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LEGISLATIVE HISTORY
1980 Vienna Diplomatic Conference

Summary Records of Meetings of the First Committee

32nd meeting

Tuesday, 1 April 1980, at 3 p.m.

Chairman: Mr. LOEWE (Austria)

The meeting was called to order at 3.05 p.m.

CONSIDERATION OF ARTICLES 1-82 OF THE DRAFT CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS AND OF DRAFT ARTICLE "DECLARATIONS RELATING TO CONTRACTS IN WRITING" IN THE DRAFT PROVISIONS PREPARED BY THE SECRETARY-GENERAL CONCERNING IMPLEMENTATION, DECLARATIONS, RESERVATIONS AND OTHER FINAL CLAUSES FOR THE DRAFT CONVENTION (agenda item 3) (A/CONF.97/5, 6) (continued)

68
Article 80 [became CISG article 68 ]
(A/CONF.97/C.1/L.195, L.231, L.237, L.240, L.244)

1. Mr. ZIEGEL (Canada) said that he was withdrawing his delegation's amendment to delete article 80 [became CISG article 68 ] (A/CONF.97/C.1/L.240).

2. Mr. INAAMULLAH (Pakistan), introducing his delegation's amendment (A/CONF.97/C.1/L.237), said that on the question of goods sold in transit, the provision of article 80 [became CISG article 68 ] passing on the risk to the buyer from the time the goods were handed over to the carrier was unjust. Basically, the provision applied to sales of commodities carried in bulk, and it should be remembered that in such transactions the buyer, having purchased the goods in transit, often had them diverted to another destination whilst they were still on the high seas. In other words, he did not see the goods and thus did not know the state they were in. It would therefore be much more just, as his delegation proposed, to state in the first sentence of article 80 [became CISG article 68 ] that the risk was assumed by the buyer "from the time the contract is concluded".

3. Mr. KRISPIS (Greece) asked whether Pakistan's amendment to the first sentence of article 80 [became CISG article 68 ] would result in the second sentence being deleted.

4. The CHAIRMAN said that, logically, that was what would happen.

5. Mr. HJERNER (Sweden) was against the Pakistan amendment. UNCITRAL had spent a long time on the provision in article 80 [became CISG article 68 ], and he felt that criticism of the provision was perhaps due to a misunderstanding. It should be understood that the proposed rule stemmed from purely practical considerations. In the maritime transport of bulk commodities and sales made essentially on the basis of documents current practice was for the buyer to use the documents to take out separate insurance or for him to be covered by a general policy, and he purchased the goods in the state they were in when the risk passed from the buyer to the carrier. The provision in question would thus in no way have the effect of penalizing him. Article 80 [became CISG article 68 ] should therefore either be kept as it was in the draft Convention or deleted. The procedure proposed by the representative of Pakistan, which amounted to trying to define the state of goods at the time of the conclusion of the contract, was likely to be impossible to apply in practice.

6. Mr. ROGNLIEN (Norway) was against the Pakistan amendment for very similar reasons to those advanced by the representative of Sweden. When goods sold in transit were damaged, it was extremely difficult to establish when the damage had taken place. That was the practical consideration behind article 80 [became CISG article 68 ]. A similar provision had already existed in the 1964 ULIS (article 99), though broader in scope. Under the new wording proposed, it was limited to cases where documents controlling the disposition of goods were issued. He would be introducing a proposal (A/CONF.97/C.1/L.195) on the matter later, but in any case the mere fact that it was in many cases impossible to know what condition goods were in when they were sold on the high seas made it essential for the risks to be passed to the buyer at the time the goods were handed over to the carrier.

7. Mr. SEVÓN (Finland) agreed that in strict logic article 80 [became CISG article 68 ] might seem strange but it effectively met the practical considerations raised by the representatives of Sweden and Norway. The representative of Pakistan was right in saying that the provision applied almost entirely to bulk trade, but his proposal would be ineffective in practice because in many cases it would be almost impossible to establish the state of goods at the conclusion of the contract.

