A. ANALYSIS OF ARTICLES 1-88 FROM A PROVINCIAL COMMON LAW PERSPECTIVE. *

* For purposes of comparison, the Ontario Sale of Goods Act has been used as the Provincial prototype. The provincial Sale of Goods Acts are almost identical. For a table of concordance of the corresponding section numbers, see G.H.L. Fridman, Sale of Goods in Canada, 2nd ed., pp. 4-5.

PART I

SPHERE OF APPLICATION AND GENERAL PROVISIONS

Chapter I

SPHERE OF APPLICATION

Article 1

(1) This Convention applies to contracts of sale of goods between parties whose places of business are in different States:

(a) when the States are Contracting States; or

(b) when the rules of private international law lead to the application of the law of a Contracting State.

(2) The fact that the parties have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract.

(3) Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration in determining the application of this Convention.

COMMENT

1. Article 1 should be read in conjunction with Articles 2 and 3. Article 1 defines the scope of the CISG; Article 2 excludes certain types of sale, while Article 3 clarifies the application of the Convention to contracts of work and materials.

2. The requirement in Art. 1(1)(a) that the parties must have their places of business in different contracting states means that the mere existence of a foreign element is not sufficient. Thus the fact that the parties have different nationalities or that the contract is to be performed, in whole or in part, in a state other than the state in which the contract was concluded will not be sufficient. "Business" and "places of business" is not defined in the Convention. Article 10 however specifies which place of business applies where a party has more than one, and also that if he does not have a place of business reference is to be made to his "habitual residence". Art. 1(1)(b) also adopts the position that the Convention should apply to parties in non-contracting states where the proper law of the contract is the law of a contracting state. The result is a substantial expansion of the scope of CISG, thus promoting the Convention's goal of maximising the uniformity of international sales law. Assume a contract between a Canadian company and an American company, which is to be governed by the law of the State of New York. If the United States has adopted the convention, CISG, rather than the domestic law of New York, will apply to the contract, assuming the U.S. has not invoked the federal-state clause (Art. 93).

3. Article 1 also raises three definitional problems which should be noted:

(a) It is clear from para. (3) that neither the nationality nor the commercial or civil character of the parties affects the applicability of CISG. The same comprehensiveness also applies to the provincial Sale of Goods Acts. The provincial Acts differ however from CISG in that merchant sellers are subjected to a stricter regime of warranty liability than non-merchants. This distinction is not drawn in CISG. For further discussion of this problem see Art. 35. What is less obvious is whether Art. 1, by referring to the parties' places of business, intends to restrict the scope of CISG to persons in business. The secretariat's commentary does not answer the question directly, but, in the light of Art. 2 and 10 the answer would appear to be no, or at least uncertain.

(b) "Contracts of sale" in Art. 1(1) is not defined. It is defined in the OSGA as an agreement for the transfer of general property in goods for a money consideration called the price. The civilian systems appear to adopt a similar, if not identical, definition. Difficulties may arise however with respect to the application of the test, particularly in the near-sales context, to such agreements as equipment leases, hire-purchase and consignment agreements. The Anglo-Canadian courts, where not otherwise required by statute (as under the Personal Property Security Acts), have generally adopted a fairly strict test whereas the American courts have tended to look at the substantive effect of the agreement. The [Secretariat] Commentary offers no guidance as to the type of test to be applied.

(c) A similar difficulty arises with respect to the meaning of goods. The definition in the Ontario Act (s. 1(1)(g)) excludes choses in action but includes growing crops, fixtures and other things attached to land that are to be severed under the contract of sale. Art. 2 suggests that choses in action (incorporeals) are meant to be excluded in their entirety, but it is not clear to what extent this is true of things attached to land that are intended to be severed under the contract of sale. This could be of some significance in contracts for the sale of agricultural products.

Article 2

This Convention does not apply to sales:

(a) of goods bought for personal, family or household use, unless the seller, at any time before or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for any such use;

(b) by auction;

(c) on execution or otherwise by authority of law;

(d) of stocks, shares, investment securities, negotiable instruments or money;

(e) of ships, vessels, hovercraft or aircraft;

(f) of electricity.

COMMENT

1. The exclusions in Article 2 turn either on the nature of the goods, the character of the parties, or the mode of sale. The exclusions have no exact parallel in the provincial Sale of Goods Acts, although the Acts do distinguish for warranty purposes between sales by merchant and sales by non-merchant sellers.

2. Exclusion (a) is justified in the [Secretariat] Commentary on the ground that consumer sales are frequently regulated by special legislation and that this makes it desirable to continue to apply the appropriate domestic law. All the Provinces have adopted a substantial volume of consumer protection legislation whose provisions are generally non-excludeable. The CISG exclusion is therefore consistent with provincial public policy.

3. Exclusions (b) through (f) rest on different grounds and several of them are perhaps more difficult to justify:

(b) Sales by auction. These are excluded from CISG because they "are often subject to special rules under the applicable national law and it was considered desirable that they remain subject to those rules even though the successful bidder was from a different State" ([Secretariat] Commentary, p. 40). There is no similar exclusion in the provincial Acts.

(c) Sales on execution or otherwise by authority of law. This exclusion again rests on the existence of separate national rules governing execution sales. Another reason is that such sales are unimportant in international trade.

(d) Sales of stocks, shares, investment securities, negotiable instruments or money. "Money" and "things in action" are also excluded from the definition of goods (and therefore from the scope of the Act) in the provincial Acts. It is well settled that "things in action" in the Canadian common law cover all forms of incorporeal property "whether or not the thing in action is evidenced by or incorporated in documents or instruments or other forms of writing, negotiable or otherwise": OLRC Sales Report, p. 54. The sale of stocks, shares, etc. are also governed by separate federal and provincial legislation, thus furnishing another reason for supporting their exclusion from CISG.

(e) Sales of ships, vessels, hovercraft or aircraft. The draft convention did not include hovercraft and this amendment was adopted at Vienna. The exclusion of all four types of goods is based on two grounds: first, because in some legal systems their sale is assimilated to sales of immovables and, secondly, because in most legal systems at least some ships, vessels and aircraft (and presumably also hovercraft) are subject to special registration requirements.

The Canadian delegation did not think these reasons were sufficiently persuasive, and a resolution was introduced to delete the exclusion. The resolution was not successful.

(f) Sales of electricity. The rationales for this exclusion are that in many legal systems electricity is not considered to be goods and because international sales of electricity present unique problems. See [Secretariat] Commentary, p. 40.

Article 3

(1) Contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production.

(2) This Convention does not apply to contracts in which the preponderant part of the obligations of the party who furnishes the goods consists in the supply of labour or other services.

