Reproduced with permission from the author and 15 Journal of Law and Commerce (1995) 1-126

Franco Ferrari [*]

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The Examination and Notification in Case of Non-Conformity of the Goods

One of the most important issues of the CISG -- apart, of course, from its applicability -- appears to be the issue of the examination of the goods bought and the notice to be given to the seller in case of non-conformity of the goods, [686] for which the CISG provides an exhaustive set of rules [687] derived from its predecessor, the ULIS. [688]

The complexity as well as the importance of this issue [689] becomes apparent, if one considers the consequences of the lack of a proper notification, an issue which was very much debated during the 1980 Diplomatic Conference, [690] as evidenced by the Official Records of the United Nations Conference. [691] According to the wording of Article 39 CISG, [692] it appears that the failure to give proper notice not only "would bar the full range of remedies: a claim for damages (Art. 45(1)(b) and 74-77), requiring performance by the seller (Art. 46), avoidance of the contract (Art. 49) and reduction of the price (Art. 50)," [693] but also that it would exclude all claims after two years, independently from whether the non-conformity was discoverable during that time. [694] However, Article 39 cannot be considered alone. [695] Indeed, the CISG contains two provisions, Articles 40 [696] and 44, [697] which mitigate the rigor of the foregoing provision and which were introduced upon the insistence of the developing countries, [698] which considered the loss of all rights and the absolute exclusion of all claims after two years as being too harsh a solution. [699] This is why one will focus not only on Article 39, but also on the articles with which it is interrelated, such as the aforementioned ones, as well as Article 38, which stresses the importance of a timely examination of the goods, which, however, is relevant "only for the preparation of the notification that Article 39 requires." [700]

At this point, it is important to examine when the buyer is required to notify sellers of the lack of conformity. In this regard, it has been said that the concept of "lack of conformity" [701] relevant under Article 39 CISG is to be derived from Article 35 CISG. [702] According to this provision, [703] there is lack of conformity, [704] for example, when there is a defect in quality, as in cases [705] where shoes bought do not have the color agreed upon in the contract [OLG Frankfurt (Germany) 18 January 1994], [706] or where their front part has an ornament the parties had not agreed upon [LG Aachen (Germany) 3 April 1990]. [707] However, according to a very recent German Supreme Court decision [BGH 8 March 1995], there is no lack of quality where mussels bought contain a quantity of a dangerous substance higher than that indicated as a limit by the government of the country where the buyer has its place of business. [708]

Furthermore, there is lack of conformity, not unlike under the ULIS, [709] where there is a defect in respect of the quantity, the description and the packaging of the goods, [710] independently from the circumstances originating the defects. [711] And even though Article 39 CISG merely refers to the "lack of conformity of the goods," it is here suggested that the notice requirement also applies where the defect relates to the documents rather than to the goods themselves, [712] not unlike under the ULIS, on the grounds not only that "the Convention is drafted on the assumption that goods will often be delivered by way of documents," [713] but also because otherwise Article 34 CISG, [714] which allows for the seller's right to cure any lack of conformity in the documents, would have only scarce value. [715]

Quid iuris where the seller delivers an aliud, i.e., goods quite different from those specified in the contract? Does the buyer in this case have to notify the seller in order not to lose the right to rely on the lack of conformity? Under the ULIS, this question did not cause any difficulties, since Article 33(b) ULIS [716] expressly stated that the delivery of an aliud could be analogized to the delivery of non-conforming goods. [717] Even though the CISG does not expressly provide for a similar solution, it must not be doubted that the notification requirement applies in this line of cases as well. [718] Thus, "[n]otification must also be given where entirely different goods are delivered." [719] A different solution would contrast with the ratio of Article 39 CISG: the seller has to be put in a position where he can examine the goods to ascertain whether a claim is justified and, if so, cure any lack of conformity. [720]

[Note that several recent court decisions have stated that the ratio behind Article 39 CISG is the need for the seller to be put in a position to know whether his claim for the payment of the price can be barred by any counterclaim, see, e.g., [BGH (Germany) 8 March 1995; OLG Düsseldorf (Germany) 8 January 1993.]

Before discussing the time requirement for a proper notice as laid down in Article 39 CISG, it is useful to focus, at least briefly, on Article 38 CISG, this Article being prefatory to Article 39. [721] Indeed, it is Article 38 [722] which, by laying down the rule according to which the buyer must examine the goods, or cause them to be examined, within as short a period of time as is practicable under the circumstances of the case, sets forth the time when the buyer ought to have discovered the defect [OLG Düsseldorf (Germany) 8 January 1993], [723] i.e., the time after the lapse of which the buyer has only a reasonable period of time within which to notify the seller of the lack of conformity in order not to lose his rights. [724] It must be pointed out, however, that even though the examination of the goods generally constitutes a prerequisite for the application of the notice requirement, the lack thereof does not per se [725] lead to the loss of the buyer's rights, [726] not unlike under the ULIS. [727] This is true, for instance, where the buyer does not inspect the goods and the lack of conformity cannot be discovered by examining the goods. [728] The contrary is true, too: "[i]f the buyer discovers a non-conformity without examining the goods, he . . . has to notify the seller." [729]

As far as the period of time is concerned within which the inspection must occur, it must be pointed out that Article 38 CISG, not unlike its predecessor, Article 38 ULIS, does not fix a specific time limit. [730] However, the CISG's period of time differs from that provided for by Article 38 ULIS according to which the examination had to be made "promptly," [731] since it requires that the inspection be made within a "short period." [732] Contrary to what statements made by various commentators have suggested, [733] an immediate examination is not necessary, [734] although it surely would avoid all doubts [LG Aachen (Germany) 3 April 1990]. [735]

From what has just been said, it follows that one should refrain from applying solutions elaborated in respect of the time requirement set forth in Article 38 ULIS to that laid down in Article 38 CISG. [736] Indeed, whereas the ULIS formula gave the same (very short and rigid) [737] indication for every case and, thus, lacked flexibility, [738] "the [1980] Convention has adopted a more flexible criterion than ULIS, because it allows an appropriate reference to different situations." [739] This does not mean, however, that all circumstances must be taken into consideration, but only the objective ones. [740] Therefore, "[i]mpediments relating personally to the buyer or to those in charge of examining the goods are not relevant," [741] unlike a general strike which, for instance, must be considered as being relevant under Article 38 CISG. [742] In respect of the goods bought, the aforementioned rule results not only in the "short period" for inspection being longer where the goods to be examined are -- from a technological point of view -- more sophisticated, [743] but also in its being shorter where the goods bought are perishable. [744]

As far as the inspection itself is concerned, the period for which commences generally [745] after the receipt of the goods, [746] Article 38 CISG does not specify what criteria should be used. However, from the legislative history as well as from the text of Article 38 itself, it can be derived that, unlike under the ULIS, [747] the criteria for inspection cannot be based upon "the law or usage of the place where the examination takes place,'' [748] mainly because of the international nature of the contract. [749] As far as the standard for inspection is concerned, it has also been suggested that the buyer (or someone of his staff or even a third person authorized to do so) [750] does not have to make extraordinary efforts; [751] it is sufficient that in inspecting the goods he employs the skills of a reasonable person of the same kind, [752] i.e., of a reasonable person involved in a contract of the same type in the particular trade concerned. [753] Indeed, "a party would not be expected to discover a lack of conformity of the goods if he neither had nor had available the necessary technical facilities and expertise, even though other buyers in a different situation might be expected to discover [the] lack of conformity." [754] However, where previous deliveries of the same goods by the same seller lacked conformity, the standard in inspecting the goods has to be higher, as pointed out by a German court [LG Stuttgart 31 August 1989]. [755]

As mentioned above, [756] from the time he discovers or ought to have discovered the lack of conformity, the buyer must send [757] notice of it to the seller "within a reasonable time.'' [758] But what is a "reasonable time" under Article 39 CISG? It is here suggested that the "reasonable time" cannot be analogized to the period of time required under Article 39(1) ULIS, [759] which asked for a "prompt" notification. Indeed, the time requirement of ULIS was shorter. [760] This is why one must be careful in using case decisions rendered in applying the ULIS. [761] In this respect, two basic rules can be established: (a) a notice which under the ULIS was considered late, does not necessarily have to be considered as being late under the CISG; (b) a notice considered to be given in time under the ULIS is to be considered in time under the CISG as well.

However, the CISG time requirement is not only more generous from a temporal point of view, but it is also more flexible than that of the ULIS. [762] Indeed, in determining the "reasonable time" one must have regard to the circumstances of the case, [763] for instance whether the buyer intends to reject the goods or keep them and claim damages. [764] In determining the period of time de quo, other circumstances have to be taken into account as well, [765] such as the perishability of the goods. [766] Indeed, where the goods are perishable, the "reasonable time" period must be shorter, [767] and this is why it is not surprising that a German court has recently decided that a notice given 7 days after the delivery of gherkins is unreasonable, i.e., too late [OLG Düsseldorf 8 January 1993; see, however, BGH 8 March 1995, also involving perishable goods (mussels) in which the German Supreme Court stated that a one month period would have been "reasonable"]. [768] Where the goods are not perishable, the period for notice may be longer. However, stating, as two very recent arbitral awards have done, that two months are "reasonable," [Austrian Arbitral Award 4318 and Austrian Arbitral Award 4366 (both dated 15 June 1994] [769] appears to be exaggerated.

