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Cite as Will, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 333-341. Reproduced with permission of Dott. A Giuffrè Editore, S.p.A.

Article 46

Michael Will

1. History of the provision
2. Meaning and purpose of the provision
3. Problems concerning the provision

ARTICLE 46

(1) The buyer may require performance by the seller of his obligations unless the buyer has resorted to a remedy which is inconsistent with this requirement.

(2) If the goods do not conform with the contract, the buyer may require delivery of substitute goods only if the lack of conformity constitutes a fundamental breach of contract and a request for substitute goods is made either in conjunction with notice given under article 39 or within a reasonable time thereafter.

(3) If the goods do not conform with the contract, the buyer may require the seller to remedy the lack of conformity by repair, unless this is unreasonable having regard to all the circumstances. A request for repair must be made either in conjunction with notice given under article 39 or within a reasonable time thereafter.

1. History of the provision

     1.1. - Article 46 contains the remedy of specific performance. As long as due delivery has not been made, the buyer may require performance (paragraph (1)). Where delivery has already been made, yet the goods delivered do not conform with the contract, the article provides two variants of specific performance: delivery of substitute goods (paragraph (2) and repair (paragraph (3)), the former being limited to situations where the lack of conformity constitutes a fundamental breach of contract.

          1.1.1. - Specific performance as it has been shaped for international sales in ULIS and the Convention is hardly the best example of compromise between civil law and common law systems. While in civil law systems the primary remedy has always been performance, under the common law it is damages. [page 333]

The common law accepts specific performance only as an exception, in equity, provided that a claim for damages would lead to inadequate compensation.

Interestingly enough, the two opposing approaches appear to be less different in practice. The law of the United States, on the one hand, has widened the availability of this remedy (see § 2-716 of the United States Uniform Commercial Code), while on the other hand, an action for performance is rare among business people from Europe or Latin America. Nevertheless, whenever it comes to unifying rules and to concluding an international convention, none of the parties appears willing to deny his own tradition. In vain it was hoped that by «relatively simple drafting changes» the Vienna Conference would give general preference to damages and make specific relief an alternative (see FARNSWORTH, Damages, 247); nobody expressed preference for the other way around. The hope was to reach a compromise that would work satisfactorily within both legal systems. However, neither ULIS nor the present Convention succeeded in establishing such a new and generally accepted rule. The compromise reached appears rather poor. Whether specific performance can be claimed is in the final instance not to be determined by the Convention itself, but rather by factors outside the Convention -- the law of the forum and, ultimately, the discretion of the forum judge (see commentary on Article 28, supra, §§ 2.1. to 2.5.). Having thus been reduced and deprived of its uniform applicability, the remedy is weakened and, in large parts of the world, without much practical effect.

          1.1.2. - Although the remedy of specific performance was taken over from ULIS, its scope has changed.

Under Article 25 of ULIS the buyer was obliged to purchase substitute goods whenever this was in conformity with usage and reasonably possible, and by doing so he was barred from claiming performance. Although the UNCITRAL Draft Convention had dropped that restriction of the principle of specific performance, an attempt was made at the Vienna Conference to reintroduce it (see Official Records, II, 330-331). The attempt was in vain, and rightly so. It would have done away with the remedy for all practical purposes and encouraged sellers to take their contractual obligations too lightly. [page 334]

Under the Convention delivery of substitute goods presupposes a fundamental breach and thus narrows the scope of the remedy as compared with that of ULIS. The UNCITRAL Draft Convention contained this restriction which was accepted at the Vienna Conference after a short debate (see Official Records, II, 337). The new rule saves sellers trouble and expenditure for goods that suffer from minor defects.

Repair of non-conforming goods was provided under ULIS but was left out in the UNCITRAL Draft Convention. This led to certain confusion as to whether the remedy had been abandoned altogether. In order to avoid any doubt the Vienna Conference discussed and approved a proposal to expressly reintegrate the right to require repair into paragraph (3) (see Official Records, II, 332, 334). It was argued that this remedy often proved to be the only effective one in the hands of the buyer and that it generally served the interest of both parties by maintaining their contract (see Official Records, II, 332, 333).

2. Meaning and purpose of the provision

     2.1. - Article 46(1) establishes the principle of specific performance as a remedy. Article 46(2) and (3) deal with particular situations of non-conforming delivery.

          2.1.1. - Paragraph (1), which enables the buyer to insist on performance of the contract as concluded, expresses the maxim pacta sunt servanda. Its purpose is to see to it that the obligations of the seller are performed as laid down in the contract and this Convention.

               2.1.1.1. - The scope of the general rule in paragraph (1) extends to all situations of non-performance by the seller and is limited only if inconsistent remedies have been exercised by the buyer.

