that uniformity can still be given priority over most of what is often described as national interest but is, in fact, more often personal ambition and prestige.

The Scandinavian Sale of Goods Acts of 1905-07 are the result of one of the most important efforts of previous Nordic unification. The preparation of these Acts started in the 1890ies and the Acts reflect the kinds and needs of trade of those times. The solutions provided by the Acts are obviously adequate to the problems of the trade of those days and do not seem to have caused any major problems to parties to contracts for the sale of goods. However, a gap seems to have developed between the rules under the Scandinavian Acts of 1905-1907 and the rules that one may find today reflected in standard contracts. The differences are significant e.g. in respect of remedies available to the buyer in cases of breach of contract by the seller and especially in the field of damages for such breach. Parties seem to exclude many of the remedies available to the buyer under the Acts and to alter considerably the basis of liability for damages and to exclude liability of the seller for a number of heads of damages recoverable by the buyer under the Acts. [page 344]

2. The Questions

The preparation of the new Sale of Goods Acts was entrusted to a Joint Nordic Working Group consisting of three members from each of the four participating countries. Towards the end observers for Iceland took part in the meetings of the Joint Group. The report of the Group was circulated to interested circles. After that the final text of the Acts was negotiated, and to a considerable extent redrafted, by representatives of the Ministries of Justice. The task of the Joint Group was first, to give a recommendation as to whether Denmark, Finland, Norway and Sweden should sign the UN-Convention. Secondly, the Group was requested to express its opinion on the possibilities to reach agreement on the contents of new Sale of Goods Acts. That was to be done by proposing texts for new Sale of Goods Acts. The Joint Group had before itself not only the Convention but also the reports that had emanated from previous Nordic preparatory work.

One of the basic questions for consideration by the Joint Group was the relation between the 1905-07 Sale of Goods Acts in force in Denmark, Norway and Sweden, the UN-Convention and the new Acts to be prepared. This question involves a number of problems. First, the Joint Group had to consider whether the UN-Convention was appropriate in respect of international sale of goods and whether it thus would be appropriate to ratify the Convention. If the attitude towards the Convention was favourable, one had to consider whether the UN-Convention might serve as a model for the national sale of goods acts in the sense that the subject matters dealt with in the Convention would be those to be dealt with in the national sale of goods acts. Was it desirable to include in the Acts provisions on all items dealt with in the Convention? Where there areas on which provisions would be desirable in the Acts although they were not dealt with in the Convention. One might then ask whether the contents of all or most of the provisions of the Convention would be appropriate in the context of national sales. If that was the case, the question would arise whether both sets of rules might be incorporated in the same Act, a general Sale of Goods Act. There was also the question how to arrange the provisions of the new Acts. If the Convention was to be ratified one would face the question whether the provisions should be presented in the order in which they appeared in the Convention or in the order of presentation of the Scandinavian Sale of Goods Acts of 1905-07. Or was there a more rational order, in which to deal with matters? This question was raised as a consequence of the fact that the proposals submitted in 1976-77 were not uniform in respect of structure. The Finnish proposal of 1977 was [page 345] based on the structure of the draft convention as it appeared in 1975. The other proposals, being in substance amendments to the 1905-07 Acts, did not depart from their structure.

3. The Results

These questions -- the ratification, the scope of the rules, the structure of the new Acts and their substance -- are, of course, interrelated. I shall try to describe the results reached on each of these issues and the main arguments behind these results.

3.1. The Ratification

The decision whether to ratify the UN-Convention was an easy one. One line of reasoning in favour of ratification was that the substance of the Convention to a considerable extent reflected in previous Nordic law. This line of reasoning is used in order to accommodate those who hold that new legislation is acceptable only if it does not change the present state of affairs. If overemphasized this argument is dangerous as it may convey the idea that the Convention and the concepts used in it are identical to national law and its concepts.