8. Mr. MINAMI (Japan) was unable to support the Pakistan amendment, for the reasons already given by the representatives of Sweden, Norway and Finland.

9. Mr. KRISPIS (Greece) observed that when article 80 [became CISG article 68 ] had been drafted in UNCITRAL he had made a similar proposal to the one Pakistan was putting forward. At the end of the discussion he had withdrawn it. As Canada had withdrawn its amendment to delete article 80, which he would have supported, his only alternative was to press for the wording proposed in the draft Convention.

10. Mr. DATE-BAH (Ghana) was not concerned that established practice should outweigh all considerations of logic in the matter. Before the goods were sold to him the buyer had no interest to protect, i.e., no insurable interest. At all events, under Ghanaian law he could not take out insurance against the risks. The passage of risk should therefore take place at the time of the conclusion of the contract, and his delegation therefore supported the Pakistan amendment.

11. The amendment by Pakistan (A/CONF.97/C.1/L.237) was rejected.

12. Mr. KIM (Republic of Korea) noted that the Pakistan proposal just rejected would have had the merit of solving the extremely complex problem created by the passage of risk when goods were sold several times over during transit and not always as a whole.

13. Mr. HONNOLD (United States of America) proposed a slight amendment of substance to the first sentence of article 80 [became CISG article 68 ] (A/CONF.97/C.1/L.231). The expression "documents controlling the disposition of goods" was likely to be understood as being limited to negotiable bills of lading, mainly used when the seller had no confidence in the buyer's credit, whereas the rule in article 80 [became CISG article 68 ] should be applicable whether the document was negotiable or not and whether the buyer was covered by insurance or not. To remove any ambiguity in that respect his delegation proposed that the wording in question should be replaced by "the documents embodying the contract of carriage".

14. Mr. ROGNLIEN (Norway) supported the proposal for the reasons stated by the United States representative. He asked whether in the English text, the term "embodying" meant anything other than "containing".

15. Mr. HONNOLD (United States of America) said that in the context the words had exactly the same meaning.

16. Mr. WIDMER (Switzerland) supported the United States amendment, as it could help prevent misunderstandings. In the French text, the "documents constatant le contrat de transport" was satisfactory.

17. The CHAIRMAN pointed out that the phrase "documents controlling the disposition of goods" existed in many conventions on the carriage of goods. It did in fact mean negotiable documents, other types of documents normally being covered by the phrase "consignment note".

18. Mr. GORBANOV (Bulgaria) was in favour of keeping the phrase "documents controlling the disposition of goods", because it was not really possible to buy and sell just on the basis of the contract of carriage.

19. Mr. GREGOIRE (France) supported the United States amendment. Once it was stated that the passage of risk corresponded to a passage of ownership, the rule did not need to be confined to "documents controlling the disposition of goods".

20. The United States amendment (A/CONF.97/C.1/L.231) was adopted by 15 votes to 13.

21. Mr. ROGNLIEN (Norway), introducing his delegation's amendment to article 80 [became CISG article 68 ] (A/CONF.97/C.1/L.195), said the article made no provision for cases where no document embodying the contract of carriage was issued. Article 99(1 ) of ULIS 1964 made some such provision, but too broadly, since it failed to state who was the consignee of the goods. The goods in question were not just any goods. Under article 79(2) [became CISG article 67(2) ] the goods had to be clearly identified to the contract. In his amendment that rule was adapted to the risk assumed by the buyer of the goods in transit, by requiring that the goods should be handed over to the first carrier for transmission to a specified consignee from whom the right under the contract was derived. Although the situation of a sale without shipping documents was not a common one in practice, the Convention would not be complete if it were not covered.

22. Mr. SEVÓN (Finland) recognized that the term "seller" in the last part of the sentence might lead to some confusion. But one situation that might arise was that of goods in transit at the time of sale which the seller sent to another buyer. He considered the Norwegian amendment acceptable as it would make it possible to deal with problems that might arise regarding the validity of documents issued by computer. The practice of carrying goods without issuing documents, which had so far been limited to certain regions, was bound to grow more widespread in the future.

