(A/CONF.97/C.1/L.135, L.161, L.180, L.199)
1. Mr. FARNSWORTH (United States of America), introducing his delegation's amendment (A/CONF.97/C.1/L.180), said that the reasons for submitting it were fully set out in document A/CONF.97/8, pages 28 and 29. A restriction should be placed on the period within which a buyer might require specific performance, otherwise he would be put in a position to speculate at the seller's expense on a rising market. The corresponding ULIS provision required that the buyer should inform the seller "within a reasonable time". The present draft limited such a requirement to the remedy of substitute goods and did not cover the case where no goods had yet been delivered.
2. Mr. ROGNLIEN (Norway) said that the United States amendment would be acceptable if it related only to non-conforming goods which had been delivered. It would however be difficult to accept it in the case of the non-delivery or delayed delivery of goods. In such cases it was not reasonable that the buyer should lose his right to performance: it was rather for the seller to ask the buyer whether he still wanted the goods delivered.
3. Mr. KRISPIS (Greece) observed that although the United States amendment referred to a reasonable time, it gave no indication as to what that period might be. The provision would therefore be difficult for the courts to interpret. He could not support the amendment unless some specific period of time was mentioned.
4. Mr. SEVÓN (Finland) asked whether the reference to legal action in the second line of paragraph 2 (bis) of the United States amendment meant that the buyer would have to file suit or appoint arbitrators in order to preserve his right to performance.
5. Mr. FARNSWORTH (United States of America) said that the buyer must be required to exercise his choice in a way which precluded him from changing his mind and hence gave him no opportunity for speculation.
6. Mr. FELTHAM (United Kingdom) supported the United States amendment. Specific performance was a strong remedy and there were good reasons for not extending it to those who did not request it promptly.
7. Mr. HJERNER (Sweden) considered that the United States amendment went too far. The buyer was entitled to wait even if the market was going up. The reference to legal action was not appropriate in the present Convention.
8. Mr. KUCHIBHOTLA (India) agreed that the United States amendment should appear in the Convention.
9. The CHAIRMAN said that it appeared from the discussion that the United States amendment did not command wide support. He took it that the Committee wished to reject it.
10. It was so agreed.
11. Mr. SEVÓN (Finland), introducing the joint proposal by the Federal Republic of Germany, Finland, Norway and Sweden (A/CONF.97/C.1/L.199), said that it dealt only with the question of repair and not with the delivery of substitute goods, on which the delegations concerned held differing views. The joint proposal was mainly based on the wording of the original amendment by the Federal Republic of Germany (A/CONF.97/C.1/L.135). The right to repair was not unlimited under the joint proposal since in some cases the buyer's right to a reduction in price and damages constituted an adequate remedy, particularly when the goods concerned could easily be repaired by him or when the cost of repair to the seller would be unreasonably high.
12. Mr. BONELL (Italy) said his delegation was in favour of expressly mentioning the buyer's right to repair in the Convention but could not support the joint proposal since it left intact the requirement in paragraph 2 that the lack of conformity should constitute a fundamental breach. The buyer's right to ask for substitute goods or repair depended upon the character of the goods as was made clear in ULIS article 42, and not on the character of the breach. That condition should be deleted from paragraph 2.
13. Mr. WIDMER (Switzerland) agreed with the Italian representative that the joint proposal did not cover the entire problem. He inquired whether the representative of the Federal Republic had withdrawn his delegation's original proposal (A/CONF.97/C.1/L.135) which had dealt jointly with the question of repair and substitute goods and had eliminated the condition of fundamental breach.
14. The CHAIRMAN said that the question of substitute goods would have to be dealt with separately, since the joint proposal did not refer to it.
15. Mr. GHESTIN (France) commented that the joint proposal had the merit of stating the buyer's right to repair but that the restrictive clause did not take sufficient account of the interest of the buyer, who should in some cases have the right to insist on repair even if repair would put the seller to considerable inconvenience. He proposed the addition of the words "due account being taken of the legitimate interests of the buyer" at the end of the first sentence.
16. Mr. KRISPIS (Greece) supported the joint proposal as orally amended by the French representative. The problem of paragraph 2, however, remained. He favoured the idea that the buyer should have a choice between substitute goods or repair whether or not there had been a fundamental breach.
17. Mrs. SOARES (Portugal) favoured the joint proposal without the French oral amendment.
18. Mrs. KAMARUL (Australia) said that the concept of specific performance under discussion was wider than that customary under Australian law but that her delegation could see the reason for it in international trade and supported the clarification of the buyer's right to repair.
19. Mr. MASKOW (German Democratic Republic) supported the joint proposal without the French oral amendment. It had appeared from the earlier discussion that a seller could not refuse repair for reasons of cost. The words "reasonably practicable" referred to technical possibility. The joint proposal must be linked with the proposal on substitute goods by the Federal Republic of Germany and the matter of drafting must be considered: it would be preferable to have them both, if they were both adopted, in one and the same paragraph.