COMMENT

1. Art. 3(1) probably corresponds with the prevailing Canadian law, although one cannot be sure because of the conflict between the two leading British decisions, Lee v. Griffin [(1861) 1 B. & S. 272.] and Robinson v. Graves [[1935] 1 K.B. 579 (C.A.)]. In any event, art. 3(1) appears to embody the sounder and simpler rule [cf. Benjamin's Sale of Goods (Guest ed.), para. 35]. The same rule is supported in the OLRC Sales Report with respect to domestic contracts [p. 46].

2. Art. 3(2) deals with contracts under which the seller undertakes to supply labour or other services in addition to supplying goods, and excludes them from the scope of the convention. The same exclusion applies in Anglo-Canadian law although the courts have applied by analogy sales rules with respect to the supplier's warranty liabilities under such a contract. [see Young & Marten Ltd. v. McManus Childs Ltd. (1969) 1 A.C. 454].

Article 4

This Convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. In particular, except as otherwise expressly provided in this Convention, it is not concerned with:

(a) the validity of the contract or of any of its provisions or of any usage;

(b) the effect which the contract may have on the property in the goods sold.

COMMENT

1. As have been noted earlier (supra, Part I, para.33), this important article substantially reduces the scope of CISG and in effect brings into play in every international contract as defined in art. 1 two separate bodies of law, viz. (a) this convention, and (b) whichever municipal law or laws govern (i) the validity of the contract, and (ii) the property effects of the contract assuming it is a valid contract.

2. Unidroit has been working on a uniform law on rules governing the validity of international contracts, and these have been circulated by UNCITRAL. [Doc. A/CN.9/143]. However, in view of the difficulty of reaching consensus on a suitable set of rules the UNCITRAL working group preparing the draft convention did not attempt to incorporate such rules into CISG.

3. "Validity" is not defined in art. 4 or elsewhere in CISG. Presumably it includes any defence that may vitiate the contract under the proper law or laws of the contract because, for example, of lack of capacity, misrepresentation, duress, mistake, unconscionability, and contracts contrary to public policy. The exclusion will be of particular importance where the contract contains a disclaimer clause restricting or excluding liability for breach of warranty or other obligation imposed on the seller under the Convention and the buyer invokes the doctrine of "fundamental breach" or impeaches the clause on grounds of unconscionability. [On this see further infra Art. 6]. The exclusion of questions of validity from the reach of CISG is therefore a debilitating if unavoidable weakness.

4. The exclusion from CISG of the property effects of the contract is much less serious. Under the convention, unlike provincial sales law [See e.g., OSGA 12(3), 21, 34, 38, 47], the parties' rights and obligations do not turn on the locus of title. In this respect CISG adopts the same approach as the American Uniform Commercial Code (see UCC 2-401) and is greatly superior to existing provincial law. Property questions will of course remain very important but only for the purpose of determining the rights of buyer and seller vis-a-vis third parties, and vice versa.

Article 5

This Convention does not apply to the liability of the seller for death or personal injury caused by the goods to any person.

COMMENT

1. This article did not appear in the draft convention. It was adopted at Vienna at the suggestion of several delegations who pointed out that the liability of suppliers of defective goods causing personal injuries is governed in many legal systems by separate rules of law and that it has also attracted the attention of separate international conventions. [See Ontario Law Reform Commission, Report on Products Liability (1979), Appendices 3-5.]

2. The Canadian position with respect to the seller's liability is rather different. Under the provincial Sale of Goods Acts a seller is liable for all types of damage caused by defective goods and involving a breach of his warranty objectives, whether the damage is physical or only economic and whether or not he has been negligent. He may also be liable in tort for negligently supplying goods causing physical injury to person or property. The Ontario Law Reform Commission recommended in its Report on Products Liability (1979) imposing a regime of strict liability on all business suppliers of dangerously defective goods, but this recommendation still awaits implementation. It is not clear what effect Art. 5 will have in a common law province that has requested adoption of CISG where a buyer suffers injury because the foreign seller has supplied defective goods. Presumably the buyer will lose his right to sue for breach of warranty under the provincial Sale of Goods Act and will be remitted to a claim in tort under the lex fori. This could leave him in a less favourable position than he is at present if the lex fori only allows recovery in tort where the seller has acted negligently.

Article 6

The parties may exclude the application of this Convention or, subject to article 12, derogate from or vary the effect of any of its provisions.

COMMENT

1. The principle of freedom of contract enshrined in article 6 proceeds from the consensual nature of the contract of sale and also appears in the provincial Acts. [e.g., OSGA 55, cf. UCC 1-102(3)]. CISG differs from modern sales legislation in so far as it imposes no restrictions, other than as provided in art. 2, on the parties' freedom to exclude the provisions of the Convention. (Cf. UCC 2-302, and s. 55 of the U.K. Sale of Goods Act as am. by the Supply of Goods (Implied Terms) Act 1973, and the Unfair Contract Terms Act, 1977).

2. Art. 6 raises an important and difficult question of exegesis. Does it permit the exclusion of obligations imposed under the Convention, however basic, even though such a disclaimer would be treated as unconscionable, and therefore unenforceable, under the applicable municipal law? Would this be a question of validity within art. 4 or would art. 6 take priority? The [Secretariat] Commentary throws no light on these issues.

3. It is not clear what language will be deemed sufficient "to exclude the application of this Convention"? Is a choice of law clause (e.g., "this contract shall be governed by the law of British Columbia") sufficient or must the clause also indicate that the domestic law of the chosen forum is intended to be applied? The [Secretariat] Commentary, p. 44, explains that art. 6 is intended to discourage exclusion of CISG by implication and this suggests that any doubt should be resolved in favour of the applicability of the Convention.

Chapter II

GENERAL PROVISIONS

Article 7

(1) In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade.

(2) Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.

COMMENT

1. There was much discussion in UNCITRAL about the desirability of including in the convention a general requirement of good faith and fair dealing, which would embrace the formation of the contract as well as application and interpretation of the provisions of the convention. Article 7(1) was eventually adopted as a compromise. Although paragraph (1) does not refer specifically to the observance of good faith in the formation of the contract, its language is sufficiently broad to admit of its inclusion. The [Secretariat] Commentary (p. 45) provides numerous examples of situations in which good faith may be a relevant factor and several of them include the formational phase of a contract.

2. Good faith, in the sense of fairness in the exercise of contractual rights and the performance of duties, is not clearly recognized under existing Anglo-Canadian law. Indeed, the contrary is often asserted but there are signs of a movement in the opposite direction. See e.g. Cehave N.V. v. Bremer HG m.b.H. (1976) 1 Q.B. 44 (C.A.). Good faith in the broader sense of fair dealing is a requirement between merchants under Article 2 of the Uniform Commercial Code and is also imposed in many civilian systems. Its adoption is also recommended in the OLRC Sales Report, ch. 7(B). Good faith in bargaining is a more radical concept though here too there are a growing number of common law precedents in Canada that support its adoption.