The reality behind this line of reasoning is first that the Scandinavian Sale of Goods Acts to some extent influenced the 1964 Hague Uniform Law on Sale, which, in turn, was a basic document in the elaboration of the UN-Convention. In addition, the Nordic countries had participated actively in the preparation of the UN-Convention, not necessarily in order to introduce into the Convention provisions similar to those in force in the Nordic countries, but rather in order to ensure that the new policies introduced in the Convention were acceptable.

Another line of reasoning dealt with the prevailing situation. It was clear that the 1964 Hague Uniform Law on Sales had no future and, indeed, was not very attractive from a Nordic point of view. It was felt certain that no new exercises in order to harmonize the law in the field of sale were likely to be initiated during the next 20 years. It seemed clear that the UN-Convention might facilitate negotiations on the law applicable to the contract and that it would be easier to ascertain the contents of the rules applicable to a sale as [page 346] compared with the situation that different laws of foreign countries would be applicable. The Convention was thought to provide a better alternative than the present situation.

It was equally clear that ratification of the Convention would not remove the need for national sale of goods Acts. The question then presented itself how to deal with sales between parties having their places in different Nordic states. In view of the policy to remove trade barriers between the Nordic countries and of the fact that smaller enterprises tend to get their first experiences of international trade by trading with the other Nordic countries, it was decided to make the national Sale of Goods Acts applicable to these sales and to make a reservation under Article 94 of the UN-Convention.

3.2. One or Two Acts?

The decision to ratify the Convention did not answer the question how to implement it. The reason why this question was pertinent is that the Nordic countries frequently ratify conventions by rewriting the provisions in the normal style of national legislation. Frequently the applicability of such legislation is extended beyond the scope of the Convention to be implemented to cover the corresponding national transactions, either as such or with minor restrictions, additions or modifications. This technique has been used i.a. in the field of maritime law as well as implementing other conventions on international transports. The use of this technique presupposes that the number of modifications to be made in respect of national transactions is limited.

The preliminary view of the Joint Group was that the rules applicable to different kinds of transactions of sale ought to be as uniform as possible. At the outset it was thought advisable not to depart from the substance of the UN-Convention in the context of national sales unless there were strong reasons for that. In order to stress this point it was thought that one might proceed on the assumption that the provisions on both international and national sales might be included in the same instrument, a Sale of Goods Act relevant to all commercial sales.

It was felt that the policies adopted in the Convention were attractive not necessarily only in the context of international sales but also in the national Sale of Goods Acts.

One would then work on the basis that a general rule would be formulated. Whenever necessary exceptions or modifications might be added in order to adjust the rule to the needs of national sales. It would then be easy for the [page 347] reader to see the differences between the provisions applicable in the two contexts. It would also minimize the number of provisions on sales, a point which does not lack importance in a climate of a strong, though often more or less unreflected demand for deregulation.

On the other hand the inclusion of the provisions of the Convention into a general Sale of Goods Act would imply some editorial work and redrafting the provisions of the Convention. Simultaneously one would have to settle differences between the official texts of the Convention and, possibly, feel tempted to make the text more precise in the light of the events at the Diplomatic Conference. This would also imply that the respective Nordic legislator would authorize certain interpretations of the text which might not be those adopted by the courts of other Contracting States. Certainly that risk would be relevant even if the provisions would not be rewritten but explained in the Bill requesting authorization to ratify the Convention. Such explanations would be necessary irrespective of the method of implementation. However, when appearing in an explanatory memorandum recommendations for interpretations would not be as binding as if they would appear in the text of an Act.

Rewriting the provisions would also give rise to a problem of an optical nature. The provisions would look different from those of the Convention. This might give rise to hesitations whether the Convention has been ratified and adequately implemented. If that were to be the case parties to contracts might find it dangerous to agree on the application of e.g. Finnish law and might then be faced with the problems of choice of law clauses to the same extent as if the Conventions would not have been ratified at all.

