BIO:
Lecturer in “private law aspects of international trade”, at The Law Faculty of
the University of Troms<sl o>, Norway. Editor of the International Trade Law
Monitor – <http://itl.irv.uit.
no/trade law/>.
SUMMARY:
… (1) If under the contract the buyer is to specify the form, measurement or
other features of the goods and he fails to make such specification either on
the date agreed upon or within a reasonable time after receipt of a request from
the seller, the seller may, without prejudice to any other rights he may have,
make the specification himself in accordance with the requirements of the buyer
that may be known to him. … In the latter case, the rule that the seller can
only make the specification unilaterally in accordance with the requirements of
the buyer that “may be known to.” … The setting of specifications can also
have a bearing on the seller’s right to obtain specific performance under
Article 62, or to avoid the contract under Article 64. … The buyer’s
non-compliance can have a bearing on a seller’s right to suspend performance and
to determine whether there has been an anticipatory breach of contract. …
Where the breach is “fundamental,” it gives the seller the right to avoid the
contract. …
TEXT:
[*239]
A fundamental principle of the United Nations Convention on Contracts for the
International Sale of Goods
1
is the recognition of the international character
2
of the transaction it regulates. Cancellation of an international contract can
impose greater burdens than the typical domestic transaction. Accordingly, the
Convention contains a number of provisions designed to help preserve the bargain
the parties have made.
3
Article 65 is one such provision. It states: [*240]
(1) If under the contract the buyer is to specify the form, measurement or other
features of the goods and he fails to make such specification either on the date
agreed upon or within a reasonable time after receipt of a request from the
seller, the seller may, without prejudice to any other rights he may have, make
the specification himself in accordance with the requirements of the buyer that
may be known to him.
4
(2) If the seller makes the specification himself, he must inform the buyer of
the details thereof and must fix a reasonable time within which the buyer may
make a different specification. If, after receipt of such a communication, the
buyer fails to do so within the time so fixed, the specification made by the
seller is binding.
5
Since the discussion over its retention at the Vienna Conference,
6
Article 65 has generated little academic debate beyond the commentaries in which
it appears
7
and even less “litigation.”
8
This paper examines the workings of the provision through analysis of its key
words.
9
It seeks to develop and supplement an understanding of their meaning by
reference to the legislative history of this provision, scholarly writings on it
and, where possible, by analogy
10
to other parts of the Convention. [*241] An attempt has been made to place
Article 65 within the context of the Convention as a whole.
Article 65 applies in circumstances where not all the details related to the
characteristics of the goods are fixed in the agreement. It is agreed or assumed
from the Article that the buyer should specify the missing details later. The
Article leaves no doubt that the contract is formed without the details, which
are yet to be provided by the buyer.
Where the buyer fails to provide these specifications, the Article facilitates
the seller’s ability to perform, providing a convenient mechanism for the seller
to keep the contract alive by laying down a procedure whereby the seller can
ultimately supply the seller’s own specifications.
11
This enables the seller to perform a contract that would otherwise have been too
vague. The Article protects the buyer by the obligations it places on the seller
who chooses to use the provision.
12
It also gives the buyer every opportunity to make its own specifications, even
after the time that the buyer should have done so.
13
By allowing the fixing of the goods in a specification sale, Article 65 may
assist in the determination of damages under Articles 74 to 77.
14
Under The Contract
The buyer’s obligation to set the specifications may be expressly stated in the
contract or may arise under the contract pursuant to Article 8 (interpretation
of statements or other conduct of a party)
15
or Article 9 (usages and practices applicable to the contract).
16
The Secretariat Commentary appears to distinguish between a buyer’s contract
right to set the specifications and contract obligation to set the
specifications.
17
Other commentators do not so distinguish. Instead, they hold that a right
[*242] to specify should be interpreted as an obligation to specify.
18
The latter is the preferred view.
Article 65 only applies when a contract of sale has been concluded. Under the
Convention, for a proposal to be capable of ripening into a contract, it must be
“sufficiently definite.”
19
A prerequisite to a proposal ripening into a contract is that the proposal must
indicate the goods.
20
A general agreement that the buyer should specify the goods required would be
too broad to qualify under Article65 and “would have no legal effect.”
21
However, an indication of the goods without specifying their “form, measurement
or other features,”
22
can be regarded as sufficient.
23
Form, measurement or other features
Intent
24
is the key to determining the scope of the phrase “form, measurement or other
features.”