3. Article 7(2) did not appear in the draft convention and was added at Vienna. It is not however a radical innovation and has a counterpart in art. 17 of ULIS. See Graveson, op. cit., pp. 8-9. An example of a question not directly addressed in the convention is the effect of the buyer's negligence in a claim against the seller for delivering non-conforming goods. Presumably in most cases a tribunal will prefer to deduce the answer from the general provisions of the convention than to rely on a domestic law to which it is referred by the applicable choice of law rule.

Article 8

(1) For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.

(2) If the preceding paragraph is not applicable, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.

(3) In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties.

COMMENT

1. Art. 8 is concerned with rules for determining the parties' intentions where their language or conduct is ambiguous or, quaere, where, to the knowledge of the other party, the first party was operating under a mistaken assumption of fact.

2. It is difficult to generalize about such a broad and ill-defined area. The objective theory of intention is one that is normally applied in Anglo-Canadian Law, [Waddams, The Law of Contract, pp. 94-95], but the theory cuts both ways and if an offeree actually knows or must have realized that the offeror has a different intention or was labouring under a mistake then he can scarcely argue that it was reasonable for him to rely on an objective interpretation of the other party's conduct. [ Smith v. Hughes (1871) L.R. 6 Q.B. 597]. Prima facie, therefore, art. 8(1) and (2) would appear to be compatible with common law doctrine.

3. It seems clear from the language of art. 8 that it applies to the interpretation of the contract as well as its formational phase. Cf. [Secretariat] Commentary, pp. 46-47. It may be questioned however whether in practice it is always easy to distinguish the intentions of the parties, objectively ascertained, from the intention of one of them. This will be particularly true where they have both signed or approved a writing. Subject to this caveat, Canadian common law appears to support the rule in art.8 (3). Cf. Waddams, op. cit., pp. 20-21. Note however that Anglo-Canadian law is more restrictive in admitting extrinsic evidence to interpret a concluded agreement which is not ambiguous and which is subject to the parol evidence rule.

Article 9

(1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves.

(2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.

COMMENT

1. Article 9 is broadly in accord with Anglo-Canadian law. However, the definition in art. 9(2) of what constitutes a binding usage [frequently, but misleadingly, referred to in English case law as "custom"] goes beyond generally stated Anglo-Canadian law but is agreeable with UCC 1-205(2). The Anglo-Canadian requirement is said to be [Benjamin's Sale of Goods, para. 844; OLRC Sales Report, pp. 174 et seq.] that "the custom (sic) must be reasonable, universally accepted by the particular trade or profession or at the particular place, certain, not unlawful and not inconsistent with the express or implied terms of the contract." The CISG and Code tests strike me as more reasonable and practical, though in practice there may be little to choose between them and the Anglo-Canadian test.

2. The [Secretariat] Commentary (p. 48) notes that Article 9 does not provide any explicit rule for the interpretation of expressions, provisions or forms of contract which are widely used in international trade and for which the parties have given no interpretation. In most such cases the missing interpretation will be supplied by the parties' practices and trade usages. Difficulties are only likely to arise where the expression has no accepted meaning or has more than one meaning and each of the parties had in mind a different meaning. This difficulty is a familiar one in domestic law and cannot be overcome by rules of interpretation.

Article 10

For the purposes of this Convention:

(a) if a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion of the contract;

(b) if a party does not have a place of business, reference is to be made to his habitual residence.

COMMENT

1. Article 10 is important for the purpose of establishing the applicability of CISG under art. 1. Determination of the relevant place of business to determine the place of delivery is also necessary for the purposes of art. 12, 20(2), 24, 31(c), 42(1)(b), 57(1)(a) and 96.

2. See also the comments under art. 1 with respect to the significance of the reference to the parties' place of residence.

Article 11

A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses.

COMMENT

1. The [Secretariat] Commentary justifies the exclusion of a writing requirement in art. 11 on the ground that many international sales contracts are concluded by modern means of communication which do not always involve a written contract. An equally persuasive reason is that writing requirements encourage litigation and unmeritorious defences. Writing requirements for contracts of sale were repealed in the U.K. in 1954 [Law Reform (Enforcement of Contracts) Act, 1954, c.34] and in British Columbia in 1958 [Stat. B.C. 1958, c.18], and no adverse consequences have resulted. Very few cases have been reported during the past decade in those Provinces that have retained the requirement and a statistical survey conducted on behalf of the Ontario Law Reform Commission shows that manufacturers frequently ignore the requirements in practice when accepting orders for goods [OLRC Sales Report, pp.108-110]. The OLRC Sales Report also recommended repeal of s.5 of the Ontario Act.

2. The precise scope of the second sentence of art. 11 is not clear. Presumably it was intended to override any requirement under domestic law governing the proof of contracts not reduced to writing such as the "commencement de preuve" under the Quebec Civil Code. What is less clear is whether the sentence also permits the introduction of evidence to add to, vary, or contradict the terms of a writing contrary to the parol evidence rule of the common law.

Article 12

Any provision of article 11, article 29 or Part II of this Convention that allows a contract of sale or its modification or termination by agreement or any offer, acceptance or other indication of intention to be made in any form other than in writing does not apply where any party has his place of business in a Contracting State which has made a declaration under article 96 of this Convention. The parties may not derogate from or vary the effect of this article.

COMMENT

1. Art. 12 constitutes an important exception to Art. 11 and was included at the request of some states (notably the USSR) who felt that countries that regard writing as an essential prerequsite for the enforcement of a contract, or to prove its modification or termination, should be free to exclude Art. 12 and the other relevant provisions of CISG by means of a declaration made pursuant to Art. 96.

2. Three features should be noted about Arts. 12 and 96:

First, the declaration can only be made by a state whose legislation requires contracts of sale to be concluded in or evidenced by writing--it cannot therefore be made by jurisdictions such as British Columbia or the United Kingdom that have deleted writing requirements from their sales legislation or have never had it. (Qu. the position where the domestic law only requires writing for some types of sale?).

Secondly, Arts. 12 and 96 are not restricted to writing requirements concerning the contract of sale, its modification or termination but extend to any communication under Pt. II of this convention.

Thirdly, the declaration cannot embrace other types of communication, e.g., a declaration of avoidance of the contract pursuant to Arts. 26 and 59. Presumeably, however, it is open to a state to restrict its declaration to some of the matters enumerated in Art. 12.

Finally, it is not clear what the exact effect of a declaration will be. Obviously it will mean that a writing will be required, but how complete a writing and at what time? Will a signature be essential? Will a communication not in writing be a total nullity or only inadmissible in legal proceedings? Since CISG does not appear to answer these questions, one possibility would to say that the domestic requirements of the declaring state apply. However, this would create difficulties where the states of two or more contracting parties have filed declarations and their domestic writing requirements are not the same. Will they all have to be complied with?