Another, and rather important issue was whether consolidation of the provisions on both international and national sales actually would facilitate the presentation of the provisions. At one stage it was believed that the provisions applicable to national sales would be identical or almost identical to those of the Convention. However, as work progressed, the differences increased in number. It was felt that one might risk cutting corners unduly and thus alter the contents of the Convention.

The result was that Denmark, Finland and Sweden decided not to implement the Convention by transforming the provisions into a general Act on the Sale of Goods but by making the Convention applicable to international sales as such. At least in Finland that means that the Convention is applicable in the original languages. The Finnish and Swedish texts of the official Gazette are thus described as translations. This enables a party to raise the point that the translations do not adequately reflect the contents of the Convention. In addition, it was thought that this method of implementation would stress the [page 348] fact that the provisions applicable to international sales are international in character and ought to be read and understood as such. A judge or an arbitrator applying those provisions would under those circumstances not be misled to believe that the provisions should be interpreted in the same manner as national legislation or that the concepts used in the Convention are those which are familiar to him in the context of national law.

In Norway it was considered more rational to enact one Act containing both sets of provisions. The provisions of the Norwegian Act will, as a rule, be applicable to all sales. However, at the end of the Act there will be a chapter where those provisions of the Convention are reproduced, which are not reflected in the general provisions.

3.3. Scope of Regulation

It was clear from the very outset, that the favourable attitude towards the Convention did not extend to all parts of it. This was obvious in respect of the provisions on formation of contracts for the international sale of goods.

When the Nordic countries signed the Convention they announced their intention to exclude, by a reservation under Article 92 of the Convention, the application of part II. It was thought undesirable to introduce special rules on formation of contracts on international sales. It was also felt that the relation between the general provisions of the Convention and those on formation of contracts was not fortunate in all respects. Furthermore it was thought that the substance of the provisions on formation, e.g. Article 14(1) read together with Article 55, was not acceptable on all points. Finally, the Joint Group did not have any mandate to revise the provisions of the Nordic Contracts Acts. A possible revision of these acts is now under consideration and may be decided upon later this spring. I do not envisage that this revision will lead to provisions enabling the Nordic countries to ratify Part II of the UN-Convention.

Secondly, it was thought that certain provisions of the Convention were not necessary or appropriate in the context of national sales. I may refer to the provisions on the interpretation of the Convention and on the definition of the relevant place of business of a party. Nor was it thought appropriate to include in the Acts provisions on such general matters as the interpretation of the conduct of the parties or on the binding effect of trade usages. These problems are of a general character and could not, in a national context, be settled in respect of contracts of sale only. [page 349]

If you turn the coin you may ask whether the new Acts contain provisions which do not appear in the Convention. There is a number of such provisions, dealing with problems which are of minor importance in international contracts or with issues which were not raised or not resolved in the Convention. I shall revert to those provisions when discussing the substance of the Convention and the nes Acts.

3.4. Structure of the Instruments

The order in which to present the rules was discussed at considerable length. As a result of these discussions the Joint Group decided to take as a starting point for the arrangement of the provisions the structure of the Convention. One reason for this was that it would complicate matters unnecessarily to use different orders of presentation in the two contexts. It was also thought that the presentation in the Convention was more logical than that of the Scandinavian Acts.

The differences between the structure of the Convention and that of the new Acts may be illustrated by the following table.

UN-Convention
             Nordic Acts
Scope
1-6
1-5
General provisions
7-13
--
Formation
14-24
--
Sale:
General provisions
25-29
82
Seller's obligations
30
Delivery
31-34
6-11
Conformity
35-44
17-21
Remedies
45-52
delay:  
22-29
lack of conformity:  
30-40
third party claims:  
41
common provisions:  
42-44
Buyer's obligations
53
Payment
54-59
45-49
Taking delivery
60
50
Remedies
61-65
51-60
Passing of risk
66-70
12-16
Anticipatory breach
71-73
61-63
Damages
74-77
67-70
Interest
78
71
Exemptions
79-80
27,40,57
Effects of avoidance  
81-84
64-66
Preservation
85-88
72-78
Proceeds
[page 350]
--
79-81

This table may call for some comments.