25
Where the requisite intent is present, this phrase is sufficiently wide to cover
most characteristics of the goods, including such matters as dimensions, size,
shape, style, version, model, aspects of design, color, texture, hardness,
quality, and technical details of the goods. One commentator is of the view
that:
When the contract states a fixed price, rather than a ‘cost plus’ or similar
formula, the parties probably would not intend that the buyer’s specifications
should substantially affect the cost. Similarly, the parties probably would not
intend that the seller could have wide discretion to decide the characteristics
of the buyer’s goods. Consequently, references in the contract and in Article 65
to ‘the form, measurements or other features of the goods’ should be construed
with sufficient strictness to avoid these problems.
26
[*243]
“Reasonable Time”
The phrase “reasonable time” appears in Article 65(1) and (2).
27
Article 65 provides that where the contract does not set the date on which the
buyer is to make the specification, the seller may request him to make the
specification within a “reasonable time.”
28
If the seller proceeds to fix the specification pursuant to Article 65(2), the
buyer must be given a “reasonable time” within which to make a different
specification.
29
In either instance, what is “reasonable” will vary depending on the
circumstances of the case, including such factors as the location of the parties
and their known requirements.
No time is indicated by which the seller is to make his Article 65(1) request,
or by which the seller is to inform the buyer of the details of a specification
fixed by the seller pursuant to Article 65(2). In either case it should be early
enough, with respect to the other obligations under the contract, to give the
buyer reasonable time within which to comply (or to make a different
specification), and for the seller subsequently to make delivery.
30
It has been said, with respect to the seller’s Article 65(1) request:
Where the seller invites the buyer only when the contract is nearing his
performance, the period will be a short one for the buyer could adapt himself to
the specification ever since the conclusion of the contract; and the mechanism
regulated here cannot be abused so as to grant him additional options for
observing the market situation to the detriment of the seller.
31
With respect to the seller’s Article 65(2) notice, it has been said that the
reasonable time “will be a short time in general because the buyer is already in
breach of contract and he is only required to make a decision.”
32
With respect to the time in which the seller is to act, “the seller should
specify early enough to leave the buyer a reasonable time to react before
[*244] manufacture must commence. Where this is no longer possible, the seller
will reflect on whether he exercises his right at all.”
33
Receipt
The word “receipt” also appears in Article 65(1) and (2).
34
The general rule under Part III of the Convention states that “if any notice,
request or other communication is given or made by a party … 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.”
35
This rule does not apply to either a request under Article 65(1) or a notice of
specification made by the seller pursuant to Article 65(2). In either case, to
be effective, the communication must be received by the buyer.
36
This places an added burden on the seller
37
who must be assured that the communication has been received.
38
[*245]
Although the general rule on communications does not apply to the seller’s
communications made pursuant to Article 65, it does apply to the buyer’s
responses to such communications. A delay or error in the transmission of the
response, or its failure to arrive, does not deprive the buyer of the right to
rely on it, as long as the response was made by means appropriate in the
circumstances.
39
May Be Known To
The right to request the buyer to make the specification is beneficial to the
seller because it has “teeth.” If the buyer fails to make the specification, the
seller may do so.
40
However, whether it will be prudent for the seller to take advantage of this
right will depend on the circumstances. In the normal situation, the request
alone should produce the response desired. When it does not, the reasons may
range from the buyer who does not care as to the unspecified form, measurement
or other features of the goods that he has ordered to the recalcitrant buyer who
no longer desires to consummate the contract.
In the latter case, the rule that the seller can only make the specification
unilaterally in accordance with the requirements of the buyer that “may be known
to.” the seller can present difficulties. These difficulties stem from the
meaning of the phrase “may be known to.” Controversy can be associated with the
dimensions of this phrase and what the seller knows or may be presumed to know.
Elsewhere within the Convention there are several references to knowledge and
awareness which express different gradations of the requirement.
41
The words “may be known to,” and the circumstances in which they are used, allow
appropri [*246] ate application of the tests provided by Article 8 (intent)
42
and Article 9 (usages)
43
in defining the scope of this phrase:
The requirements of the buyer that the seller may be presumed to know and take
into account with respect to the setting of specifications include the intent of
the buyer that the seller is expected to have understood, as determined through
application of Article 8, and any relevant usages that the seller should have
taken into account as defined by Article 9.
Articles 8 and 9 are contained in Part I, General Provisions, and permeate the
Convention. An argument may be made that they should be applied directly to what
the seller may be presumed to know when making the specifications. In any event,
the circumstances in which “may be known to” is used within Article 65 make
appropriate a closely analogous understanding to Articles 8 and 9, with much the
same result: a uniform interpretation of Article 65 that is in accordance with
the general principles on which the Convention is based.
