1. Mr. BENNETT (Australia) said that, following the discussion at the previous meeting, his delegation had reconsidered the wording of its proposal (A/CONF.97/C.1/L.227). His delegation continued to consider that the buyer's obligation to preserve the goods should be made clear in the situation envisaged in paragraph 2. That could be achieved either by amending paragraph 2 or by introducing a new paragraph 3 to deal with the question. The proposal had the further advantage of making the provisions of articles 76 and 77 [became CISG article 87 and CISG article 88 ] applicable to the cases governed by article 75(2) [became CISG article 86(2) ].
2. If a new paragraph 3 were added, it might provide that a buyer who had taken possession of goods on behalf of a seller in accordance with paragraph 2 must take such steps as were reasonable in the circumstances to preserve them and might retain the goods until his reasonable expenses had been reimbursed by the seller.
3. His delegation was not wedded to that formulation and would accept any form of words having the same effect. Nor did it insist that the new provision should constitute a separate paragraph.
4. Mr. BOGGIANO (Argentina) supported the Australian proposal. The proposal would have the merit of making provision for the buyer's right to retain the goods as security for the payment of his expenses in the situation mentioned in article 75(2) [became CISG article 86(2) ].
5. The CHAIRMAN said that there appeared to be no opposition to the central idea in the Australian proposal. The only objection had been that the point was already covered by the provisions of the draft. His own suggestion was that the purpose of the Australian proposal could be achieved more simply by inserting a new sentence between the first and second sentences of paragraph 2 stating that in such cases, the provisions of paragraph 1 were applicable.
6. Mr. BENNETT (Australia) said that his only objection to the wording suggested by the Chairman was that it did not bring out the buyer's right to retain the goods in the situation governed by paragraph 2 as specifically as did his delegation's proposal.
7. Mr. KHOO (Singapore) said that he had no objection in principle to the insertion of a provision on the lines of the Australian proposal, but had misgivings concerning the omission from it of the proviso "provided that he could do so without . . . unreasonable inconvenience or unreasonable expense" which appeared in paragraph 2. If the Committee agreed that the same conditions should apply to the taking possession of goods as to the preservation of goods, he could agree to the Australian proposal and the Chairman's formulation being referred to the Drafting Committee.
8. Mr. OLIVENCIA RUIZ (Spain) supported the wording suggested by the Chairman but said that he understood the doubts expressed by the previous speaker. At the same time, it was essential to set forth in paragraph 2 the buyer's right to retain the goods until his expenses had been reimbursed by the seller. He could not understand why the existing text of article 75 [became CISG article 86 ] departed so materially from the corresponding provision in the 1964 ULIS. He welcomed the fact that the Australian proposal would make a buyer in the situation envisaged in paragraph 2 liable to all the obligations set forth in articles 76 and 77 [became CISG article 87 and CISG article 88 ].
9. Mr. ROGNLIEN (Norway) supported the Australian proposal. He agreed, however, that the same result could also be achieved with the language suggested by the Chairman.
10. Mr. SEVÓN (Finland) considered that only the original Australian proposal (A/CONF.97/C.1/L.227) could be referred to the Drafting Committee as no revised proposal had been submitted in writing. The Drafting Committee could, of course, reshape the proposed amendment at its will.
11. Mr. ZIEGEL (Canada) remarked that as the buyer, in the situation covered by paragraph 2, was being required to assume certain responsibilities that had not previously devolved on him, it would clearly be appropriate to apply the test of reasonableness both to the trouble and to the expense to which that buyer might be put in order to discharge those new responsibilities.
12. Mr. HONNOLD (United States of America) suggested that the Australian representative should submit the revised version of his delegation's proposal in writing. A revised text would probably be accepted without discussion, thereby reducing the burden on the hard pressed Drafting Committee.
13. Mr. GREGOIRE (France) said that he had two objections to the Chairman's formulation. The first was the absence of any reference to the requirement that the steps taken and the expenses reimbursed should be reasonable. The second was the fact that the formulation did not clearly specify the buyer's right to retain the goods until his expenses were reimbursed.