Furthermore, the terms of the contract are to be taken into consideration as well. [770] And since Article 39 is dispositive, [771] the parties may agree upon a specific time period within which the notice of lack of conformity has to occur, [772] as pointed out by several court decisions [LG Giessen (Germany) 5 July 1994; LG Baden-Baden (Germany) 14 August 1991; OLG Saarbrücken (Germany) 13 January 1993]. [773]

Apart from the relative [774] time period for notice required by Article 39(1), the CISG also contains an absolute, [775] inflexible "outer time limit" [776] beyond which no notice, not even one that would satisfy the Article 39(1) requirements, can avoid the loss of the buyer's right to rely on the lack of conformity. [777] This latter period -- which, compared to some domestic law rules, has been considered as being pro-buyer [778] -- differs from the former one not only on the grounds of its inflexibility, but also because it starts to run from the time the goods are actually handed over to the buyer, [779] without it being possible to interrupt its running. [780] Even though in some instances this rule may lead to harsh results, as in the case where "an importer has to meet domestic claims for a latent nonconformity which becomes apparent more than two years after delivery but is unable to claim against the seller because the importing contract is governed by the convention," [781] this provision was considered as being necessary in order to protect the seller against claims which may arise long after the delivery of the goods. [782]

In order to bar the loss of the right to rely on the lack of conformity, it is not sufficient, however, that the buyer notifies the seller in time. In effect, according to Article 39(1) CISG, the buyer must also "specify the lack of conformity" in order to give the seller the possibility to decide how to react to the buyers claim [783] (by examining the goods himself, by remedying the lack of conformity by repair or by delivering substitute goods). [784] Thus, the lack of conformity must be so specific as to enable the seller to take that decision. [785] Not unlike under the ULIS, [786] a notice that merely states that the goods are defective cannot be considered a proper notice in the sense of Article 39(1). [787] The same is true in respect of a notice concerning defective fashion goods which says no more than "poor workmanship and improper fitting" [LG München (Germany) 3 July 1989] [788] or a notice regarding defective shoes which just states that "the goods are defective in all makings" [OLG Frankfurt (Germany) 18 January 1994]. [789] A notice which merely states that the shoes bought "are partially very badly stitched" [790] does not fulfill the Article 39(1) requirement either. [791] This does not mean, however, that the buyer must specify the defects in all details, since that would signify to locate the risk of the breach of contract with the buyer. [792] However, the notice must contain the indication of the defective goods, [793] their approximate quantity [794] as well as the result of the inspection of the goods. [795] As far as the form of the notice is concerned, Article 39 does not require any specific form; thus, it can be given both in writing or orally, [796] and also via phone [LG Stuttgart (Germany) 31 August 1989]. [797]

As mentioned above, [798] according to Article 39 CISG an improper notice by the buyer leads to the loss of his right to rely on the lack of conformity, i.e., an improper notice bars the full range of the buyer's remedies, from the avoidance of the contract [799] to the reduction of the price. [800]

However, according to Article 40 CISG, [801] an improper notice by the buyer does not lead to the loss of his right to rely on the lack of conformity, if this lack of conformity relates to facts which the seller knew or could not have been unaware of and which he did not disclose to the buyer -- and this is true even if more than two years from the date of delivery of the defective goods have passed. [802] This provision, the language of which corresponds nearly literally to that of Article 40 ULIS, [803] relaxes the rigor of the consequences of an improper notice laid down in Article 39, [804] on the grounds that "[i]n such situations, the seller has no reasonable basis for requiring the buyer to notify him of these facts.'' [805] In order for a missing disclosure to lead to the seller's impossibility of relying upon Articles 38 and 39, it is, however, not necessary that the seller does not disclose the lack of conformity in bad faith. [806] Unlike under the German Commercial Code, for instance, which contains a similar provision which is, however, limited to deceit, [807] according to Article 40 CISG gross negligence as well is relevant. [808]

The aforementioned provision is not the only one by virtue of which the rigor of an improper notice of the lack of conformity is relaxed. [809] During the 1980 Vienna Diplomatic Conference, [developing] countries raised their voices against the "drastic" rule [810] set forth in Article 39. [811] Despite some reservations, [812] this criticism finally led to the inclusion of Article 44 [813] which maintains the remedies of price reduction and compensatory damages, except for loss of profit, [814] in cases where the buyer has a reasonable excuse for his failure to give required notice, [815] i.e., for not giving a notice at all or for giving a notice which is not specific enough. [816] According to the text of Article 44, this rule does not, however, affect the two-year cut-off period provided for in paragraph (2) of Article 39. [817] Thus, after the expiration of two years after the delivery of the goods, the buyer loses his rights to rely on the lack of conformity, even though he may have a "reasonable excuse." [818]

In regard to Article 44 CISG, the main question is to what extent it will serve as a means of relaxation of the rule set forth in Article 39(1). The answer to this question depends on how the vague [819] "reasonable excuse" criterion will be interpreted. In this respect, some legal scholars have pointed out that Article 44 CISG will rarely become applicable, since a buyer who discovers or ought to have discovered a defect can hardly be excused for not giving a proper notice. [820] Other legal writers, on the contrary, have asserted that the provision de quo will become rather important, since it may put a considerable burden on the seller, especially because of the "reasonable excuse" criterion being vague and open to an interpretation advantageous to the buyer. [821]

At this point it is too early to foresee how the provision will be applied by the courts, [822] although it is very probable that it will be applied restrictively, because of its being an exception to a general rule (Article 39(1)). [823] Despite this uncertainty, it can be predicted that in the application of the "reasonable excuse" criterion, regard will be had to the circumstance that it resulted from a compromise [824] intended to mitigate the harsh consequences of Article 39(1). In other words, in its application regard will be had to the need to reach equitable results, [825] a goal which can be reached by, among other means, resorting to "more individualized considerations than would otherwise be relevant under Article 39(1).'' [826]

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Go to entire text of Ferrari commentary

FOOTNOTES

* Professor of Comparative Private Law, Katholieke Universiteit Brabant, Tilburg, the Netherlands; J.D. (Honors), University of Bologna, Italy; LL.M., University of Augsburg, Germany. Copyright, Franco Ferrari.

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686. For a similar affirmation, see Magnus, supra note 156, at 316, stating that the obligation to notify the seller in case of lack of conformity of the goods bought is one of the most important practical issues of the CISG; under the 1964 Uniform Sales Law, about one fourth of all the published court decisions dealt with the notification of the buyer.

687. For this affirmation, see Reinhard Resch, Zur Rüge bei Sachmängeln nach UN-Kaufrecht, ÖSTERREICHISCHE JURISTENZEITUNG 470, 470 (1992).

688. See Herber & Czerwenka, supra note 43, at 181, stating that Article 39 CISG is based upon Article 39 ULIS, but that there are some differences. Indeed, Article 39(2) ULIS was not retained. Thus, unlike under the ULIS, under the CISG it is not necessary that "[i]n giving the notice to the seller of any lack of conformity, the buyer shall . . . invite the seller to examine the goods or cause them to be examined by his agent." Article 39(2) ULIS.

689. See, e.g., Schlechtriem, supra note 187, at 60.

690. For this statement, see also Schlechtriem, supra note 92, at 70, stating that "[o]ne of the [1980 Diplomatic] Conference's most difficult problems concerned the consequences of failing to give timely notice of non-conformity." For a similar statement, see Eörsi, supra note 274, at 350, where the author states that "one of the most dramatic debates at the U.N. Conference concerned the procedure in cases of nonconformity."

691. See, e.g., OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 320 ff. & 345 ff.

692. See Article 39 CISG:

"(1) The buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it.

(2) In any event, the buyer loses the right to rely on a lack of conformity of the goods if he does not give the seller notice thereof at the latest within a period of two years from the date on which the goods were actually handed over to the buyer, unless this time-limit is inconsistent with a contractual period of guarantee."

693. Honnold, supra note 25, at 337, where the author also states that under the language of Article 39 "a seller's action to recover the price would not be subject to a set-off or counterclaim based on a defect which the buyer knew or ought to have discovered if the buyer fails to notify the seller within the periods stated in Article 39." (footnote omitted)

694. See Schlechtriem, supra note 92, at 70.

695. For a similar statement, see also Honnold, supra note 25, at 331, stating that Article 39 CISG is so interrelated with other Articles that they have to be considered as a group.

696. See Article 40 CISG: "The seller is not entitled to rely on the provisions of articles 38 and 39 if the lack of conformity relates to facts of which he knew or could not have been unaware and which he did not disclose to the buyer."

697. See Article 44 CISG: "Notwithstanding the provisions of paragraph (1) of articles 39 and paragraph (1) of article 43, the buyer may reduce the price in accordance with article 50 or claim damages, except for loss of profit, if he has a reasonable excuse for his failure to give notice."

698. See Elizabeth H. Patterson, United Nations Convention on Contracts for the International Sale of Goods: Unification and the Tension Between Compromise and Domination, 22 STAN. J. INT'L. L. 263, 289 (1986).

699. See also Henry Gabriel, PRACTITIONER'S GUIDE TO THE CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (CISG) AND THE UNIFORM COMMERCIAL CODE (UCC) 117-118 (1994), where the author states that "Articles 40 and 44 modify the harshness of the consequences to the buyer who fails to give notice in conjunction with Article 39."

700. Id. at 115.

701. For a detailed discussion of the conformity of goods under the CISG and the seller's liability in case of non-conformity, see, among others, Richard Hyland, Liability of the Seller for Conformity of the Goods under the UN Convention (CISG) and the Uniform Commercial Code, in EINHEITLICHES KAUFRECHT UND NATIONALES OBLIGATIONENRECHT, supra note 16, 305.