20. Mr. ROGNLIEN (Norway) said there was no disagreement as to the importance of the interests of the buyer. That was the underlying idea of the joint proposal and the French oral amendment was not required. A further duty to repair in particular cases would depend upon the interpretation of the contract, read in conjunction with article 7(3) [became CISG article 8(3) ] of the Convention. It was usual for sellers of factory plant and machines to provide assistance with service and maintenance and to have an establishment in the buyer's country competent to effect repairs. In the case of the raw materials, however, it would often not be reasonable or practicable to insist on the right to repair. What was reasonable or practicable would depend inter alia on the nature of the goods and the seller's establishment.
21. Mr. DATE-BAH (Ghana) said that his country's domestic law did not provide for the buyer's right to repair, but he was attracted by the idea of such a remedy for non-conforming plant and machinery, which were particularly important in developing countries. He also supported the French oral amendment, since in such countries it was very unlikely that local staff would be competent to make the necessary repair and however inconvenient to the seller, he should be required to send qualified technicians. He could not agree with the representative of the German Democratic Republic that the phrase "not reasonably practicable" did not include a consideration of costs. It should easily be so interpreted by the courts. It would be better to reword the phrase to read "not technically feasible".
22. Mr. SAMI (Iraq) supported the joint proposal with the French oral amendment, which balanced the interests of the two parties. The concept of the buyer's right to repair, however, was unknown to his country's domestic legislation.
23. Mr. ZIEGEL (Canada) supported the joint proposal which dealt with a common situation in the sale of machinery and other durables. The seller generally expected to undertake to repair or to replace defective goods. However, he suggested that in the second line of the joint proposal the words "by repair" should be omitted or alternatively, if it was desired to retain them, they should be followed by the words "or otherwise".
24. Mr. MEDVEDEV (Union of Soviet Socialist Republics) said that serious attention should certainly be paid to the interests of the buyer, and that some measure of objectivity should be introduced into the criteria relating to the removal of defects. He did not consider that such objectivity was ensured by the wording of the draft amendment and consequently proposed the deletion of the words "for the seller" at the end of the first sentence of the new paragraph 3. If those words were deleted, he would be able to support the draft amendment (A/CONF.97/C.1/L. 199).
25. The CHAIRMAN remarked that the purpose of the French and the USSR amendments seemed to be similar and wondered if they could be combined.
26. Mr. GHESTIN (France) said that he could agree to the amendment proposed by the USSR representative but preferred his own because the idea of what was reasonably practicable more specifically applied to the situation of the seller. For the buyer the matter was not one of possibility but, as his amendment put it, of "legitimate interests".
27. Mr. WANG Tian ming (China) said that his delegation supported the French subamendment, which took into account the interests of both seller and buyer. He suggested that the new paragraph 3 should be inserted before paragraph 2 and the paragraphs re-numbered accordingly.
28. Mr. FARNSWORTH (United States of America) said that the proposed new paragraph seemed reasonable although it had no counterpart in the domestic law of the United States, or of other common law countries. He did not consider that the words "reasonably practicable for the seller" would allow the courts to take into account the relative practicability of repairs for both buyer and seller and wondered if more specific wording might not be helpful. He was not sure that either the French or the USSR amendment clarified that point and suggested the introduction of a phrase such as "taking account of the circumstances of the seller and the buyer".
29. Mr. SEVÓN (Finland) informed the Committee that the French and the USSR amendments, which seemed similar, would both be acceptable to the sponsors of the joint proposal. The United States amendment would also be acceptable to his own delegation.
30. The CHAIRMAN suggested that the representatives of France, the Soviet Union and the United States should try to harmonize their amendments.
31. Mr. PLUNKETT (Ireland) suggested that the Canadian draft amendment should be voted on first because it related to the scope of the whole article.
32. The CHAIRMAN said that he had heard little support of that proposal, probably because it was very close to paragraph 1 of the existing draft article.
33. Mr. FELTHAM (United Kingdom) said that the Canadian proposal seemed to relate more closely to the question of delivery of substitute goods than to that of repair.
34. Mr. ZIEGEL (Canada) explained that he had had in mind, not so much the delivery of substitute goods, as the completion of performance by the delivery of essential, albeit small components, required for complicated machinery.
35. After a discussion in which Mr. ROGNLIEN (Norway), Mr. FARNSWORTH (United States of America), Mr. DATE-BAH (Ghana), Mr. KRISPIS (Greece) and Mr. HJERNER (Sweden) took part, the CHAIRMAN proposed that the representatives who had made oral amendments should try to combine them into a joint proposal.
