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Petar Sarcevic & Paul Volken eds., International Sale of Goods: Dubrovnik Lectures, Oceana (1986), Ch. 8, 265-303. Reproduced with permission of Oceana Publications.

Passing of Risk in International Sales of Goods

Bernd von Hoffmann
Professor of Law, Trier

Introductory remarks
I.    General Part
      1.  The issue
      2.  Comparative law

a) Conclusion of the contract
b) Transfer of ownership
c) Transfer of physical possession
d) Comparative evaluation
      3.  Particularities of international sales
a) Contracts involving carriage
b) Transport documents, bill of lading
c) Passing of risk
     (1) Transport cost
     (2) Delivery
     (3) Hand over of documents
     (4) Typological approach
      4.  Incoterms; General conditions of sales (CMEA, ECE)
a) Incoterms
b) CMEA General Conditions of Delivery
c) ECE General Conditions of Sale
II.  The Convention
      1.  Contracts involving carriage (Art. 67)
a) Contracts involving carriage of goods
b) The first carrier
c) Hand over at particular places
d) Identification of goods to the contract (Art. 67(2))
      2.  Sale of goods during transit (Art. 68)
      3.  General residual rule (Art. 69)
III. Conclusion

INTRODUCTORY REMARKS

The passing of risk is one of the classic topics of sales law. It is also one of the main preoccupations of the parties in international sales transactions. The practical needs of international transactions differ widely from the established concepts of national sales law. The UN Sales Convention made a fresh start on the passing of risk problem with an original approach differing remarkably from conventional wisdom, yet trying to be close to practical needs.

The aim of this paper is to explain the new system and its policies against the background of comparative national law, international trade usages, and the instruments of internationa1 transport. It does not attempt to give an exhaustive account of all the problems connected with the passing of risk. In particular, it leaves aside the effect of the seller's breach of contract on passing of risk, a problem which is alluded to in Art. 70 of the UN Sales Convention and can only be dealt with properly in the context of remedies of the buyer.[1] [page 266]

I. GENERAL PART

1. The Issue

The typical aim of a sale of goods transaction is that goods in the hands of a seller pass into the hands of the buyer who is then entitled to use the goods and dispose of them according to his wishes. The shorthand expression of this ability of the buyer is that he is called the owner of the goods. In some cases, this transaction is very straightforward: B enters the shop of A, asks for a bottle of wine, pays the purchase price in cash and takes the bottle with him. In this example, the conclusion of the contract and its completion (delivery of the goods and payment of the purchase price) are done simultaneously. Very often a sales transaction is more complex and involves an element of time between the conclusion of the contract and its completion. Again a simple example: B telephones wine seller A and orders 12 bottles of red wine Chateau Lafite 1978. They agree that B will go to A's shop the next day to pick up the 12 bottles. In this example, there is a time element between the conclusion of the contract and delivery of the goods. Let us now assume that during the night, between the conclusion of the contract and the intended delivery of the goods, thieves break into the seller's shop and take all his bottles of Chateau Lafite including the 12 bottles which have already been boxed for the purpose of transport to the buyer; or a fire breaks out in the shop damaging the bottles. Let us further assume that the seller took all reasonable precautions to prevent theft or fire.

In this situation, two legal problems arise. First, the buyer wants to know whether the seller [page 267] is still bound by his obligation to deliver 12 bottles of wine and, in particular, whether the buyer is entitled to claim damages aiming at the recovery of his positive interest (Erfüllungungsinteresse). The answer of the Convention is that in case of supervening impossibility of delivery, the seller is discharged of his obligation (Art. 97(1)). This means that the risk of performance is borne by the buyer. This question, however, is outside the scope of this paper.

The second question, which is precisely the scope of this paper, concerns the following: Is the buyer obliged to pay the purchase price even if he did not receive the goods for which he undertook to pay the price?

It is a common denominator of all legal systems that from a certain point in the development of a sales transaction the buyer remains bound to pay the purchase price even though he did not receive the goods for which he contracted. This is the problem of passing of risk from the seller to the buyer.[2] It is dealt with in Articles 67-70 of the UN Sales Convention. Art. 66 recognizes the principle of passing of risk by providing that "loss of or damage to the goods after the risk has passed to the buyer does not discharge him from his obligation to pay the price ..." The problem now is to identify the point in the development of the sales transaction at which risk of payment passes from the seller to the buyer.

2. Comparative Law [3]

Comparative law teaches that there are three main points to which passing of risk in sales transactions may be linked:

a) The conclusion of the contract; [page 268]
b) The transfer of ownership from the seller to the buyer;
c) The transfer of physical possession from the seller to the buyer.

a) Conclusion of the contract

This principle can be traced to Roman law. The Institutes of Justinian expressly state that the risk passes to the buyer at the conclusion of the contract even if the buyer is not yet in possession of the goods.[4]

The shorthand formula is periculum est emptoris. This rule has been adopted, e.g., in Europe by Art. 1496 of the Dutch B.W., Art. 1452 of the Spanish C.c., and Art. 185 of the Swiss O.R. In Switzerland, however, the rule has been criticized by legal writers and has been restrictively construed by the Federal Court.[5]

b) Transfer of ownership

This principle finds support in the legal proverb res perit domino. This rule, which also appears to be of Roman origin, was developed by the proponents of natural law (Grotius, Pufendorf) during the 17th Century.[6] It has been adopted by the French Code civil (Art. 1624/1138(2) and Art. 1465 of the Italian Codice civile. It is also part of the English Sale of Goods Acts of 1893 and 1979.[7] It has to be noted, however, that under these legal systems the transfer of ownership, to which the passing of risk is linked, is already effected at the time of the conclusion of the contract. Therefore, as a matter of practice, the rule periculum est emptoris is also retained under the principle of linking risk of loss to the transfer of ownership.[8] [page 269]

c) Transfer of physical possession

Section 446 of the German Civil Code links passing of risk to the transfer of possession to the buyer. It has been followed by Art. 522 of the Greek Civil Code. The same principle can be found in the Swedish Act of 1905 relating to the purchase and exchange of goods (Art. 17); also the US Uniform Commercial Code ( 2-509(3)) establishes the general rule that the "risk of loss passes to the buyer on his receipt of the goods," thereby deviating from common law tradition.

d) Comparative evaluation [8a]

An analytical evaluation of the best starting point for the passing of risk has to take into consideration different arguments. There are several reasons to link risk allocation to the transfer of physical possession of the goods. First, as long as the seller is in physical possession of the goods, it is only he who can take measures for the prevention of risks of loss and damage. If goods are damaged or lost while in the possession of the seller, there is a strong presumption of his negligence. Therefore, the buyer who is requested by the seller to pay the purchase price for goods that are in possession of the seller will inevitably respond that the loss is due to the negligence of the seller. Thus a rule that links risk of loss to possession minimizes litigation on negligence. Secondly, the goods are covered by the risk insurance (e.g., fire insurance) of the seller as long as they are on his premises. It would be impractical to request the buyer to insure goods that are still in the care of the seller. Finally, it is easier for [page 270] the seller to press a claim against the insurance company.