702. For a similar statement, see, for instance, Honnold, supra note 25, at 334, where the author states -- in respect of the "nonconformity" of goods -- that "[t]he area embraced by this concept is defined in Article 35." For a similar statement, see also Herber & Czerwenka, supra note 43, at 182.

703. See Article 35 CISG:

"(1) The seller must deliver the 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 the 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 judgment;

(c) posses 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 subparagraph (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."

704. For papers written on the lack of conformity, see, among others, Marino Bin, La non conformità dei beni nella convenzione di Vienna sulla vendita internazionale, RIVISTA TRIMESTRALE DI DIRITTO E PROCEDURA CIVILE 755 (1990); Luciana Cabella Pisu, La "mancanza" di conformità: il modello della Convenzione e la tradizione giuridica italiana, in LA VENDITA INTERNAZIONALE, supra note 32, 359; Denis Tallon, La consécration de la notion de conformité après la Convention des Nations Unies sur les contrats de vente internationale de marchandises, in GEDÄCHTNISSCHRIFT FÜR LEONTIN-JEAN CONTANTINESCO 753 (Köln 1983); René Wyler, Garantie, conformité et inspection des marchandises dans la vente internationale. Etude de la convention de Vienne, in FESTSCHRIFT FÜR GILLIARD 175 (Tolochenaz 1987).

705. For a gathering of cases concerning the non-conformity of goods, see Witz, supra note 68, at 86.

706. See OLG Frankfurt a.M., January 18, 1994, published in NEUE JURISTISCHE WOCHENSCHRIFT 1013 (1994).

707. See LG Aachen, April 3, 1990, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 491 (1990).

708. See BGH, March 8, 1995, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 595 (1995).

709. For cases specifying when there is lack of conformity under the ULIS, see Schlechtriem & Magnus, supra note 168, at 220-229.

710. For this statement, see Gabriel, supra note 699, at 118; Honnold, supra note 25, at 334.

Note, however, that under the ULIS, defects in packaging were not always considered as defects in the sense of Article 33 ULIS; see, in this regard, Rechtbank Alkmaar, May 2, 1985, reported in Schlechtriem & Magnus, supra note 168, at 228-229.

711. See for this statement, Ingeborg Schwenzer, Art. 39, in KOMMENTAR ZUM EINHEITLICHEN UN-KAUFRECHT, supra note 48, 357 at 358.

For a judicial affirmation of this principle, see OLG Bamberg, February 23, 1979, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 566 (1979), relating, however, to the ULIS.

712. For this solution, see also Gabriel, supra note 699, at 118-119.

713. Honnold, supra note 25, at 334.

714. See Article 34 CISG:

"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."

715. For a similar suggestion, see also Honnold, supra note 25, at 334, where the author also suggests applying the notice requirement to cases where the defect relates to the documents on the grounds that "supplying the correct documents is part of the seller's obligation to deliver the goods. . . . Moreover, the provision in Article 34 allowing the seller to cure a defect in documents would be of little value unless the seller is notified of the defect." (footnote omitted)

For this solution, see also Enderlein et al., supra note 48, at 135; Herber & Czerwenka, supra note 43, at 160-161; Magnus, supra note 156, at 319.

716. See Article 33 ULIS:

"(1) The seller shall not have fulfilled his obligation to deliver the goods where he has handed over:

(a) part only of the goods sold or a larger or a smaller quantity of the goods than he contracted to sell;

(b) goods which are not those to which the contract relates or goods of a different kind;

(c) goods which lack the qualities of a sample or model which the seller has handed over or sent to the buyer, unless the seller has submitted it without any express or implied undertaking that the goods would conform therewith;

(d) goods which do not possess the quantities necessary for their ordinary or commercial use;

(e) in general, goods which do not possess the qualities and characteristics expressly or impliedly contemplated by the contract.

"(2) No difference in quantity, lack of part of the goods or absence of any quality or characteristic shall be taken into consideration where it is not material."

717. See, e.g., Herbert Stumpf, Art. 33, in KOMMENTAR ZUM EINHEITLICHEN KAUFRECHT, supra note 166, 269 at 271.

718. For this line of reasoning, see also Resch, supra note 687, at 471.

719. Schlechtriem, supra note 92, at 70. For this solution, see also Michael Binder, Diskussionsbeitrag, in DAS UNCITRAL-KAUFRECHT, supra note 119, 146 at 146; Ebenroth, supra note 389, at 689; Ulrich Huber, Die Haftung des Verkäufers für Verzug und Sachmängel nach dem Wiener Kaufrechtsübereinkommen, ÖSTERREICHISCHE JURISTISCHE BLÄTTER 273, 278; Huber, supra note 270, at 483-484; Karollus, supra note 59, at 125-126; Magnus, supra note 156, at 319; Piltz, supra note 21, at 50; Elisabeth Stern, ERKLÄRUNGEN IM UNCITRAL-KAUFRECHT 73 (Vienna, 1990).

Contra, in the sense that he does not consider the delivery of an aliud as requiring a notification in order not to lose one's rights, Massimo Cesare Bianca, Art. 35, in COMMENTARY ON THE INTERNATIONAL SALES LAW, supra note 12, 268 at 273-274; Franz Bydlinski, Diskussionsbeitrag, in DAS UNCITRAL-KAUFRECHT, supra note 119, 137 at 137; LOEWE, supra note 346, at 51; Karl Neumayer, Diskussionsbeitrag, in DAS UNCITRAL-KAUFRECHTS, supra note 119, 135 at 136. For this line of reasoning, see also OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 29, stating that "if the contract calls for the delivery of corn, the seller has not delivered if he provides potatoes."

720. According to Honnold, supra note 25, at 333-334, as well, the ratio behind the notification requirement laid down in Article 39 CISG lies in the possibility for the seller, if the buyer notifies him promptly, "[to] inspect and test the goods to ascertain whether a claim is justified. Moreover, when the inspection shows that the goods are defective, the seller may be able to exercise its right to cure the defect." See also Enderlein, supra note 326, at 170-171.

Note, that several recent court decisions have stated that the ratio behind Article 39 CISG is the need for the seller to be put in a position to know whether his claim for the payment of the price can be barred by any counterclaim; see, e.g., BGH, March 8, 1995, reprinted in RECHT DER INTERNATIONALEN WIRTSCHAFT 595, 597 (1995); OLG Düsseldorf, January 8, 1993, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 325, 325 (1993). For this rationale behind the notice requirement, see, with reference, however, to the ULIS provisions, BGH, June 2, 1982, published in NEUE JURISTISCHE WOCHENSCHRIFT 2730, 2731 (1982); OLG Bamberg, February 23, 1979, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 566, 567 (1979); OLG Köln, December 19, 1977, published in MONATSSCHRIFT FÜR DEUTSCHES RECHT 1023, 1023 (1980).

721. See, for instance, OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 34, which expressly states that Article 38 is prefatory to Article 39; see also Schlechtriem, supra note 92, at 69 (stating the same).

722. See Article 38 CISG:

"(1) The buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances.

"(2) If the contract involves carriage of the goods, examination may be deferred until after the goods have arrived at their destination.

"(3) If the goods are redirected in transit or redispatched by the buyer without a reasonable opportunity for examination by him and at the time of the conclusion of the contract the seller knew or ought to have known of the possibility of such redirection or redispatch, examination may be deferred until after the goods have arrived at the new destination."

723. This has been expressly pointed out by a recent German court decision; see OLG Düsseldorf, January 8, 1993, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 325 (1993).

724. For a similar statement evidencing the interrelationship of Articles 38 and 39, see OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 34:

"This article [38] is prefatory to article [39], which provides that if the buyer fails to notify the seller of lack of conformity of the goods within a reasonable period of time after he has discovered it or ought to have discovered it, he loses the right to rely on the lack of conformity. The time when the buyer is obligated to examine the goods under article [38] constitutes the time when the buyer "ought to have discovered" the lack of conformity under article [39]."

725. See, however, Honnold, supra note 25, at 328, stating that the inspection of the goods constitutes "a necessary step towards the timely notification of defects required by Article 39."

726. For a similar statement, see also Herber & Czerwenka, supra note 43, at 175; Magnus, supra note 156, at 302-303.

727. See BGH, June 2, 1982, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 228 (1983).

728. This was true under the ULIS, as expressly pointed out by a German Supreme Court decision; see BGH, June 2, 1982, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 228 (1983).

729. Enderlein, supra note 326, at 166.

730. This is why one cannot agree with Piltz, supra note 21, at 192, where the author states a rule according to which a period of time of 3 or 4 days is to be generally considered as being a "short period" in the sense of Article 38 CISG.

731. See Article 38 ULIS:

"(1) The buyer shall examine the goods, or cause them to be examined, promptly.

"(2) In case of carriage of the goods the buyer shall examine them at the place of destination.

"(3) If the goods are redispatched by the buyer without transshipment and the seller knew or ought to have known, at the time when the contract was concluded, of the possibility of such redispatch, examination of the goods may be deferred until they arrive at the new destination.

"(4) The methods of examination shall be governed by the agreement of the parties or, in the absence of such agreement, by the law or usage of the place where the examination is to be effected. (emphasis added.)"

[ULIS defines promptly as "performed within as short a period as possible in the circumstances, from the moment when the act could reasonably be performed" (ULIS Article 11).]

732. See Huber, supra note 270, at 482.

733. See Wolfgang Reishofer, Diskussionsbeitrag, in DAS UNCITRAL-KAUFRECHT, supra note 119, 134 at 134; Ingeborg Schwenzer, Art. 38, in KOMMENTAR ZUM EINHEITLICHEN UN-KAUFRECHT, supra note 48, 347 at 352.