23. Mr. KRISPIS (Greece) wondered whether it might not be enough just to delete the clause "who issued the documents controlling their disposition".

24. Mr. ROGNLIEN (Norway) observed that an essential condition would then be dropped, namely, transmission to a specified person, namely the seller or another consignee.

25. Mr. MANTILLA-MOLINA (Mexico) requested an explanation of the last part of the sentence in the Norwegian amendment.

26. Mr. ROGNLIEN (Norway) explained that it related to the case where goods were sold to a new buyer, namely the actual buyer, while in transit; it did not matter what had happened before they had been handed over to the first carrier and by whom they had been handed over, e.g., by a previous seller. The important thing was that they should have been handed over to the first carrier for transmission to the seller who was a party to the actual contract or to a consignee from whom the seller derived his rights.

27. Mr. ZIEGEL (Canada) questioned the need for documents to have been issued before article 80 could take effect. Article 99(1) of ULIS did not mention any document, merely stipulating that the risk should be borne by the buyer as from the time at which the goods were handed over to the carrier.

28. The CHAIRMAN noted that the Norwegian amendment went further than the original text, as modified by the United States amendment, since it provided for the case where there was no document embodying a contract of carriage.

29. Mr. ZIEGEL (Canada) requested that the Drafting Committee should remove all ambiguity on the subject of the carrier, so as to make it quite clear that the term meant an independent carrier and not a seller who, as in the case of a vertically integrated company, used his own means of transport.

30. Mr. WAGNER (German Democratic Republic) said he feared that where, for example, the goods were first carried by rail to a port, passage of the risk would be detrimental to the buyer. His delegation could not support the Norwegian amendment, which was too complex and obscure.

31. Mr. HJERNER (Sweden) agreed with the Finnish representative on the need to take account of new means of communication and new methods of issuing documents. The Convention should provide for those new means and methods and not sanction too strict an interpretation of the word "document". Nevertheless, it was seldom that no document at all was issued. The Convention should not attempt to regulate exceptional cases, but the most common situations, which were when there was a document embodying the contract of carriage or a document controlling the disposition of the goods, or any other document testifying to the existence of the transaction. Perhaps the Committee might consider substituting another word for the word "document".

32. Mr. ROGNLIEN (Norway) said that the difficulty about deleting all reference to shipping documents was that a provision would then be needed requiring the goods to be identified to a particular contract. If they were carried in bulk to several specified or unspecified consignees or buyers, they were not identified to a particular contract; the risk must not pass to any one of the buyers until that had been done. The old ULIS text was not clear on that point. His country's amendment was aimed precisely at filling that gap by providing for the existence of a particular consignee, which meant that the goods were identified to the contract in question. That condition was essential for passage of the risk in the particular situation in question.

33. Mr. MANTILLA-MOLINA (Mexico) maintained that the text was still obscure, particularly the last part of the sentence; why would the goods be transmitted to the seller?

34. Mr. HONNOLD (United States of America) feared that if article 80 [became CISG article 68 ] was amended in accordance with the Norwegian proposal, it might be open to too broad an interpretation. When the goods were forwarded by different means of transport, it was essential to define the limits of carriage. The original text, as modified by the United States amendment, did so, since it stipulated the existence of documents embodying the contract of carriage. Consequently, he could not support the Norwegian amendment.

35. Mrs. FERRARO (Italy) considered the original text of article 80 [became CISG article 68 ] the most satisfactory one. Her delegation could not accept the Norwegian proposal, because if no document were issued, the only proof of the transaction would be a transport document which did not identify the goods and, if there were several successive sales, it would be the last buyer who bore all the risks, which would be unfair. Her delegation was therefore unable to support the Norwegian amendment.