There is an argument which has been put forward in favour of linking the passing of risk to the conclusion of the contract. It has been said that an early passing of risk is an invitation to the buyer to take possession of the goods as early as possible. The transfer of risk, it has been said, is the price for the laziness of the buyer in collecting the goods.[9] This argument, however, presupposes that the seller is always in the position to deliver physical possession to the buyer at the time of the conclusion of the contract. This, however, is in conflict with practice: At the conclusion of the contract, the seller is often not yet the owner of the goods sold to the buyer. Even if he is the owner, he may have stored the goods outside his premises and be unable to deliver them immediately. Therefore, one can only blame the buyer for not taking immediate possession of the purchased goods provided the seller has ownership and physical possession of the goods at the date of the contract. Making these elements conditions of a transfer of risk to the buyer would also enhance litigation between seller and buyer in case of loss.

3. Particularities of international sales

a) Contracts involving carriage

This presentation of the problem of passing of risk started with a simplified model case: A cash sales transaction in which the buyer takes the goods from the shop of the seller. The typical international sales transaction is characterized by greater complexity. The buyer living in a foreign country normally is not prepared to physically [page 271] take the goods from the seller's premises; also the seller is not equipped to bring the goods to the premises of the buyer situated in a foreign country. Normally, they agree that the seller will make the necessary arrangements for the transport of the goods to the buyer. This typical transaction should be illustrated by an example: A manufacturer of agricultural machines has his place of business in Belgrade. He sells 20 machines to an import company located in Alexandria, Egypt. The seller undertakes to provide for transport to Alexandria. The practical means of transport in this particular situation is the following: The machines are transported by railway from Belgrade to Rijeka, then shipped from Rijeka to Alexandria.

b) Transport documents, bill of lading

For reasons of simplicity, let us now concentrate on sea transport. Normally, the seller concludes a maritime contract of affreightment with the carrier. In this contract, the seller is called the "shipper." The carrier issues the shipper a document, the bill of lading which contains two elements:

  1. An acknowledgment of the carrier that he has received the goods;
  2. A promise to hand over the goods to the person holding the bill of lading.[10]

The buyer can collect the goods from the carrier at the port of destination only when he has the bill of lading in his hand. The bill of lading, therefore, is an essential document that enables the buyer to collect the goods. In a certain sense, the bill of lading represents the goods that are transported.

The bill of lading often has a very important [page 272] ancillary function connected with payment of the price. Since the bill of lading represents the transported goods, handing it over to the buyer against payment of the purchase price gives a security for payment of the purchase price equivalent to the retention of the goods until payment in cash sales. The seller often does not want to trust the willingness and ability of the buyer to pay after he has received the goods. Therefore, he may request a letter of credit from a bank in the buyer's country by which the bank undertakes to make payment on receipt of the transport documents. Such a letter of credit is usually confirmed by a correspondent bank of the buyer's bank in the seller's country. In such so-called irrevocable letters of credit, the seller gets the purchase price from a bank in his own country upon receipt of the bill of lading. The bank in the seller's country sends the bill of lading to the bank in the buyer's country that has issued the letter of credit which, in turn, hands it over to the buyer. As letters go faster than freight, the buyer has the bill of lading in his hands before the ship has arrived in his country.

c) Passing of risk

The central topic concerning passing of risk in international sales of goods is the sales contract involving carriage. The general policy on risk allocation that was developed above is that risk should be linked to physical possession. This policy, however, is not very helpful in contracts involving carriage. During the time of carriage neither the seller nor the buyer is in physical possession of the goods. Therefore, the general criterion of risk allocation has to [page 273] be adapted to the transport situation. There is some support to link the passage of risk to one of the following criteria: (1) transport cost; "delivery"; transfer of documents.

(1) Transport cost

It has been suggested that the risk be allocated to the party contractually bound to pay the cost of transportation. This had been the rule of the US Uniform Sales Act section 19, subsection 5. There is also some support for such a rule in older British authorities.[11] The reason for this rule is obvious: A seller who pays the carrier and the insurance company thereby impliedly acknowledges that it is his duty to bring the goods to the buyer. Any accident during transport is therefore assumed to be at that party's risk; insurance cover paid by the seller again implies that he assumes to suffer the risk of loss.

This argument disregards contractual practice. Let us assume that in case the seller is entitled to repayment of his expenses for carriage and insurance, the buyer has to take the risk of loss during the transport process. It should be clear that such an obligation to repay these costs is very onerous for the buyer. He cannot calculate the costs in advance and it is very difficult for him to prove that the seller charged him an unreasonably high transport cost. Moreover, the seller frequently has made general arrangements with carriers and insurance companies for discount rates which will make the overall transaction not only more predictable, but also cheaper. And, indeed, international commercial practice reflects these considerations: In most cases the [page 274] seller assumes the mentioned obligations. Shifting the burden of payment of transport and insurance costs to the seller is to the advantage of the buyer. It seems unsatisfactory to automatically link to this another advantage: to shift the burden of risk of loss from the buyer to the seller. Such an automatic link between the risk of loss and payment of transaction cost could have the effect that the sellers would be less inclined to accept the obligation to pay the transportation cost and insurance.

There is another argument in favour of this link between the obligation to provide for transport and risk: If, on the one hand, the seller has to pay for the transport and the buyer, on the other hand, has to bear the risk of loss during transport, the danger exists that the seller will look for the cheapest carrier and insurer. This keeps his expenses low, but enhances the risk of loss to the buyer. If the seller who chooses the carrier also has to bear the risk of loss, he will look for a reliable carrier even if that implies higher cost.[12]

This argument certainly has some appeal in those cases in which the seller gets the purchase price by means of a letter of credit immediately after he has presented the shipping documents. Nevertheless, the argument does not hold ground for other export transactions. In many transactions, payment of the purchase price is not due on shipment of the goods but only on presentation of the bill of lading by the seller's representative to the buyer at the port of destination. In such cases, the seller runs the risk that the buyer does not pay upon presentation of the bill of lading. Therefore, his interest in safe carriage of the goods remains: If the buyer does not [page 275] pay, the seller can sell the goods again or retain the insurance premium for goods lost or damaged. He is therefore interested in safe carriage and correct insurance even if the risk of loss is assumed by the buyer.