First, one may notice that there are no provisions in the Acts corresponding to Articles 7-13 of the Convention. The reasons for this are obvious in respect of Article 7 on the interpretation of the Convention and Articles 11 and 12 on the form of the contract. In as far as the other provisions of the Convention are concerned they were thought to deal with general question which, within the framework of national law, better be settled in a more general way.

The reasons why there are no provisions in the Acts corresponding to Articles 14-24 of the Convention on formation of contracts have already been dealt with.

Articles 25-29 of the Convention contain general provisions on the sale of goods. There are no provisions in the new Acts corresponding to the rules in the Convention on fundamental breach, notice of avoidance, specific performance and modification of contracts. However, Section 82 of the Acts deal with the same problems as Article 27 on notices.

In the Acts the provisions on passing of risk are formulated as corrollaries to the provisions on delivery. The main rule on the risk is that it passes to the buyer when delivery takes place. Consequently, the provisions are located immediately after the provisions on delivery. The corresponding provisions of the Convention are inserted between the obligations of the buyer and the provisions common to the obligations of the seller and the buyer. In the provisions on passing of risk in the Convention no reference is made to delivery. By using identical language in dealing with delivery and passing of risk the Convention ends up with results, which in substance are almost identical to those of the Acts.

Lastly, the effects of avoidance are dealt with in slightly different contexts in the two sets of rules.

3.5. The Substance

The Joint Group took as a starting point that the provisions of the Convention would, broadly speaking, be appropriate also in the context of national sales [page 351] of goods. A number of the policies of the Convention were thought desirable or, at least acceptable. This involved the acceptance of a number of new policies to be introduced in respect of national sales. In the Acts the prior distinction between sale of generic and specific goods has been abandonned. That is also the case with the distinction between commercial and civil sales. The possibility for a party fix an additional period of time for performance has been introduced in the Acts, although not as broadly as in the Convention. Nevertheless, the question arose on what points the basic hypothesis would have to be modified. The outcome of the exercise was the following.

The provisions on delivery of the goods in the Acts differ on some points from those of the Convention. The Acts contain a provision (Section 7.1) dealing with the case where the seller has undertaken to provide local carriage of the goods to the buyer. This case is of little relevance in international sales.[5] There is also a provision in the Acts under which a seller having the right to choose the time of delivery within a defined period of time, must give the buyer notice of his choice in order to enable to buyer to take delivery. On the other hand, the Acts do not contain any provision corresponding to Article 34 on delivery of documents relating to the goods.

Among the provisions on conformity of the goods you may find a number of provisions in the Acts which do not appear in the Convention. These provisions deal with the effects of information provided by the seller or by someone else on his behalf, on the conformity of the goods. The rule is, that if relevant information provided by the seller is incorrect, or if the seller has such relevant information but withholds it, the buyer may resort to the provisions on remedies for lack of conformity. There is a similar provision in the Acts dealing with the clause "as is", stating that in spite of such a clause the buyer may treat the goods as not conforming to the contract if the goods do not correspond to specific information given by the seller as well as if the seller withholds relevant information concerning the goods or its use. Lastly, the buyer may resort to the provisions on remedies for lack of conformity if goods sold "as is" are of essentially lesser quality than the buyer was entitled to expect, taking into account the price and the other circumstances of the case.

These provisions originate from the legislation on consumer protection. During the 1980ies there has been some pressure to make similar provisions apply to contracts between large and small enterprises. [page 352]

There are no provisions in the Acts corresponding to Articles 37 and 52 dealing with the rights of the seller in cases where he has delivered goods before the date for delivery or has delivered a greater quantity of goods than that provided for in the contract.

Articles 42 and 43 deal with the effect on the relation between the seller and the buyer of rights or claims based on industrial property or other intellectual property. These provisions of the Convention define the law under which such rights or claims ought to be established in order to be relevant. It was not deemed necessary to include any such provisions in Acts applicable mainly to national sales.

