The buyer's obligation to pay the price includes taking such steps and complying with such formalities as may be required under the contract or any laws and regulations to enable payment to be made.
OUTLINE OF ISSUES
Reproduced with permission of UNCITRAL
54A Obligation to pay includes enabling steps 54A1 Common examples: arranging for letter of credit
54A2 Failure to take such steps may invoke remedies (arts. 61-65) DESCRIPTORS
Price ; Letters of credit
CASE ANNOTATIONS: UNCITRAL DIGEST CASES PLUS ADDED CASES
Presented below is a composite list of Art. 54 cases reporting UNCITRAL Digest cases and other Art. 54 cases. All cases are listed in chronological sequence, commencing with the most recent. Asterisks identify the UNCITRAL Digest cases, commencing with the 17 November 2000 citation reported below. Cases are coded to the UNCITRAL Thesaurus.
English texts and full-text English translations of cases are provided as indicated. In most instances researchers can also access UNCITRAL abstracts and link to Unilex abstracts and full-text original-language case texts sourced from Internet websites and other data, including commentaries by scholars to the extent available. United States 20 August 2008 U.S. District Court [New York] (Hilaturas Miel, S.L. v. Republic of Iraq)
Germany 6 July 2007 Amtsgericht [Lower Court] Freiburg (Shoe case) [translation available]
Argentina 31 May 2007 National Commercial Court of Appeals, Division "A" (Sr. Carlos Manuel del Corazón de Jesús Bravo Barros v. Salvador Martínez Gares) 54A [translation available]
Switzerland 27 April 2007 Tribunal cantonal [Appellate Court] Valais (Oven case) [translation available]
France 22 December 2006 Tribunal de grande instance Strasbourg (Cathode ray tube case) [translation available]
Switzerland 20 December 2006 Bundesgericht [Supreme Court] [translation available]
Slovak Republic 27 June 2006 District Court Nitra (Children's equipment case) [translation available]
Slovak Republic 23 June 2006 Regional Court Nitra (Raw material for women's coats case) [translation available]
Switzerland 23 May 2006 Tribunal cantonal [Higher Cantonal Court] Valais (Suits case) [translation available]
Switzerland 22 December 2005 Handelsgericht [Commercial Court] Zürich (Retail fashion clothes case) [translation available]
China 25 May 2005 CIETAC Arbitration Award [CISG 2005/09] (Iron ore case) 54A [translation available]
Russia 23 March 2005 Arbitration Award 126/2004 [translation available]
China 21 February 2005 CIETAC Arbitration Award [CISG 2005/14] (Equipment case) [translation available]
Switzerland 3 November 2004 Tribunal Cantonal [Appellate Court] Jura [translation available]
Ukraine 19 October 2004 Arbitration Award (Iron and steel castings case) [translation available]
Russia 28 September 2004 Arbitration Award 157/2003
Slovak Republic 29 March 2004 Regional Court Zilina (Polyethelene case) [translation available]
Russia 30 December 2003 Arbitration Award No. 58/2003 [translation available]
Germany 10 December 2003 Oberlandesgericht [Appellate Court] Karlsruhe [translation available]
China 3 December 2003 CIETAC Arbitration Award [CISG/2003/02] (False hair case) 54A [translation available]
Russia 22 October 2003 Arbitration Award No. 134/2001 [translation available]
Russia 17 September 2003 Arbitration Award No. 24/2003 [translation available]
China 7 July 2003 CIETAC Arbitration Award [CISG 2003/18] (Stroller and diaper case) [translation available]
Argentina 2 July 2003 Commercial Court of Original Jurisdiction, Buenos Aires (Arbatax S.A. Reorganization Proceeding) 54A [translation available]
ICC 2003 International Court of Arbitration, Case 11849 (Fashion products case) 54A1 [English text]
Russia 10 December 2002 Arbitration Award No. 211/2001 [translation available]
Russia 7 June 2002 Arbitration Award No. 116/2001 [translation available]
Austria 31 May 2002 Oberlandesgericht [Appellate Court] Graz (Timber case) [translation available]
China 4 February 2002 CIETAC Arbitration Award [CISG/2002/03] (Styrene monomer case) [translation available]
Germany 12 November 2001 Oberlandesgericht [Appellate Court] Hamm (Memory module case) [translation available]