It has been the historical achievement of the CIF clause to clearly dissociate risk of loss from the obligation to pay transport cost and insurance.[13]

In the movement for international unification of sales law, the idea of linking risk of loss to payment of transport cost (in cases of loss) has not been accepted. Whereas the Hague Sales Law [ULIS] only expressed a rule against a necessary link of transport cost and risk of loss,[14] the UN Sales Convention does not mention such a link at all.

(2) Delivery

During the preparation of the Hague Sales Law, there was widespread agreement on the principle that risk of loss should pass from the seller to the buyer at the moment when he has done all the steps required by the contract. Art. 97(1) of the 1964 Uniform Law in the International Sale of Goods [ULIS] states:

"The risk shall pass to the buyer when delivery of the goods is effected in accordance with the provisions of the contract and the present law."

This formula of linking the passage of risk to "delivery" has been praised by several authors, but it has also been criticized for theoretical and practical reasons.

The main theoretical argument against such a link is the following: The concept of delivery has been used in the Hague Sales Law for the solution of different legal issues: It defines [page 276] the performance of the seller's obligations (Art. 30); it also marks the passing of risk from the seller to the buyer (Art. 97(1)), the date of payment of the purchase price (Art. 71) and the moment of identification of unascertained goods to the contract.[15]

This solution of different legal issues by one and the same concept necessarily makes the concept abstract and impractical. This conceptual approach, moreover, disregards that different policies may rule different issues. Take the example already quoted supra: B orders by telephone 12 bottles of Chateau Lafite 1978 from A to be taken from A's shop the next day. A collects 12 bottles from the cellars and boxes them. The following night the box is stolen. It is true that in this situation the seller has complied with his contractual obligations and therefore is not liable for damages for breach of contract. This does not necessarily imply that risk of loss passes to the buyer with the effect that the buyer is liable to pay the purchase price.[16] Practical considerations may advise postponement of risk of loss to the date the goods are actually handed over to the buyer.

There are two other practical objections against the use of delivery as the critical point for passing of risk. First: In the Hague Sales Law delivery means fulfillment of all contractual requirements by the seller. A seller who hands over defective goods to the buyer has not met his contractual obligations; he has not delivered. It follows that the risk remains with the seller even when the buyer has the goods in his hands.[17] Second: The possible connection of risk of loss with the handover of transport documents remains unresolved (infra 3). [page 277]

(3) Hand over of documents

The second argument against linking the passing of risk to delivery may be illustrated by our above-mentioned case: Agricultural machines have been sold by a Belgrade seller to a buyer in Alexandria. Let us assume that the goods were damaged as a result of a ship collision in the Adriatic Sea before the seller sent the bill of lading to the buyer. There is considerable argument as to whether or not the seller has already fulfilled his contractual duty of delivery by handing over the goods to the carrier or whether handing in the transport documents is also part of the delivery. There is widespread agreement in several legal systems (France, England, USSR) [18] to combine the handover of transport documents with the passing of risk. The legal rules of other systems, such as the US Uniform Commercial Code,[19] and of several Incoterms clauses [20] are in opposition to such a link. The problem was discussed at length during the preparation of the Hague Uniform Law [ULIS] but it has not been expressly solved in that Convention.[21]

In favour of linking risk of loss to handing in the transport documents is the argument that the seller who keeps the transport documents in his hands reserves control over the goods. The buyer only gets control of the goods when he receives the transport documents. On the other hand, the reservation of a security interest in the goods (like reservation of title by the seller) generally is not regarded as a sufficient ground to reverse the general rules on risk allocation. Moreover, linking passing of risk to the surrender of documents can lead to practical difficulties. One example: Goods are shipped from Rijeka on March 1 and arrive at Alexandria on [page 278] April 1. The shipping documents are handed over to the buyer on March 15. By then it may be clear that the goods were damaged during shipment, but it is not clear on which particular date the damage occurred. Last but not least, damage is usually discovered only after arrival. Therefore the buyer is closer to the assessment of damage than the seller.

(4) Typological approach

It was the policy of the UN Sales Convention not to use the ambiguous word "delivery" as the critical point for the transfer of risk in all international sales. The Convention replaced that conceptual approach with a typological one.[22]

It distinguishes between different transport situations and gives a clear cut answer in which, event risk passes to the buyer for each of them. In the previous example (3), Art. 67 clarifies that risk passes to the buyer "when the goods are handed over to the first carrier for transmission to the buyer in accordance with the contract of sale ..." The fact that the seller is authorized to retain documents controlling the disposition of the goods according to an express provision of the Convention does not affect the passing of risk (Art. 68).

4. Incoterms; General Conditions of Sales (CMEA, ECE)

Export and import traders have long been aware of the problems inherent in the carriage of goods sold to different countries. They have developed several types of clauses describing in a short-hand form the respective obligations and risks of seller and buyer concerning the international [page 279] carriage of goods. Particular consideration is given in these clauses to the passing of risk from the seller to the buyer. Such clauses were originally formulated for the international carriage of goods by sea. Later they were developed for international carriage by rail and by airplane. It seems, however, that for international carriage by road, no such clauses have yet been introduced.

a) Incoterms [23]

After the First World War, the understanding of these basic commercial terms in different countries was the object of inquiry in business circles. This showed that despite international agreement on the respective duties of seller and buyer in the international business community, national differences of understanding persisted as to several obligations. The International Chamber of Commerce invited business circles of its member countries to develop a common understanding of those terms which seemed to be internationally acceptable. This unification attempt was the "International Rules for the Interpretation of Trade Terms" (Incoterms) which were first published in 1936. They were later followed by Incoterms 1953 and in 1980 the International Chamber of Commerce recommended that an explicit reference to Incoterms be added when using these trade terms in order to make it clear that they are to be interpreted in accordance with Incoterms. In many export contracts, specific reference has been made to Incoterms.

The question remains, however, whether or not the rules of interpretation as set out in Incoterms are relevant in those instances in which no express reference to Incoterms has been made [page 280] by the parties. The alternate solutions are that, in these instances, the national trade terms either of the forum, of the place of formation or performance of the contract, or of the country of the party whose obligations are involved shall apply.[24] Article 9(2) of the UN Convention makes reference to the usage which in international trade is widely known to be observed by parties to contracts of the type involved in the particular trade concerned. In regard to the parallel provision in the Hague Sales Convention, there was some dispute among legal writers as to whether or not Incoterms constitute a usage that is binding for the interpretation of their terms.[25] The materials of the UN Convention constantly refer to Incoterms.[26] Therefore, it seems that in the interpretation of those standard terms Incoterms should prevail not only over the UN Convention but also over national trade terms.