44
Article 8 applies to pre-contract and post-contract communications and actions,
which communications are similarly relevant under Article 65. Both the
subjective and objective tests provided by Article 8 are relevant. Under Article
8(1) what the seller is asked is whether the seller “knew or could not have been
unaware” of information which impacts upon the specification the seller is to
make.
45
There are two parts to this standard. The first is “Could not have been
unaware.” Of what a party “could not have been unaware,” it has been suggested
that this “does not [impose] an express obligation to conduct relevant
research.”
46
The second is “What may be known.” Similarly, what “may be known to” the seller,
has been said to require knowledge or a strong assumption of knowledge on the
part of the seller, so that a seller “may have known” requirements of the buyer
that the seller is presumed to know, having been in a good position to learn
them.
47
It is said that although this “does [*247] not require the seller … to make
efforts to obtain such knowledge … [the seller] must not ignore clues.”
48
The objective tests in Article 8(2) and (3) offer further assistance in defining
the scope of what the seller is to be regarded as having known or understood
from communications with the buyer (providing a measure of the comprehension
objectively expected of the seller with regard to any “clues”).
49
Article 8(2) applies whenever it is not possible to apply Article 8(1). This
suggests that, based on the buyer’s communication to the seller, the seller
should have the understanding of “a reasonable person of the same kind [as the
seller] … in the same circumstances.”
50
Article 8(3) states that in determining the degree of “understanding a
reasonable person would have had, due consideration is to be given to all
relevant circumstances of the case including the negotiations, any practices
which the parties have established between themselves, usages and any subsequent
conduct of the parties.
51
Where there is a usage of which the seller should take account in making his
specification, the formulation in Article 9 which uses the words “knew or ought
to have known”
52
should be applied.
Distinguishing the formulations in Article 8 and 9, it has been commented that
“‘Could not have been unaware’ appears close to actual knowledge. It can be
contrasted with ‘ought to have known’ or ‘discovered’ which is used in several
other provisions of the Convention … While the latter formula appears to
impose a duty to investigate the former may not ….”
53
It has also been suggested that in accordance with the principle of good faith,
the seller is obligated to take into consideration “probable or presumed needs
of the buyer;” and that the seller cannot, for example, take the chance of
specifying non-stylish goods “when he is aware of fashion trends in the buyer’s
coun [*248] try, even when he is not informed of the concrete needs of the
buyer.”
54
That a party in the sale of goods has responsibility for the acts or omissions
of his “employees”
55
may be stated to be a tenet of the Convention and perhaps further as lex
mercatoria
56
for international sales. This may be assumed from the discussion of the
formulation of the text for Article 80 of the words “by his own act or omission”
57
where it was concluded that no additional provision was necessary to include
“persons whom that party may employ in the performance of the contract” as it
was universally accepted that such “employees” would be included by reference to
the party.
58
This must also apply to the knowledge of such employee or agent, either:
1. By an analogous presumption applied to the knowledge of employees. The seller
and his relevant employees being regarded as a single entity. Such employees
being understood to be covered within the meaning of the word “seller”. Thereby
imputing upon the seller all the knowledge of his employees who are part of the
transaction; or [*249]
2. By direct application of the principle – of the seller having responsibility
for the acts and omissions of employees involved in the transaction. Where the
seller is unaware of relevant knowledge possessed by his “employees” this can be
regarded as an omission on the part of the seller for which the seller is
responsible. The seller should thus act to ensure that he possesses relevant
information known to his “employees” before making the specification himself.
The former imposes a more strict responsibility. The seller cannot excuse itself
from failure to discover some obscure item of information provided by the buyer
to the seller’s employee, which may not on its own appear to be significant,
and, of which, on the latter formulation, the seller may be able to avail itself
in some circumstances. This could be unduly harsh on a long drawn-out
transaction involving several individuals on both sides, or the seller’s side.
Given the safeguards provided the buyer within Article 65, the latter
interpretation should be sufficient. In either event, it is clear that, with
respect to “employees”,
59
the seller is under an obligation at the very least, to investigate what they
know about the buyer’s requirements that is relevant to the specification the
seller makes. However, the seller who did not actually know and could not have
known the buyer’s requirements, is not bound to consider them. Determination of
what “may be known to” the seller is a question of evidence and appraisal of the
circumstances.
60
If the seller avails himself of Article 65, on failure to make specifications in
accordance with the provisions of Article 65, the seller is himself in breach of
contract.
61
The remedies available to the buyer are all those that may be relevant in the
circumstances as resulting from the seller’s breach.