734. See Reinhart, supra note 139, at 92.

735. See, e.g., LG Aachen, April 3, 1990, published in RECHT DER INTERNATIONALEN WIRTSCHAFT, where the court states that an examination made the same day as the delivery is timely. But this is not surprising; see Resch, supra note 687, at 473.

736. For a similar conclusion, see also Magnus, supra note 156, at 307.

Note, however, that Herber & Czerwenka, supra note 43, at 177, state that from a substantial point of view the provisions of the ULIS and the CISG do not differ, and this is why the authors have recourse to case law concerning the ULIS when trying to determine the concept of the "short period" of time referred to in Article 38 CISG.

737. See Magnus, supra note 156, at 307.

738. See also Massimo Cesare Bianca, Art. 38, in COMMENTARY ON THE INTERNATIONAL SALES LAW, supra note 12, 295 at 299.

739. Id. at 296. For a similar conclusion, see also Magnus, supra note 156, at 307.

740. For this assertion, see Bianca, supra note 738, at 299; Magnus, supra note 156, at 308.

741. Bianca, supra note 738, at 299.

742. See Herber & Czerwenka, supra note 43, at 177.

743. For a similar statement, see Enderlein & Maskow, supra note 58, at 155, stating that "[g]enerally, it can be said that goods of more sophisticated technology or of complex composition require longer time to be examined." See also Bianca, supra note 738, at 299.

744. For this assertion, see also Magnus, supra note 156, at 308.

For a more detailed list of circumstances which might influence the length of the "short period" mentioned in Article 38 CISG, see, e.g., Enderlein, supra note 326, at 167, stating that

"[t]he circumstances which have to be taken into account include the place where the goods are situated at the time of passing of the risk (cf. Art. 36 para. 1 and Art. 66 et seq.); the type of goods, for instance, a single piece, bulk goods, perishable goods, consumer goods; how the goods are packaged or the type of container; whether there is a package which, for example, will not be opened till the goods reach the final consumer; whether the buyer uses the goods himself or resells them; the technical prerequisites at the buyer's disposal; and . . . whether usages and practices apply."

745. Where a contract involves carriage of the goods, however, Article 38 CISG defers inspection until the goods arrive at their destination (see, e.g., Gabriel, supra note 699, at 115), since "[a]n examination of the goods at the frontier or when passing the rail of a ship is hardly imaginable, and, in general, . . . neither possible nor necessary." Enderlein, supra note 326, at 168.

According to Article 38(3) CISG, inspection is also deferred in cases where the goods are redirected or redispatched provided (a) that the buyer did not have a reasonable opportunity to examine them and (b) that at the time of the conclusion of the contract the seller knew or ought to have known of the possibility of such dispatch or redirection; see Bianca, supra note 738, at 300.

746. For this statement, see also Herber & Czerwenka, supra note 43, at 177.

747. See Schlechtriem, supra note 92, at 69.

748. Article 38(4) ULIS.

749. See OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 34, stating that "because of the international nature of the transaction, the determination of the type and scope of examination required should be made in the light of international usages." (emphasis added)

For a similar statement, see also Bianca, supra note 738, at 297, where the author also states that "the reference to the law or usage made in ULIS . . . does not seem satisfactory, especially because it could lead to exonerating the buyer from his burden when there are no laws, rules, or sound usages in the place where the goods must be examined."

750. It has been often pointed out that the inspection need not be made by the buyer himself; see, for instance, Enderlein, supra note 326, at 166, stating that "[t]he goods need not be examined personally by the buyer or his own staff. The buyer may also order third persons, for instance, specialized and impartial control organizations, to examine the goods."

751. For a similar statement, see also OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 34, stating that "[t]he examination which this article requires the buyer to make is one which is reasonable in the circumstances. The buyer normally is not required to make an examination which would reveal every possible defect."

752. See Kazuaki Sono, Art. 39, in COMMENTARY ON THE INTERNATIONAL SALE LAW, supra note 12, 303 at 310.

753. See Resch, supra note 687, at 472.

754. OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 34.

755. For this principle, see LG Stuttgart, August 31, 1989, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 984, 984 (1989).

756. See supra text accompanying notes 721 & 722.

757. By virtue of Article 27 CISG ("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") it is sufficient for the notice de quo to be sent in time. See also Karollus, supra note 59, at 126; Resch, supra note 687, at 476; Schlechtriem, supra note 187, at 59.

758. See Sono, supra note 752, at 309.

759. But see Heuzé, supra note 177, at 230, stating that the concept of "reasonable time" under Article 39 CISG is to be considered very similar to that of "prompt" notification under the ULIS; see also Reinhart, supra note 139, at 95, which presupposes the foregoing analogization, when stating that the cases rendered under the ULIS can be taken into account in order to determine whether the buyer has to give notice.

760. Contra, see Enderlein & Maskow, supra note 58, at 159, stating that "[t]he reasonable time is in any case a short period (just like in Article 39, paragraph 1 ULIS). Such time is a relative time. . . . Reasonable, in many cases, will mean giving notice immediately."

761. For this suggestion, see also Magnus, supra note 156, at 324; Schwenzer, supra note 711, at 361.

762. For this conclusion, see also Schwenzer, supra note 711, at 361.

763. For this assertion in legal writing, see also Magnus, supra note 156, at 325; Piltz, supra note 21, at 194. See also 3 UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW YEARBOOK 87 (1972).

764. For the importance of this element in determining the "reasonable time" under Article 39 CISG, see also Sono, supra note 752, at 309, where the author states that

"[w]here the buyer is rejecting the goods, a prompt communication to the seller is important so that he can have an opportunity to make a tender of conforming goods within the required period. In such cases, a prompt communication might also be important to give the seller an opportunity to care for or redispose of the rejected goods and reduce the chance for loss or damage to the goods or the incurring of unnecessary expense. On the other hand, where the buyer decides to keep the defective goods, subject to a claim for damages, the above reasons for prompt notification may not be applicable."

765. For a list of different circumstances which can impact on the determination of the period for notice, see Claude D. Rohwer & Jack Coe, The 1980 Vienna Convention on the International Sale of Goods and the UCC -- Peaceful Coexistence?, in LEGAL ASPECTS OF INTERNATIONAL BUSINESS TRANSACTIONS 272-273 (Dennis Campbell and Claude D. Rohwer eds., Elsevier, 1984), where the authors state that

"[f]actors important in determining whether a reasonable time has passed might include: (1) difficulty of discovering the defect -- influenced by the nature of the defect, the complexity of the goods, and the sophistication of the buyer; (2) the terms of the contract; (3) relative perishability of the goods; (4) course of performance of the contract to date; and (5) usage of trade."

However, it is here suggested that not all the foregoing circumstances must be taken into account in determining whether the notice is made within a reasonable period of time. The complexity of the goods, for instance, may be relevant for the time needed for the inspection. But it does not appear to be relevant in order to determine whether a reasonable period has passed between the moment the defects are discovered (or ought to have been discovered) and that at which the notice is given.

766. It has often been said that perishability is a circumstance to be taken into account in determining the "reasonable period" of time for notice; see, e.g., Magnus, supra note 156, at 325; Schwenzer, supra note 711, at 361.

767. See also Enderlein et al., supra note 48, at 135.

768. See OLG Düsseldorf, January 8, 1993, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 325, 325 (1993).

Note, however, that in a recent case the German Supreme Court stated, although the sales contract [involved] perishable goods (mussels), that a one month period would have been "reasonable," but that in the case at hand the buyer lost his rights since he gave notice more than a month after the (apparent) defect ought to have been discovered; see BGH, March 8, 1995, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 595, 597 (1995).

769. See Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft in Österreich, Arbitral Awards Nos. 4366 & 4318, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 590 (1995).

770. See Rohwer & Coe, supra note 765, at 272; Schlechtriem, supra note 92, at 72.

771. For this assertion, see also Herber & Czerwenka, supra note 43, at 187; Magnus, supra note 156, at 330.

772. See also Schwenzer, supra note 711, at 366.

773. See LG Giessen, July 5, 1994, published in NEUE JURISTISCHE WOCHENSCHRIFT RECHTSSPRECHUNGS-REPORT 438 (1995) (stating that the agreement of the parties to limit the period of time within which the notice must occur to 8 days is valid); LG Baden-Baden, August 14, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 62, 62 (1992) (considering the agreement of a 30 days limitation as being valid); OLG Saarbrücken, January 13, [1993], quoted in Schwenzer, supra note 711, at 367 n.101 (deciding that the agreement concerning an eight day "reasonable time period" is valid).

774. For this qualification, see Schwenzer, supra note 711, at 363.

775. For this qualification, see Resch, supra note 687, at 476.

776. Honnold, supra note 25, at 336.

777. See Sono, supra note 752, at 310, where the author states that

"in the absence of a contrary contractual agreement, Article 39(2) provides a cut off period of two years beyond which the buyer can no longer give notice of non-conformity of the goods. Accordingly, although Article 39(1) provides that, in order to assert a lack of conformity against the seller, notice of the non-conformity must be given within a reasonable time after the buyer has discovered it or ought to have discovered it, such assertion will be practically precluded if the time of the discovery of the non-conformity is after the two-year time-limit."

See also Honnold, supra note 25, at 336, stating that according to Article 39(2) "the notice must be given within the two-year period even though a defect is discovered subsequent to that period, and even though a later notice would satisfy the general standards of Article 39(1). . . ."

For similar remarks, see also Jacob Ziegel, REPORT TO THE UNIFORM LAW CONFERENCE OF CANADA ON THE CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS 96 (Uniform Law Conference of Canada ed., 1981).