36. It was so agreed.
The meeting was suspended at 11.20 a.m. and resumed at 11.45 a.m.
37. The CHAIRMAN announced that the representatives who had proposed oral subamendments had agreed on a joint text which was acceptable to the sponsors of the joint draft amendment (A/CONF.97/C.1/L.199). The new paragraph 3 had accordingly been revised to read: "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 not reasonable, taking into account all the circumstances."
38. The joint draft amendment as so revised was adopted.
39. The CHAIRMAN asked the Canadian representative whether he maintained his oral amendment.
40. Mr. ZIEGEL (Canada) thought that the insertion of words "or otherwise" after "repair" would clarify the new paragraph 3. The point at issue was that the seller should be required to put the goods in an operable condition, which might involve replacement rather than repair. The addition of the words "or otherwise" should remove any ambiguity.
41. Mr. HJERNER (Sweden) said that although he sympathized with the Canadian representative's desire to eliminate ambiguity, he could not accept his restrictive interpretation of the word "repair".
42. Mr. DATE-BAH (Ghana) agreed.
43. Mr. FELTHAM (United Kingdom) said that he was in agreement with the representatives of Ghana and Sweden and was opposed to the Canadian amendment.
44. The CHAIRMAN said that as the Canadian proposal did not appear to have wide support, he took it that the Committee wished to reject it.
45. It was so agreed.
46. The CHAIRMAN invited the Committee to take up the draft amendment by the Federal Republic of Germany (A/CONF.97/C.1/L.135).
47. Mr. LANDFERMANN (Federal Republic of Germany) suggested that his delegation's draft amendment (A/CONF.97/C.1/L.135) should be brought into line with the paragraph 3 just adopted. Paragraph 2 should accordingly be revised to read: "if the goods do not conform with the contract, the buyer may require the seller to deliver substitute goods unless this is not reasonable, taking into account all the circumstances. Any request to deliver substitute goods may be made only in conjunction with notice given under article 37 [became CISG article 39 ] or within a reasonable time thereafter."
48. His delegation's proposal was a compromise between the ULIS provision, which made no reference to fundamental breach and the draft Convention under which delivery of substitute goods could be required only if the lack of conformity constituted a fundamental breach. The text would allow the courts to take account of the circumstances of each particular case, including the difficulties of both the seller and the buyer.
49. Mr. STALEV (Bulgaria) could not accept the amendment. Requiring the delivery of substitute goods even in cases in which the delivery of non-conforming goods did not represent a fundamental breach of the contract might impose heavy expenditures on the seller for transport and the like. From the economic point of view, the avoidance of a contract and the delivery of substitute goods were very similar situations. He preferred the existing text of paragraph 2.
50. Mr. CUKER (Czechoslovakia) said that the Committee had not resolved the question of the link between the delivery of substitute goods and the requirement to remedy lack of conformity by repair. The best way of settling the question would be to revert to the Federal Republic's original proposal and to try to combine it with the new paragraph 3.
51. Mr. BONELL (Italy) said that his delegation was unable to accept the existing text of article 42(2) [became CISG article 46(2) ] and strongly supported the amendment proposed by the Federal Republic. It was generally agreed that paragraphs 2 and 3 dealt only with specific cases and that the general right was set out in paragraph 1. The choice between the two possible remedies described in paragraphs 2 and 3, basically depended on the nature of the goods and not, as the existing text of paragraph 3 provided, on the nature of the breach. He appreciated the Bulgarian representative's concern that there might be cases in which delivery of substitute goods might prove unreasonable but felt that the wording adopted for paragraph 3 should allay those fears. He agreed with the Czechoslovak representative that the amendment proposed by the Federal Republic should be combined with the new paragraph 3.
52. Mr. HJERNER (Sweden) said he preferred the original text. The main problem in regard to the amendment concerned the nature of the goods. While the remedy of repair was more suitable in the case, for example, of machines, the remedy of substitution was more suitable in the case of commodities. If any amendment were to be made, it should be along the lines of the original ULIS provision, namely that the right to request substitute goods applied only in the case of goods which were substitutable. The Federal Republic's proposal confused the situation, since it combined two ideas, substitution and repair, that ought to be kept separate.
53. Mr. GHESTIN (France) had some hesitation in accepting the proposal. The delivery of substitute goods might turn out to be even harder on the seller than simple avoidance, especially when costs of transport were involved. He agreed with the previous speaker that a clear distinction should be drawn between repair and substitution. He preferred the Federal Republic's original proposal (A/CONF.97/C.1/L.135), which seemed more flexible.
54. The CHAIRMAN noted that opinion in the Committee appeared to be equally divided in regard to the revised amendment by the Federal Republic of Germany. If there were no objections, he would consider the proposal rejected.