62
Where the seller does not take into account requirements which “may be [*250]
known to” him, and subsequently delivers goods, such goods would be regarded as
non-conforming goods.
63
Also, in considering evidentiary issues, the seller must be mindful of the
Convention’s “informality principle,” pursuant to which evidence of such
knowledge need not be confined to written communications.
64
Seller may
The seller’s right to use the remedy prescribed by Article 65 is a discretionary
one, the seller is under no obligation to do so. However, whether the seller
does or does not use the remedy, the seller must take into account the
consequences for mitigation of loss.
65
Several factors will influence the seller’s decision as to whether to utilize
the provision. Practical considerations will be important, including: the time
available for performance under the contract; the seller’s appraisal of the
buyer’s commitment to the contract; the certainty of payment under the contract;
and any implications for future business relations.
Without prejudice
Action under Article 65 is “without prejudice” to other remedies available to
the seller. Damages are the typical remedy sought for breach of contract. For
the seller to assert his right to damages
66
he “must take such measures as are reasonable in the circumstances to mitigate
the loss.”
67
[*251]
The setting of specifications can also have a bearing on the seller’s right to
obtain specific performance under Article 62,
68
or to avoid the contract under Article 64.
69
In the case of specific performance, Article 65 is designed to assist in the
prevention of the buyer escaping its obligations by refusing to supply missing
specifications when contractually bound to do so. However, an attempt to use
Article 65 as a device for making the buyer perform his part of the contract in
circumstances in which he is reluctant or refuses to do so, will in practice
seldom be the most beneficial legal solution for the seller. In these
circumstances, Article 65 leaves room for the buyer to raise complicated
questions of evidence and appraisal.
The fact pattern that leads to examination of Article 65 (buyer’s non-compliance
with his obligation to specify the form, measurement or other features of the
goods) can also be cross-referenced to Article 80 as such a non-compliance by
the buyer can be a defense to allegations of non-performance on the part of the
seller. Other cross-references to consider are Articles 71 and 72. The buyer’s
non-compliance can have a bearing on a seller’s right to suspend performance and
to determine whether there has been an anticipatory breach of contract.
Binding – Article 65 and its interaction with the right to avoid. Special issues
Article 65 confers an optional right
70
on the seller to make his own specifications and keep the contract alive.
71
Furthermore, Article 65 is to operate without prejudice to the seller’s other
rights.
72
Where the seller chooses not to perform by making his own specifications, but
instead makes a request that the buyer should perform, under Article 62, the
breach may eventu [*252] ally become fundamental, if the buyer refuses to
perform.
73
The “without prejudice” language of Article 65 appears to indicate that it is
not intended to affect any other available remedies, including the right to
avoid the contract. Despite this, taking the Convention as a whole and the
integral working of its provisions, it would appear that exercise of seller’s
rights under Article 65 can affect the seller’s right to avoid the contract.
This area is complicated because Article 65 is designed to assist performance of
the contract, not its avoidance. Put simply, the ability for the seller to make
a binding specification in Article 65 is not synonymous with performance, nor is
it necessarily regarded by the seller as making an election to perform.
74
Yet, prior to use of Article 65, the seller may be entitled to avoid the
contract should the buyer not supply the missing specifications; and after
application of the Article, this right to avoid may be lost.
75
One caveat is that the phrase “without prejudice to any other rights” does not
necessarily mean that a failure to exercise this optional remedy will not
prejudice a party’s ability to exercise still another right. As an example, like
Article 65, Article 63 provides an optional remedy
76
(in that case, the CISG’s “Nachfrist”-type remedy).
77
In that setting, a court has indi [*253] cated that failure to exercise this
optional remedy prejudiced a buyer’s ability to avoid the contract.
78
There can be circumstances in which a similar logic may be applied to a seller’s
failure to exercise the optional remedy provided under Article 65.
Fundamental breach and avoidance of contract under Article 64(1)(a) or Article
72
The problem concerns the relationship between the provisions of Article 65 being
“without prejudice to any other rights” and those defining fundamental breach
79
and the consequentially available remedies.
80
Where the breach is “fundamental,” it gives the seller the right to avoid the
contract.
81
The buyer’s initial failure to make a specification will not amount to a
fundamental breach unless the seller is deprived of what he is entitled to
expect under the contract.
82
This can only happen where time is, for whatever reason, essential to the
seller.
On their natural meaning, the words “without prejudice to any other rights” in
Article 65(1) might seem to apply to the whole of Article 65 and the remedy it
provides. For this to be true, the seller would have to be entitled to avoid
even after the seller’s specification has become binding under the Article.