36. Mr. KRISPIS (Greece) thought that where no document had been issued the original text of article 80 [became CISG article 68 ] was open to two interpretations: first, the risk passed at the time the goods were handed over to the first carrier, and second, it passed at the time of delivery. As for the Norwegian proposal, it was superfluous, since it was clear from the original text that in the absence of documents the risk was assumed by the buyer from the time the goods were handed over to the first carrier.

37. Mr. ROGNLIEN (Norway), finding that his amendment (A/CONF.97/C.1/L.195) was not getting enough support in the Committee, said that he would withdraw it.

38. Mr. VENKATASUBRAMANYAN (India) introduced an amendment (A/CONF.97/C.1/L.244) to add a second paragraph to article 80 [became CISG article 68 ]. His delegation would have preferred to drop that article altogether, but had assumed, for purposes of its proposal, that it would be kept, which had proved to be the case. Article 80 [became CISG article 68 ] did not provide for the case, which had occurred in practice, where the goods, sold during transit between two ports, were completely lost in a shipwreck. Buyer and seller were both unaware of the loss at the time of the conclusion of their contract. In his delegation's view, there would be no contract in such a case, since the parties had assumed that the goods existed whereas in fact they no longer did. It would be advisable to take that possibility into account in article 80 [became CISG article 68 ] which was why his delegation proposed that the second paragraph should read: "The provisions of paragraph (1) do not apply where the goods are lost or damaged before the conclusion of the contract ".

39. Mr. ZIEGEL (Canada) said that the Indian representative had raised the very important question of the interaction between article 80 [became CISG article 68 ] and the provisions of national law governing the validity of the contract [referred to in CISG article 4(a) ]. Common law systems provided that where the parties were mistaken about the existence of the goods at the time of the conclusion of the contract, it was no longer valid. That was the rule of "res extincta", which the Indian amendment was designed to preserve. If it was not accepted, and given that the Convention was not concerned with the validity of the contract, could a contracting party, against whom article 80 [became CISG article 68 ] was invoked maintain that the contract was invalid because the goods had not existed at the time of its conclusion and that article 80 [became CISG article 68 ] was no longer operative? During the consideration of previous articles, some delegations had asked whether a buyer, having noted a lack of conformity of the goods, could declare that, owing to an error as to the nature of the goods, he did not regard himself as bound by the contract or by the provisions which would otherwise have been applicable (article 37 [became CISG article 39 ] in the case in point). The same question arose again with article 80 [became CISG article 68 ]. The Committee should therefore decide whether or not article 80 [became CISG article 68 ] prevailed over any other contrary provision of national law concerning the validity of the contract in the event of a mistake by the parties as to its purpose.

40. The CHAIRMAN noted that one part of the Convention was aimed at unifying the law, but that it could be circumvented by the provisions of national law. One answer to that situation, admittedly an inadequate one, was provided by article 6 of the Convention [became CISG article 7 ], which dealt with the interpretation and application of the provisions of the Convention.

41. Observing that the Indian amendment (A/CONF.97/C.1/L.244) commanded only limited support, he said that if there were no objections he would take it that the Committee wished to reject it and adopt article 80 [became CISG article 68 ] with the change proposed by the United States.

42. It was so decided.

43. Mr. INAAMULLAH (Pakistan) expressed a wish that the record of the meeting should mention that the Pakistan amendment (A/CONF.97/C.1/L.237) which had been rejected reflected the remarks and proposals made by the Asian/African Legal Consultative Committee in document A/CONF.97/8/Add.5. That Committee had made the following comments on article 80 [became CISG article 68 ]: "The Committee noted that the purpose of this article was to determine at what point of time the risk passed in respect of goods sold in transit. Under article 80 [became CISG article 68 ], the risk passed retroactively at the time when the goods were handed over to the carrier who issued the document controlling their disposition. There was strong support for the view that a rule under which the risk of loss passed prior to the making of the contract was unacceptable. Thus, it was difficult to comprehend why a buyer of goods in transit that had been damaged before the conclusion of the contract should bear the risk. Accordingly, the Committee strongly suggested that the rule should be modified to the effect that the risk of loss would be deemed to have passed at the time the contract was concluded".

