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GUIDE TO CISG ARTICLE 28

Secretariat Commentary and Subsequent commentary


Guide to the use of the Secretariat commentary

The Secretariat Commentary is on 1978 Draft article 26 (which became CISG article 28). A significant change was made to article 26 of the 1978 Draft. The CISG text reads "unless the court would do so under its own law . . ." rather than "unless the court could do so. The Secretariat Commentary on 1978 Draft article 26 is therefore of limited utility as an aid to the interpretation of CISG article 28.


Text of Secretariat Commentary on article 26 of the 1978 Draft
[draft counterpart of CISG article 28]   [Judgment for specific performance]

PRIOR UNIFORM LAW

ULIS, article VII and article 16.

COMMENTARY

1. This article considers the extent to which a national court is required to enter a judgement for specific performance of an obligation arising under this Convention.

2. If the seller does not perform one of his obligations under the contract of sale or this Convention, article 42 [draft counterpart of CISG article 46] provides that "the buyer may require performance by the seller". Similarly, article 58 [draft counterpart of CISG article 62] authorizes the seller to "require the buyer to the pay the price, take delivery or perform his other obligations".

3. The question arises whether the injured party can obtain the aid of a court to enforce the obligation of the party in default to perform the contract. In some legal systems the courts are authorized to order specific performance of an obligation. In other legal systems courts are not authorized to order certain forms of specific performance and those States could not be expected to alter fundamental principles of their judicial procedure in order to bring this Convention into force. Therefore, article 26 [draft counterpart of CISG article 28] provides that a court is not bound to enter a judgement providing for specific performance unless the court could do so under its own law in respect of similar contracts of sale not governed by this Convention, e.g., domestic contracts of sale. Therefore, if a court has the authority under any circumstances to order a particular form of specific performance, e.g. to deliver the goods or to pay the price, article 26 does not limit the application of articles 42 or 58 [draft counterpart of CISG article 46 or 62]. Article 26 [draft counterpart of CISG article 28] limits their application only if a court could not under any circumstances order such a form of specific performance. [See also paragraph 9 of the commentary to article 42 (draft counterpart of CISG article 46)]

4. It should be noted that articles 42 and 58 [draft counterpart of CISG article 46 and 62], where not limited by this article, have the effect of changing the remedy of obtaining an order by a court that a party perform the contract from a limited remedy, which in many circumstances is available only at the discretion of the court, to a remedy available at the discretion of the other party.


Subsequent commentary

Commentary on Article 28 by Senior Legal Officer, International Trade Law Branch, United Nations

[Views quoted below are those of the author, Eric E. Bergsten, and do not necessarily reflect the views of the United Nations ("Les Ventes 1nternationales de Marchandises (Problèmes juridiques d' actualité)", Paris Economica 1981, pp. 11-14.)]

"At a broad level of generalization there are only three forms of remedy for breach of contract which a legal system can make available to the aggrieved party.

These three forms of remedy can be combined in various ways and, in particular, some form of monetary relief can be given in conjunction with either a requirement of performance of the contract or termination of the contract. All three forms of remedy are recognized by all legal systems. The significant differences are in the priority given by a legal system to one or the other of them. In particular, there is a clear difference in priority given to the right of an aggrieved party to require performance rather than to receive a substitutionary form of relief.

Right to Require Performance

"In principle, the right to require performance is the natural remedy in all continental legal systems. In practice, in the Western market economy legal systems if one party does not perform, the other party will not insist that he do so when it would be cheaper, easier and faster to procure the goods or services from some other party. If there are consequent additional costs, they can eventually be recovered as damages. The right to require performance is of practical importance where the party in breach is the only supplier, or the only supplier who can deliver in the requisite period of time.