14. In reply to a question by the CHAIRMAN, Mr.BENNETT (Australia) said that he would be prepared to see the substance of his proposal referred to the Drafting Committee, on the understanding that the latter would work on the basis of the Chairman's formulation.
15. Article 76 [became CISG article 87 ] was adopted.
16. Mr. BOGGIANO (Argentina), introducing the amendment submitted by the delegations of Argentina, Portugal and Spain said that the proposal was intended to avoid possible difficulties by providing that the seller should be given notice requiring him to take possession of the goods within a reasonable time and warning him of the intention to proceed with an immediate sale. If the Committee decided the amendment was a mere clarification of the existing wording, the sponsors would have no objection to its being referred directly to the Drafting Committee.
17. Mr. KRISPIS (Greece) considered that the proposal dealt with an important substantive question. He believed that the wording should be revised to make it clear whether the "reasonable time" mentioned in the amendment was to be added to the "unreasonable delay" in the existing text. The warning of the intention to proceed with an immediate sale should be more categorical.
18. Mr. HJERNER (Sweden) suggested that the notice to the other party should include the date and place of the sale, which was implicit in article 77(1) [became CISG article 88(1) ], in order to enable the other party to attend the sale himself or to send a representative.
19. Mr. GREGOIRE (France) endorsed the Greek representative's comments. He thought that the notice should require the other party to take possession of the goods immediately rather than within a reasonable time.
20. Mr. SAMI (Iraq) agreed that further delay should not be encouraged. He preferred the existing wording, which adequately covered the whole question.
21. Mr. KHOO (Singapore) supported the joint proposal. The existing wording of paragraph 1 did not make it clear whether the party in default must be given an opportunity to take back the goods. He did not agree that the amendment necessarily imposed an additional delay on the party who was bound to preserve the goods. On the other hand, the delay in taking back the goods on the part of the seller could be due to a bona fide dispute as to the buyer's right to reject the goods. The proposal would be improved if it were specified that the notice should give an indication of the date on which the buyer proposed to sell the goods. It might also be clearer if the words "in case of default" were added after "proceed" in the last line of the amendment. Those changes could be made by the Drafting Committee.
22. Mr. FOKKEMA (Netherlands) also saw merit in the proposal but thought the wording could be improved. In particular it should be made clear that there was no intention of imposing a double delay on the party who was bound to preserve the goods. The text might be referred to a small working group or to the Drafting Committee.
23. Mr. BOGGIANO (Argentina) said that the sponsors agreed to the suggestion that the notice should specify the intended date of sale and that the text should make clear that there would be no question of a double delay. It was important that the person holding the goods should not dispose of them without warning their owner, especially if the unreasonableness of the delay was interpreted unilaterally.
24. Mr. ZIEGEL (Canada) said it was his view that the phrase "notice of the intention to sell" in the existing text necessarily implied reasonable notice to give the other party adequate opportunity to prevent the sale if he so wished. He appreciated the sponsor's desire to put the matter beyond doubt but thought the same effect could be obtained by inserting the word "reasonable" before the phrase "notice of the intention to sell". Double delay would not necessarily result since under the existing text of paragraph 1, it was open to the party concerned to give notice of his intention to sell before the unreasonable delay referred to had actually occurred. It was the sale itself that could not take place until there had been an unreasonable delay. The interests of both parties were thus protected.
25. Mr. OLIVENCIA RUIZ (Spain) said that the concluding phrase of the present text of paragraph 1 implicitly required an additional period to elapse before the sale. In order to comply with article 77 [became CISG article 88 ], it was not sufficient for a party merely to announce his intention to sell without providing any details or giving adequate opportunity for the other party to take appropriate action. However, it was to guard against the possibility that the paragraph might be so interpreted that the delegations of Argentina, Portugal and Spain had proposed their amendment. It should further be noted that article 77 [became CISG article 88 ] did not impose an order in which steps should be taken: the conjunction "provided that" did not establish a definite time for notification of intention to sell. The text of the amendment could be improved in the Drafting Committee.
26. The CHAIRMAN asked the sponsors whether they wished it to be passed to the Drafting Committee with the subamendments they had accepted, or whether they would prefer a small working group to be set up.
