2008 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods
Digest of Article 61 case law [reproduced with permission of UNCITRAL] [*]
[Text of article
Remedies available to the seller (art. 61(1))
Claiming damages in combination with other remedies (art. 61(1))
Refusal of a period of grace (art. 61(3))]
(1) If the buyer fails to perform any of his obligations under the contract or this
Convention, the seller may:
(a) exercise the rights provided in articles 62 to 65;
(b) claim damages as provided in articles 74 to 77.
(2) The seller is not deprived of any right he may have to claim damages by exercising his right to other remedies.
(3) No period of grace may be granted to the buyer by a court or arbitral tribunal when the seller resorts to a remedy for breach of contract.
Remedies available to the seller (article 61(1))
1. Article 61(1) describes in general terms the various remedies available to the seller when the buyer does not perform one of its obligations. In stating that the seller may "exercise the rights provided in articles 62 to 65", article 61(1)(a) merely refers to these provisions without independently giving them legal force: each of the referenced provisions itself authorizes an aggrieved seller to exercise the rights described therein, so that those rights would be available to the seller even absent the reference in article 61(1)(a). On the other hand, in providing that the seller may "claim damages as provided in articles 74 to 77", article 61(1)(b) provides the legal basis for the seller's right to claim such compensation; articles 74 to 77 merely specify the way in which damages, once they are found to be awardable, are to be measured. It is thus correct to cite article 61(1)(b) as the source of a seller's right to claim damages, as a number of court and arbitrational decisions have done, and not to refer merely to, e.g., article 74 of the Convention.
2. Failure on the part of the buyer to perform any one of its obligations is the only prerequisite for recourse to the remedies referred to in article 61(1). Thus, as one decision stated, an aggrieved seller's recourse to remedies is not subject to a requirement that the seller prove the buyer was at fault.
3. Article 61(1) mentions only the principal remedies available to an aggrieved seller. Other remedies in addition to those referred to in this provision may be available when a seller suffers a breach by the buyer. These remedies are set out in articles 71, 72, 73, 78 and 88 of the Convention.
4. As reflected in case law, the main difficulty in applying article 61(1) arises in cases in which the contract of sale imposes on the buyer obligations not provided for by the Convention. As suggested by the heading of the section of the Convention in which article 61 appears (Section III of Part III, Chapter III "Remedies for Breach of Contract by the Buyer"), failure by the buyer to perform any of its obligations gives the seller recourse to the remedies provided in the Convention, even when the failure relates to a contractual obligation created by an exercise of party autonomy. Thus in these cases there is no need to look to the national law governing the contract in order to determine the seller's remedies, as the approach adopted in several decisions confirms. In one decision, however, the court resorted to national law.
Claiming damages in combination with other remedies (article 61(2))
5. Article 61(2) provides that the seller is not deprived of any right to claim damages by choosing to exercise its right to other remedies. This provision is contrary to the legal tradition of certain countries, including that of Germany before the reform of the law of obligations which entered into force on 1 January 2002 and which authorized combined remedies.
Refusal of a period of grace (article 61(3))
6. Under article 61(3), a judge or arbitrator is deprived of the power to grant the buyer a period of grace for performance of its obligations, including the obligation to pay the price. The forbidden measures were judged contrary to the best interests of international trade. Only the seller can grant the buyer an extension of time for performance. An issue yet to be resolved is whether article 61(3) creates an obstacle to the application of insolvency laws that grant a defaulting buyer a period of grace for making payment.
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1. Article 61(1)(a) is, nevertheless, cited in some decisions: [GERMANY Landgericht Münchengladbach 15 July 2003 (Filters case)]; [SWITZERLAND Kantonsgericht Zug 12 December 2002 (Methyl tertiary-butyl ether case)]; [SWITZERLAND Handelsgericht St. Gallen 3 December 2002 (Sizing machine case)]; [ARGENTINA Cámara Nacional de Apelaciones en lo Comercial de Buenos Aires 21 July 2002 (Malt case)].
2. See [GERMANY Landgericht Berlin 21 March 2003 (Fabrics case)]; [SWITZERLAND Cour de Justice, Genève 13 September 2002 (Grain case)]; [FRANCE Cour d'appel de Colmar 12 June 2001 (Polyurethane foam covers for air conditioners case)]; [GERMANY Oberlandesgericht Düsseldorf 11 July 1996 (Lawn mower engines case)]; [GERMANY Arbitration-Schiedsgericht der Handelskammer Hamburg, 21 March 1996 and 21 June 1996 (Chinese goods case)]; [GERMANY Landgericht Aachen 14 May 1993 (Electronic hearing aid case)]; [GERMANY Oberlandesgericht Hamm 22 September 1992 (Frozen bacon case)].
3. [GERMANY Oberlandesgericht Koblenz 17 September 1993 (Computer chip case)] (see full text of the decision).
4. See [FRANCE Cour d'appel Grenoble 22 February 1995 (Jeans case)] (breach of a re-export prohibition) (see full text of the decision); [SWITZERLAND Handelsgericht des Kantons Aargau 26 September 1997 (Cutlery case)] (violation of an exclusivity agreement); [GERMANY Oberlandesgericht Köln 8 January 1997 (Tannery machines case)] (breach of an agreement to correct a lack of conformity within an agreed period of time); [ICC International Court of Arbitration, Award 7197 of 1992 (Failure to open letter of credit and penalty clause case)] (failure to open a letter of credit); [SWITZERLAND Berzirksgericht der Sanne, 20 February 1997 (Spirits case)]; [AUSTRALIA Supreme Court of Queensland 17 November 2000 (Scrap steel case)].
5. [GERMANY Bundesgerichtshof 5 February 1997 (Containers for plants case)].
6. German courts have succeeded in departing from their national law and granting damages in conjunction with other remedies such as avoidance of contract; see the following decisions (applying article 45(2), which with respect to buyer's remedies incorporates the same principle as article 61(2): [GERMANY Oberlandesgericht Hamburg 26 November 1999 (Jeans case)]; [GERMANY Landgericht Heilbronn 15 September 1997 (Film coating machine case)]; [GERMANY Landgericht Landshut 5 April 1995 (Sport clothing case)]; [GERMANY Landgericht München 20 March 1995]; [GERMANY Landgericht Baden-Baden 14 August 1991 (Wall tiles case)]; implicitly, see [GERMANY Bundesgerichtshof 25 June 1997 (Stainless steel wire case)].
7. United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980, Official Records, Documents of the Conference and Summary Records of the Plenary Meetings and of the Meetings of the Main Committee, 1981, p. 48.
8. For the seller's right to fix an additional period of time for the buyer to perform, see article 63.
9. One court avoided this question by holding that the contract in question was a distribution agreement not governed by the CISG. See [UNITED STATES Federal District Court, Southern District of New York, 21 July 1997 (Helen Kaminski v. Marketing Australian Products)].