Serbia 24 September 2001 Foreign Trade Court of Arbitration, Yugoslav Chamber of Commerce (Plums and mushrooms case) 54A [translation available]
Spain 15 June 2001 Audiencia Provincial [Appellate Court] Baleares [translation available]
Russia 30 May 2001 Arbitration Award No. 185/2000 [translation available]
Russia
30 May 2001 Arbitration Award No. 239/2000 [translation available] United States 10 April 2001 U.S. Federal Bankruptcy Court [Ohio] (Victoria Alloys v. Fortis Bank)
China February 2001 CIETAC Arbitration Award [CISG/2001/01] (Equipment, material and services case) [translation available]
Austria 24 January 2001 Oberlandesgericht [Appellate Court] Graz (Ice cream robots case) [translation available]
* Australia 17 November 2000 Supreme Court of Queensland (Downs Investments v. Perwaja Steel) 54A1
Germany 30 August 2000 Oberlandesgericht [Appellate Court] Frankfurt [translation available]
Spain 27 March 2000 Audiencia Provincial [Appellate Court] Navarra
Russia 10 February 2000 Arbitration proceeding 340/1999 [translation available]
Russia 17 January 2000 Arbitration award 28/1998 [translation available]
Germany 27 December 1999 Oberlandesgericht [Appellate Court] Dresden [translation available]
Switzerland 11 June 1999 Handelsgericht [Commercial Court] Aargau 54A [translation available]
China 6 January 1999 CIETAC Arbitration Award [CISG/1999/04] (Australian raw wool) [translation available]
Germany 29 December 1998 Hamburg Arbitration award [translation available]
Mexico 30 November 1998 Compromex Arbitration award [translation available]
Switzerland 30 November 1998 Handelsgericht [Commercial Court] Zürich [translation available]
* Switzerland 30 June 1998 Kantonsgericht [Appellate Court] Wallis
Russia 25 June 1998 Arbitration award 478/1996 54B [translation available]
China 22 June 1998 Shanghai Second Intermediate People's Court [District Court] (China Yitou Group Company. v. Germany Gerhard Freyso LTD GmbH & Co.) 53A [translation available]
Russia 25 May 1998 Arbitration award 104/1997 [translation available]
Germany 27 March 1998 Landgericht [District Court] Halle
Hungary 1998 Fovárosi Biróság [Metropolitan Court] Budapest
Germany 23 July 1997 Bundesgerichtshof [Federal Supreme Court] [VIII ZR 134/96] [Benetton II] [translation available]
Hungary 1 July 1997 Fovárosi Bíróság [Metropolitan Court] [translation available]
China 16 June 1997 CIETAC Arbitration Award [CISG/1997/15] (Leather case) 54A [translation available]
Switzerland 20 February 1997 Bezirksgericht [District Court] Saane 54A [translation available]
ICC February 1997 International Court of Arbitration, Case 8716 [English text]
China 18 December 1996 CIETAC Arbitration Award [CISG/1996/56] (Lentil case) 54A1 [translation available]
Germany 17 June 1996 Landgericht [District Court] Hamburg [translation available] * Germany 17 April 1996 Landgericht [District Court] Duisburg [translation available]
Germany 3 April 1996 Bundesgerichtshof [Federal Supreme Court] [translation available]
Germany 15 March 1996 Oberlandesgericht [Appellate Court] Frankfurt [Benetton II]
Russia 12 March 1996 Arbitration award 218/1995 [translation available]
Germany 5 March 1996 Landgericht [District Court] Düsseldorf
* Austria 6 February 1996 Oberster Gerichtshof [Supreme Court] 54A1 [translation available]
China 5 February 1996 CIETAC Arbitration Award [CISG/1996/07] (Antimony ingot case) [translation available]
Russia 22 January 1996 Arbitration award 40/1995 54A [translation available]
Russia 5 December 1995 Arbitration award 426/1994
* Hungary 17 November 1995 Budapest Arbitration award Vb 94124 54A
Russia 17 October 1995 Arbitration award 123/1992 54A [translation available]
Germany 21 September 1995 Landgericht [District Court] Kassel [translation available]
Germany 2 May 1995 Landgericht [District Court] Kassel [Benetton I]
China 23 April 1995 CIETAC Arbitration Award [CISG/1995/07] (Australian raw wool case) 54A1 [translation available]
Germany 31 March 1995 Oberlandesgericht [Appellate Court] Frankfurt [translation available]
* Germany 24 January 1994 Kammergericht [Appellate Court] Berlin [translation available]
ICC 1994 International Court of Arbitration, Case 7660 [English text]