44. His delegation regretted that a large majority of members of the Committee had not seen fit, for reasons which to him seemed unconvincing, to take into account the legitimate interests of sellers of bulk commodities in developing countries. His delegation noted that the representatives of Ghana, Kenya, Nigeria, the Republic of Korea, Singapore and Thailand had voted in favour of his proposal.

The meeting was suspended at 4.30 p.m. and resumed at 4.50 p.m.

85
Article 74 [became CISG article 85 ] (continued)
(A/CONF.97/C.1/L.211)

45. Mr. KLINGSPORN (Federal Republic of Germany) reminded the meeting that during the previous day's discussion leading up to the adoption of his country's amendment to article 74 [became CISG article 85 ] (A/CONF.97/C.1/L.211), some delegations had felt that the meaning of some of the expressions used in the amendment was not completely clear. As the question was one of drafting he suggested that the amendment should be sent to the Drafting Committee. The Drafting Committee should also consider article 77 [became CISG article 88 ] in order to make allowance for the widened scope of article 74 [became CISG article 85 ] as amended.

46. It was so decided.

69
Article 81 [became CISG article 69 ] and new article 81 bis
(A/CONF.97/C.1/L.212, L.242)

47. The CHAIRMAN invited the Committee to consider the proposal by the Federal Republic of Germany (A/CONF.97/C.1/L.212) to add a new article, 81 bis after article 81 [became CISG article 69 ].

48. Mr. KLINGSPORN (Federal Republic of Germany) said that article 81(1) [became CISG article 69(1) ] governed the passage of risk when a buyer committed a breach of contract by failing to take delivery of goods placed at his disposal. Other situations might be envisaged where non-performance by the buyer of another of his obligations would have the effect of delaying delivery of the goods; for example, if the buyer did not carry out his obligation to supply a letter of credit or if he failed to indicate the name of the ship on board which the goods were to be transported. In his delegation's opinion, the risk of loss in such cases should pass to the buyer from the last date when, apart from such breach, delivery of the goods could have been in accordance with the contract.

49. He wished to show the advantages of his country's proposal by giving two examples. In the first, in connection with the situation covered in article 79 [became CISG article 67 ] where a contract involved carriage of goods, the seller was to deliver the goods on 1 June by handing them over to the sea carrier. In his opinion, assuming that the buyer was to arrange for the carriage of the goods and that he should specifically have given the name of the ship on which they were to be carried, but failed to fulfil that obligation, the risk should pass to the buyer on 1 June, it being understood that if the contract was for the sale of goods which had not yet been identified, risk would only pass when the goods were clearly identified to the contract. Existing article 79 [became CISG article 67 ] did not seem to be applicable in the situation given in the example where the seller was not in a position to hand over the goods to the sea carrier because the buyer had not given the name of the ship to be used for the carriage of the goods.

50. In the second example, in connection with article 80 [became CISG article 68 ], the seller was to deliver the goods by placing them at the disposal of the buyer on 1 June at a place of business of the seller. Assuming that payment of the price and delivery of the goods were to take place at the same time and that on 1 June the buyer was quite ready to take over the goods but was not in a position to pay the price, it was not certain that article 81 [became CISG article 69 ] would be applicable since that article presupposed that the buyer committed a breach of contract by not taking delivery of the goods. Thus, in the above-mentioned example, the buyer was ready to take delivery of the goods but the breach of contract he committed was that of not paying the price. Article 81 [became CISG article 69 ] was concerned solely with the obligation to take over the goods.

