Excerpt from John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed. (1999), pages 370-372. Reproduced with permission of the publisher, Kluwer Law International, The Hague.
"The buyer must pay the price on the date fixed by or determinable from the contract and this Convention without the need for any request or compliance with any formality on the part of the seller."
This provision was inherited from ULIS 60, which was designed to overturn the rule of some Continental legal systems that a party may not recover damages for delay unless he has given an advance warning or protest directed at delay. The purpose of Article 59 is to eliminate unnecessary formalities or delays in payment when the date for payment is "fixed by or determinable from" the contract and the Convention. Implicit in this language is the policy that liability for delay in performance should arise only when the date for performance is fixed or determinable. As we shall see, the Convention’s general rules on the obligations of the parties are consistent with this policy.
Article 59 may be applied without difficulty when the seller has delivered the goods on credit; in this case the price will be due on a fixed date and should be remitted by the buyer on that date "without the need for any request or the compliance with any formality on the part of the seller." Normally a delay in payment will not result in damages other than an obligation to pay interest on any "sum that is in arrears." See Art. 78, infra at §420. In any event, in connection with the delivery the seller will normally send the buyer an invoice that would be understood as a request for payment.
In documentary exchanges, the statement in Article 59 that the buyer must pay without "any request" calls for interpreting Article 58, supra at §333. Article 58(1) states that the buyer must pay the price when the seller places the goods "at the buyer’s disposal." Before the seller can place the goods at the buyer’s "disposal" he must complete a series of operations that may include procurement or production of the goods, packaging (Art. 35(2)(d)) and arrangements for carriage (Art. 32) and [page 370] documentation (Art. 58). The contract normally allows the seller to complete these operations within a specified period or prior to a specified date. Only the seller knows when all these steps have been completed; this requires the seller to take the lead. Consequently, the seller does not place the goods "at the buyer’s disposal" (Art. 58(1)) until it informs the buyer that the goods are ready. At this point, the buyer will know that it has the next move, and that its duty to pay the price has matured. At this point Article 59 makes it clear that the buyer must pay without any "request or...formality."
In a helpful analysis of Article 59, Professor Tallon supports interpreting the Convention so that liability for delay in performance will not arise until the date for performing is fixed or determinable. Tallon also raises this interesting point: Article 59 rejects domestic formal demands for payment of the price whereas the French Civil Code, Art. 1139, requires a formal demand (mise en demeure) for every kind of obligation. Does this suggest that the Convention preserves such domestic formal requirements for all obligations other than payment of the price?
It seems difficult to reconcile such domestic formalities with Articles 30, 33 and 45 (obligations of the seller) and 53 and 61 (obligations of the buyer). Each set of provisions states that the party "must" perform the duties "required by the contract and this Convention" (Arts. 30, 53), and adds that when a party "fails to perform any of his obligations under the contract or this Convention" the other party "may exercise" the full battery of remedies that the Convention provides for breach (Arts. 45, 61). There is no indication in the legislative history that Article 59 on payment of the price carried a negative implication that domestic formalities in other settings could postpone the obligations and remedies established by the Convention in Articles 30, 53, 45 and 61. (Cf. Arts. 45(3) and 61(3) barring application for a "period of grace".) The draft that became Article 59 attracted little attention in UNCITRAL and the Diplomatic Conference: discussion was limited, on one hand, to suggestions that the provision was unnecessary and, on the other, to comments that it was found in ULIS and might be "useful". [page 371]
In sum, Article 59 embodies two principles: (1) Domestic formalities such as mise en demeure may not interfere with obligations and remedies established by the Convention. (2) liability for delay must be based on failure to comply with a date or performance that is fixed or determinable. Both principles can be implemented through proper interpretation of the contract and the Convention without subjecting international sales to domestic formalities.[page 372]
FOOTNOTES: Chapter on Article 59
1. This article, except for minor redrafting, is the same as Art. 55 of the 1978 Draft, and is closely patterned on ULIS 60.
2. Treitel, Remedies (Int. Enc.) §75: France (mise en demeure); Germany (Mahnung); Treitel, Remedies (1988) 129–130, 132; Nicholas, French Law of Contract 232–234.
3. Accord: Huber, 43 Rabels Z 413, 515 (1979).
4. Tallon, Parker Colloq. 7–14, §7.03(b).
5. See V YB 31, IV YB 34, VIII YB 50, O.R. 47, 370–371; Docy. Hist. 177, 211, 343, 437, 591–592. ULIS included a provision (Art. 20) rejecting formalities as a prelude to the seller’s obligation to deliver where "the parties have agreed upon a date for delivery or where such date is fixed by usage..."—a provision similar to ULIS 60 on which CISG 59 was based. Language based on ULIS 20 disappeared in the general consolidation and streamlining of ULIS’s remedial system; there was no indication that the omission was designed to reestablish domestic formalities. See IV YB 40, 51–60, V YB 83–84, VI YB 67–72; Docy. Hist. 117, 128–137, 162–163, 143–150. It is probable that ULIS 20 was considered unnecessary in view of CISG 33 which includes detailed provisions for determining the time when the "seller must deliver the goods".