The provisions on notice of the Convention have not been incorporated as such into the Acts. There are differences mainly in respect of the effect of late notice. Under the Acts as well as under the Convention the buyer shall notify the seller of the lack of conformity within a reasonable time after he has discovered or should have discovered it. The Convention also contains a two-year period within which notice is to be given. On this point uniformity has not been achieved in the Nordic Acts. A provision similar to that of the Convention is likely to be proposed in Norway and Sweden. In Denmark there has been strong support for maintaining the present period of one year. In Finland, where no similar time-bar has existed so far, the Parliament deleted a proposed rule introducing a time-bar of two years. This was the only relevant change made by Parliament to the Bill.

Under the Convention the seller may not rely on the provisions on lack of notice if the lack of conformity relates to facts of which he knew or could not have been unaware and which he did not disclose to the buyer. Under the Acts the relevant criteria is gross negligence or acts in bad faith on part of the seller.

There are also differences between the Acts and the Convention in respect of the consequences of failure to give notice in due time. Under Article 44 of the Convention a buyer having a reasonable excuse for not having given notice in time may still reduce the price or claim damages. There are no corresponding provisions in the Acts.

The Acts have not adopted the technique of the Convention to consolidate the provisions on remedies for breach of contract by the seller. In the Acts the corresponding provisions have been split up in provisions on delay and on lack of conformity. On the other hand, the Acts do not contain provisions or other breaches on contract by the seller, as the Convention does.

The Acts do not contain any provisions corresponding to Article 45(2) and (3). Those provisions deal with issues which are self-evident within the Scandinavian systems and need not be reproduced in the Acts. [page 353]

With respect to delay, a provision has been inserted in the Acts according to which the buyer may not require delivery if delivery is impossible or would require sacrifices which are unreasonable in the light of the interest that the buyer may have in performance. The provision is broader than the one relating to damages as the cause of impossibility is irrelevant.

There are also some differences in respect of the requirements for substitute goods. Under Article 46(2) the buyer may require delivery of substitute goods only if the lack of conformity constitutes a fundamental breach of contract. Under the Acts a requirement for delivery of substitute goods may not be made if delivery is impossible or unreasonably burdensome to the seller. There is also a provision -- the last reminisence of the distinction between sale of generic and specific goods -- according to which a requirement for substitute goods may neither be made if the goods existed at the time of conclusion of the contract and cannot be substituted by other goods.

Under Article 47 the buyer may fix an additional period of time of reasonable length for performance by the seller of his obligations. As drafted the provision applies not only to the time for delivery but also to the time for cure and delivery of substitute goods. Under Article 49(l)(b) the lapse of the additional time may only in cases of non-delivery lead to avoidance. The Acts contain a rule similar to that on avoidance but do not extend the possibility to fix an additional time to cure and delivery of substitute goods.

The Acts contain a special rule on avoidance of the contract in cases of delay by the seller in the delivery of goods which have been produced to the order of the buyer. In many cases there is no market for such goods and the seller cannot resell them at a reasonable price if the buyer declares the contract avoided. Under the provision it is not sufficient for avoidance that there is a fundamental breach, but the breach must be such that the object of contract would to a real degree be frustrated by the delay. A greater measure of tolerance is thus required from the buyer when he orders goods to be produced.

The most important difference in the provisions on delay -- and probably the most important difference between the Convention and the Acts as a whole -- may be found in the provision on damages. Previously a distinction has been made in Nordic law between damages in respect of generic and specific goods. In cases of generic goods the buyer is entitled to damages unless it was impossible for anyone to deliver the goods or there is a case of force majeure. In sales of specific goods damages are payable in cases of fault and neglect on part on the seller.