[The legislative history of the Convention contains a 1972 Secretary-General report to the same effect. It states "Finding a generally acceptable provision on the right to require performance has been difficult. However, it would be easy to exaggerate the practical importance of this 'right'. Enforcing this right is subject to the delays of litigation. Since a seller who is resisting performance will usually claim some justification, such as a dispute over required quality or breach by buyer in providing for payment, the buyer can seldom anticipate a final decision by the trial and appellate courts -- and eventual coerced performance -- within the period required by his business needs. Instead, he will supply his needs elsewhere; if damage results he can pursue this claim without interrupting his business activity. [Compelling a seller in a foreign country to perform presents even greater practical difficulties than when the parties are in the same country.] Hence, even in legal systems where specific performance is theoretically available in the normal cases, this remedy is seldom invoked in legal proceedings. In practical operation, the threat of a damage claim (and the loss of confidence by the buyer and others in the trade) seem to be more effective sanctions than the threat of an action compelling specific performance" (UNCITRAL, Yearbook V, A/CN.9/SER.A/1974, p. 53, para. 127; Honnold J., DOCUMENTARY HISTORY OF THE UNIFORM LAW FOR INTERNATIONAL SALES, Kluwer (1989), p.130. See also UNCITRAL Yearbook VI, A/CN.9/SER.A/1975, pp.101-102, para. 127; Honnold, DOC'Y HIST. pp. 226-227).]

"What is in principle the natural remedy in the continental Western market economy countries is the most important remedy in the planned economies of the socialist States of Eastern Europe. A buyer who has not received the goods promised him cannot turn to the market where damages received could be used to purchase substitute goods.[1] Therefore, it is of vital importance that the party in breach be made to perform as soon as and as well as possible. Just the opposite rule prevails in the common law. Specific performance is available, but only if damages are not an adequate remedy. A buyer who has not received the goods ordered or has received goods which are seriously defective is expected to terminate the contract and purchase the goods elsewhere, if they are available. These rules originated in the ancient distinction in England between the courts of law and the courts of equity. They continue in effect today, at least in part because they are perceived as encouraging a rational use of economic resources.[2] Even though a seller has agreed to deliver goods at a particular price, if he would be financially advantaged by paying damages to the buyer rather than delivering the goods as promised, this suggests that the economic value of the goods to the buyer would be less than the cost of production and transportation by the seller.

"Specific performance of a sale of goods was historically available in the common law only if the goods were unique and, therefore, damages for non-delivery would not give the buyer the equivalent of that which the seller had promised. The examples usually given were a contract for a sale of an heirloom or the sale of a particular painting by a famous artist. In recent years there has been a greater willingness to order the delivery of ordinary commercial goods where the buyer has a pressing need for them and cannot procure them elsewhere in the necessary quantities in the time required. These cases fit within the general idea that damages awarded at some later time would not be an adequate remedy, though they go beyond the historical examples.

[HONNOLD states " 'Common law' restrictions on requiring (specific) performances of sellers' obligations are sometimes exaggerated. It is true that common-law courts will not ordinarily compel a seller to deliver goods that the buyer can readily acquire; common examples are standard raw materials -- wheat, cotton or the like. In these cases the courts usually find that the buyer's only loss is the added cost of purchasing the goods -- a loss that can readily be ascertained and compensated by awarding damages. However, if substitute goods cannot readily be obtained because of shortages or their unique character the buyer's loss may not be readily measured or compensated by a damage-award. Other examples include a seller's repudiation of a long-term contract; in this and similar situations the buyer's loss may be difficult to ascertain. In these and many other situations where damages do not fully compensate the buyer one may expect a favorable response to an action to require ('specific') performance " (Honnold, J.O., Uniform Law for International Sales under the 1980 United Nations Convents Convention, 2d ed. Kluwer (1991), p. 361). And LOOKOFSKY points out "Various commentators have noted a trend in American courts. towards a greater availability of this once 'exceptional' remedy: see, e.g., Farnsworth, E.A., Farnsworth on Contracts (1990), at p. 830 and White, J. & Summers, R., Handbook of the Law Under the Uniform Commercial Code 6-6 (3d ed. St. Paul 1988). On the other hand, there are numerous exceptions to what civilian systems regard as their 'primary' means of relief; see, e.g., Dawson, J., Specific Performance in France and Germany, 57 Mich. L.R. 495 (1954)" ("The 1980 United Nations Convention on Contracts for the International Sale of Goods", International Encyclopaedia of Laws, Blanpain, gen. ed. (Kluwer 1993), p. 30, n. 1).]