* Germany 17 September 1993 Oberlandesgericht [Appellate Court] Koblenz 54A [translation available]
* China 31 December 1992 Xiamen Intermediate People's Court (Lian Zhong v. Xiamen Trade)
Germany 3 July 1992 Landgericht [District Court] Heidelberg [translation available]
* Hungary 24 March 1992 Fovárosi Biróság [Metropolitan Court]
* ICC 1992 International Court of Arbitration, Case 7197 54A1
ICC 1992 International Court of Arbitration, Case 7585 54A1 [English text]
Argentina 20 May 1991 Juzgado Nacional de Primera Instancia en lo Comercial [National Commercial Court of First Instance] [translation available]
Germany 24 April 1990 Amtsgericht [Lower Court] Oldenburg (Fashion textiles case) 53A [translation available]
Germany 26 September 1990 Landgericht [District Court] Hamburg
CASE DIGEST AND ANALYSIS
The UNCITRAL Digest of case law on the United
A/CN.9/SER.C/DIGEST/CISG/54 [8 June 2004]
The buyer's obligation to pay the price includes taking such steps and complying with such formalities as may be required under the contract or any laws and regulations to enable payment to be made. DIGEST OF ARTICLE 54 CASE LAW
1. This provision deals with actions preparatory to payment of the price which are
specified in the contract or in applicable laws and regulations. Thus the contract may
provide for the opening of a letter of credit, the establishment of security or of a bank
guarantee, or the acceptance of a bill of exchange. Preparatory actions required under the
applicable laws or regulations could, for example, be any administrative authorizations
required for a transfer of funds. 2. The usefulness of this provision is twofold. First, article 54 assigns these
obligations, unless otherwise specified in the contract, to the buyer who must bear the
costs thereof. One court decision seems to indicate that the costs associated with payment
are generally the responsibility of the buyer.[1] Furthermore, the steps which the buyer has
to take are obligations, violation of which entitles the seller to have recourse to the
remedies specified in articles 61 et seq. and are not considered simply as part of "his conduct
in preparing to perform or in performing the contract" (art. 71 (1)); they can be analysed,
should the case arise, only in terms of an anticipatory breach of contract. Scope of the buyer's obligations 3. The question arises whether article 54 obliges the buyer only to carry out such steps
as are necessary for the accomplishment of preparatory actions, without making him
responsible for the result, or whether the buyer is in breach of his obligations the moment it
is seen that the result has not been attained. A number of decisions have been delivered
with regard to letters of credit and follow the principle that the buyer is in breach of its
obligations if it does not deliver the letter of credit opened on behalf of the seller.[2] 4. Certain hesitations are justified with regard to the administrative measures required
under the applicable laws or regulations. Under one possible interpretation of article 54, a
distinction has to be drawn in determining the scope of the buyer's obligations, between
measures of a commercial nature and administrative measures. Under the first of these the
buyer is thought to assume a commitment with regard to the result whereas for the second
the buyer is thought to take on only a best-effort obligation, since the buyer cannot
guarantee, for example, that the competent administrative authority will approve the
transfer of funds; the buyer's only obligation then would be to carry out the steps needed to
obtain the relevant administrative authorization. Under another interpretation of the
provision, however, this distinction should not be made since the buyer is responsible as a
matter of law if the preparatory action, whatever its nature may be, is not carried out,
subject to the operation of article 79 of the Convention. 5. The provision says nothing about the currency of payment. Here one has to
consider first and foremost the will of the parties (art. 6) as well as commercial usage
(art. 9(2)) and any practices the parties have established between themselves (art.