4. In light of the above observations, it should be clear that Art. 12 creates as many difficulties as it purports to resolve (I have only mentioned some of them) and that, in Canada's case, the Provinces should be discouraged from asking for a declaration under Art. 12.

Article 13

For the purposes of this Convention "writing" includes telegram and telex.

COMMENT

Art. 13 was added at Vienna to ensure that "writing" was interpreted liberally conformably to modern means of communication. The definition in Art. 13 is not exhaustive and it is not clear whether the definition encompasses any "mechanical, electronic or other form of recording of information" (the definition adopted in s. 1.1(1).27 of the OLRC draft Revised Sale of Goods Act), or whether it requires some form of paper imprinted record. "Writing" is referred to or required inter alia in Arts. 29 and 97(2). Query whether the definition also applies to determine whether writing requirements under Art. 12 and 96 have been met where the domestic law of the declarant state has a narrower definition of writing. The answer presumeably is no since the purpose of Art. 12 is to enable a state to retain its own writing requirements for international contracts.

PART II

FORMATION OF THE CONTRACT

Article 14

(1) A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price.

(2) A proposal other than one addressed to one or more specific persons is to be considered merely as an invitation to make offers, unless the contrary is clearly indicated by the person making the proposal.

COMMENT

1. Article 14 is very helpfully analysed in the [Secretariat] Commentary to s. 12 of the draft convention (the original section number). It is only necessary therefore to draw attention to the following differences between Art. 14 and the common law and statutory rules obtaining in the common law Provinces:

(a) There is no common law requirement that the proposal must be addressed to one or more "specific" persons; it can be addressed to the world at large if that is the offeror's intention, as it frequently is in the case of unilateral contracts. Cf. Carlill v. Carbolic Smoke Ball Co. (1892) 2 Q.B. 484 (C.A.).

However, the strictness of art. 14 (1) is substantially qualified by the provision in 14(2) that a proposal not addressed to one or more specific persons may be treated as an offer if such an intention is "clearly indicated". [The [Secretariat] Commentary, p. 55, explains that art. 14(2) was adopted as a "middle position" between those legal systems that recognize public offices and those that do not.]

As a result the difference between the CISG and common law positions is substantially narrowed and is only one of presumption and the burden of proof.

(b) At first sight the second sentence of article 14(1) appears to depart substantially from the common law rule in so far as it requires, as a condition of the definiteness of an offer, that it must "expressly or implicity" fix or make provisions, inter alia, for determining the price. The common law rule, as reproduced in s.9 of the Sale of Goods Act, is that if the contract is silent with respect to the price an agreement to pay a reasonable price will be implied.

The requirement of a fixed price in Art. 14(1) is apparently derived from French law and was the subject of intensive debate at Vienna. The debate was complicated by the fact that Art. 51 of the draft convention contradicted what was then Art. 12(1), because it provided that if the contract does not expressly or impliedly make provision for the price, "the buyer must pay the price generally charged by the seller at the time of the conclusion of the contract."

The Francophone countries and delegates from a substantial number of developing states felt that Art. 12(1) was doctrinally sound and necessary to prevent buyers being confronted by sellers with unreasonable prices after the goods had been delivered, and that Art. 51 should be amended to make it consistent with Art. 12(1). Other delegates felt just as keenly that Art. 12(1) was too rigid and needed the ameliorating touch of Art. 51. A compromise was eventually hammered out. Art. 12(1) was retained without change but Art. 51 (now Art. 55) was amended to read as follows:

"Where a contract has been validly concluded but does not expressly or implicitly fix or make provision for determining the price, the parties are considered, in the absence of any indication to the contrary, to have impliedly made reference to the price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the trade concerned."

Article 15

(1) An offer becomes effective when it reaches the offeree.

(2) An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer.

COMMENT

1. It is not clear to what extent the common law rules of offer differ from the rule in art. 15(1). The common law rule is that an offer cannot be accepted until the offeree learns of it [Cheshire & Fifoot, The Law of Contract, 7th ed., pp. 45-46] but it is not clear whether he must learn of it in the manner intended by the offeror. Art. 15(1) states that an offer is not "effective" until it reaches the offeree. "Reaches" is defined in art. 24 (formerly art. 22) and is interpreted in the [Secretariat] Commentary (p. 71) to mean that "an offeree who learns of an offer from a third person prior to the moment it reaches him may not accept the offer until it has reached him" If this is correct, a purported acceptance by the offeree will be a nullity and the offeror may withdraw even an irrevocable offer at any time before it reaches the offeree.

2. Art. 15(2) deals with the unusual situation where the withdrawal of an offer reaches the offeree before or at the same time as the offer. The meaning of "at the same time" is not defined and could be of importance if the two communications are only separated by minutes and the offer purports to be irrevocable. Presumably a tribunal will be guided by the underlying rationale of 15(2) and (quaere) by whether or not the two communications might be expected to come to the attention of a responsible officer of the offeree at the same time.

Article 16

(1) Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance.

(2) However, an offer cannot be revoked:

(a) if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or

(b) if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer.

COMMENT

1. Three aspects of Art. 16 call for consideration:

(a) Notice to offeree where offer made to the public. Art. 16(1) seems to require that the revocation must actually reach the offeree even where the offer is made to the public. This seems inconsistent with art. 14(2) which, as has been noted, does recognize the validity of offers made to non-specific persons if this was the intention of the person making the proposal. Presumably the meaning of "reaches" must be relaxed accordingly and, in the case of an offer made to the public, or a part thereof, an offer will be effectively revoked if reasonable steps are taken to bring it to the attention of the offerees. [Gaston, para. 34].

(b) Binding character of offer stated to be irrevocable. The Anglo-Canadian common law is exceptional in not recognizing the binding character of an offer stated to be irrevocable unless it is supported by consideration. The reversal of the rule was recommended before the war by an English Law Reform Committee and has been recommended again in a recent Working Paper by the English Law Commission [Firm offers: Working Paper No. 60 (1975)] if the firm offer is made in the course of a business. UCC 2-205 also recognizes the binding character of a firm offer by a merchant for a maximum period of three months and provided it is made in a signed writing. A similar, though not identical, recommendation appears in the OLRC Sales Report, pp. 91-95.

In view of these precedents, there is nothing startling about art. 16(2)(a) and it can be accepted as reflecting modern thinking in the common law as well as the non-common law legal community.

(c) Reasonable reliance by offeree. Art. 16(2)(b) has no clear counterpart in the Canadian common law though there is evidence that some courts may be moving in the same direction by penalizing an offeror who acts in bad faith. Art. 16(2)(b) is also supported by section 89B(2) of the Tent. Rest. 2d on Contracts (American Law Institute, Tent. Drafts Nos. 1-7, 1973), which reads:

"89B. (2) An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice."