An important reservation has to be made in regard to the actual world-wide use of Incoterms. In the United States, the American Foreign Trade Definitions of 1941 are still in current use; also, many countries in the Far East which have the US as their most important trading partner adopt the American definitions.[27]

The different clauses in Incoterms provide for a wide variety of points at which the risk passes from the seller to the buyer in contracts involving carriage.

Under the term "free on rail" (FOR), risk passes to the buyer when the seller has delivered the goods into the custody of the railway authority at the agreed place. In the same way, under the clause "freight or carriage paid to (named point of destination)" the seller bears all risk for the goods until they have been delivered into the custody of the first carrier. [page 281]

The port of shipment is the point for passing of risk in the clauses "free alongside ship" (FAS), "free on board" (FOB), "cost and freight" (C&F) as well as "cost, insurance, freight" (CIF). The purpose of these clauses is that the specific risk of shipment is at the buyer, whereas the seller is regarded as being closer to the risk of land transport before shipment.

The alternative connection point for carriage by sea contracts is the port of destination. This port may be located in the country of the buyer or (as in Switzerland, Austria and Hungary) in the port of the country next to the buyer. The port of destination is the point for passing of risk according to the clauses "ex ship" and "ex quay." According to the latter clause, it is the seller who has to pay customs duties.

It should be noted that Incoterms also provide for clauses "ex works" and "delivered" (to a named place of destination in the country of importation). Under the first clause, the risk already passes at the seller's place of business. Under the second clause, it does not pass until the goods arrive at the buyer's place of business.

Incoterms only describe the usual meaning of the standard clauses concerning carriage in international business without indicating preference for any of the clauses. This has to be seen against the background that the ICC did not want to show any preference for one of these clauses and that the different arrangements are the reflection of different market conditions that may change very quickly.[28] It is obvious that in a seller's market the clause "ex warehouse" is used more frequently than in a buyer's market which will show preference for the clause "delivered." In sea transport, the market situation will probably [page 282] be reflected in those clauses which opt for the port of shipping or those opting for the port of destination.

b) CMEA General Conditions of Delivery [29]

The general conditions of delivery of goods between organizations of the member states of the Council for Mutual Economic Assistance (CMEA) of 1968 undertake to give an order of preference to different clauses according to the type of transportation involved. As to carriage by rail, the usual clause "FOR" is modified in comparison with Incoterms in so far as the seller bears the risk not only until the goods are put under the custody of the railway of the seller's country but also until they are transferred from the railway of the seller's country to the next railway receiving the goods ( 5(b)). The same policy is true for carriage by road. In this eventuality the risk passes to the buyer at the moment when the goods are examined by border customs of the country next to the seller's country, even if the goods are delivered by the seller's means of transport to the buyer ( 5(b)). As to transport by sea, preference is given to the moment when the goods pass the ship's rail at the port of shipment ( 7(b)). As to carriage by air, risk passes with the surrender to the air carrier in the seller's country.

The common denominator behind those rules is that the seller takes transit risk for damage occurring within his own country. The buyer takes all other transit risks, even when transport is effected by the seller's own staff. This policy reflects the responsibility of state-trading organizations for acts within the territory of that state and cannot be exported to trade with [page 283] countries belonging to different economic systems.

c) ECE General Conditions of Sale [30]

Another source reflecting international trade usages are the general conditions of sale promulgated under the auspices of the Economic Commission for Europe of the United Nations (ECE). The General Conditions for the Supply of Plant and Machinery for Export No. 188, 1953 [31] show a preference for a sale "ex works." This implies that risk passes from the seller to the buyer already while the goods are on the premises of the seller. The same is true for the ECE General Conditions of Sale for the Import and Export of Durable Consumer Goods and of Other Engineering Stock Articles, No.730, 1961 (Clause 5).[32] The more recent General Conditions of Sale for Fresh Food and Vegetables including Citrus Fruit of 1979 [33] (clause 31) do not give preference to any of these clauses but -- like Incoterms -- leave it entirely to the parties to determine the applicable clause.

II. THE CONVENTION

1. Contracts involving carriage (Art. 67)

The first rule concerning passing of risk is established in Art. 67. The basic policy is expressed in Art. 67(1)(first sentence): "If the contract of sale involves carriage of goods ... the risk passes to the buyer when the goods are handed over to the first carrier ..." This sentence already raises two questions: [page 284]

a) When does a contract of sale involve carriage of goods?
b) Who is the first carrier?

Art. 67(1)(second sentence) gives an exception to the basic rule (infra c): Art. 67(2) deals with a prerequisite of passing of risk: the identification of goods to the contract (infra b).

a) Contracts involving carriage of goods

The term "contract of sale involving carriage of goods" is already mentioned in the chapter concerning obligations of the seller (Art. 31(a)). In regard to the obligations of the seller concerning the delivery of goods, the said article makes the following distinctions:

-    The seller is bound to deliver the goods at a particular place (Bringschuld);[34]
-    The contract involves carriage of goods (Versendungskauf);
-    The seller only has to place the goods at the buyer's disposal at the seller's place of business (Holschuld).

From the context, it becomes clear that the obligation to deliver the goods at a particular place is the exception which has to be specifically agreed upon by the parties. In the case of silence of the contract, the question arises whether or not the seller has to hand the goods over to the first carrier or whether he only is obliged to place the goods at the buyer's disposal at his own place of business.

The Convention does not give a specific rule of interpretation for this event. Therefore, the silence of the parties concerning whether or not the contract involves carriage has to be construed in each particular case. One has to take into account the understanding of a reasonable [page 285] person, all facts relevant to the case, the usages of the parties and international trade usages (Art. 8(3)); Art. 9(2)). Accordingly, it seems that there are very few cases in which an international sale is concluded with the seller not being involved in carriage. It has been pointed out that this provision could apply when the seller and buyer are relatively near each other and the buyer has access to trucks that can conveniently go to the seller's place of business.[35]

Let us come back to the case in which a buyer from Egypt orders several agricultural machines from a seller in Belgrade. The seller accepts the order and there is no agreement on delivery of the goods to a specific place nor do the circumstances of the case suggest that the buyer wants to go to Belgrade in order to take delivery of the machines there. Therefore, the normal consequence is that the seller has to send the goods to the buyer. It may be interesting to ask who has to arrange for the carriage of goods in a situation where there has not been a specific contractual agreement concerning the carriage. Art. 32(2) of the Convention says:

"If the seller is bound to arrange for carriage of goods, he must make such contracts as are necessary for carriage to the place fixed by means of transport appropriate in the circumstances and according to the usual terms for such transportation."