778. See Joseph Lookofsky, Remedies for Breach under the CISG, in COMMERCIAL DAMAGES: A GUIDE TO REMEDIES IN BUSINESS LITIGATION 1, 21-22 (Charles L. Knapp ed., 1986), where the author states that "[Article 39(2)] with its absolute, two-year cutoff regarding the right to rely -- i.e., assert any cause of action for nonconformity -- marks a significant departure from some national laws. . . . Compared with the UCC, which contains no comparable provision, the rule is clearly pro-seller. But the provision also represents a pro-buyer shift when compared with national statutes of seller which provide for even shorter cutoff periods." See also Reitz, supra note 315, at 462-463, stating that "the two-year cap represents a compromise between the German six-month limitations period and the UCC (and Limitations Convention) period of four years." (footnotes omitted)

For a list of some domestic cutoff periods, see, e.g., Kritzer, supra note 56, at 317.

779. See Enderlein et al., supra note 48, at 136.

780. See id. at 137.

781. J.D. Feltham, The United Nations Convention on Contracts for the International Sale of Goods, J. BUS. LAW 346, 354 (1981).

782. For a similar justification of the rule set forth in Article 39(2) CISG, see also OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 355, where it is stated that

"[e]ven though it is important to protect the buyer's right to rely on the latent defects which become evident only after a period of time has passed, it is also important to protect the seller against claims which arise long after the goods have been delivered. Claims made long after the goods have been delivered are often of doubtful validity and when the seller receives his first notice of such a contention at a late date, it would be difficult for him to obtain evidence as to the condition of the goods at the time of delivery, or to invoke the liability of a supplier from whom the seller may have obtained the goods or the materials for their manufacture."

783. For this conclusion, see also Magnus, supra note 156, at 321; Resch, supra note 687, at 475.

784. See OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 35, where it is stated that

"The purpose of the notice is to inform the seller what he must do to remedy the lack of conformity, to give him the basis on which to conduct his own examination of the goods, and in general to gather evidence for use in any dispute with the buyer over the alleged lack of conformity. Therefore, the notice must not only be given to the seller within a reasonable period of time after the buyer has discovered the lack of conformity or ought to have discovered it, but it must specify the nature of the lack of conformity."

785. See also Honnold, supra note 25, at 334-335, where the author states that "[q]uestions as to what the notice must say should be answered with regard for the functions served by the notice. . . . [T]he principal functions are to give the seller an opportunity to obtain and preserve evidence of the condition of the goods and to cure the deficiency." See also Magnus, supra note 156, at 321; Resch, supra note 687, at 475.

786. See, e.g., LG Giessen, June 6, 1978, reported in Schlechtriem & Magnus, supra note 187, at 243-244.

787. For this assertion, see also Piltz, supra note 68, at 1104.

788. See LG München, July 3, 1989, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 316 (1990).

789. See OLG Frankfurt, January 18, 1994, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 240 (1994).

790. See LG Stuttgart, August 31, 1989, published in PRAXIS DER INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 317 (1990).

791. For a reference to the cases mentioned in the text as well as other cases decided under the CISG, see, most recently, Magnus, supra note 156, at 321.

792. Id. at 322.

793. See also Resch, supra note 687, at 475.

794. See, in respect, however, of the ULIS, OLG Koblenz, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 591 (1991).

795. See Magnus, supra note 156, at 322.

796. Id. at 327.

797. See LG Stuttgart, August 31, 1989, published in PRAXIS DER INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 984 (1989).

798. See supra text accompanying notes 693-94.

799. See Honnold, supra note 25, at 337.

800. According to Resch, supra note 687, at 474, the buyer who does not give a proper notice (because it is either untimely or not specified enough), has to pay the entire amount even though the lack of conformity consists in the delivery of less goods than agreed upon. The contrary is true as well: where the seller delivers a quantity of goods greater than that provided for in the contract, the improper notice binds the buyer to pay for the excess quantity at the contract rate.

801. For the text of Article 40 CISG, see supra note 696.

802. See Resch, supra note 687, at 478.

803. See Article 40 ULIS: "The seller shall not be entitled to rely on the provisions of Articles 38 and 39 if the lack of conformity relates to facts of which he knew, or of which he could not have been unaware, and which he did not disclose."

804. See also Kazuaki Sono, Art. 40, in COMMENTARY ON THE INTERNATIONAL SALES LAW, supra note 12, 314 at 314, stating that Article 40 "relaxes the notice requirements of Article 38 and 39." However, it does not appear the notice requirements are relaxed, but rather the consequences of an improper notice.

805. Id.

806. For this statement, see also Magnus, supra note 156, at 333.

807. See par. 377(5) of the German Commercial Code.

808. See Schlechtriem, supra note 92, at 70, where the author states that Article 40 "concerns not only the seller's deceit . . . but also his gross negligence." For similar statements, see also Loewe, supra note 346, at 61; Magnus, supra note 156, at 332-333; Resch, supra note 687, at 478.

809. See Resch, supra note 698, at 471.

810. For this evaluation, see Kazuaki Sono, Art. 44, in COMMENTARY ON THE INTERNATIONAL SALES LAW, supra note 12, 324 at 326.

811. For a summary of the criticism of the rule laid down in Article 39, see S.K. Date-Bah, The Convention on the International Sale of Goods from the Perspective of the Developing Countries, in LA VENDITA INTERNAZIONALE, supra note 32, 23 at 30-31.

812. See Herber & Czerwenka, supra note 43, at 201-202, stating that the industrialized nations reluctantly accepted the compromise in which the introduction of Article 44 CISG resulted.

813. See, e.g., Honnold, supra note 25, at 338.

814. See Sono, supra note 810, at 326, stating that

"[u]nder Article 44, the buyer who has a reasonable excuse for his failure to give the required notice will be afforded some limited remedies: the buyer may reduce the price in accordance with Article 50 or claim damages under Article 74 except for his loss of profit such as the profit that he would have gained by resale had the goods conformed to the contract. There are only residual remedies that the buyer may pursue. Accordingly, the buyer can no longer require the seller to cure the lack of conformity as a matter of right under Article 46. Most importantly, the buyer cannot avoid the contract under Article 49 even if the avoidance would have otherwise been possible."

815. See Article 44 CISG: "Notwithstanding the provisions of paragraph (1) of article 39 and paragraph (1) of article 43, the buyer may reduce the price in accordance with article 50 or claim damages, except for loss of profit, if he has a reasonable excuse for his failure to give the required notice."

816. See Magnus, supra note 156, at 359.

817. See Honnold, supra note 25, at 338; Loewe, supra note 346, at 65.

818. For this statement, see Magnus, supra note 156, at 259.

819. See OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 346, where the statements of the French delegate are reported, who considered the "reasonable excuse" criterion not only as being vague, but also as being a "fruitful source of litigation."

820. See, e.g., Honnold, supra note 25, at 340, stating that "the problems [Article 44] poses can easily be overstated. The sanction imposed by Article 39(1) . . . is severe and significant sanctions are preserved against even a buyer who qualifies for 'excuse' under Article 44. Consequently buyers are not likely to refrain from making a prompt complaint when they receive defective goods. In any event, an undue delay in asserting a defect will continue to militate against the credibility of the claim." (footnote omitted)

821. See Schlechtriem, supra note 92, at 70, asserting that "[t]his inroad to the seller's interest in regarding the transaction as fully completed may put a considerable burden on the seller, particularly because 'reasonable excuse for his failure to give the required notice' is indefinite and open to an interpretation favorable to the buyer."

822. The provision de quo has already been referred to in a court decision where, however, it was not examined in detail. Indeed, the court referred to it and merely stated that there was no "reasonable excuse" in the case at hand, without elaborating further on it. See OLG Düsseldorf, February 10, 1994, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 53 (1995).

823. For similar statements, see also Magnus, supra note 156, at 360; Reinhart, supra note 139, at 105.

824. See for a similar assertion, Honnold, supra note 25, at 338, stating that "[t]he "reasonable excuse" for a failure to give notice in conformity with Article 39(1) needs to be understood and applied in the light of its legislative history."

825. Several legal scholars have pointed out that the "reasonable excuse" criterion has been introduced to reach equitable results in cases where the application of the rule laid down in Article 39(1) appears to be too drastic. See, e.g., Karollus, supra note 59, at 128; Resch, supra note 687, at 479.

826. Honnold, supra note 25, at 338.

(. . .)

The Issue of the Rate of Interests on Sums in Arrears

The last issue to be discussed in this paper, the issue of interests on sums in arrears, was one of the most debated issues during the 1980 Vienna Conference. [827] And although this issue has been examined very often not only in legal writing, [828] but in many court decisions [829] and several arbitral awards [830] as well, it still creates difficulties, for the reasons that will be pointed out infra. [831]

[The decisions and awards cited in notes 829 and 830 are: Court decisions. Argentina: Elastar v. Bettcher, Juzgado National de Primera Instancia 20 May 1991. Germany: LG Stuttgart 31 August 1989; LG Hamburg 26 September 1990; OLG Frankfurt 13 June 1991; LG Frankfurt 16 September 1991; LG Heidelberg 3 July 1992; OLG Frankfurt 18 January 1994; KG Berlin 24 January 1994; OLG Düsseldorf (6 U 119/93) 10 February 1994; OLG München 2 March 1994; OLG Frankfurt 20 April 1994. Arbitral Awards. ICC Arbitral Award 7153 of 1992; Austrian Arbitral Award SCH - 4318 of 15 June 1994; Austrian Arbitral Award SCH - 4366 of 15 June 1994.]