55. It was so agreed.
56. Mr. HOSOKAWA (Japan), introducing his delegation's amendment (A/CONF.97/C.1/L.161), said the proposed addition might seem obvious, but that it was best to make the position clear in order to avoid uncertainty. In practice it was unlikely that, in a good business relationship, a buyer would request substitute goods one day and the following day avoid the contract in its entirety; however, unless the Convention expressly precluded such a possibility, avoidance of contract might appear to be permitted under the Convention. The addition he proposed would not restrict the buyer's right to avoidance; a buyer could always avoid the contract if the seller did not conform to his request under article 42 [became CISG article 46 ].
57. Mr. KHOO (Singapore) suggested that it might be more appropriate to deal with the Japanese proposal under article 45 [became CISG article 49 ], which dealt with the question of avoidance of contract.
58. Mr. ZIEGEL (Canada) supported that suggestion.
59. It was so decided.
60. Mr. MATHANJUKI (Kenya) took the Chair.
(A/CONF.97/C.1/L.136, L.156, L.163, L.179)
61. The CHAIRMAN drew attention to the Turkish amendment (A/CONF.97/C.1/L.136), which was a drafting proposal. He suggested that it should be forwarded direct to the Drafting Committee.
62. It was so decided.
63. Mr. FELTHAM (United Kingdom) introducing his delegation's amendment (A/CONF.97/C.1/L.156), said the word "fix" in article 43(1) [became CISG article 47(1) ] did not make clear that the buyer, in determining the additional period of time of reasonable length for performance, needed also to inform the seller of that period. His delegation accordingly proposed that the phrase "give notice to the seller" should be substituted for "fix". If a notice was lost or delayed, the case would fall within the scope of article 25 [became CISG article 27 ].
64. Mr. KHOO (Singapore) supported the United Kingdom proposal. However, in order to avoid the need to redraft subsequent articles in which the word "fix" was used, he suggested that the proposal should be further amended to read "The buyer may, by giving notice to the seller, fix . . .".
65. Mr. FERRARO (Italy) said the French version of the United Kingdom amendment would need redrafting, since the phrase "par voie de notification " was not clear.
66. Mr. ROGNLIEN (Norway) could not agree with the United Kingdom representative that his amendment should be covered in all respects by article 25 [became CISG article 27 ], namely that the giving of notice should be at the risk of the receiver. He would prefer it to constitute an exception to article 25 [became CISG article 27 ], so that there should only be consequences for the seller if in fact he had received the notice. (See article 45(1)(b) [became CISG article 49(1)(b) ]). It did not seem to him right for the situation of the seller to be changed by a notice he had not even received. The question was an important one which needed to be decided before the proposal was adopted.
67. Mr. SAMI (Iraq) was opposed to the United Kingdom proposal, which seemed to him to restrict the freedom of the buyer as to how he notified the seller. It implied that the notice given should be sent in writing, and could not be made orally. He preferred the existing text.
68. Mr. SEVÓN (Finland) sympathized with the intent behind the United Kingdom proposal, but agreed with the Norwegian representative regarding the giving of notice. In regard to the point raised by the representative of Iraq, he did not think the provision as worded implied that written notice was mandatory.
69. Mr. KRISPIS (Greece) said he would have some difficulty with the United Kingdom proposal, since his delegation was opposed to the dispatch theory and hence had not wished article 25 [became CISG article 27 ] to appear in the Convention. That article might be taken as being applicable both to the original text and to the text as amended by the United Kingdom, and he would have difficulty in accepting either of them.
70. Mr. GHESTIN (France) preferred the original text. As he saw it, if the buyer was to fix an additional period of time for performance by the seller, that meant that the latter would necessarily be informed of it by some means or other. If the phrase "give notice" were used, the difficulty arose of deeming what form that notice should take.
71. Mr. VINDING KRUSE (Denmark) said the problem mentioned by the Norwegian representative would be solved if a sentence were added requiring performance by the seller within the additional period, provided he had been informed of the period.
72. Mr. FELTHAM (United Kingdom of Great Britain and Northern Ireland) said that his proposal was not intended to require either written or formal notification.
73. Mr. DATE-BAH (Ghana) suggested that if the communication was assumed to be informal the phrase "The buyer may fix, and inform the seller of an additional period" would be more appropriate. He pointed out that the difficulty mentioned by the Norwegian representative was inherent in the existing text and was not consequential upon the amendment proposed by the United Kingdom. Once the period of time had been fixed, there would necessarily be a communication, and article 25 [became CISG article 27 ] covered all communications unless there were indications to the contrary.
74. Mrs. KAMARUL (Australia) agreed that the text of article 43(1) [became CISG article 47(1) ] gave rise to difficulties and that it should be stated how the period of time was to be fixed if uncertainty was to be avoided.