This clause does not specify under which circumstances the seller is bound to arrange for carriage of the goods. The commentators seem to be silent on this point. It seems to me, however, that in case the contract involves the seller in the carriage of goods and the contract does not [page 286] provide for specific ways of sending the goods, it is up to the seller to arrange for carriage of the goods according to the terms provided for in Art. 32(2). Such an obligation, however, does not bind the seller to arrange for insurance (Art. 32(3)). Therefore, it remains up to the buyer to effect insurance; the seller, however, is obliged to provide the information necessary for conclusion of the insurance contract.

b) The first carrier

Let us stick to our introductory case. The Belgrade seller has accepted the buyer's order for several machines. The contract directs no specific means of transport. In accordance with usage, the seller decides to take the machines by railway from the railway station in Belgrade to Rijeka Port railway terminal and then ship them via Athens to Alexandria. He requests a local truck carrier to bring the machines from his factory to the railway station. During the transport from the factory to the railway station there is a car accident in which the machines are heavily damaged. Is the seller entitled to request payment from the Egyptian buyer? The question is whether or not the local truck company which had to transport the goods from the factory to the railway station was the first carrier. This problem seems to have been discussed at length during the preparation of the Hague Sales Convention [ULIS].[36]

It seems that the uniform view has been that local transportation cannot have the effect of a passing of risk to the buyer. This is also valid for the UN Convention.

The next question is whether or not transport by the staff of the seller can be regarded as [page 287] transport by the first carrier. Take our initial example. The Belgrade seller has his own trucks and chooses to transport the machines to Rijeka with his own trucks and not by railway. Midway between Belgrade and Rijeka the goods are damaged in an accident. Under the Hague Sales Law [37] and also the UN Convention, the prevailing opinion is that transportation by the staff of the seller is not equivalent to transportation by an independent carrier. Above all, there is a practical argument in favour of leaving the risk with a seller who undertakes transportation: The goods remain physically in his hands. He is closer and can thus take preventive measures easier than the buyer.

I do not believe that it is a good policy to leave the risk with the seller. It penalizes a seller who provides transportation services that are quicker or cheaper than those of established transport organizations. Only in these eventualities (economy, rapidity) is he entitled to replace his own service by existing carriers. It is certainly true that the burden of proving that the loss or damage was not due to an act of the seller (or of his staff) is upon the seller. When the seller has presented such evidence, there is no reason why he should not be discharged from the risk of loss during transport effected by his own staff. In the end, this policy I suggest operates in favour of the buyer: He is the person who profits from specific measures of the seller to compete in transport with other established institutions.

c) Hand over at particular places

The traditional trade terms "FAS," "CIF," "FOB" reflect the idea that when carriage involves [page 288] land transport as well as sea transport, the risk passes to the buyer only at the port of shipment and not already when the goods are handed over to the first land carrier. During the discussions of the Hague Sales Law [ULIS] it had been suggested that a special rule be made for sea transport.[38] This suggestion was rejected as a general rule, and the UN Sales Convention also does not provide for such a general rule. Nevertheless, Art. 67(1) (second sentence) can be explained by that policy: If the seller is bound to hand the goods over to a carrier at a particular place, the risk does not pass to the buyer until the goods are handed over to the carrier at that place. Let us give an example: The buyer in Alexandria orders several agricultural machines from the seller in Belgrade with the provision to ship the machines from Rijeka to Alexandria. In this situation, the seller is bound to hand the goods over to the sea carrier at Rijeka. The result is that the seller bears the risk of loss during the land transport from Belgrade to Rijeka even though this transport has been effected by the railway as the first carrier. The splitting of transit risk between the seller and the buyer presents practical problems in determining the place where the damage occurred. Therefore, this exception should be construed narrowly.[39]

The first example for narrow construction is where the port of shipment has not been provided for at the conclusion of the contract but by a later instruction of the buyer to the seller. Such subsequent choice should not affect the passing of risk.[40]

Also in cases where the parties have agreed on alternative ports, e.g., UK-port, Amsterdam/Antwerp, Hamburg/Le Havre, Deutsche Nordseehäfen, the aim of such a clause is to enable shipment at [page 289] the port from which the next vessel is departing to the destination of the goods. In this situation, the identification of the "particular place" where the goods are to be handed over to the carrier depends on an act of the carrier after the conclusion of the contract. Such alternative determination of a particular place, whereby the place is specified only after the conclusion of the contract, should have no effect on the passing of risk.[41]

Provided a particular place has been agreed upon between seller and buyer, the risk passes when the "goods are handed over to the carrier at that place." Traditional trade terms are more specific on the transfer of risk between seller and buyer in contracts involving sea transport. They alternatively provide that risk passes when the goods are delivered by the seller free alongside ship or when they have effectively passed the ship's rail. The first clause puts the risk of loading on the buyer; the latter on the seller. Art. 67(1) (second sentence) is not so sophisticated: It lets risk pass when the goods enter into the physical possession of the carrier. In regard to the Hague Sales Convention, it was suggested that in contracts involving sea transport, risk regularly pass to the buyer only when the goods have effectively passed the ship's rail, even if they have previously been put in the physical possession of the carrier.[42]

In view of the different trade usages concerning passing of risk in sea transport (alongside ship or passing the ship's rail), it seems that a uniform international trade usage cannot be determined that has prevalence over the provision of the Convention. Therefore, the physical hand over to the sea carrier is decisive. [page 290]

d) Identification of goods to the contract (Art. 67(2))

This is a very obscure provision that has limited practical interest and normally is neglected by commentators of the Convention. Nevertheless, it is worthwhile to go into it as it shows some interesting peculiarities of the transfer of risk problem unknown to national laws.

The starting point is very simple. B telephones A and orders 12 bottles of wine Chateau Lafite 1978. Risk then passes -- according to conventional wisdom -- to B only when A takes the bottles out of his wine cellar, boxes them, and writes the buyer's name on the box. If the seller has done all these steps before the goods are destroyed, then risk has passed to the buyer. The procedure carried out by the seller was to "appropriate" goods which hitherto have been unascertained. The UN Convention now uses the term "identification" instead of "appropriation" which is a term of English law. Identification means that it becomes obvious that goods of the seller have become connected with a particular contract.