This issue did not, on the contrary, cause any difficulties under the ULIS, since Article 83 ULIS [832] provided for "a rule for interest in arrears in the event of payment in arrears of the price which provided for one percent above the official discount rate in the creditor's country." [833] This formula has not been retained by the drafters of the Vienna Sales Convention, although there were various attempts to do so. [834] Apart from these attempts to fix the rate of interest in the same way as the ULIS, other attempts [835] were made to precisely determine the rate of interests, but they were not successful either. [836] The German view in favour of a fixed interest rate was rejected, [837] as was the view of the Czechoslovakian Delegation, according to which the applicable rate of interest should be the discount rate prevailing in the country of the debtor. [838] The same is true with the viewpoint held jointly by Denmark, Finland, Greece and Sweden, according to which interest should be calculated on the basis of the customary rate for commercial credits at the creditor's place of business. [839]

The different political, [840] economic [841] and religious [842] views made it impossible to agree upon a formula to calculate the rate of interest. [843] Thus, the Vienna Sales Convention contains a provision -- considered to work as a compromise among the different views presented during the Vienna Conference [844] -- Article 78, [845] which limits itself to merely providing for "the general entitlement to interest" [846] in case of payments in arrears. [847]

[The statement Article 78 limits itself to merely providing for "the general entitlement to interest" has often been repeated in judicial applications of Article 78; see, among others, German cases: OLG Frankfurt 13 June 1991; OLG Koblenz 17 September 1993; OLG Frankfurt 18 January 1994; OLG München 2 March 1994.]

In other words, Article 78 only sets forth the obligation to pay interest as a general rule, [848] and it does so independently from the damage caused by the payment in arrears, [849] as pointed out by several court decisions, which expressly stated that the entitlement to interests does not exclude the possibility to claim damages ex Article 74 [AG Oldenburg (Germany) 24 April 1990; LG Hamburg (Germany) 26 September 1990; OLG Frankfurt 18 January 1994]. [850] And since Article 78 does not set forth a time starting from which interests may be calculated either, [85l] it has been said that "Art. 78 is more conspicuous for the questions it fails to answer than the questions it answers. In particular, it does not stipulate the rate of interest or how the rate is to be determined by a tribunal in the absence of explicit guidance in the Convention." [852]

The lack of a specific formula to calculate the rate of interest on sums in arrears has led some courts as well as several legal writers to consider this issue as being a gap praeter legem, i.e., as being governed by, but not expressly settled in, the CISG, whereas other courts and legal scholars consider the issue de quo as falling outside the scope of application of the CISG, i.e., as being a gap intra legem. [853]This had necessarily to lead to diverging solutions, since under the CISG, the aforementioned kinds of gaps have to be dealt with differently. [854] According to Article 7(2) CISG, the gaps praeter legem (or internal gaps) have to be filled by resorting to the general principles on which the Convention is based or, in the absence of such principles, by having recourse to the law applicable by virtue of the rules of private international law. [855] On the contrary, if an issue is considered as falling outside the Convention's scope of application, [856] i.e., if it is an external gap, it must be solved in conformity with the law applicable by virtue of the rules of private international law [for a recent application, see OLG Koblenz (Germany) 16 January 1992], [857] i.e., without any tentative recourse to the "general principles" of the CISG. [858]

Unfortunately, the CISG does not set forth any useful criterion to determine in concreto when a gap is to be considered as being a lacuna praeter legem as opposed to a lacuna intra legem, [859] although this distinction appears to be quite important for the consequences in which it results. [860] Undoubtedly, the setting forth of a criterion to be used to decide whether a gap must be considered a lacuna intra legem or one praeter legem would have favored the uniform application of the Vienna Sales Convention. [861]

The absence of such a criterion raises, as already mentioned above, [862] the question of whether the lack of a formula fixing the rate of interest must be dealt with as a lacuna praeter legem or as a lacuna intra legem. [863]

On the one hand, it has been said that the issue of determining the rate of interest is not governed by the Vienna Sales Convention [864] and that it is, therefore, governed by the applicable domestic law. [865] Although many scholars hold this view, they appear not to agree on how to determine the applicable domestic law. Indeed, some scholars favor the view according to which the applicable domestic law is to be determined by virtue of the rules of private international law, [866] thus, making applicable, "in general, the subsidiary law applicable to the sales contract [since no] special connecting points seem to have developed for the entitlement to interest." [867] Other scholars, [868] however, argue in favor of either the application of the law of the creditor, independently from whether this is the lex contractus, or the application of the law of the debtor. [869]

On the other hand, there are a few authors holding the contrasting view according to which the issue de quo has to be dealt with as a lacuna praeter legem, on the grounds that "[t]he mandate of Article 7(1) to construe the Convention to promote 'uniformity in its application' requires us to seek a principle governing the scope of Article 78 that can be considered as a basis for uniform application of the Convention." [870] Indeed, the "[d]eference to domestic law . . . seems inconsistent with the policy underlying Article 78." [871] Thus, it has been suggested that "the interest to be paid is defined by the function of the assessment of damages, i.e., to put the seller in the same position he would have been had the sum been paid in time," [872] a formula which, however, must be criticized for leading to a confusion of the line between damages and interest which Article 78 has expressly drawn. [873]

The aforementioned dispute is not merely a doctrinal one, as evidenced by the number of different solutions adopted in the courts. These different solutions can mainly be divided into two categories:

those favoring the view that the rate of interest has to be calculated on the basis of the domestic law [German cases cited: LG Stuttgart 31 August 1989; AG Oldenburg 24 April 1990; LG Hamburg 26 September 1990; OLG Frankfurt 13 June 1991; LG Frankfurt 16 September 1991; OLG München 3 March 1994][874]; and

those holding that the issue de quo must be resolved by resorting to the "need to promote uniformity in the application" of the CISG and, thus, to the general principles of the Convention.

In regard to this latter category, several cases are worth mentioning. On the one hand, there are two decisions of Argentinean courts [Juzgado Nacional de Primera Instancia en lo Comercial No. 7 of 20 May 1991 and Juzgado Nacional de Primera Instancia en lo Comercial No. 10 of 6 October 1994], [875] which invoked Article 9 CISG [876] in order to solve the issue of the applicable rates of interest [877] and "determined the amount of interest payable according to the relevant trading customs," [878] thus "avoid[ing] the difficult problem of determining which domestic law applies." [879] On the other hand, one must mention two recent arbitral awards of the Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft in Österreich [Arbitral Award SCH-4318 of 15 June 1994; and Arbitral Award SCH-4366 of 15 June 1994] [880]according to which "the applicable interest rate is to be determined autonomously on the basis of the general principles underlying the Convention,'' [881] on the grounds that recourse to domestic law would lead to results contrary to those promoted by the CISG, at least in those cases where the applicable domestic law would be that of a country which expressly prohibits the payment of interest. [882] This is why in the foregoing awards the issue of the rate of interest was solved by resorting to the general principle of full compensation, [883] which led to the application of the law of the creditor, since it is he who has to borrow money in order to be as liquid as he would be had the debtor paid the sum he owed in due time. This solution, however, contrasts with the legislative history: during the 1980 Diplomatic Conference a proposal to link the rate of interests to the law where the creditor had its place of business was rejected. [884] Independently from this criticism, it is doubtful whether the solution suggested by the aforementioned arbitral awards really offers a new solution, as it wanted to do according to the awards themselves. As has been rightly pointed out by one commentator, [885] the arbitral awards do not lay down a uniform substantive law rule derived from the general principles of the CISG. They merely lay down a conflict of laws rule, since this rule refers to the law of the State where the creditor has his place of business, an approach which, in the end, does not offer anything new but a uniform rule of private international law which, for the reason mentioned above, [886] is to be rejected.

As far as the court decisions are concerned, where the issue de quo is solved by resorting to domestic law, a distinction must be made: there are, on the one hand, cases applying the domestic law by virtue of the rules of private international law [AG Oldenburg (Germany) 24 April 1990; LG Hamburg (Germany) 26 September 1990; OLG Frankfurt (Germany) 13 June 1991], [887] on the other hand, cases where the domestic law of the creditor is applied without, however, it being the law made applicable by the rules of private international law [LG Stuttgart (Germany) 31 August 1989; LG Frankfurt (Germany) 16 September 1991]. [888]

Even though many solutions which differ greatly from each other can be found both in scholarly writing and judicial practice, there seems to be the tendency to apply the lex contractus, i.e., the law which would be applicable to the sales contract if it were not subject to the Vienna Sales Convention. [889] Thus, in respect of the formula to calculate the rate of interest, the interest rate of the country of the seller generally applies, [890] at least where the rules of private international law of the forum are based upon criteria comparable to those set forth by the 1980 EEC Convention on the Law Applicable to Contractual Obligations. [891] Absent a choice of law, this Convention makes applicable the law with which the contract has the closest connection, as already mentioned above. [892] This is presumed to be the law where the party who is to effect the "characteristic performance'' [893] has its habitual residence, [894] and since the characteristic performance has to be effected by the seller, [895] it is the interest rate of the country where the seller has its place of business which generally is applicable.

Quid iuris, however, where the seller's law does prohibit the payment of interest? In this line of cases, the claim does not become unenforceable as suggested by several authors. [896] It is here suggested, that Article 78 remains enforceable even in this line of cases, but that in order to calculate the rate of interest recourse should be had to the level of interest generally applied in international commerce in the particular trade concerned. [897]

FOOTNOTES

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827. See, in this regard, Enderlein & Maskow, supra note 58, at 310, stating that "[t]he regulation of interest has caused considerable difficulties both in preparing and holding the [1980 Vienna] diplomatic conference." See also Kritzer, supra note 56, at 498.