51. He reminded the meeting that the problem had already been discussed during consideration of his delegation's amendment to article 74 [became CISG article 85 ], which had been adopted by a large majority. His delegation therefore proposed that a new article 81 bis should be added to govern passage of risk in the above-mentioned and similar cases. The wording of the proposal might certainly be improved, particularly in the light of the fact that existing article 81(1) [became CISG article 69(1) ] already covered a specific case, i.e., where delivery of the goods was delayed because of breach of contract committed by the buyer. The phrase "except in cases covered by article 81" [became CISG article 69 ] might, for example, be added at the beginning of paragraph 1 of the new article 81 bis in order to clarify the relationship between article 81 [became CISG article 69 ] and new article 81 bis, but that was purely a drafting matter.

52. Mr. ZIEGEL (Canada) did not quite see what was the purpose of paragraph 2 of the new article 81 bis proposed by the Federal Republic of Germany.

53. Mr. KLINGSPORN (Federal Republic of Germany) explained that the paragraph was largely based on article 81(3) [became CISG article 69(3) ], which provided that if a contract related to the sale of goods not at that time identified, the goods were not deemed to have been placed at the disposal of the buyer until they had been identified to the contract. The same problem arose in connection with new article 81 bis. Thus, in the second example given above, the buyer was not in a position to pay the price and as a result the goods were still in the possession of the seller. If those goods had not been identified to the contract the risk should not pass to the buyer until they had been. That was the purpose of the new article 81 bis (2).

54. Mr. OLIVENCIA RUIZ (Spain) considered that the amendment proposed by the Federal Republic of Germany was superfluous since the expression "placed at his disposal" in article 81(1) [became CISG article 69(1) ] seemed to him to cover the situations foreseen by the representative of the Federal Republic of Germany. It was therefore unnecessary to provide in a separate paragraph for the case where the seller was not able to deliver as a result of breach of an obligation by the buyer. Paragraph 2 of new article 81 bismerely repeated the rule already given in article 81(3) [became CISG article 69(3) ].

55. The CHAIRMAN noted that the amendment proposed by the Federal Republic of Germany (A/CONF.97/C.1/L.212) had received only limited support. If there was no objection, he would take it that the Committee rejected it.

56. It was so decided.

57. Mrs. KAMARUL (Australia), introducing her delegation's amendment to article 81 [became CISG article 69 ] (A/CONF.97/C.1/L.242), said that the article provided for the passage of risk to the buyer when he took over the goods or when the goods were placed at his disposal, where the contract did not involve carriage. A problem arose in that respect when the seller, in accordance with article 54 [became CISG article 58(1) ], made payment a condition for handing over the goods. It might be asked whether article 81(1) [became CISG article 69(1) ] was applicable in that case. It was certainly possible to interpret article 54(1) [became CISG article 58 ] as meaning that the goods might be handed over to the buyer notwithstanding the fact that the seller made payment a condition for handing over the goods or the documents controlling their disposition, but that interpretation seemed to be contradicted by the last sentence of article 79(1) [became CISG article 67(1) ], which governed the passage of risk when the sales contract involved carriage. It was in fact expressly stated in that sentence that the fact that the seller was authorized to retain documents controlling the disposition of the goods did not affect the passage of risk. If such a provision was necessary in article 79 [became CISG article 67 ], as her delegation believed it was, it would seem desirable in the interests of clarity to introduce a similar provision in article 81 [became CISG article 69 ]. That was the purpose of her delegation's proposal to insert a new paragraph 3 after paragraph 2, with existing paragraph 3 becoming paragraph 4.

58. Mr. ROGNLIEN (Norway) was not in favour of the Australian proposal since in article 81 the words "placed at his disposal" had the same meaning as in article 29 [became CISG article 31 ] (b) and (c) and covered only the goods as such and not the documents controlling their disposition. There was therefore no reason to mention the documents controlling their disposition in article 81 [became CISG article 69 ]. If, however, the Committee decided otherwise, article 29 [became CISG article 31 ] would have to be changed accordingly.

59. Mr. VINDING KRUSE (Denmark) said that the Australian proposal in part overlapped with the amendment by the Federal Republic of Germany which the Committee had just rejected.