The Act rejects, without hesitation, this distinction. Instead, a distinction is introduced between direct and indirect losses. In cases of direct damage, the [page 354] basis of liability under the Acts is basically that of the Convention: no-fault liability and an exemption under Article 79. There is a difference as the Acts make it clear, that the seller is liable also in cases where the delay is attributable to anyone on his side irrespective of the fact whether that party is someone who the seller has engaged to perform the contract. This difference may be relevant e.g. if a foreign producer cannot deliver the goods to the Finnish importer, who in turn cannot deliver to the seller. If the delay on part of the producer is caused e.g. by bad management, the Finnish seller would not be exempted from liability.

The effects of the introduction of such a strict liability are modified by the fact that the seller is liable for indirect damage only in cases of fault or neglect on his part.

The reasons for developing this model were the following. First, while the provisions of the Convention seem to operate adequately in respect of delay, they would almost always make the seller liable in cases of lack of conformity. There would seem to be very few cases of lack of conformity where the exemptions under Article 79 would be applicable. Such a strict liability does not coincide with present practices and there seems to be no reason to believe that these practices would change by the introduction in the Acts of such a basis of liablility. Under most standard conditions sellers today exclude liability at least for indirect damage. The question then arose whether one should depart from what seems to be common practice and what effects this might have on small traders lacking the knowledge and resources to develop standard contracts. It was also deemed acceptable to establish an extensive right to damages in respect of losses which a seller may reasonably envisage as consequences of his breach but not to do so in respect of damage, the occurrance and extent of which may depend esentially on the buyer and be uncalculable by the seller. This is, e.g. the situation in respect of loss of profit by the buyer.

As a result, the Acts contain a provision defining indirect loss and categorizing other kinds of damage as direct losses. Thus loss of or reduced production or turn-over is deemed to be an indirect loss. That is also the case with loss resulting from the fact that the goods cannot be used as envisaged and with loss of profit caused by the avoidance of a contract by a third party, typically the person to whom the buyer has sold the goods. If the buyer cannot fulfil such a contract and thus becomes liable in damages, such a loss of profit would be an indirect loss of the buyer. Further damage caused to property other than the goods sold is treated as indirect loss. From the point of view of the definition it does not matter whether the loss appears as out-of-pocket money or as an internal loss of the buyer. [page 355]

The provisions of the Convention on the obligations of the buyer are to some extent different from those presently in force in the Nordic countries. Today there are not written rules on a buyer's obligation to take delivery of the goods or to cooperate in the performance of the contract. It is said that taking delivery is not an obligation, and that refusal to take delivery only has the effect that the buyer may not invoke delay on part of the seller. Under the new Acts three kinds of obligations of and breaches by the buyer are distinguished: non-payment, failure to take delivery and failure to cooperate so that the seller may perform his obligations.

In respect of the price the Acts suggest a slightly different method for determining the price than that proposed in Article 55. Under the Convention the parties are considered to have impliedly made reference to the price generally charged at the time of the conclusion of the contract. Under the Acts the buyer shall pay a price which is reasonable taking into account, i.a., the current price at the time of the conclusion of the contract. The rule of the Acts is more flexible in allowing due account to be taken of the price at the time of delivery. Simultaneously the rule of the Acts provides less guidance to the parties on the price to be paid where no agreement on this issue exists.

The Acts contain a provision on cancellation of orders which have a bearing on a requirement by the seller for payment of the price. The idea is that upon cancellation of an order for goods, the production of which has not started or has done so only recently, the seller may be under an obligation to stop the production. This rule may be seen as an application of the general rule that a party claiming damages is under an obligation to limit his losses. If the seller in such a case is under an obligation to cease production he may not be entitled to require payment of the whole price. In those cases the seller's claim for the price is converted into a claim for adequate compensation for the damage caused to him by the cancellation.

In the Acts the present rule in Nordic law has been retained under which the seller loses his right to declare the contract avoided on the basis of non-payment if goods have been handed over to the buyer unless the seller has assured such a right by an appropriate clause in the contract.

The Acts contain provisions on the duty of the buyer to cooperate in the performance of the contract in such a manner that the seller may perform his obligations. The remedies for non-cooperation may be described as the mirror of the remedies available to the buyer on breach of contract by the seller.