In contracts involving carriage, identification of goods may give rise to particular problems. Normally, the name of the buyer is marked on the goods, or the person entitled to claim delivery from the carrier may be inferred from the shipping documents, in particular the bill of lading. Therefore, in this case the bill of lading entitles the buyer to receive goods that are clearly identified to the contract by the shipping documents.

Nevertheless, in many cases the buyer is not named as consignee in the bill of lading.[43] The seller often prefers to send the goods to himself as the consignee at the port of arrival. This is [page 291] particularly true in situations in which payment has not been received by way of letter of credit. Then the seller wants to maintain the possibility of disposing of the goods in case the buyer does not procure payment on the presentation of the bill of lading. Therefore, the bill of lading is not an appropriate means of identifying the goods to the contract. In this situation, a notice of dispatch of the goods to the carrier is regarded as sufficient for the identification of the goods to the contract.

Such a notice of dispatch provides identification of goods to the contract after the risk has passed from the seller to the buyer: handing the goods over to the first carrier or to the sea carrier. The question arises whether or not such identification has retroactive effect. Many laws support the viewpoint that an identification of goods to the contract that took place after the goods have been lost does not have retroactive effect. The opposite view, however, has also been defended. Art. 100 of the Hague Sales Convention [ULIS] excluded the passing of risk from the seller to the buyer only in those situations in which the buyer knew or should have known at the time of sending of the document that the goods handed over to the carrier have been lost or damaged. This implies that, according to the Hague Convention, identification of goods to the contract generally had retroactive effect. Art. 67(2) of the UN Convention uses clear language; in our example, risk only passes when the seller gives notice to the buyer. It is true that such a rule produces the probability of dispute whether or not the damage occurred before sending notice. On the other hand, it avoids dispute on the question whether or not the seller was bona fide in sending the notice. It also encourages the seller to [page 292] send the notice to the buyer without delay. And normally it should be possible for the seller to send the notice of dispatch immediately after he has handed over the goods to the carrier.

2. Sale of goods during transit (Art. 68)

In a particular type of international sales transaction, the goods are already in transport at the time of the conclusion of the contract between the seller and buyer. Let me give an example: An American corn exporter ships corn from New York to Rotterdam. He has a contract with a European buyer CIF Rotterdam. The contractual time of delivery in the contract gives the seller a certain time period within which he can choose whether to use the quantity of corn afloat to meet his existing contractual delivery obligations towards his buyer or to look for another buyer with whom he may agree on a more favourable price than in his previous contract. He can then fulfill his original contractual obligation by sending another shipment of corn. It should be noted that the prices of commodities vary considerably with time, and therefore a sale of goods afloat enables the seller to speculate.[44] Let us assume that the cargo of corn has been shipped by the seller on April 15 and sold to a European importer on April 20. The seller hands over the bill of lading to the buyer on the date of the sale. Upon arrival the corn is found to have been damaged by sea water.

The question now arises whether the seller or the buyer has to bear the risk of loss. The general rule -- as we have seen -- is that the buyer bears the risk of loss from the time of the hand over to the first carrier. In this particular case, the hand over to the first carrier has been [page 293] effected before the contract between the seller and the buyer was concluded. Therefore, the question is whether or not the buyer has to bear the transit risk even for the time before conclusion of the contract. The alternative would be to make the risk pass only from the time of conclusion of the sales contract. The practical inconvenience of this latter solution is that it is very difficult to determine when damage occurred to the goods in transit. Therefore, such a rule leads to disputes. Moreover, the general argument that the buyer who inspects the goods is closer in order to press a claim against the carrier or the insurance company is also valid for risks that occurred before the conclusion of the contract. It seems that there has been an international trade usage, at least in Europe, which makes risk pass retroactively to the buyer for the whole sea transport.[45] This rule has been recognized in the Hague Sales Law ([ULIS] Art. 99).

The UNCITRAL Draft of the Sales Law contained a similar provision (Art. 80), which, however, gave rise to strong protests on the part of the delegates of a number of developing countries who pointed out that such a commercial usage contradicted the interests of buyers in developing countries.[46]

The most impressive argument against the retroactive passing of risk was that it is unacceptable for the buyer to assume the risk for the time before conclusion of the contract if the goods had not been insured prior to that date.[47]

The following compromise has finally been agreed upon: Normally, the risk in respect of goods sold in transit passes to the buyer only at the conclusion of the sales contract (Art. 68 (first sentence). There is, however, an important exception. The risk passes to the buyer [page 294] retroactively from the time of the handover to the carrier "if the circumstances so indicate." The question remains open as to which circumstances indicate such a retroactive passing of risk. It is clear from the wording of that exception that the parties need not agree expressly on retroactivity but that such an agreement can be implied from the circumstances of the sales transaction. It has been reasonably argued that under the typical circumstances indicating retroactive passing of risk, the seller, in execution of the sales contract, hands over the buyer an insurance policy payable "to the order of the assured" endorsed by the seller to the buyer.[48]

3. General residual rule (Art. 69)

It has been stated that the characteristic feature of international sales transactions is that they involve carriage obligations of the seller. Only in exceptional cases is the whole transport obligation assumed by the buyer (as in "ex works" contracts). Therefore -- in contrast to purely international sales transactions -- the rule on passing of risk in sales not involving carriage by the seller has only a subsidiary function. Art. 69(1) covers those situations. The principle is that risk passes from the seller to the buyer at the time the buyer takes over the goods at the seller's place of business. Therefore, the risk remains with the seller during the time period the buyer is permitted but not contractually bound to take over the goods. If the buyer is to take over the goods by the end of May and the goods are stolen on May 28, the risk of loss is still at the seller. The reason behind this rule is that the seller who has the goods in his hands is closer to their custody than the [page 295] buyer. The rule is preferable to Incoterms "ex works" which makes risk pass to the buyer as soon as the goods are placed at his disposal.

The question remains whether or not a breach of contract by the buyer can effect a transfer of risk to him. Art. 69(1) makes risk pass to the buyer if he does not take over the goods in due time. From that time on he commits a breach of contract by failing to take delivery when the goods are placed at his disposal. The latter means that goods have been identified to the contract by the seller (cf. Art. 67(2)). Art. 69(1) does not expressly cover the situation in which a breach of contract by the buyer does not consist of a refusal to take delivery but of a refusal to do other acts that according to the contract have to be done by the buyer prior to delivery. A typical case of such a breach of contract may occur when the buyer is bound to make payment on delivery but refuses to do so. In this situation, the buyer does not fail to take delivery, but it is the unpaid seller who refuses to deliver to the buyer.