Since it is often in the interests of the offeror that the offeree should have a reasonable opportunity to determine whether or not to accept the offer, the implication of a firm offer as provided in Art. 16(2)(b) seems to be a fair interpretation of the offeror's intention. Whether the implication should be drawn in a particular case will of course depend on all the circumstances, including the relevant trade practices and usages.

Article 17

An offer, even if it is irrevocable, is terminated when a rejection reaches the offeror.

COMMENT

The common law rule is the same as art. 17 in the case of revocable offers. The standard Anglo-Canadian textbooks on contracts do not discuss the effect of the rejection of an irrevocable offer before the period of the offer has expired, but the implication appears to be that it makes no difference. [See however, contra, s. 35A of the Rest. Contracts 2d, which deals with the termination of a power of acceptance under an option contract and assimilates a rejection of the offer or a defective acceptance with the rules generally governing the termination of agreements.]

At any rate, that is the position of art. 17 and it appears to me to be a sensible position. The question of what amounts to a rejection is dealt with in art. 19.

Article 18

(1) A statement made by or other conduct of the offeree indicating assent to an offer is an acceptance. Silence or inactivity does not in itself amount to acceptance.

(2) An acceptance of an offer becomes effective at the moment the indication of assent reaches the offeror. An acceptance is not effective if the indication of assent does not reach the offeror within the time he has fixed or, if no time is fixed, within a reasonable time, due account being taken of the circumstances of the transaction, including the rapidity of the means of communication employed by the offeror. An oral offer must be accepted immediately unless the circumstances indicate otherwise.

(3) However, if, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, the offeree may indicate assent by performing an act, such as one relating to the dispatch of the goods or payment of the price, without notice to the offeror, the acceptance is effective at the moment the act is performed, provided that the act is performed within the period of time laid down in the preceding paragraph.

COMMENT

1. The first sentence of Art. 18 possibly goes further than the common law since it fails to take into account a particular mode or place of acceptance prescribed by the offeror. The common law rule is that the offeror is master of his offer and hence is entitled to require such mode and place of acceptance as he deems fit. However, nowadays the courts are relucant to find that an indicated mode of acceptance was intended to be the exclusive mode. Cf. Waddams, op. cit., pp. 63-64, and UCC 2-206(1).

2. Paragraph (2) adopts the reception theory of acceptance common to many civil law jurisdictions, and not the postal theory of the common law. Both rules are defensible and merchants in common law jurisdictions should have no difficulty in adjusting to the reception rule. In any event it is not uncommon for an offer to stipulate that an acceptance is not effective until it reaches the offeror.

3. There is a dearth of Anglo-Canadian authority with respect to the circumstances in which an offer may be accepted by performance or part performance where the offer itself is silent with respect to the question. Art. 18(3) is not too helpful since it merely refers us back to the offer or the parties' practices or the usages of the trade in which they are engaged. UCC 2-206 and section 29 of the American Second Restatement on the Law of Contracts (Tent. Draft) permit acceptance "in any manner and by any medium reasonable in the circumstance" including, it would seem, performance of the requested act. UCC 2-206(1)(b) further provides that: "an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship by the prompt or current shipment of conforming ... goods, ...".

The [Secretariat] Commentary (p. 64) to the draft convention indicates that its authors envisage a similar result under art. 18(3).

4. Art. 18(3) raises two other questions:

(a) If the offeree is entitled to accept by performance must he give notice of his election to the offeror where the offeror is not otherwise likely to learn promptly of the election? UCC 2-206(1)(b) says yes, and presumably the same conclusion would be reached under the good faith provisions of art. 7.

(b) Can the beginning of a requested performance constitute an acceptance? UCC 2-206(2) clearly acknowledges the possibility provided prompt notice of the acceptance is given to the offeror. To the same effect, see Restatement on Contracts 2d, s. 63. Semble, the Anglo-Canadian cases have so far only considered the problem in the context of unilateral contracts. See e.g., Errington v. Errington (1952) 1 K.B. 290 (C.A.); Sloan v. Union Oil of Canada Co. Ltd. (1955) 4 D.L.R. 664 (B.C.). The CISG [Secretariat] Commentary (p. 64) recognizes that commencement of requested performance may be a sufficient act of acceptance. The conclusion is supported by the language of art. 18(3), which merely requires assent by performing "an act". This is different from requiring full performance.

Article 19

(1) A reply to an offer which purports to be an acceptance but contains additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer.

(2) However, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially alter the terms of the offer constitutes an acceptance, unless the offeror, without undue delay, objects orally to the discrepancy or dispatches a notice to that effect. If he does not so object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance.

(3) Additional or different terms relating, among other things, to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or the settlement of disputes are considered to alter the terms of the offer materially.

COMMENT

1. The rule in paragraph (1) corresponds to the common law rule on the effect of an acceptance containing variant terms. See e.g., Hyde v. Wrench (1840) 49 E.R. 132, Waddams, op. cit., p. 73.

2. Paragraph 2 contains a very modest exception to the "mirror image" rule prescribed in paragraph 1, and does not come to grips with the thornier aspects of the "battle of the forms" so much discussed in American literature. See OLRC Sales Report, pp. 81-86. In particular art. 19 does not indicate whether there is a binding contract where the parties have proceeded to perform although their writings are in conflict and, if there is, whose terms will prevail. UCC 2-207 has attempted to provide some guidance but its provisions have engendered much litigation and dissension. Other jurisdictions have been no more successful in finding satisfactory answers to this intractable problem. Given this circumstance, CISG was probably wise not to rush in where angels fear to tread but to leave it to the courts to work out the answers on a case by case basis.

Article 20

(1) A period of time for acceptance fixed by the offeror in a telegram or a letter begins to run from the moment the telegram is handed in for dispatch or from the date shown on the letter or, if no such date is shown, from the date shown on the envelope. A period of time for acceptance fixed by the offeror by telephone, telex or other means of instantaneous communication, begins to run from the moment that the offer reaches the offeree.

(2) Official holidays or non-business days occurring during the period for acceptance are included in calculating the period. However, if a notice of acceptance cannot be delivered at the address of the offeror on the last day of the period because that day falls on an official holiday or a non-business day at the place of business of the offeror, the period is extended until the first business day which follows.

COMMENT

1. Paragraph (1) provides some sensible rules to determine the commencement of the period of time during which an offer can be accepted and appears to be unobjectionable from a common law point of view.

2. Paragraph (2) is a logical corollary to the reception rule for acceptances adopted in art. 18(2). Since the acceptance is not effective until it reaches the offeror some provision is necessary where the last day for acceptance is a non-business day or an official holiday at the offeror's place of business. The practical effect of art. 20(2) appears to be to extend the period for acceptance by at least one day where the notice of acceptance cannot be delivered. It may of course be longer depending on the circumstances.