The remedies available to the seller in cases where the buyer refuses to take delivery are somewhat limited in scope under the Acts. Avoidance is possible only in cases where the seller has a special interest in disposing of the goods. [page 356] In normal cases the seller must take measures for the preservation of the goods and may sell them on account of the buyer.

In the provisions on damages for breach of contract by the buyer a distinction has been made between non-payment and other breaches. The circumstances exempting the buyer from liability for non-payment are identical to those under which he according to the Interest Acts is relieved from his duty to pay interest on sums in arrears. In cases of other breach by the buyer the basis of liability is similar to that described above as applicable to the seller.

The provisions on the passing of the risk are, except for the technique used, almost similar to those of the Convention. Even the provision on goods afloat has been incorporated into the Acts. On the other hand, the problem discussed in Article 70 of the Convention is not solved in the context of passing of the risk. In addition, a provision has been inserted in the Acts dealing with situation that the buyer shall take possession of the goods at some other place than the seller's place of business.

The Acts treat the issue of damages in a more nuanced way than the Convention. The basis of liability is, in most cases, the same as in the Convention. In respect of non-payment the exemptions are more limited than under the Convention. In respect of other breaches the special rules on indirect damages contain the most important departure from the Convention in the Acts.

The question of interest is not treated in the Acts, which only contain a reference to the Interest Acts.

In conclusion one may note that the differences in substance between the Convention and the new Acts in many cases are caused by the different situations they deal with. While a provision may be deemed to be appropriate in the context of international sales it may be out of place, or unnecessary, in the context of national sales and vice versa. Certain rules in the Convention need not be reproduced in a national Sale of Goods Act because it deals with a problem to which the national legal system has an answer in another context.

In other cases a provision may be desirable in a national Sale of Goods Act because the problem it deals with has not been resolved in the Convention. In a number of cases the differences are due to policy decisions. Those cases are not many, but they are of some importance, as in the case of the rules on indirect damage. [page 357]


FOOTNOTES

1. The Official Gazette (355/87). The Sale of Goods Act is based on the Government Bill 93 to the 1986 session of Parliament.

2. Committee Report 1973:12 and Publications of the Department of Legislation of the Ministry of Justice 1977:13, Proposal by the Working Group on Sale of Goods, and Report by the Nordic Working Group on the Sale of Goods, Nordic Reports 1984:5.

3. Government Bill 198 to the 1986 session of Parliament.

4. The Ministries of Justice of Denmark, Norway and Sweden appointed, in 1962, observers to follow the Finnish preparatory work. Later these observers were requested to prepare proposals for limited revisions of the Scandinavian Sale of Goods Acts of 1905-1907, see the Swedish Report SOU 1976:66 and the Norwegian Report NOU 1976:34. Although the proposals were presented as new Acts they did in fact contain limited amendments to the Scandinavian Acts. The proposals were closely related in substance. However, the Finnish proposal was based on the structure of the Draft UN-Convention as formulated at that stage by the UNCITRAL Working Group on Sale.

In 1977 the Ministries of Justice of the Nordic countries decided to postpone further preparation of new sale of goods acts until the final outcome of the efforts by UNCITRAL was known. It was, however, agreed that Finland would pursue the work during this period. After the adoption of the UN-Convention -- a task which was rapidly performed -- and to prepare proposals for new uniform sale of goods acts for Denmark, Finland, Norway and Sweden. The Joint Group was composed of three representatives of each of the participating countries. It may be of interest to note, that of the twelve members of the Joint Group four had a least at same stage participated in the "UNCITRAL Working Group on sales of in the discussions of the Draft Convention in UNCITRAL itself. Seven members of the Joint Group had taken part in the Diplomatic Conference in Vienna.

5. It follows from Article 1 of the Convention that a sale may be international for the purposes of the Convention even if the goods need not be moved at all as well as if there would only be local or other domestic carriage of it.


Pace Law School Institute of International Commercial Law - Last updated February 19, 2008
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