60. Mrs. KAMARUL (Australia) said that, in view of the lack of support, her delegation would withdraw its proposal.

70
Article 82 [became CISG article 70 ]
(A/CONF.97/C.1/L.229/Rev.l)

61. Mr. HONNOLD (United States of America), introducing his delegation's amendment to article 82 [became CISG article 70 ] (A/CONF.97/C.1/L.229/Rev.l), underlined the importance of that article, the aim of which was to protect the buyer against the risk of loss when the conditions of carriage were defective and that represented a fundamental breach of contract on the part of the seller. The existing wording of article 82 [became CISG article 70 ] was not sufficiently clear, and his delegation therefore proposed that it should be changed so as to specify that the risk of loss did not pass to the buyer as long as he retained the right to declare the contract avoided. That rule was particularly important for the buyer, particularly in the light of article 34(1) [became CISG article 36(1) ], which stipulated that the seller was liable for any lack of conformity at the time of passage of risk to the buyer, even where such lack of conformity only became apparent at a later date. It was clear that while the buyer might declare the contract avoided because the seller had not carried out his obligations in regard to conformity, the buyer had available all the remedies offered by the Convention in the event of breach of contract.

62. Mr. NICHOLAS (United Kingdom) supported the United States proposal, which provided useful clarification with regard to an important protection for the buyer. The new text was clearly preferable to the existing draft.

63. Mr. HJERNER (Sweden) said that the United States proposal should not be accepted since it involved changes of substance and raised difficulties. The proposed change might appear unimportant but in fact it was likely to upset the whole of the system established by the Convention. It was clear from article 82 [became CISG article 70 ], in the existing wording, that the buyer might declare the contract avoided and that the risk might be passed to the seller retroactively. However, that rule did not only apply in the event of total loss of the goods but also in the event of lack of conformity or quality. If it was said, as in the United States proposal, that risk of loss did not pass to the buyer as long as he could exercise his right of avoidance, that meant that there was no passage of risk and that the time when the buyer could control the quality of the goods was delayed until a time when he would have lost the right to declare the contract avoided. That situation would be unreasonable. If the buyer decided not to declare the contract avoided, the normal rules on the passage of risk ought to apply.

64. The CHAIRMAN noted that the United State proposal did not appear to have received wide support. If there was no objection, he would take it that the Committee rejected it.

65. It was so decided.

79
Article 65 [became CISG article 79 ] (continued) (A/CONF.97/C.1/L.243)

66. Mr. MASKOW (German Democratic Republic) introduced the proposal (A/CONF.97/C.1/L.243) by the ad hoc working group set up to prepare suggestions concerning paragraph 2 of article 65 [became CISG article 79 ], with the aim of clarifying its relationship with paragraph 1. The representatives of Spain and Turkey had also contributed to the deliberations of the working group, which had been followed by an observer for Denmark. The working group proposed two possible solutions: variant I, which clarified the text of paragraph 2; and variant II, which proposed its deletion. In variant I, which should be slightly modified by the insertion of the word "also" after the words "third person" in the third line, the working group had endeavoured to bring out the fact that paragraph 2 contained an additional condition for exemption: namely, that the party in breach must show not only his own exemption from liability but also -- and for the same reasons -- that of the third person engaged. Denmark, Ghana, Norway and Sweden preferred that alternative. The other members of the working group felt that to keep paragraph 2 could affect the interpretation of paragraph 1, widening its scope to a considerable extent. Moreover, keeping paragraph 2 would make delimitation of the respective fields of application of the two paragraphs difficult, since the phrase "engaged for the performance of the whole or a part of the contract" might be interpreted in many different ways. Would a carrier, for example, be covered by that phrase? For all those reasons, Switzerland, Turkey and his own country favoured variant II.

67. Mr. SEVÓN (Finland) supported variant I. The discussion of paragraph 2 had shown that it could be construed in two different ways. Some representatives believed that it would make the non-performing party liable in a greater number of cases than did paragraph 1; others thought that its liability would be more limited. The text proposed by the working group in variant I was clearer than the original text and reflected the observations by the Rapporteur of the Committee.