27. Mr. BOGGIANO (Argentina) said that he would prefer a working group to be set up.
28. The CHAIRMAN suggested that the working group should be composed of Argentina, Canada, Netherlands, Singapore and Spain.
29. It was so agreed.
30. Mr. MICHIDA (Japan), Rapporteur, recalled that the present text had been discussed in UNCITRAL. It had been felt that very strict requirements should not be imposed on merchants. He hoped that the working group would bear in mind the need to keep the text flexible.
31. Mr. MASKOW (German Democratic Republic) drew the working group's attention to the need to bear in mind the implications of the amendment of the Federal Republic of Germany to article 74 [became CISG article 85 ] (A/CONF.97/C.1/L.211) which the Committee had accepted at its thirtieth meeting (A/CONF.97/C.1/SR.30).
32. Mr. KRISPIS (Greece) drew the working group's attention to the repeated use of the word "reasonable" in article 77 [became CISG article 88 ].
33. Article 78 [became CISG article 66 ] was accepted.
34. Mr. ROGNLIEN (Norway), introducing his proposal regarding the repositioning of the articles on damages and on passing of risk (A/CONF.97/C.1/L.230), said that although the only earlier explicit mention of passing of risk occurred in article 34 [became CISG article 36 ], the concept was vital for an understanding of the rights and obligations of the parties. Unless it was placed earlier, a non-lawyer reading the text would fail to understand many of the preceding articles, particularly the buyer's remedies for breach of contract by the seller and the buyer's obligation to pay the price. For example, article 49 [became CISG article 53 ] must be read in conjunction with article 78 [became CISG article 66 ]. He suggested that chapter V on passing of risk should be repositioned either between the present chapters II and III or immediately after chapter III. The section on damages (section IV of chapter IV) should also come earlier but after the articles on passing of risk.
35. Mr. HONNOLD (United States of America) supported the Norwegian proposal. The final decision about the repositioning of the articles concerned should be left to the Drafting Committee.
36. Mr. HJERNER (Sweden) inquired whether the Drafting Committee should not also consider their positioning after sections I, II or III of chapter III.
37. Mr. ZIEGEL (Canada) asked whether the Drafting Committee would be at liberty to recommend no change in the positioning of the articles concerned.
38. The CHAIRMAN said that he took it that the Committee wished to pass the Norwegian proposal to the Drafting Committee to make whatever recommendations it deemed appropriate.
39. It was so agreed.
The meeting was suspended at 11.22 a.m. and resumed at 11.48 a.m.
(A/CONF.97/C.1/L.233, L.236, L.238, L.241)
40. Mr. NICHOLAS (United Kingdom), introducing his delegation's amendment (A/CONF.97/C.1/L.238) said it was essentially a matter of drafting. The word "destination" usually referred to the locality at which the goods ended their journey, whereas the more general word "place" could include intermediate localities. In the third line of paragraph 1, he took it that the intention was to refer to any particular place, which would normally be other than the destination of the goods, and he proposed that the text should read accordingly. It could not have been the intention of the drafters to suggest, in the sixth line of the text, that the goods could be handed over to a carrier at their destination. He therefore proposed the deletion of the phrase "other than the destination".
41. Mr. HONNOLD (United States of America) said that now that the United Kingdom proposal (A/CONF.97/C.1/L.238) had been adopted, the part of his own delegation's proposal (A/CONF.97/C.1/L.233) relating to article 79(1) [became CISG article 67(1) ] was redundant and he would withdraw it.
42. Mr. INAAMULLAH (Pakistan), introducing his delegation's amendment (A/CONF.97/C.1/L.236), said the proposal was essentially a drafting one. Its intent was to clarify that when goods were handed over to the first carrier for transmission to the buyer, that procedure should be in accordance with the contract.
43. The CHAIRMAN suggested that the amendment be forwarded to the Drafting Committee.
44. It was so agreed.
45. Mr. HONNOLD (United States of America), introducing his delegation's amendment to article 79(2) [became CISG article 67(2) ] (A/CONF.97/C.1/L.233), said the existing text laid undue emphasis on identification by specifying that goods should be marked with an address. That was not the most normal means of identification and was unworkable for bulk goods. For the sake of clarification he proposed a more flexible formulation which would be more in accord with commercial practice.