It is true that an amendment proposed by the German delegation with the aim of effecting the passing of risk to the buyer in all cases in which he prevents delivery by a breach of contract was not adopted.[49] However, I believe that systematic coherence demands that delivery prevented by a breach of contract on the part of the buyer lets the risk of loss pass to the buyer. This argument is supported by the policy consideration that passing of risk is one of the elements which may encourage the buyer to meet his contractual obligations.[page 296]

III. CONCLUSION

The legal effect of the rules concerning the passing of risk is that, as all provisions of the UN Sales Convention, they are non-mandatory. Therefore, the specific provisions on passing of risk that have been agreed upon by the parties as well as established by international trade usages prevail over the rules of the Convention. We have seen that in export trade, standard trade terms such as ex works, CIF and FOB give very precise definitions of the passing of risk, especially when they are interpreted in the light of Incoterms.

The Convention itself did not attempt to present rules for the interpretation of these trade terms. Such an effort might have had the positive effect of promoting an even greater international uniformity of interpretation of these terms than that guaranteed by Incoterms.[50] The important drawback of such an effort, however, would be that it would lead to a "petrification" which is in contradiction to the notion of commercial usage. Commercial usage is in a permanent state of development and takes continual notice of new technical and documental developments. It is not difficult to anticipate that the further development of container transport [51] and of "multi-modal" transport documents [52] will influence future trade practices concerning the passing of risk. Therefore, the reluctance of this Convention in formulating trade terms wisely recognizes the respective roles of international trade usage and the Convention in the development of international trade: Priority is given to trade usage, enabling dynamic development and adaptation, whereas the Convention -- replacing national statutes -- provides a subsidiary framework.[53] [page 297]

In its choice of a model for the rules on the passing of risk, the Convention did not rely on precedence in national legislations or on traditional legal concepts. It refuses to link passing of risk to the conclusion of the contract, to the transfer of property, to the execution of the seller's contractual obligation (delivery), or to payment of the transport cost. The main reason for the lack of such a general rule for the passing of risk seems to be that it would be unable to cope with the practical needs of different types of international contracts involving carriage. Trade terms, as reflected by Incoterms, show that none of the classical systems of linking passing of risk to a certain event has been accepted by the commercial world. Therefore, this Convention does not offer one general criterion for the transfer of risk but rather a typology covering different situations:

-     Contracts involving carriage,
-     Contracts involving carriage to a particular place,
-     Sale of goods in transit, and then gives a general residual rule.

On the whole, the underlying policy for risk allocation in contracts involving carriage is the following: In export sales, goods are normally insured against transportation risks. Therefore, the main question concerning risk allocation is whether it is easier for the seller or the buyer to claim compensation for loss and damage from the insurance company. The practical consideration after goods have been sent to the buyer is that only the buyer can discover transit damage. The consequence is to let the buyer suffer the loss, thus keeping the seller out of the dealings with the insurance company. The other way around, letting the seller suffer the loss would make the [page 298] transaction with the insurance company more difficult: First the seller has to be informed of the damage by the buyer and then recover the damage from the insurance company. The risk of loss allocation has therefore become a question of balancing the respective inconveniences of buyer and seller. Such a model of risk allocation is unfamiliar to national systems;[54] I am confident, however, that it will be accepted by the international commercial community for which this Convention has been designed.


FOOTNOTES

1. On this topic cf. J. Honnold, Uniform Law for International Sales (Deventer 1982) pp. 385-390.

2. According to P.M. Roth, "risk is an elusive concept." This statement, however, is only true when the different legal issues raised by one factual event are not distinguished from each other. "The Passing of Risk" 27 Am.J.Comp.L. (1979) p. 291 et seq.

3. For a recent comparative study cf. G. Hager, Die Gefahrtragung biem Kauf (Frankfurt/M. 1982).

4. I. 3, 23, 3; D. 18, 6, 8 pr. quote classical authors for support of the opinion; it is, however, a matter of dispute whether or not this principle had already been part of the classical law. Cf. P. Jörs/W. Kunkel/L. Wenger, Römisches Recht 3rd ed. (Berlin 1949) p. 228.

5. B.G. 18.4.1958, B.G.E. 84 II 158.

6. Cf. G. Hager, supra n. 3, at p. 39.

7. SGA 1893 (s. 20 (1), s. 18 rule 1); SGA 1979 (sec. 20, sec. 18 rule 1).

8. Remarkable agreement between French and English law is noted by G. Hager, supra n. 3, at p. 57.

8a. Those policies have been stressed mainly by P.M. Roth, supra n. 2, at p. 296, and J. Honnold, "Uniform Law and Uniform Trade Terms," in N. Horn and C.M. Schmitthoff (eds.) The Transnational Law of International Commercial Transactions, Studies in Transnational Economic Law, vol. 2 (Deventer 1982) pp. 161-162. They are apparently influenced by the "Economic Analysis of Law" Movement. Cf. infra 54.

9. H. Giger, Berner Kommentar zum Schweizerischen Privatrecht VI, 2/1 (Bern 1973) Art. 185 Rz. 24. Contra: B. von Hoffmann, Das Recht des Grundstückskaufs. Ein rechtsvergleichende Untersuchung (Tübingen 1982) p. 197.

10. For a short introduction to the nature of bills of lading see C.M. Schmitthoff, The Export Trade 7th ed. (London 1980) p. 345.

11. J.Ph. Benjamin, A Treatise on the Law of Sale of Personal Property 8th ed. (London 1950) p. 337.

12. On this argument, cf. H. Grossmann and D. Doerth, Das Recht des Überseekaufs vol. 1 (Mannheim/Berlin/Leipzig 1930) p. 143 f.

13. Ibid. cf. p. 144 f.

14. Art. 101 only says: "The passing of risk shall not necessarily be determined by the provisions of the contract concerning expenses." This does not exclude, however, presumptions in favour of such link.

15. P. Schlechtriem, "The Seller's Obligations Under the United Nations Convention on Contracts for the International Sale of Goods," in International Sales (ed.) Parker School of Foreign and Comparative Law (New York 1984) pp. 6-7.

16. Ibid, at pp. 6-10.

17. For criticism cf. K. Neumayer, "Zur Revision des Haager Einheitlichen Kaufrechts ..." in Festschrift E. von Caemmerer (Tübingen 1978) pp. 955- 986 (985); P.M. Roth, supra n. 2, at p. 295; C. Angelici, "La disciplina del passaggio dei rischi," in b.2. Vendita internazionale (Milano 1981) p. 226.