Whether this is possible, will depend on the way in which Article 65 operates in
relation to a fundamental breach as defined in the Convention.
83
If the effect of the breach is to be looked at in the light of the seller’s
specifications having become binding, and, thus, enabling the seller to perform,
the breach will not be fundamental.
84
The result is that “without prejudice” to the seller’s other rights, as used in
Article 65 with respect to avoid [*254] ance of the contract, is confined to
the seller putting into motion the apparatus for making a binding specification,
and no longer applies once these specifications have become binding.
85
Avoidance of contract under Articles 63 and 64(1)(b)
The Secretariat Commentary suggests, with respect to factual circumstances to
which Article 65 would apply, that one of the alternatives includes that under
Article 63 the seller may “fix an additional period of reasonable length for the
buyer to perform his obligation,”
86
and on his subsequent non-performance, the seller may avoid under Article
64(1)(b).
87
The obligation to which Article 64(1)(b) refers is restricted to the buyer’s
obligation to “perform his obligation to pay the price or take delivery of the
goods.”
88
To extend it to the buyer’s obligation to provide specifications as part of the
buyer’s “obligation to … take delivery of the goods”
89
would put a strained construction on the wording of Article 64(1)(b), which
singles out and limits its scope to the two primary obligations of the buyer,
namely, payment and delivery.
90
Indeed several authors regard the Commentary to be in error on this point.
91
Clearly, an argument against the right to avoid after the fixing of an
additional time is that a minor breach of contract should not be made
fundamental by the setting of a deadline. However, without Article 65 it is
likely that a similar effect will [*255] eventually result (the seller being
entitled to avoid for fundamental breach), unless it is possible for the seller
also to perform without the aid of Article 65, as argued above.
FOOTNOTES:
href=”#r1″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1025″>n1.
U.N. Convention on Contracts for the International Sale of Goods, U.N. Doc.
A/Conf. 97/18 (1980), reprinted in 19 Int’l Legal Mats. 668 1980 [hereinafter
CISG or Convention]. Official Records of the United Nations Conference on
Contracts for the International Sale of Goods, 10 March 11 April, 1980 A/Conf.
97/19 [hereinafter Official Records]. The UN-certified English text is published
in 52 Fed. Reg. 6262, 6264-6280 (Mar. 2, 1987).
href=”#r2″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1026″>n2.
As of February 1997, the international sales law consists of 47 Contracting
States: Argentina, Australia, Austria, Belarus, Belgium, Bosnia-and-Herzegovina,
Bulgaria, Canada, Chile, China, Cuba, Czech Republic, Denmark, Ecuador, Egypt,
Estonia, Finland, France, Georgia, Germany, Guinea, Hungary, Iraq, Italy,
Lesotho, Lithuania, Mexico, Netherlands, New Zealand, Norway, Poland, Republic
of Moldova, Romania, Russian Federation, Singapore, Slovak Republic, Slovania,
Spain, Sweden, Switzerland, Syrian Arab Republic, Uganda, Ukraine, United States
of America, Uzbekistan, Yugoslavia, and Zambia.
href=”#r3″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1027″>n3.
Illustrated by the gap filling for price where none is agreed Article 55. Also
by the restricted grounds for avoidance of contract Articles 49, 64 and 73.
Further by such Articles providing remedies as 46, 47, 48, 50, 51, 52(2), and
65. Beyond these Articles it may be described as pervasive throughout the
Convention and manifested in the Convention’s implied terms which provide the
parties with an agreement in the absence of their agreeing express terms.
href=”#r4″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1028″>n4.
CISG, supra note1, art. 65. Italicization of keywords added by author.
href=”#r5″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1029″>n5.
CISG, supra note 1, art. 65.
href=”#r6″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1030″>n6.
The text of the Vienna Conference appears in Annex I of the Final Act of the
1980 Vienna Conference, U.N. Doc. A/Conf. 97/19 (1980) [hereinafter Vienna
Conference].
href=”#r7″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1031″>n7.
Article 65 is historically tied to Article 67 of the Uniform Law for
International Sales (ULIS) under the 1964 Hague Sales Convention and was Article
61 in the 1978 UNCITRAL Draft Convention. There was considerable discussion in
the Vienna Conference as to whether Article 61 of the Draft Convention should be
retained. See Vienna Conference, supra note 6. Suggestions included that it gave
the seller a privilege for which the buyer had no equivalent; that it was not in
line with existing trading practice, which gave adequate protection in the
provisions related to fundamental breach. For a comparison with the earlier ULIS
text, see V. Knapp, Specification by Seller, in Commentary on the International
Sales Law: The 1980 Vienna Sales Convention 476 (C. M. Bianca & M. J. Bonell
eds., 1987).
href=”#r8″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1032″>n8.