68. Mr. OLIVENCIA RUIZ (Spain) said that his delegation had submitted a written proposal to the working Group which was essentially the same as variant I as finally adopted. That variant seemed to him a definite improvement on the original text. He was opposed to the deletion of paragraph 2, believing that it was essential for the the Convention to make explicit provision for cases where a third person was involved in the performance of a contract.

69. Mr. VINDING KRUSE (Denmark) supported the new text proposed by the working group. It was necessary to clarify the relationship between paragraphs 1 and 2. If the seller engaged a sub-supplier to furnish material or components in part performance of obliogations contracted with regard to the buyer, and if defects in those articles led to a lack of conformity in the merchandise sold to the buyer, such a case should be solved by paragraph 1 and not by paragraph 2. On the other hand, the seller himself could be held liable for those defects if -- for example -- he had been careless in selecting the sub-supplier, if he had not taken adequate steps to check the quality of the material or components supplied by the sub-supplier, or if he had not remedied the defects or obtained replacements. In all those cases, the seller could not disclaim liability on the grounds of non-performance by the sub-supplier by invoking the impediment referred to in article 65(1) [became CISG article 79(1) ].

70. Mr. PLANTARD (France) did not favour variant I, which would, he believed, make exemption too widespread and too easy. It was not enough that the third person or sub-contractor should be in a situation of force majeure for the party who had assumed direct responsibility to be entirely exempted from liability. If, for example, a consignment of coffee was ordered from a merchant, who applied to a Brazilian supplier, and if the latter was in a situation of force majeure, the merchant could not disclaim liability on the grounds that the supplier was in that situation, which would be the effect of variant 1. He would have to obtain coffee elsewhere and perform his obligation, because he was not in a situation of force majeure. Since the Committee must choose between the two, his delegation would prefer variant II, i.e., the deletion of paragraph 2.

71. The CHAIRMAN observed that variant I made no mention of a supplier, but referred merely to "a third person whom a party has engaged for the performance of the whole or a part of the contract"; the criterion for exemption stated in paragraph I would only apply to that party.

72. Mr. ALKIN (Ireland) was in favour of keeping the existing text of paragraph 2. The new version proposed by the working group oversimplified the matter and opened a giant loophole by enabling the non-performing party to disclaim liability merely by proving that a third person had been unable to perform the contract. The text went far beyond the existing provisions. Pursuing the example cited by the representative of France, he said that for one party to be able to release himself from the contract simply because the supplier engaged was in a situation of force majeure would be to favour that party unreasonably, to the detriment of the other party. Variant I proposed for article 65(2) [became CISG article 79(2) ] might lead to quite different results from what had been intended.

73. Mr. SEVÓN (Finland) wondered whether the representatives of France and Ireland had taken due account in their interpretation of variant I of the oral change made by the representative of the German Democratic Republic.

74. Mr. HJERNER (Sweden) fully supported variant I. The working group's terms of reference had merely covered a matter of drafting and the clarification of paragraph 2. The Committee had already decided to keep that paragraph, and those who had voted in favour of doing so had made it clear that in their view its purpose was to increase the liability of the party in breach. He considered that the representatives of France and Ireland had misinterpreted article 65(1) [became CISG article 79(1) ], which was not concerned with force majeure nor with impossibility, but with the quite different issue of circumstances beyond the control of one of the parties. The purpose of paragraph 2 was to limit the scope of paragraph 1. The wording proposed for the former by the working group was sufficiently flexible, since it made no mention of a sub-contractor or supplier, but referred merely to a third person. He pointed out that there was a discrepancy between the French and English texts of variant I; in the second line of the former, the words "pour exécuter" should be replaced by the words "pour l'exécution de" to bring the two texts into line.

The meeting rose at 5.55 p.m.


Pace Law School Institute of International Commercial Law - Last updated January 29, 1999
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