The right to require performance presupposes first that the seller has not fulfilled his obligations. Whereas paragraph (2) and (3) cover only the specific case of non-fulfillment of the seller's obligation to deliver conforming goods, paragraph (1) covers non-fulfillment of any other of the seller's obligations under [page 335] Articles 30 to 34 of the Convention, namely non-delivery or delivery to the wrong place, or delivery of only part of the goods sold.

One might think of including the case where goods other than those contracted for are delivered (aliud). To be specific, would delivery of apples instead of pineapples be a case of non-delivery? The question is not entirely academic. If the answer were positive the buyer might find it difficult to avoid the contract. For the mere delay in performance caused by the delivery of apples instead of pineapples does not necessarily amount to a fundamental breach. In order to avoid that consequence and not to deprive the buyer of the remedy of Article 49, the answer should be that this is not a case of non-delivery. Consequently, this is a case of non-conformity covered by paragraph (2).

The right to require performance further presupposes the buyer's not having «resorted to a remedy which is inconsistent with this requirement». But this goes without saying. One of the inconsistent remedies is avoidance which immediately releases the seller from his original obligations (see Articles 49, 81(1)); the other is price reduction, which immediately adapts the seller's obligations to the performance under way or already made.

          2.1.2. - Claiming specific performance, whether by mere declaration or by court action, in no way affects the contract as such; nor does it preclude the buyer from claiming damages suffered while awaiting performance. By the same token the buyer may later switch to other remedies such as avoidance or price reduction.

     2.2. - Paragraphs (2) and (3) continue to pursue the aim of respect for the contract (pacta sunt servanda) after delivery has been made, although of non-conforming goods. The buyer is then given two remedies: delivery of substitute goods (paragraph (2)) and repair of the delivered goods (paragraph (3)). He may, however, choose between the two only in fundamental breach situations. If a fundamental breach is lacking, he has no choice but to require repair.

          2.2.1. - The right to require delivery of substitute goods presupposes that the time limits are respected and that there is a fundamental breach. [page 336]

               2.2.1.1. - Substitute goods must be requested either in conjuction with notice given under Article 39 or within a reasonable time thereafter. This was precisely the wording of the UNCITRAL Draft Convention. «In conjunction with» apparently means «at the very moment of», as is suggested by the authentic versions of the text. But the matter appears to be of little importance. What may at first glance look like two distinct time-limits («or»), in fact is only one -- that of a reasonable time after having given notice. But what is reasonable in this context? It might be argued that the two-year period of Article 39(2) ought to be considered as a maximum, and for precisely the same reasons. Another possibility would be to allow two years for the notice and then another two years for the subsequent request. The text does not seem to advocate any such limitation, but the necessities of international trade as recognized in Article 39 definitely do.

The time limit serves the interests of both parties. For the buyer to require performance makes sense only if he receives the substitute goods within a reasonable period of time after the first attempt of delivery. The more time that passes, the more his interest in performance usually diminishes. The time limit ought to protect the seller against the buyer's speculating on rising market prices. In addition, both parties will be interested in settling the matter.

               2.2.1.2. - Substitute goods can be requested only in the instance of a fundamental breach. For a general discussion of what constitutes fundamental breach, see commentary on Article 25, supra. A special situation arises with the delivery of goods wholly unrelated to the contract (see § 2.1.1.1., supra). Under Article 33(1)(b) of ULIS such delivery figured among the cases of lack of conformity. Article 35 of the Convention lacks a parallel provision. The omission, however, is by no means the result of a decision that «aliud» deliveries should no longer be considered cases of non-conformity; in fact, this possibility appears not to have been brought up at all during the preparatory work or at the Vienna Conference. «Aliud» deliveries, covered by the general principles of Article 35(1), constitute a fundamental breach of contract. Receiving apples instead of pineapples satisfies the criteria of Article 25.

The purpose of limiting the right to request delivery of substitute goods to instances of fundamental breach is to avoid [page 337] hardship on the seller. He finds himself in the same economic position as if the buyer had chosen avoidance of the contract under Article 49. That is, the seller bears the risk of being unable to deliver substitute goods or to dispose of the goods returned and of all transport costs involved. Such a risk would hardly be justified as long as the defects are only of minor importance. That is a point well taken under Article 49, and it is equally well taken under Article 46(2).

The buyer, on the other hand, finds himself in a far less comfortable situation. Under Article 42(1)(c) of ULIS his choice was between delivery of substitute goods and repair whether or not there was a fundamental breach. The buyer had to decide whether there was a breach of contract, and assume the risk of a wrong decision on that point. Under Article 46(2) of the Convention he has a second decision to make, namely whether the breach is a fundamental one. The risk of error on this second decision is much greater because the question is more subtle.