Article 21

(1) A late acceptance is nevertheless effective as an acceptance if without delay the offeror orally so informs the offeree or dispatches a notice to that effect.

(2) If a letter or other writing containing a late acceptance shows that it has been sent in such circumstances that if its transmission had been normal it would have reached the offeror in due time, the late acceptance is effective as an acceptance unless, without delay, the offeror orally informs the offeree that he considers his offer as having lapsed or dispatches a notice to that effect.

COMMENT

1. Paragraph (1) deals with the effect of a late acceptance and gives the offeror the option of treating it as an effective acceptance if he so notifies the offeree. I am not aware of any Anglo-Canadian authority that has adopted a similar rule, but it is a reasonable rule and can be justified by analogy with the rule that an acceptance containing variant terms is a counter-offer. Note however that under art. 21(1) the late acceptance takes effect from the date of its receipt and not from the time when the offeror communicates with the offeree.

2. The common law has no counterpart to the rule in art. 21(2), and has no need for it, because of its postal theory of acceptance for letters. Art.21(2) mitigates the rigour of the reception rule and protects the offeree's reasonable reliance interests where he has no reason to anticipate that his acceptance will not reach the offeror on time.

Article 22

An acceptance may be withdrawn if the withdrawal reaches the offeror before or at the same time as the acceptance would have become effective.

COMMENT

1. Article 22 is the counterpart to art. 15 on the effect of a simultaneous offer and its withdrawal and complements the rule in art. 18(2) that an acceptance is effective when it reaches the offeror.

2. The meaning of "at the same time" raises the same questions as in art. 15, which see.

Article 23

A contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convention.

COMMENT

The common law rule is the same as the rule stated in art. 23. Art. 23 fails to deal with the situation where the precise time of acceptance cannot be readily established, as in the well known case of Brogden v. Metropolitan Ry Co. (1877) 2 A.C. 666 (H.L.) There is no doubt that a binding agreement exists in such a case and the same is presumably true under the Convention.

Article 24

For the purposes of this Part of the Convention, an offer, declaration of acceptance or any other indication of intention "reaches" the addressee when it is made orally to him or delivered by any other means to him personally, to his place of business or mailing address or, if he does not have a place of business or mailing address, to his habitual residence.

COMMENT

1. Art. 24 is a definition section and is a necessary complement to the Convention's adoption of the reception rule to determine the time of effectiveness of acceptances and other communications.

2. Art. 24 applies a uniform rule to the communication of all types of intention governed by Part II of this convention, including acceptances. As previously indicated, this may conflict with the common law rule that an offeror is master of his offer and is free to determine how and when his offeror may be accepted. See Waddams, op. cit., p. 63. Where an offeror has evinced an intention that an offer must be accepted in a given way presumeably, that will be sufficient to override the presumptive effect of art. 24. See art. 6.

3. The reception rule in art. 24 should be contrasted with the dispatch rule adopted in art. 26 for communications required under Part III of the convention. There the communication is effective from the time of its dispatch and the risk of non-arrival or late arrival lies with the recipient.

PART III

SALE OF GOODS

Chapter I

GENERAL PROVISIONS

Article 25

A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result.

COMMENT

1. Article 25 is a key article because the remedies of the buyer and seller under CISG turn on the character of the breach involved. Generally speaking, if the breach is fundamental the aggrieved party is entitled to avoid the contract; if it is not, he is remitted to a claim in damages although in appropriate circumstances he may also be entitled to seek an order for specific performance. See art. 49,64.

2. The common law rules are different and more complex. The OSGA adopts an a priori system of classification into warranties and conditions with respect to the implied terms of title, description, merchantability, fitness and sale by sample. The breach of a condition, as thus defined, prima facie entitles the aggrieved buyer to reject the goods and avoid the contract, even though the actual breach is minor in character. (In the interests of conciseness I ignore the important qualifications to this rule in ss. 12 and 34-35). With respect to stipulations as to time, s. 11 provides that, unless a different intention appears from the terms of the contract, stipulations as to time of payment are not of the essence and that whether any other stipulation as to time is of the essence of the contract depends on the terms of the contract. So far as other express terms of the contract of sale are concerned, it was for a long time assumed that they would also have to be classified a priorily into warranties and conditions regardless of the severity of the breach.

However, the contrary was held in Cehave N.V. v. Bremer H.G. (1976) Q.B. 44, and as a result of this and other decisions [in particular, Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen (1976) 1 W.L.R. 989 (H.L.)] many observers now detect a trend to bring the law of sales into closer alignment with the general rules governing the consequences of a breach of contract as laid down in the Hong Kong Fir Shipping Co. case [Hong Kong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. (1962) 2 Q.B. 26 (C.A.)]. This is that they should be governed by the severity of the breach and not turn on the a priori classification of the term breached.

3. It will be seen therefore that the remedial regime adopted in CISG is not fundamentally opposed to the rules in other branches of Anglo-Canadian contract law and the integrative movement observable in the law of sales. Some lawyers may regret the loss of certainty provided by a system of classification into warranties and conditions, but others will argue that the certainty is bought at too high a price. Mercantile practice itself, with the possible exception of stipulations as to time in the international commodities trade, seems to support the CISG approach. In any event, CISG does not leave the parties adrift in a sea of uncertainty. First, so far as time is concerned, CISG has borrowed the German concept of Nachfrist which enables the aggrieved party to treat a delay in performance as a fundamental breach if the breach is not cured within a reasonable time after notice. [See CISG 47, 63]. Secondly, the parties are always free to make other arrangements with respect to the consequences of a breach and will no doubt frequently do so where stipulations as to time are concerned.

4. I therefore support the CISG approach. However this does not end the inquiry and it needs to be further asked what types of breach should be sufficient to entitle the aggrieved party to avoid the contract and whether it is appropriate to describe such a breach as a fundamental breach. For the purposes of art. 25 a breach is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract unless he could not reasonably have foreseen such a result. This test is substantially more stringent than the test in the original version of art. 25. This merely required proof of "substantial" detriment to the other party. The change was adopted at Vienna, presumably to accommodate the sentiment that an aggrieved person should only be entitled to avoid a contract for very serious breaches.

5. In my view, the new test is too severe and will make it very difficult in practice for a seller or buyer (but particularly a buyer) to cancel a contract because of defective performance by the other. The other common law delegates at the Vienna Conference were not as disturbed by the change as I was and seemed to feel that verbal formulae do not much matter since they are all subject to interpretation by the courts. I am not as sanguine and still feel that the definition will lead to undesireable results. However, it should be borne in mind that the parties are free to adopt their own definition and in practice it is very common for seller to limit, or even exclude entirely, the buyer's right to reject defective goods and to cancel the contract.