828. For papers on the issue de quo, see, most recently, Franco Ferrari, Tasso degli interessi ed applicazione uniforme della Convenzione di Vienna sui contratti di vendita internazionale, RIVISTA DI DIRITTO CIVILE II 277 (1995); Gert Reinhart, Fälligkeitszinsen und UN-Kaufrecht, PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 376 (1991).

829. For court decisions dealing with the issue of the rates of interests on sums in arrears, see, among others, OLG Frankfurt, April 20, 1994, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 593 (1994); OLG München, March 2, 1994, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 595 (1994); OLG Düsseldorf, February 10, 1994, published in NEUE JURISTISCHE WOCHENSCHRIFT RECHTSPRECHUNGS-REPORT 506 (1994); KG Berlin, January 24, 1994, reprinted in RECHT DER INTERNATIONALEN WIRTSCHAFT 683 (1994); OLG Frankfurt, January 18, 1994, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 240 (1994); OLG Koblenz, September 17, 1993, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 934 (1993); LG Heidelberg, July 3, 1992, reported in Michael J. Bonell, Rassegna giurisprudenziale in tema di vendita internazionale, 7 DIRITTO DEL COMMERCIO INTERNAZIONALE 651, 655 (1993); Municipal Court of Budapest, March 24, 1992, published in German in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 263 (1993); LG Frankfurt a.M., September 16, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 952 (1991); OLG Frankfurt a.M., June 13, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 591 (1991); Juzgado nacional de primera instancia en lo comercial, May 20, 1991, reported in Bonell, supra this note, at 653; LG Hamburg, September 26, 1990, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 400 (1991); AG Oldenburg i.H., April 24, 1990, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 336 (1991); LG Stuttgart, August 31, 1989, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 984 (1989).

830. See, e.g., Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft in Österreich, Nos. 4366 and 4318, partially reprinted in RECHT DER INTERNATIONALEN WIRTSCHAFT 590 (1995); Arbitral Tribunal ICC, No. 7153, published in JOURNAL DU DROIT INTERNATIONAL 1006 (1992).

For a paper discussing the rate of interests in the practice of international arbitral tribunals (independently, however, from the CISG), see Paolo Cerina, Interest as Damages in International Commercial Arbitration, 4 THE AM. REV. OF INT'L ARB. 255 (1993).

831. See infra text accompanying notes 851-63.

832. See Article 83 ULIS:

"Where the breach of contract consists of delay in the payment of the price, the seller shall in any event be entitled to interest on such sum as is in arrears at a rate equal to the official discount rate in the country where he has his place of business or, if he has no place of business, his habitual residence, plus 1%."

For a judicial application of this formula, see, most recently, OLG Frankfurt, January 5, 1989, NEUE JURISTISCHE WOCHENSCHRIFT RECHTSPRECHUNGS-REPORT 636 (1990).

833. Enderlein & Maskow, supra note 58, at 310.

834. See, e.g., Article 58 of the 1976 Draft Convention; see also the proposal made by the Czechoslovakian Delegation (A/CONF.97/C.1/L/218) during the Vienna Conference, reprinted in OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE 137.

For the reasons which lead to the rejection of the formula laid down in Article 83 ULIS, see, among others, Schlechtriem, supra note 92, at 100.

835. For an overview of the different attempts, see, among others, Date-Bah, supra note 811, at 36-37.

836. For a short historical account on the issue of the rate of interest raised during the drafting period of the Vienna Sales Convention, see Barry Nicholas, Art. 78, in COMMENTARY ON THE INTERNATIONAL SALES LAW, supra note 12, 568 at 568.

837. See the Summary Record of the Considerations of the German Delegation, reprinted in OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 416, which stated that "[a]t all events, the innocent party should be entitled to interest on the sum due in an amount based on interest rates fixed by law or by the Convention itself and which represent a minimum figure."

838. See Summary Records of the Czechoslovakian Delegation's Considerations Made During the 29th Meeting, reprinted in OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 137, where the Czechoslovakian proposal is reprinted:

"(1) If the breach of contract consists of delay in the payment of the price, the seller is in any event entitled to interest on such sum as is in arrears at a rate equal to the official discount rate prevailing in the country where the buyer has his place of business, at the time of delay increased by one per cent or, if there is no such rate, at the rate applied to unsecured short-term international commercial credits increased by one per cent."

839. See the joint proposal of Denmark, Finland, Greece and Sweden (A/CONF.97/C.1/L.216), reprinted in OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 137.

840. See Reinhart, supra note 139, at 177-178, stating that the impossibility of agreeing upon a rule on the interest rates was due, among others, to political reasons.

841. As previously stated in the text, the differing economic views of Western countries and Socialist ones led to contrasting opinions revolving

"around the question of whether the interest level in the creditor's country or the one in the debtor's country should be decisive. At the time of the diplomatic conference there were serious differences between the Western industrialized countries, where the amount of interest is formed in the market (naturally influenced by political measures) and had at that time reached considerable amounts, and most of the at-the-time-so-called socialist countries where the interest was fixed by law and relatively low. It was against this background that the Western industrialized countries aimed towards interest to be set according to the level of the creditor's country. This would have meant that debtors from those countries would have had to pay low interest to creditors from Eastern countries, but by contrast, debtors from the latter countries would pay high interest." Enderlein & Maskow, supra note 58, at 310.

For a reference to the discussion of this issue by the different delegations during the Vienna Conference, see OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 388-393.

842. See Schlechtriem, supra note 92, at 99, stating that the problems relating to interest payments arose partially out of religious beliefs. For similar statements, see also Rolf Herber, WIENER UNCITRAL-ÜBEREINKOMMEN ÜBER INTERNATIONALE WARENKAUFVERTRÄGE VOM 11. APRIL 1980 46 (2d ed., Cologne 1983); Nicholas, supra note 836, at 569; OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 416.

843. For this affirmation, see also Reinhart, supra note 139, at 177-178.

See also Peter Schlechtriem, Recent Developments in International Sales Law, 18 ISRAEL L. REV. 323 (1983), stating that during the 1980 Vienna Conference "[t]here were . . . irreconcilable, ideologically as well as economically motivated convictions on the issue of payment of interest for outstanding debts, in particular the purchase price: some Islamic countries, for instance, rejected an obligation to pay interest for religious reasons."

844. For this evaluation, see Schlechtriem, supra note 843, at 324.

845. See Article 78 CISG: "If a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it, without prejudice to any claim for damages recoverable under article 74."

846. Enderlein & Maskow, supra note 58, at 311.

This statement had often been repeated in judicial applications of Article 78; see, among others, OLG München, March 2, 1994, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 595, 596 (1994); OLG Frankfurt, January 18, 1994, reprinted in RECHT DER INTERNATIONALEN WIRTSCHAFT 240, 241 (1994); OLG Koblenz, September 17, 1993, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 934, 938 (1993); OLG Frankfurt a.M., June 13, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 591, 591 (1991).

847. Note, that in order for a payment to be in arrears no formal notice of default is necessary, as it is, on the contrary, in some national legal systems. See Denis Tallon, The Buyer's Obligation Under the Convention on Contracts for the International Sale of Goods, in INTERNATIONAL SALES, THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS, supra note 79, 7.1, 7.14, stating that "payment is due without any request or compliance with any formality on the part of the [creditor]." For a similar affirmation, see also Hans Herrmann Eherstein, Art. 78, in KOMMENTAR ZUM EINHEITLICHEN UN-KAUFRECHT 644, 646 (Peter Schlechtriem ed., Munich 1990).

848. Note that, since the obligation to pay interest is conceived as a general rule, "a debtor still remains liable for interest payments even if his default is due to an impediment beyond his control and he is, therefore, not liable for damages." Schlechtriem, supra note 92, at 100. "If, for example, the price is payable in the seller's currency and the buyer is prevented from paying by a temporary ban imposed by his government on the export of currency, and if under Article 79 the seller is able to claim the price when the ban ends, Article 78 seems to entitle him to interest." Nicholas, supra note 836, at 571.

Contra, in the sense that he assumes that interest is part of the damages and therefore wants to permit an exemption on the ground of impediments, see F.J.A. van der Velden, HET WEENSE KOOPVERDRAG 1980 EN ZIJN RECHTSMIDDELEN 405 (Deventer, 1988).

849. For this solution, see also Enderlein & Maskow, supra note 43, at 311, stating that the amount of interest "is fixed a priori and irrespective of the damage which is caused by the arrears in payment." Therefore, "the creditor should not have to show he actually incurred such a cost." Nicholas, supra note 836, at 570. For a similar statement, see also Herber & Czerwenka, supra note 43, at 348.

850. See, e.g., OLG Frankfurt a.M., January 18, 1994, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 240, 241 (1994); LG Hamburg, September 26, 1990, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 1015, 1019 (1990); AG Oldenburg i.H., April 24, 1990, reprinted in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 336, 338 (1991).

851. See Leif Sevón, Obligations of the Buyer under the Vienna Convention on the International Sale of Goods, JURIDISK TIDSKRIFT 327, 341 (1990), stating that "[t]he Convention established only the right to interest but deals neither with the rate of interest nor with the time for which interest may be calculated."

852. Ziegel, supra note 777, at 149. For a similar statement, see also Sevon, supra note 326, at 229.

853. For the distinction of gaps intra legem and gaps praeter legem when discussing the issue of the rate of interests on sums in arrears, see, most recently, Franco Ferrari, Uniform Application and Interest Rates under the 1980 Uniform Sales Law, 24 GA. J. INT'L & COMP. L. 467 (1995).