               2.1.1.3. - The buyer who has required delivery of substitute goods and has fixed a period of time for their delivery is held to this remedy by Article 47. He may not, during a certain period, resort to any other remedy except damages. This can be derived from the idea underlying Article 47; the seller, in such a constellation, needs no less protection of his dispositions (see HUBER, UNCITRAL-Entwurf, 492).

          2.2.2. - The right to require repair presupposes that the time limits have been respected and that the request is not unreasonable.

               2.2.2.1. - As to the time limits, see § 2.2.1.1., supra.

               2.2.2.2. - The seller can evade repair by successfully maintaining that the request is unreasonable. This rule is based on the idea that the buyer must not aggravate the seller's circumstances.

The unreasonableness of repair does not depend on the character of the breach, but rather on the nature of the goods delivered and all the other circumstances. Certain goods by their very nature do not allow any repair at all or, if they do, would [page 338] require expenditure out of all proportion. When it comes to all the other circumstances, regard must be given to both the seller's and the buyer's interests.

As for the seller's circumstances, the Convention, unlike Article 42(1)(a) of ULIS, does not exempt distributors from the obligation to repair. Yet, the idea behind the former distinction between producers and manufacturers on the one side and distributors and dealers on the other, may still enter into the weighing of all the relevant circumstances.

As for the buyer's circumstances, a typical example of a circumstance to be considered would be the availability of qualified repair locally. Where qualified personnel is particularly scarse, as may be the case in some developing countries, the seller's inconvenience may have to give way to the interests of the buyer.

3. Problems concerning the provision

     3.1. - The first problem arising is whether specific performance can be claimed where the defect lies in the title to the goods. This question was not raised at the Vienna Conference (but see HARTLEY, Study, 24). Since the debates there were concerned with physical defects, one might be tempted to limit the provision to physical defects. However, the article's wording and purpose allow a different interpretation. Article 46(1) refers to «performance by the seller of his obligations». Since «his obligations» is unrestricted and general, it necessarily refers to all of his obligations including the obligation to deliver goods free from any right or claim by a third party (see Article 41). This argument is supported by the consideration that specific performance may also be an appropriate remedy for non-performance of obligations other than those related to physical defects in the goods.

Where the goods are fungible and the defect of title constitutes a fundamental breach, as it often does, specific performance presents no problem. The buyer clearly has a right to claim delivery of substitute goods free from third party claims. Should the defect of the title not amount to a fundamental breach, it would appear reasonable to let the buyer require «repair» [page 339] of the defect in title to the goods already delivered, even though the word «repair» might not seem to cover defects of that kind.

When, however, goods are not fungible, a third party, whether the true owner or some other claimant, cannot be forced to enter into any kind of agreement with the seller. In consequence, there is no possibility of granting specific relief to the buyer. One might argue, however, that the situation is different where no cooperation of a third party is needed in order to satisfy and remove his claims (e.g., to pay-off the last instalment in an instalment sale or a leasing arrangement). In such a case specific performance does not appear to be barred a priori. The judge will have to look into the special circumstances of the case.

     3.2. - Another problem concerns the buyer's requiring performance in cases of late delivery. Though mentioned in the Secretariat's Commentary (see Official Records, I, 38) the issue was not further pursued at the Vienna Conference. By accepting late performance does the buyer require performance under Article 46 or does he offer to modify the contract (Article 29(1))? The answer will determine whether the buyer may claim damages, in addition to performance. It is a matter of interpretation of the buyer's declaration, guided by the principles of Article 8. In case of doubt the declaration should be interpreted as requiring performance under Article 46. Two considerations support this rule.

First, the risk of paying damages for late delivery generally lies with the seller. Shifting it away from the seller would require the buyer's unambiguous intent. In such cases it cannot be generally presumed that the buyer, apart from accepting late delivery, should be willing to forego any damage claim. Otherwise, without the powerful threat of damage claims, late deliveries might be encouraged.

Second, it should be kept in mind that one of the purposes of the Convention -- to improve the position of the buyer would be jeopardized. Buyers might easily find themselves deprived of their right to claim damages for late delivery solely because their statements were not so unambiguous as to avoid interpretation in favour of a modified delivery date. This could be particularly hard on buyers in developing countries.

     3.3. - A third problem concerns future court practice under Article 28. [page 340]

Obviously, the buyer bringing his action in certain parts of the world, especially those under common law influence, has the extra burden and risk of convincing the judges that under the lex fori a judgement of specific performance would lie. This hypothetical reasoning already carries much uncertainty.

Uncertainty increases when the courts conclude that they are not compelled to give such specific relief. Uncertainty as to whether and how the Convention enlarges the narrow confines of national laws of procedure, and if so, whether the judges would be willing to embark upon new and less familiar remedies in the given case.

Conflicting decisions are probable. Accordingly merchants will be advised to think twice before seeking the remedy of specific performance in common law countries. [page 341]


Pace Law School Institute of International Commercial Law - Last updated January 31, 2005
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