The word “litigation” encompasses reported arbitral proceedings as well.
href=”#r9″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1033″>n9.
The key statutory words are: “under the contract”; “form, measurement or other
features”; “reasonable time”; “receipt”; “may be known to”; “seller may”;
“without prejudice”; and “binding”.
href=”#r10″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1034″>n10.
For further reading on this subject see J. Hellner, Gap Filling by Analogy –
Article 7 of the U.N. Sales Convention in its Historical Context, in Festskrift
till Lars Hjerner, Studies in International Law 219 (Norstedts Forlag, et al.
eds., 1990).
href=”#r11″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1035″>n11.
See CISG, supra note 1, art. 65(1).
href=”#r12″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1036″>n12.
See id. art. 65(2).
href=”#r13″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1037″>n13.
See id.
href=”#r14″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1038″>n14.
See CISG, supra note 1, arts. 74 to 77. For other reference to the role of
Article 65 in the context of its antecedent, Article 67 of the ULIS, see Hans
Dolle, Kommentar zum Einheitlichen Kaufrecht 394 (1976). For specific references
to CISG Articles 74 and 75, see J. Honnold, Uniform Law for International Sales
Under the 1980 United Nations Convention 447 (2d ed. 1991).
href=”#r15″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1039″>n15.
CISG, supra note 1, art. 8.
href=”#r16″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1040″>n16.
See id. art. 9.
href=”#r17″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1041″>n17.
Secretariat Commentary, CISG Ann. art. 65, P5 (1993).
href=”#r18″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1042″>n18.
Knapp, supra note 7, at 482. See also Fritz Enderlein & Dietrich Maskow,
International Sales Law 249 (1992).
href=”#r19″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1043″>n19.
CISG, supra note 1, art. 14.
href=”#r20″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1044″>n20.
Knapp, supra note 7, at 477.
href=”#r21″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1045″>n21.
See id.
href=”#r22″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1046″>n22.
See CISG, supra note 1, art. 65.
href=”#r23″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1047″>n23.
Secretariat Commentary, supra note 17, P4.
href=”#r24″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1048″>n24.
For a definition of intent, see CISG, supra note 1, art. 8.
href=”#r25″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1049″>n25.
CISG, supra note 1, art. 65(1).
href=”#r26″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1050″>n26.
Honnold, supra note 14, at 447-48.
href=”#r27″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1051″>n27.
CISG, supra note 1, art. 65.
href=”#r28″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1052″>n28.
See id. art. 65(1).
href=”#r29″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1053″>n29.
See id. art. 65(2).
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See Enderlein & Maskow, supra note 18, at 250.
href=”#r31″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1055″>n31.
See id.
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See id. at 252.
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See id. at 251.
href=”#r34″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1058″>n34.
CISG, supra note 1, art. 65.
href=”#r35″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1059″>n35.
See id. art. 27.
href=”#r36″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1060″>n36.
The two general rules on effective communications relate to dispatch (Part II,
CISG, supra note 1, art. 24) and to receipt (Part III, CISG, supra note 1, art.
27). Receipt as used here is regarded as analogous to its definition and use in
Part II.
Article 24 which applies to Part II of the Convention determines for that Part
when a communication “reaches” the person to whom it is addressed. See Honnold,
supra note 14, at 249. It is persuasively argued that it should be applied by
analogy to the exceptions to the dispatch rule applied in Part III of the
Convention. See Honnold, supra note 14, at 250. This results in a consistent
solution for the definition of receipt within the Convention and means that the
much greater detail existing on receipt in relation to Article 24 can be applied
here. See, e.g., the Official Records of the prior uniform law, ULIS, p. 26.
Because a communication that ‘reaches’ the addressee when it is delivered to his
place of business or mailing address … will have legal effect even though some
time may pass before the addressee … knows of it … even thought the
addressee may not know of its delivery. (Secretariat Commentary, paragraphs 3
and 4), a prudent response to application of Article 24 concepts to Part III of
the Convention is the use of a contract clause which identifies by position
title, parties to whom notices or other communications must be sent.
A. Kritzer, 1 Int. Contract Man., 193 (1994).
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Burden of proof and other procedural issues are traditionally for the
determination of the domestic court; further discussion is outside the scope of
this paper.
href=”#r38″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1062″>n38.