Article 26

A declaration of avoidance of the contract is effective only if made by notice to the other party.

COMMENT

1. "Avoidance" is used in CISG in the sense of cancellation for cause. Cf. UCC 2-106(4), 2-703(f), 2-711(1). "Avoidance" is generally used in Anglo-Canadian law in the context of contracts induced by the misrepresentation or other misconduct of one of the parties rather than to describe the remedy available for breach of a contractual obligation. However, CISG's use of the term seems to me quite acceptable and not likely to cause confusion even among common law lawyers.

2. The OSGA contains no general notice provision corresponding to art. 26. There is an express notice requirement in OSGA 46(2) with respect to the right of resale of an unpaid seller and an implied notice requirement in OSGA 34 involving the buyer's right to reject non-conforming goods. Other situations will be governed by common law principles. The general common law rules are (a) that the party in breach cannot unilaterally terminate the agreement without the consent of the other party [cf. Decro-Wall International S.A. v. Practitioners in Marketing Ltd. (1971) 2 All E.R. 216 (C.A.)]; and (b) that a party who is entitled to elect among two or more remedies must communicate his election to the other party. In other words, the common law, like CISG, does not recognize a doctrine of ipso facto avoidance. There may be circumstances when, at common law, the aggrieved party may have no option but to treat the contract as avoided: for example, where the other party has become bankrupt or, in the case of a sale of specific goods, the goods have been destroyed owing to the seller's fault. In such cases the aggrieved party would not be electing a remedy and a notice requirement would make little sense. It is not clear whether CISG envisages a different result, i.e., whether a declaration of avoidance is always necessary. Cf. arts. 49. 64. Even if the answer is yes, the difference would not appear to be of great practical importance given the fact that no formal requisites are prescribed for the giving of a notice of avoidance. See art. 27.

Article 27

Unless otherwise expressly provided in this Part of the Convention, if any notice, request or other communication is given or made by a party in accordance with this Part and by means appropriate in the circumstances, a delay or error in the transmission of the communication or its failure to arrive does not deprive that party of the right to rely on the communication.

COMMENT

1. The provincial Sale of Goods Acts contain no corresponding provision but the Code has a similar provision in UCC 1-201(26), meaning of "notifies" or "gives" a notice.

2. As previously noted "Art. 27 adopts a dispatch theory for communications under this Part of the Convention as contrasted with the receipt rule adopted under Part II. I think the distinction can be justified. Part II is concerned with communications during the formative phase of a contract where neither party has committed a breach. Art. 27 only applies after a contract has been concluded and where, generally speaking, a breach has occurred. It is not unreasonable therefore that the breaching party should run the risk of a communication not reaching him or not reaching him on time. In any event Part III is not inflexible and contains many exceptions to the general rule in Art. 27. See Arts. 47(2), 48(4), 63(2), 65(1), 65(2), and 70(2)."

Article 28

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.

COMMENT

1. Art. 28 is based on a similar provision in ULIS 16. The common law and equitable rules for the granting of an order for specific performance (or, its equivalent, judgment for the price in an action by this seller) are contained in ss. 47 and 50 of the OSGA and are much narrower than those recognized, for example, under German or French law [see Dawson, "Specific Performance in France and Germany" (1959) 57 Mich. L. Rev. 495]. The CISG draftsmen, like their predecessors, felt that national courts could not be expected to alter "fundamental principles of their judicial procedure" to accommodate CISG. [[Secretariat] Commentary, p. 77]. This seems reasonable enough. For further discussion of Art. 28, see Comment to art. 46.

2. A small but significant change to art. 28 was made at Vienna. The draft version provided that a court was not bound to make an order for specific performance unless the court "could" do so under its own law. The American delegation felt "could" was too loose since a common law court always possesses the power to make an order for specific performance: what was important, in their view, was whether the order would be made in fact. To accommodate the American concern, "could" was changed to "would".

Article 29

(1) A contract may be modified or terminated by the mere agreement of the parties.

(2) A contract in writing which contains a provision requiring any modification or termination by agreement to be in writing may not be otherwise modified or terminated by agreement. However, a party may be precluded by his conduct from asserting such a provision to the extent that the other party has relied on that conduct.

COMMENT

1. At common law an agreement modifying the terms of an agreement is not binding unless supported by consideration. There are exceptions of varying importance to this rule [e.g., modifications under seal, statutory provisions such as those in the Mercantile Law Amendment Act, R.S.O. 1970, c. 272, s. 16, and, above all, the doctrine of equitable estoppel] - some statutory in origin, others developed by the courts themselves - but the principle itself still applies. The requirement of consideration creates particular difficulties in the so called "duty" cases, i.e., where the seller waives payment of part of the price, or the buyer agrees to pay more than the contractual price [see e.g., Gilbert Steel Ltd. v. University Construction Ltd. (1973) 3 O.R. 286, aff'd 67 D.L.R. (3d) 606 (C.A.)] in consideration of the other party performing his obligations.

2. The common law rule has been widely criticized and it has been abolished in UCC 2-209(1). The OLRC Sales Report also recommends its reversal. Art. 29(1) is not therefore nearly as radical as may appear at first sight and should arouse no concerns.

3. Presumably art. 29(1) is subject to a requirement of good faith on the strength of either art. 7(1) or art. 7(2). Though not expressly required under UCC 2-209(1), the official comment assumes its existence [UCC 2-209, Comment 2] and arguably good faith may be required at common law even in those cases where consideration exists. [cf. "The Atlantic Baron" (1978) 3 All E.R. 1170].

4. The first sentence of art. 29(2) corresponds to UCC 2-209(2), although the Code provision is more circumscribed. A clause requiring modifications to the written contract to be in writing is valid at common law but its effectiveness must be judged in the light of the doctrine of equitable estoppel.

5. The second sentence of art. 29(2) introduces an important, and very necessary, qualification to the rule in the first sentence. A similar qualification is recognized at common law [cf. Hartley v. Hymans (1920) 3 K.B. 475; Chas. Richard Ltd. v. Oppenheim (1950) 1 K.B. 616 (C.A.)] and in UCC 2-209(4). No doubt there may be arguments about the "extent" to which the other party has relied "on that conduct" in a particular case, but this difficulty seems to me unavoidable.

OBLIGATIONS OF THE SELLER

Article 30

The seller must deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract and this Convention.

COMMENT

Art. 30 corresponds to OSGA 26 and UCC 2-301 and, like its common law counterparts, merely states the obvious. The purpose of art. 30 is to set the stage for the more particularized rules on delivery and the required character of the goods set forth in the succeeding chapters.

SECTION I.

