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Source: Doc. B(1) Reproduced from UNCITRAL Yearbook VIII (1977), A/32/17, pages 25-64

EXCERPT FROM ANNEX I

Report of Committee of the Whole I relating to the
draft Convention on the International Sale of Goods

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CISG
number
Art. 64

Article 45

380. The text of article 45, as adopted by the Working Group on the International Sale of Goods, is as follows:

"(1) The seller may declare the contract avoided:
"(a) If the failure by the buyer to perform any of his obligations under the contract and this Convention amounts to a fundamental breach of contract; or
"(b) If the buyer has been requested under article 44 to pay the price or to take delivery of the goods and has not paid the price or taken delivery within the additional period of time fixed by the seller in accordance with that article or has declared that he will not comply with the request.
"(2) However, in cases where the buyer has paid the price, the seller loses his right to declare the contract avoided if he has not done so:
"(a) In respect of late performance by the buyer, before the seller has become aware that performance has been rendered; or
"(b) In respect of any breach other than late performance, within a reasonable time after the seller knew or ought to have known of such breach or, if the seller has requested the buyer to perform under article 44, within a reasonable time after the expiration of the additional period of time or after the buyer has declared that he will not comply with the request."

Paragraph (1)

381. The Committee did not retain a proposal that article 45(1) be amended to the effect that if the seller had allowed the buyer to take possession of the goods, he could not take them back from the buyer unless the buyer had failed to pay the price within the additional period set by the seller pursuant to article 44.

Subparagraph (1)(b)

382. The Committee considered a proposal that article 45(1)(b) be amended to read as follows:

"(b) If the buyer has been requested under article 44 to pay the price, or to take the steps with respect to payment required under article 35, or to take delivery of the goods, and has not complied with the request within the additional period of time fixed by the seller in accordance with article 44 or has declared that he will not comply with the request."

383. In support of this proposal, it was noted that in international sales the critical step in the buyer's performance was often not the buyer's actual payment of the price but the establishment of a letter of credit or a bankers' guarantee. These steps were within the concept of "request performance" in article 44 but the present text of article 45(1)(b), in implementing article 44, provided merely for avoidance by the seller if the buyer, after a request, had failed "to pay the price or take delivery." This failure "to pay" would not include a failure to take the steps required under article 35 to ensure payment,

384. The Committee, after deliberation, retained the substance of this proposal.

Paragraph (2)

385. The Committee considered a proposal that article 45(2) be amended to read as follows:

"(2) However, in cases where the buyer had paid the price the seller loses his right to declare the contract avoided if he has not done so:
"(a) In respect of late payment, before the seller has become aware that payment has been made; or
"(b) In respect of any other breach than late payment, within a reasonable time after the seller knew or ought to have known of such breach, or after the expiration of any additional period of time applicable under article 44."

386. In support of this proposal, it was stated that it was necessary to distinguish cases of late payment of the purchase price from all other breaches. In the case of late payment, the right to declare the contract avoided should be lost if not done before the seller had become aware that payment had been made. However, in respect of any other breach the seller should be able to declare. the contract avoided even after he has received payment, if he has requested performance, by the buyer under article 44.

387. There was considerable opposition to narrowing the scope of application of article 45(2)(a) to cases of late payment c and dealing with all other matters under article 45(2)(b). It was considered that if the buyer had paid the price, the [page 52] seller should lose the right to declare the contract avoided in respect of any late performance if he had not done so before becoming aware that the buyer had performed.

388. The Committee, accordingly, did not retain the proposal.

Subparagraph (2)(a)

389. The Committee considered a proposal that article 45(a) read as follows:

"(a) In respect of late performance by the buyer within a reasonable time after the seller has become aware that payment has been rendered; or"

390. In support of this proposal it was stated that the present text of article 45(2)(a) could result in harsh results in cases where payment is due before delivery of the goods. Should the payment not eventuate, the seller may reasonably assume that the transaction is at an end and sell the goods to a third party. If the buyer subsequently pays the purchase price the seller should have a reasonable period of time to declare the contract avoided.

391. Under another view the seller should be compelled to declare the contract avoided before he becomes aware of performance. This was a clear rule and works no hardship as the seller will know when performance is due and can react if that performance is late.

392. The Committee, after deliberation, decided not to retain the proposal.

393. The Committee also considered, but did not retain, a proposal that if the goods were delivered but the price had not been paid the seller would have to require that payment of the price be made within an additional period or the right to declare the contract avoided would be lost.

Decision

394. The Committee decided to adopt, in principle, the present text of this article. It therefore recommends that the Commission should adopt the following text, now renumbered as article 46.

"Article 46

"(1) The seller may declare the contract avoided:
"(a) If the failure by the buyer to perform any of his obligations under the contract and this Convention amounts to a fundamental breach of contract; or
"(b) If the buyer has not, within the additional period of time fixed by the seller in accordance with paragraph (1) of article 45, performed his obligation to pay the price or taken delivery of the goods, or if he has declared that he will not do so within the period sp fixed.
"(2) However, in cases where the buyer has paid the price, the seller loses his right to declare the contract avoided if he has not done so:
"(a) In respect of late performance by the buyer, before the seller has become aware that performance has been rendered; or
"(b) In respect of any breach other than late performance within a reasonable time after he knew or ought to have known of such breach, or within a reasonable time after the expiration of any additional period of time fixed by the seller in accordance with paragraph (1) of article 45 or the declaration by the buyer that he will not perform his obligations within such an additional period." [page 53]

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Pace Law School Institute of International Commercial Law - Last updated July 26, 2007
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