A German court has added a further definition to the Convention’s term
“reaches.” See Amstergericht Kehl 6 October 1995 (3C 925/93)
Wirtschaftsrechtliche Beratung (Munchen) 1996, 398. There, the court held that
to “reach” the addressee, the communication should be in the addressee’s
language. Id.
href=”#r39″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1063″>n39.
See CISG, supra note 1, art. 27.
href=”#r40″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1064″>n40.
See id. art. 65.
href=”#r41″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1065″>n41.
Provisions on anticipatory breach and installment contracts contain three
gradations of knowledge: “is clear that” (CISG, supra note 1, art. 72); “gives
good grounds to conclude” (Id. art. 73); and “becomes apparent that” (see id.
art. 71). Elsewhere, the Convention contains other gradations of knowledge:
“knew” (see id. at arts. 31(b) and 43(2)); “known to” (see id. at arts. 9(2),
10(a), and 35(2)(b)); “is aware of” (CISG, supra note 1, art. 69(2)); “knew or
could not have been unaware of” (see id. at arts. 8(1), 35(3), 40, 42(1) and
42(2)(a)); “knew or ought to have known” (see id. at arts. 9(2), 38(3), 49(2)(b)(i),
64(2)(b)(i), 68, 74 and 79(4)); “has become aware or ought to have become aware
of” (see id. art. 43(1)); and “discovered or ought to have discovered” (see id.
art. 82(2)(c)).
href=”#r42″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1066″>n42.
CISG, supra note 1, art. 8.
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See id. art. 9.
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See id. art. 7.
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See id. art. 8(1).
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Enderlein & Maskow, supra note 18, at 170.
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See id. at 251.
href=”#r48″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1072″>n48.
See id.
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See CISG, supra note 1, art. 8.
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See id. art. 8(2).
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See id. art. 8(3). As of particular interest, and beyond the scope of this
paper, other commentaries on the Convention should be examined for further
elucidation with respect to the scope of Article 8.
href=”#r52″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1076″>n52.
CISG, supra note 1, art. 9.
href=”#r53″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1077″>n53.
The United Nations Convention on Contracts for the International Sale of Goods:
New Zealand’s Proposed Acceptance, Report No. 23 of the Law Commission 40
(1992). For the text of this report, see Introductions to the CISG, supra
note 38.
href=”#r54″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1078″>n54.
CISG, supra note 1, art. 7. This Article is concerned with the interpretation of
the Convention. To apply here, the principle of good faith would be used in the
interpretation of the scope that should be attributed to the words “known to” as
used in Article 65. In addition to this there is a growing use of good faith and
loyalty principles in relation to the Convention and international sales. Id.
For references to building a good faith requirement into international sales
contracts and loyalty to the other party to the contract as a general principle
of the Convention, see, for the former, J.A. Manwaring, Reforming Domestic Sales
Law: Lessons to be learned from the International Sale of Goods in Actes du
colloque sur la vente internationale 146 (Peret and Lacasse eds., 1989); and,
for the latter, Leif Sevon reported in J. Honnold, Einheitliches Kaufrecht und
Nationales Obligationenrecht, in Uniform Words and Uniform Application. The 1980
Sales Convention and International Juridical Practice 139-40 (Peter Schlechtriem
ed., 1987).
href=”#r55″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1079″>n55.
Employees, as used in this article, refers to persons engaged by the party in
the performance of the contract.
href=”#r56″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1080″>n56.
Lex mercatoria is defined as the law merchant; commercial law. See Black’s Law
Dictionary 911 (6th ed. 1990).
href=”#r57″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1081″>n57.
CISG, supra note 1, art. 80.
href=”#r58″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1082″>n58.
Exchange between Professors Rognlien (Norway – who raised the question), Maskow
(German Democratic Republic), Michida (Japan), Khoo (Singapore), Loewe (Austria
– Chairman), Shafik (Egypt). Summary Records of the First Comm., U.N. Conf. on
Contracts for the Int’l Sale of Goods, 37th mtg., Agenda Items 87 and 88, at
430, U.N. Doc. A/Conf.97/C.1/SR.37 (1980).
href=”#r59″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1083″>n59.
Supra note 55.
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See supra text accompanying note 37.
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This includes in addition to the setting of specifications, the provision of
notices and giving of reasonable time. It has been suggested that where the
seller fails to take into account the requirements of the buyer the
specification made will not be binding. Knapp, supra note 7, at 479. F.
Enderlein & D. Maskow conclude otherwise and are consistent with the view
expressed here. See Enderlein & Maskow, supra note 18.
href=”#r62″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1086″>n62.