854. For papers on gap-filling under the CISG, see, among others, Stephen Rosenberg, The Vienna Convention: Uniformity in Interpretation for Gap-Filling -- An Analysis and Application, 20 AUSTRALIAN BUS. L. REV. 442 (1992); Hans Stoll, Regelungslücken im Einheitlichen Kaufrecht und IPR, PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 75 (1993).

855. See Article 7(2) CISG:

"Questions concerning matters governed by the Convention which are not expressly settled in it are to be 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."

856. For examples of issues falling outside the scope of application of the 1980 Sales Convention, see Articles 4(a), 4(b) and 5 CISG.

857. For a recent application of the rule mentioned in the text, see, e.g., OLG Koblenz, January 16, 1992, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 1019 (1992).

858. For a detailed discussion of the external gaps to be found in the CISG and their treatment, see, most recently, Bettina Frigge, EXTERNE LÜCKEN UND INTERNATIONALES PRIVATRECHT IM UN-KAUFRECHT (ART. 7 ABS. 2) (Bern, 1994).

859. For this statement, see also Ferrari, supra note 828, at 285.

860. See also Bonell, Art. 7, supra note 33, at 75-76, stressing the importance of the distinction between gaps in the sense of Article 7(2) and issues which are not within the scope of the Convention.

861. See Ferrari, supra note 828, at 282.

862. See supra text accompanying note 854.

863. For this question, see also Reinhart, supra note 828, at 377.

864. See, for this statement, Witz, supra note 68, at 146.

865. For this conclusion, see Guido Alpa & Mario Bessone, Inadempimento, rimedi, effetti della risoluzione nella vendita internazionale di cose mobili, in LA VENDITA INTERNAZIONALE, supra note 32, 165 at 207; Fritz Enderlein et al., supra note 48, at 245 (stating that "where the parties have not agreed the amount of interest will have to be calculated on the basis of the applicable domestic law"); Loewe, supra note 346, at 95; Schlechtriem, supra note 92, at 100 (stating the same); Denis Tallon, Art. 84, in COMMENTARY ON THE INTERNATIONAL SALES LAW, supra note 12, 611 at 612 (stating the question of what "interests are to be paid . . . is governed by the applicable domestic law").

866. For this conclusion, see also Herber & Czerwenka, supra note 43, at 347 (stating the rate of interest is to be determined by resorting to the law chosen by the rules of private international law); Ulrich Magnus, Währungsfragen im Einheitlichen Kaufrecht. Zugleich ein Beitrag zu seiner Lückenfüllung und Auslegung, RABELS ZEITSCHRIFT FÜR AUSLÄNDISCHES UND INTERNATIONALES PRIVATRECHT 116, 140-141 (1989) (according to which the law applicable to the rate of interest should be domestic law referred to by the rules of private international law); Piltz, supra note 21, at 280 (stating the rate of interest is governed by the domestic law chosen by the rules of private international law); Peter Schlechtriem, Recent Developments in International Sales Law, ISRAEL L. REV. 309, 324 (stating "there is an obligation to pay interest, but the details of this obligation are left up to the domestic law called upon by the rules of private international law. This is especially true for the chargeable amount of interest").

See also Herbert Asam & Peter Kindler, Ersatz des Zins- und Geldentwertungsschadens nach dem Wiener Kaufrechtsübereinkommen vom 11.4.1980 bei deutsch-italienischen Kaufverträgen, RECHT DER INTERNATIONALEN WIRTSCHAFT 841, 841 (1989); Peter Kindler, Einige Haupttragen des CISG im Spiegel der neueren deutschen Kommentarliteratur, JAHRBUCH FÜR ITALENISCHES RECHT 201, 216 (1992); Magnus, supra note 156, at 615; Peter Rummel, Schadenersatz, höhere Gewalt und Fortfall der Geschäftsgrundlage, in DAS EINHEITLICHE WIENER KAUFRECHT, supra note 199, 177 at 184-185; Schlechtriem, supra note 92, at 100.

867. Enderlein & Maskow, supra note 58, at 312.

868. For this view, see Hans Stoll, Inhalt und Grenzen der Schadensersatzpflicht sowie Befreiung von der Haftung im UN-Kaufrecht im Vergleich zu EKG und BGB, in EINHEITLICHES KAUFRECHT UND NATIONALES OBLIGATIONENRECHT, supra note 16, 257 at 279-280.

869. See, e.g., Hans Stoll, Internationalprivatrechtliche Fragen bei der landesrechtlichen Ergänzung des Einheitlichen Kaufrechts, in FESTSCHRIFT FÜR FERID 495, 510 (Andreas Heldrich ed., Frankfurt a.M. 1988).

870. Honnold, supra note 25, at 526; for a similar reasoning in legal writing, see also Heuzé, supra note 177, at 341.

871. Honnold, supra note 25, at 525 n.5.

872. Giulio Ponzanelli, Art. 78, NUOVE LEGGI CIVILI COMMENTATE 308, 309.

873. Indeed, "the text speaks of interest as something distinct from damages" (Nicholas, supra note 836, at 570). The formula mentioned in the text, however, would result in "the fact that the interest claim would . . . move very near a claim of damages." Enderlein et al., supra note 48, at 245.

874. For court decisions dealing with the issue of the calculation of the rate of interest by applying domestic law, see, e.g., OLG München, March 3, 1994, reprinted in NEUE JURISTISCHE WOCHENSCHRIFT RECHTSPRECHUNGS-REPORT 1075 (1994); LG Frankfurt, September 16, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 552 (1991); OLG Frankfurt, June 13, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 591 (1991); LG Hamburg, September 26, 1990, reprinted in EUROPÄISCHE ZEITSCHRIFT FÜR WIRTSCHAFTSRECHT 188 (1991); AG Oldenburg i.H., April 24, 1990, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFARHRENSRECHTS 336 (1990); LG Stuttgart, September 6, 1989, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 984 (1990) [note: appears to be same case as LG Stuttgart, August 31, 1989 cited below]; LG Stuttgart, August 31, 1989, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 317 (1990).

For an arbitral award applying the domestic law as the law applicable to interest rates, see, e.g., Arbitral Tribunal ICC, No. 7153, published in JOURNAL DU DROIT INTERNATIONAL 1002 (1992).

875. See Juzgado Nacional de Primera Instancia en lo comercial No. 10 Buenos Aires, quoted in Piltz, supra note 68, at 1005 n.79; Juzgado Nacional de Primera Instancia en lo comercial No. 7 Buenos Aires, reported in CASE LAW ON UNCITRAL TEXTS (case 21).

876. See Article 9 CISG:

"(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."

877. For a reference to this practice, see Piltz, supra note 68, at 1005.

878. Eva Diederichsen, Commentary to Journal of Law and Commerce Case I: Oberlandesgericht Frankfurt am Main, 14 J.L. & COM. 177, 181 (1995).

879. Id.

880. See Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft in Österreich, Nos. 4366 and 4318, partially reprinted in RECHT DER INTERNATIONALEN WIRTSCHAFT 590 (1995).

881. Id. at 591.

882. Id.

883. Id.

884. See supra text accompanying note 839.

885. See Peter Schlechtriem, Anmerkung, RECHT DER INTERNATIONALEN WIRTSCHAFT 592, 593 (1995).

886. See text accompanying note 839.

887. See, e.g., OLG Frankfurt a.M., June 13, 1991, published in NEUE JURISTISCHE WOCHENSCHRIFT 3102 (1991); LG Hamburg, September 26, 1990, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFARHRENSRECHTS 400 (1991); AG Oldenburg i.H., reprinted in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 336 (1991).

888. Two early German court decisions referred to the domestic law of the creditor as the law applicable; see LG Stuttgart, August 31, 1989, reprinted in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 317 (1991); LG Frankfurt, September 16, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 952 (1991).

889. For this affirmation, see Ferrari, supra note 828, at 288; Magnus, supra note 68, at 90.

890. See for a similar conclusion, Piltz, supra note 21, at 281; Reinhart, supra note 828, at 378.

891. See supra note 244.

892. See supra text accompanying notes 253-64.

893. See supra text accompanying notes 256-60.

894. See supra the text of Article 4(2) of the EEC Convention, reproduced in note 257.

895. See supra text accompanying notes 259-60.

896. See Joseph Lookofsky, The 1980 United Nations Convention on Contracts for the International Sale of Goods, in INTERNATIONAL ENCYCLOPEDIA OF LAWS 1, 129 (Blanpain ed., Deventer 1993) (stating that "the validity of a contractual claim to interest . . . remains a national concern. . . . In those countries where interest is forbidden, the mere mention of interest in the agreement will render it invalid"): Schlechtriem, supra note 103, 132 n.21 (stating "[i]nsofar as a national law does not allow interest -- for religious reasons, for example -- [Article 78] has no effect"); Schlechtriem, supra note 92, at 100 n.414 (stating that "[t]o the extent applicable domestic law prohibits interest payments, Article 78 would of course, be unenforceable").

897. The view expressed by Nicholas, supra note 836, at 570, who states that if the domestic law "provides no relevant formula for calculating interest, it would seem that the court should look to the cost of credit at the creditor's place of business," has been criticized. It has been said that this solution "does not seem practicable because the solution aspired to by the Western industrialized countries, which was not adopted at the diplomatic conference, would in part be introduced by way of interpretation. Other countries would then be inclined to interpret into the Convention their own rejected proposals." Enderlein et al., supra note 48, at 245.

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