9(1)). In the many cases where the currency of payment cannot be established in this
way, hesitations are justified as to the appropriate manner of determining it. 6. Most decisions in case law refer to the law of the place where the seller's place of
business is located or to the law of the place where payment is to be made.[3] These
decisions reflect a current of doctrine that reasons in terms of general principles on which
the Convention is based (art. 7(2)), and in general defines the currency of payment as the
one that exists in the place where the seller's place of business is located, since this is
generally also the place where the obligation to pay the price is discharged (art. 57) and the
place where delivery is taken (art. 31(c)). However, one court has found the currency of
payment should be determined by the law which would govern the contract if the Convention
were not applicable.[4] FOOTNOTES
* The present text was prepared using the full text of the decisions cited in the Case Law on UNCITRAL Texts (CLOUT) abstracts and other citations listed in the footnotes. The abstracts are intended to serve only as summaries of the underlying decisions and may not reflect all the points made in the digest. Readers are advised to consult the full texts of the listed court and arbitral decisions rather than relying solely on the CLOUT abstracts.
[Citations to cisgw3 case presentations have been substituted [in brackets] for the case citations provided in the UNCITRAL Digest. This substitution has been made to facilitate online access to CLOUT abstracts, original texts of court and arbitral decisions, and full text English translations of these texts (available in most but not all cases). For citations UNCITRAL had used, go to <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.] 1. [GERMANY Landgericht [District Court] Duisburg 17 April 1996; available at <http://cisgw3.law.pace.edu/cases/960417g1.html>], concerning costs associated with payment of the price by cheque.
2. [AUSTRALIA Downs Investments v. Perwaja Steel [Supreme Court] Adelaide 17 November 2000, available online at <http://cisgw3.law.pace.edu/cases/001117a2.html>];
CLOUT case No. 176 [AUSTRIA Oberster Gerichtshof [Supreme Court] 6 February 1996;
available at <http://cisgw3.law.pace.edu/cases/960206a3.html>] (in this case, however, the buyer was not considered to have been in breach of its obligations since the seller had omitted to indicate the port of embarkation when that was in fact necessary, under the contract, for establishing the letter of credit);
CLOUT case No. 104 [ICC International Court of Arbitration, case No. 7197 of 1993; available at <http://cisgw3.law.pace.edu/cases/937197i1.html>];
[CHINA Lian Zhong v. Xiamen Trade, Xiamen Intermediate People's Court 31 December 1992, available online at <http://cisgw3.law.pace.edu/cases/921231c1.html>].
Similarly, it was decided in arbitration that a buyer who had not paid the price for equipment delivered was liable if it had merely given instructions to its bank to make a transfer to the seller but had done nothing to ensure that the payment could actually be made in convertible currency; see
CLOUT case No. 142 [RUSSIA Arbitration Award case No. 123/1992 of 17 October 1995; available online at <http://cisgw3.law.pace.edu/cases/951017r1.html>].
3. See CLOUT case No. 80
[GERMANY Kammergericht [Appellate Court] Berlin 24 January 1994; available at <http://cisgw3.law.pace.edu/cases/940124g1.html>], (see full text of the decision) (currency of payment should, in case of doubt, be that of the place of payment);
CLOUT case No. 281 [GERMANY Oberlandesgericht [Appellate Court] Koblenz 17 September 1993; available at <http://cisgw3.law.pace.edu/cases/930917g1.html>], (currency of the place where the seller has his place of
business is the currency in which the price should be paid);
CLOUT case No. 52 [HUNGARY Fovárosi Biróság [Metropolitan Court] Budapest 24 March 1992, available online at <http://cisgw3.law.pace.edu/cases/920324h1.html>], (court compelled the buyer to pay the seller's in the seller's currency without stating reason).