46. Mr. ZIEGEL (Canada) supported the amendment in principle, but thought the wording might be improved by the addition of the word "or" before "notification", to make clear that those were alternative methods. In addition, the word "sent" was not entirely appropriate, since it supposed that notification would always be sent by mail. He also assumed that the intent of the provision was that notice would not actually have to reach the buyer as long as it had been dispatched to him either by mail or by other carriers.
47. Mr. HONNOLD (United States of America) said those amendments would be useful and he could agree that they should be incorporated in his proposal and forwarded to the Drafting Committee.
48. Mr. SCHLECHTRIEM (Federal Republic of Germany) said he was not sure he understood the purpose of the United States proposal. He would prefer the original text.
49. Mr. KRISPIS (Greece) thought the United States proposal should be left unchanged. The wording suggested by Canada would open the way to disputes in that it would not be clear whether the receipt theory or the dispatch theory was to operate.
50. Mrs. FERRARO (Italy) said she could support the United States proposal. However, if the buyer did not receive the notification it did not seem equitable that he should bear the risk, and she would therefore prefer the provision to specify that notification should be received by the buyer.
51. Mr. HJERNER (Sweden) also supported the proposal. The provision as now drafted was too strict and the amended wording would provide some flexibility.
52. Mr. HONNOLD (United States of America), in reply to the suggestion that the risk would not be passed until notice was received by the buyer, said he feared that such a provision would lead to difficulties in practice. If, for example, notification was received by a buyer only after a ship carrying the goods had put to sea, it would be very difficult to establish, in the case of damage occurring in the course of the voyage, the precise time at which the damage had occurred.
53. Mr. MASKOW (German Democratic Republic) said he too could support the United States proposal. With regard to the Italian suggestion, it did not seem logical that it should be necessary for the buyer actually to receive the information concerned, whereas in other cases it was not necessary.
54. Mr. STALEV (Bulgaria) shared that view.
55. Mr. SCHLECHTRIEM (Federal Republic of Germany) said he withdrew his objections to the wording of the proposal.
56. The CHAIRMAN noted that a majority supported the United States proposal. If there was no objection, he would consider it adopted.
57. It was so agreed.
58. Mr. BENNETT (Australia), introducing his delegation's proposal (A/CONF.97/C.1/L.241), said it was intended to fill a gap in the existing text. The general rule was that the risk passed to the buyer when the goods were handed over to the first carrier for transmission. He did not question the appropriateness of that rule, but felt it necessary for the article to recognize the close relationship between the passage of risk in the goods and the need to insure those goods. It was important that the article should not provide for the risk to pass before the buyer had an opportunity to insure. He drew attention to article 30(3) [became CISG article 32(3) ], which provided that the buyer should be able to request information necessary for him to effect the insurance of the goods. If such a request had been made under that provision, it would be appropriate for article 79 [became CISG article 67 ] nevertheless to provide for the risk to pass.
59. Mr. MANTILLA-MOLINA (Mexico) said he could not support the proposal. He pointed out that the text of article 30(3) [became CISG article 32(3) ] referred to "available" information, which implied that such information might in fact not be provided in certain circumstances.
60. Mr. KOPAC (Czechoslovakia) said he too had difficulties with the proposed amendment. He felt that the provisions of article 30(3) [became CISG article 32(3) ] should be sufficient to cover the situation.
61. Mr. WAGNER (German Democratic Republic) said he too was opposed to the Australian amendment. It was not the case that there was a gap in the Convention; the lack of a provision to that effect was intentional. If the purpose of the proposal was to enable the buyer to have the necessary information for insurance purposes, it could only be effective if he had in fact received that information, and it would be impracticable to try to foresee the moment at which the information would be received.
62. The CHAIRMAN noted that there was little support for the Australian proposal. If there was no objection, he would therefore consider it rejected.
63. It was so agreed.
64. Mr. HONNOLD (United States of America) said that the failure of the proposal might not be as serious for the buyer as some representatives might fear, in view of the provision under article 60(1)(a) [became CISG article 64(1)(a) ] which provided protection for the buyer in case of fundamental breach of contract.