"Th[e] different attitudes towards the remedy of specific performance were considered to be so fundamental within each legal system that in the preparation of the U.N. Sales Convention it was thought necessary to find a compromise that would not require any State to change significantly its law on the matter. The means of doing so was quite simple. Article 46(1) provides that:

'The buyer may require performance by the seller of his obligations unless the buyer has resorted to a remedy which is inconsistent with this requirement.'

"Article 62(1) gives the seller a similar remedy against a buyer who has not paid the price, taken delivery or performed one of his other obligations. On the other hand, Article 28 provides that:

'If, in accordance with the provisions of this Convention, one party is entitled to require performance of any obligation by the other party, a court is not bound to enter a judgement for specific performance unless the court would do so under its own law in respect of similar contracts of sale not governed by this Convention.'

"By this combination of provisions, the principle is preserved that as a matter of the law of sales a party has the right to require performance by the other party, but the Convention itself recognizes that there may be limitations on the enforcement of the right. In the context of French law, for example, it means that the courts have the same discretion as to whether to order an astreinte against the seller as they would if the contract were governed by the Civil Code.

"The balance between Article 28 on the one hand and Articles 46 and 62 on the other is not, therefore, a compromise only between the civil law recognition of the principle that a party has the right to require the other party to perform the contract and the common law restriction on that right. It is also a recognition that in many legal system the courts will use discretion in enforcing the right and that such discretion is to be preserved by the Convention. Nevertheless, Article 28 may not have been of importance to a proper integration of the Convention into the domestic law in the civil law countries whereas it was of vital importance to the common law. This arises from the fact that in the civil law legal systems the statement as to the rights of the parties, including remedies for breach of contract, tends to be set forth in the Civil Code as a statement of the relationship between the parties themselves. The means of enforcing those rights in the courts is set forth in the law of civil procedure. The fact that the right to require performance by the other party may be absolute as a matter of civil law does not necessarily mean that the obligation of the court to enforce that right would be absolute as a matter of civil law procedure.

"The common law does not tend to draw the same distinction between the statement of a right and the procedures for its enforcement. The two are held to be inextricably linked. Therefore, the law of sales in common law legal systems does not speak of the buyer's right to have the seller perform. Instead, the law of sales speaks of the buyer's right to the aid of the court in requiring the seller to perform.[3] The law of sales also expresses any limitations that may exist in securing that aid.[4] Therefore, according to the common law methodology, the buyer's right to require the seller to perform is coextensive with the court's obligation to order specific performance.

"It can be seen that Article 46 of the Convention, which states an absolute right on the part of the buyer to have the seller perform his obligations, would seem to have removed from the common law courts any basis for refusing to order the party in breach to perform. From a common law point of view it would even have been difficult to have found a basis in the Convention or in any clearly applicable law for refusing to order the seller to perform his obligations where performance of those obligations was objectively impossible, though it is difficult to imagine a court issuing such an order in those circumstances. Article 28 resolves those problems. To determine whether it must coerce the seller to perform, the court can exercise the same discretion that it would if the contract were a domestic contract of sale."


FOOTNOTES

[1] G. Eörsi, Contractual Remedies in Socialist Legal Systems, in International Encyclopedia of Comparative Law, Vol. VIII, Ch. 16.

[2] E.A. Farnsworth, Damages and Specific Relief, 27 American Journal of Comparative Law, 247 (1979).

[3] United Kingdom: Sale of Goods Act 1893, sec. 52 (in part). "In any action for breach of contract to deliver specific or unascertained goods the court may, if it thinks fit, on the application of the plaintiff, by its judgement or decree direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods or paying damages".

[4] I.e., sec. 52 of the Sale of Goods Act 1893 provides that the court may order specific performance "if it thinks fit".


Pace Law School Institute of International Commercial Law - Last updated August 29, 2006
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