4. CLOUT case No. 255
[SWITZERLAND Tribunal [Appellate Court] Valais / Wallis 30 June 1998, available online at <http://cisgw3.law.pace.edu/cases/980630s1.html>].
Reprinted by special permission of Northwestern University School of Law. 34 Northwestern Journal of International Law and Business (Winter 2004) 299-440.[*] excerpt from Larry A. DiMatteo, Lucien Dhooge, Stephanie Greene,
[...] 1. Formalities of Payment: Article 54 National courts have focused on one issue arising from Article 54. This issue is the enumeration of
formalities with which the buyer must comply in order to enable payment of the price. The formalities
identified by the national courts consist of two requirements. The courts of Austria and Switzerland,
and the Court of Arbitration of the International Chamber of Commerce, have required buyers to
open letters of credit where required by the terms of the sales contract.[436] Compliance with
Article 54 also requires the buyer, where necessary, to comply with currency exchange regulations,
including authorization to transfer currency.[437] However, despite these opinions, there is no
requirement that the buyer needs to succeed in its efforts to comply with contractual formalities.
Failure to satisfy required formalities does not constitute a breach. The buyer must make a good faith
effort to satisfy the requirements of the contract and cannot use its own lack of action as an excuse
for failure.[438] The seller cannot hinder the buyer's attempts to comply with these formalities.
[439] [page 373] [...] FOOTNOTES * For a subsequent text on this subject by these authors, see Larry A. DiMatteo, Lucien Dhooge, Stephanie Greene, Virginia Maurer & Marisa Pagnattaro, "International Sales Law: A Critical Analysis of CISG Jurisprudence", Cambridge University Press (2005) 241 p. [...] 436. See OGH, 10 Ob 518/95, Feb. 6, 1996, supra note 134; BG der Saane, T 171/95, Feb. 20,
1997 (Switz.), available at <http://cisgw3.law.pace.edu/cases/970220s1.html> [English translation by Stefan Kuhm]. 437. See ICC Arbitration Case No. 7197/1992, supra note 436. Furthermore, Article 54 does
not require the seller to demand compliance with contractual formalities from the buyer. See
Arbitration Court of the Chamber of Commerce & Indus. of Budapest, Vb 94124, Nov. 17, 1995
(Hung.), available at <http://cisgw3.law.pace.edu/cases/951117h1.html>. See also, Trib. of Int'l
Commercial Arbitration at the Chamber of Commerce & Indus., 123/192, Oct. 17, 1995 [(Russ.)], available at <http://cisgw3.law.pace.edu/cases/951017r1.html> [English translation by Yelena Kalika, translation edited by Mykhaylo Danylko]. 438. See, e.g., Trib. of Int'l Commercial Arbitration at the Chamber of Commerce & Indus., supra note 437 (Russian buyer could not excuse failure to obtain letter of credit because of an absence of funds). 439. See OGH, 10 Ob 518/95, Feb 6, 1996, supra note 134 (failure of German seller to name
the port of origin of the goods causing the Austrian buyer to be unable to obtain a letter of credit). [...] Go to complete text of Analysis of Fifteen Years of CISG Jurisprudence
Australia
1
Germany
3
ICC
1
Austria
1
Hungary
2
Switzerland
1
China
1
TOTAL:
10
- UNCITRAL's case law digest; and
- An analysis of CISG jurisprudence
Nations Convention on the International Sale of Goods [*]
Reproduced with the permission of UNCITRAL
Digest of Article 54 case law
- General
- Scope of the buyer's obligations
- Currency of payment]
ARTICLE 54
ANALYSIS OF CISG CASE LAW
The Interpretive Turn in International Sales Law:
An Analysis of Fifteen Years of CISG Jurisprudence
Virginia Maurer and Marisa Pagnattaro
Pace Law School
Institute of International Commercial Law - Last updated June 26, 2009
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