Article 31

If the seller is not bound to deliver the goods at any other particular place, his obligation to deliver consists: (a) if the contract of sale involves carriage of the goods - in handing the goods over to the first carrier for transmission to the buyer;

(b) if, in cases not within the preceding subparagraph, the contract relates to specific goods, or unidentified goods to be drawn from a specific stock or to be manufactured or produced, and at the time of the conclusion of the contract the parties knew that the goods were at, or were to be manufactured or produced at, a particular place - in placing the goods at the buyer's disposal at that place;

(c) in other cases - in placing the goods at the buyer's disposal at the place where the seller had his place of business at the time of the conclusion of the contract.

COMMENT

1. Art. 31 corresponds to OSGA 28 and UCC 2-308 and contains some very elementary rules about the place of delivery where the contract of sale contains no contrary provisions. Delivery is not defined in art. 31 but presumably has the same meaning as in OSGA 1(1)(d), viz. the voluntary transfer of possession of the goods. In international contracts of a commercial character it is most unlikely that the contract will not spell out the delivery terms more fully; hence art. 31 is not likely to be of great practical importance.

2. (a) Art. 31(a) involves a shipment contract, i.e., a contract obligating the seller to deliver the goods for transmission to the buyer or the buyer's order. In practice, the seller's shipping obligations will be much more precisely specified in terms of a recognized trade term such as "f.o.b.", "c.&.f." or "c.i.f." named place of shipment. CISG, like the OSGA, neither refers to such delivery terms nor attempts to define them. The Code does both: see UCC 2-319 to 2-323, and UCC 2-509.

(b) Art. 31 (b) corresponds to OSGA 28(1) and UCC 2-308(b), but is wider than both in so far as it covers future goods - goods to be manufactured or produced at a particular place - and goods to be drawn from a specific stock as well as specific goods.

(c) Art. 31 (c) embraces the residuary category and corresponds to OSGA 28(1) and UCC 2-308(a). Art. 31(c) only refers to the seller's place of business, but it is clear from art. 9(b) that this includes the seller's habitual residence where the seller has no place of business. Hence there is no difference between CISG and the OSGA and Code provisions on this score.

Article 32

(1) If the seller, in accordance with the contract or this Convention, hands the goods over to a carrier and if the goods are not clearly identified to the contract by markings on the goods, by shipping documents or otherwise, the seller must give the buyer notice of the consignment specifying the goods.

(2) If the seller is bound to arrange for carriage of the goods, he must make such contracts as are necessary for carriage to the place fixed by means of transportation appropriate in the circumstances and according to the usual terms for such transportation.

(3) If the seller is not bound to effect insurance in respect of the carriage of the goods, he must, at the buyer's request, provide him with all available information necessary to enable him to effect such insurance.

COMMENT

1. Art. 32 specifies the seller's obligations under a shipment contract and is unremarkable. Comparable, though not identical provisions, are found in s.31 of the Ontario Act and its provincial counterparts, and in UCC 2-504. The Ontario and Code provisions are discussed in the OLRC Sales Report at pp.338-341.

2. Art. 32 like the other articles with respect to the seller's delivery obligations only applies in the absence of contrary agreement between the parties. In practice, the agreement will spell out the seller's delivery obligations quite precisely by adopting an established shipment term (e.g., F.O.B., C.I.F., C. & F.) and less frequently by incorporating the INCOTERMS of the International Chamber of Commerce or the definitions in UCC 2-319 et seq. As a result the need to rely on art. 32, is not often likely to arise in practice.

Article 33

The seller must deliver the goods:

(a) if a date is fixed by or determinable from the contract, on that date;

(b) if a period of time is fixed by or determinable from the contract, at any time within that period unless circumstances indicate that the buyer is to choose a date; or

(c) in any other case, within a reasonable time after the conclusion of the contract.

COMMENT

1. Art. 33 deals with the time of delivery. Paragraphs (a) and (b) deal with the construction of the agreement where a date or period of time is fixed by or determinable from the contract. Paragraph (c) is concerned with cases where the contract itself prescribes no time.

2. The provincial Sale of Goods Act contain no provisions exactly corresponding to paragraphs (a) and (b), but since they state no more than the obvious this should make no difference. If a statutory text is needed to justify this conclusion, it can be found in OSGA 26 providing that "it is the duty of the seller to deliver the goods ... in accordance with the terms of the contract of sale." Art. 33(c) finds its counterpart in OSGA 28(2).

3. Art. 33 does not deal with the consequences of a delayed or late delivery. This is dealt with in Art. 47 and 49.

Article 34

If the seller is bound to hand over documents relating to the goods, he must hand them over at the time and place and in the form required by the contract. If the seller has handed over documents before that time, he may, up to that time, cure any lack of conformity in the documents, if the exercise of this right does not cause the buyer unreasonable inconvenience or unreasonable expense. However, the buyer retains any right to claim damages as provided for in this Convention.

COMMENT

1. Article 34 is merely an expansion of the seller's basic obligations announced in art. 30, but lacks the detail contained in the preceding articles on the seller's delivery obligations with respect to the goods themselves. Presumably it was thought that the subject is already adequately covered in such well known and widely accepted terms as the International Chamber of Commerce's INCOTERMS and its Uniform Customs and Practice for Documentary Credits (ICC Pub. No. 274 and 290).

SECTION II. Conformity of the goods and third party claims

Article 35

(1) The seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract.

(2) Except where the parties have agreed otherwise, the goods do not conform with the contract unless they:

(a) are fit for the purposes for which goods of the same description would ordinarily be used;

(b) are fit for any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the contract, except where the circumstances show that the buyer did not rely, or that it was unreasonable for him to rely, on the seller's skill and judgement;

(c) possess the qualities of goods which the seller has held out to the buyer as a sample or model;

(d) are contained or packaged in the manner usual for such goods or, where there is no such manner, in a manner adequate to preserve and protect the goods.

(3) The seller is not liable under subparagraphs (a) to (d) of the preceding paragraph for any lack of conformity of the goods if at the time of the conclusion of the contract the buyer knew or could not have been unaware of such lack of conformity.

COMMENT

1. From a practical point of view, art. 35 is one of the most important articles in Part III of the Convention. Paragraph (1) of art. 35 states the seller's express obligations with respect to the quantity, quality, and description and packaging of the goods and really only states the obvious. Paragraph (2) addresses itself to the seller's implied obligations with respect to the general and particular fitness of the goods, their packaging, and their required qualities where there is a sale by sample or model. These obligations are only presumptive and are displaced to the extent that the parties "have agreed otherwise". One important example of such displacement is given in paragraph (3), viz. where at the time of the conclusion of the contract the buyer knew or could not have been unaware of such non-conformity.

2. The corresponding provisions are to be found in OSGA ss. 14, 15 16, and 55 and its provincial counterparts. There are close resemblances between the CISG provisions and the provincial provisions but there are also some material differences. There are also some unanswered questions. A detailed comparison would require a lengthy exposition: in