18. For references see H. Dölle and K. Neumayer, Kommentar - Einheitlichen Kaufrecht (München 1976), Art. 97 Rz 55.

19. S. 2-509 (1 a).

20. CIF; C & F.

21. Cf. H. Dolle and K. Neumayer, supra n. 18, at Art. 97 Rz 55.

22. C. Angelici, supra n. 17, at p. 228.

23. F. Eisemann and J. Ramberg, Die Incoterms heute und morgen (Wien 1980); J. Ramberg, "Incoterms 1980," in Horn and Schmitthoff (eds.), supra n. 8a, at pp. 137-151.

24. For a discussion of this problem see B.von Hoffmann, "Zur Auslegung von Formularbedingungen des internationalen Handelsverkehrs," AWD (1970) pp. 247-253.

25. Pro: Y. Loussouarn and J.-D.Bredin, Droit du Commerce international (Paris 1969) p. 676. Also the German Federal Court construed the FOB clause in conformity with Incoterms even when the contract did not contain an express reference to those rules (BGH, 18.6.1975. RIW/AWD (1975) p. 578); B. von Hoffmann, supra n. 24, at p. 252; F. Eisemann and J. Ramberg, supra n. 23, at p. 34 et seq.; contra: H.-J.Mertens and E. Rehbinder, Internationales Kaufrecht (Frankfurt/M. 1975), Art. 9 Rz 42; H. Dölle and W. Junge, supra n. 18, at Art. 9 Rz 18 expressly reserve the future development of Incoterms towards an international trade usage.

26. In particular, the Secretariat of UNCITRAL makes specific reference to Incoterms for the interpretation of trade terms used in contracts, in its commentary to the UNCITRAL Draft of March 14,1979 (A/Conf. 97-5) pp. 82,198.

27. J.Ramberg, supra n. 23, at p. 151.

28. F. Eisemann and J. Ramberg, supra n. 23, at p. 25 et seq.

29. Cf. Szasz, A Uniform Law on International Sales of Goods -- General Conditions (Budapest 1976); J. Jakubowski, CMEA General Conditions of Contract," in Horn and Schmitthoff, supra n. 23, at pp. 153-157.

30. Cf. H. Cornil, "The ECE General Conditions of Sale," 3 JWTL (1969) pp. 390-412.

31. Reprinted in K. Zweigert and J. Kropholler, Sources of International Uniform Law I (Leiden 1971) p. 90; cf. L. Goffin, "Les conditions généales de vente à l'exportation de biens déquipement" 1 D.P.C.I. (1975) pp. 215-224.

32. Reprinted in K. Zweigert and .J. Kropholler, supra n. 31, at pp. 149-153.

33. UN/ECE General Conditions of Sale. For Fresh Fruit and Vegetables Including Citrus Fruit (1979) ECE/AGRi/40.

34. Remarkably enough, the Convention does not specifically mention the obligation to deliver goods at the buyer's place. Such contracts are not infrequent in Continental Europe. Cf. P. Schlechtriem, supra n. 15, at pp. 6-10.

35. H. Dölle and K. Neumayer, supra n. 18, at Art. 97 Rz 15.

36. Ibid. Art. 97 Rz 15 reproduces the discussions in detail.

37. Ibid., at Art. 97 Rz 15 (para. 2); P. Schlechtriem, Einheitliches UN-Kaufrecht (Tübingen 1981) p. 82.

38. J. Honnold, supra n. 1, at p. 368.

39. Cf. L. de Vries, "The Passing of Risk in International Sales under the Vienna Sales Convention as compared with Traditional Trade Terms," 17 European Transport Law (1982) p. 504: "for it is ancient usage, indeed, that a particular and (more or less) strict rule as regards passing of risk as implied in each trade term cannot -- once agreed upon -- be made invalid ... made by changing subsequently the modalities of taking over ..."

40. Ibid., p. 503.

41. Ibid., p. 504.

42. H. Grossmann and D. Doerth, supra n. 12, at p. 257 s.

43. H. Dölle and K. Neumayer, supra n. 18, at Art. 96 Rz 16.

44. E. Rabel, Das Recht des Warenkaufs, vol. 2 (Berlin/Tübingen 1958) p. 335.

45. Cf. the references in Dölle and Neumayer, supra n. 18, at Art. 99 Rz 7.

46. Report of the United Nations Commission on International Trade Law on the Works of its 10th Session (Vienna, 23 May -17 June 1977) (A/32/17) UNCITRAL Yearbook VIII (Vienna 1977) p. 63: "the representative of the Philippines expressed a reservation ... in that the provisions of that paragraph were not consistent with logic. It was stated that it was inconceivable that the buyer should bear the risk of loss or damage to the goods prior to the time that the contract was concluded. Also the view had been expressed in the committee that if the paragraph accorded with international commercial practice, that practice was one of the developed world. UNCITRAL should take into account that the Resolutions of the General Assembly which laid down the framework of a new international economic order. If UNCITRAL wished to carry out its mandate to make ULIS more acceptable to countries of widely different economic and social backgrounds, it should not ignore these General Assembly Resolutions." Cf. the position of the representative of Finland, ibid., stressing the arguments in favour of the retroactive passing of risk.

47. P. Schlechtriem, supra n. 37, at p. 82, N. 366.

48. J. Honnold, supra n. 1, a t p. 372 ; P . Schlechtriem, supra n. 37, at p. 82; the same position already had been advocated by Neumayer concerning Art. 99 of the Hague Sales Law. Cf. H. Dölle and K. Neumayer, supra n. 18, at Art. 99, 11, 13.

49. Cf. P. Schlechtriem, supra n. 37, at p. 83.

50. Cf. supra n. 27 where some reservations on the actual worldwide use of Incoterms are noted.

51. Cf. J. Basedow, "Die Incoterms and der Container oder wie man kodifizierte Usances reformiert," 43 RabelsZ (1978) pp. 116-146 (144-144).

52. K. Grönfors, "Container Bills of Lading -- A New Trend in Documentation," in Festschrift Schmitthoff (Frankfurt/M. 1974) pp. 187-205. N.R. McGilchrist, "In Perspective -- ICC rules for a Combined Transport Document," 1 Lloyds Mar.Comm.L.Q. (1974) pp. 25-28; W.D. Mapp, "Documentary Problems of Intermodal Transport," 12 JWTL (1978) pp. 514-547. Incoterms 1980 did not yet take into account these new practices, cf. J. Ramberg, supra n. 23, at p. 147.

53. J. Honnold, supra n. 8a, at p. 171.

54. It should be noted that the theoretical analysis of that model can draw benefit from R.A. Posner, Economic Analysis of Law 2nd ed. (Boston/ Toronto 1977) pp. 74-79.


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