See CISG, supra note 1, art. 45(1). Avoidance, as a remedy, is only available in
the limited circumstances provided by the Convention.
href=”#r63″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1087″>n63.
See CISG, supra note 1, art. 35 (especially (1)and (2)(b)).
href=”#r64″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1088″>n64.
The informality principle provides that “sales contracts are not subject to any
formal requirements” as applied to Articles 8(3), 11 and 29. See J. Rajski Form
of Contracts, in Commentary on the International Sales Law: The 1980 Vienna
Sales Convention 121 (C. M. Bianca & M. J. Bonell eds., 1987).
href=”#r65″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1089″>n65.
Literally, the sole consequence Article 77 imposes for non-mitigation of loss is
the reduction of an otherwise applicable claim for damages. See CISG, supra
note1, art. 77. On the other hand, resort to Article 7(2), general principles of
the Convention, can likely lead to an expanded obligation to mitigate one’s
loss. Id. art. 7(2). A basis for such a broader obligation would be the reading
into the Convention of a general principle of “loyalty to the other party to the
contract.” See Sevon supra note 54. For a further reference to the principle of
loyalty to the other party, see Peter Schlechtriem, Recent Developments in
International Sales Law, 18 Israel L. Rev. 309, 320-21 (1983).
href=”#r66″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1090″>n66.
CISG, supra note1, arts. 61 and 74, 75 or 76.
href=”#r67″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1091″>n67.
See id. art. 77. The Secretariat Commentary makes it clear that specifying a
vessel can be a mitigation obligation of the seller in cases of delivery of the
goods FOB INCOTERMS (free on board in compliance with terms) when the buyer
defaults on his obligation to name the vessel. Secretariat Commentary, supra
note 17, art. 62, P 9. The same principle would apply to specifications as to
the nature of the goods under fact patterns encompassed by Article 65.
href=”#r68″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1092″>n68.
See CISG, supra note 1, art. 62.
href=”#r69″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1093″>n69.
Id. art. 64. For a fuller discussion of such matters and of “Nachfrist” issues
under Article 63 see Enderlein & Maskow, supra note 18, at 240-41, and A.
Kritzer, supra note 36, at 499-507.
href=”#r70″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1094″>n70.
The optional right is indicated by use of the word “may”. See CISG, supra note
1, art. 65(1).
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See id. art. 65(1).
href=”#r72″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1096″>n72.
See id. art. 65.
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See id. art. 62. An exception to this is where, looking to the intent of the
parties (Article 8), it is clear that the selection is of no importance to the
buyer. See id. art. 8. In this circumstance, the seller is obliged to supply the
goods as required under Article 35 of the Convention. See id. art. 35.
href=”#r74″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1098″>n74.
The remedy in Article 65 provides the mechanism for supplying missing
specifications consequently making performance possible. This is distinct from
performance. The language used appears to indicate that Article 65 is not meant
to be inconsistent or to interfere with the right to avoid. Specifically, one
might assume (mistakenly as it turns out) that no election is being made at the
time of using Article 65 to perform (i.e., not to avoid) and that the words
within the Article “without prejudice to any other rights” include the remedy of
avoidance of contract if then available.
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For example, see Official Records supra note 1, at 51-52. Other commentaries,
however, point out the incompatibility of the two remedies. Enderlein & Maskow
conclude “the seller has no obligation to make the specification himself …if
he specifies, nevertheless, he insofar removes for himself the right to avoid
the contract.” Enderlein & Maskow, supra note 18, at 251.
href=”#r76″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1100″>n76.
CISG, supra note 1, art. 63.
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Involving the fixing of an additional period within which to perform an
obligation that is due. In the case of payment of the price and taking delivery,
failure to perform after this additional time permits the seller to avoid the
contract, under Article 64(1)(b). For a discussion of “Nachfrist” issues under
Article 63, see Enderlein & Maskow, supra note 18, at 240-241. For a detailed
analysis of Article 63, see A. Kritzer supra note 36, at 499-507.
href=”#r78″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1102″>n78.
Amtsgericht Oldenburg in Holstein (Germany) 24 April 1990, IPRax (1991) 336. See
UNCITRAL abstract reported in A/CN.9/SER.C/Abstracts 1 (19 May 1993) [CLOUT
abstract no. 7]. For related data on this case, see Case Presentation dated
April 1997 <http://www.cisg.law.pace.edu>.
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See CISG, supra note 1, art. 25, for a definition of fundamental breach.
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See id. art. 61 for available remedies.
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See id. arts. 64(1)(a) and 72.
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See id. art. 25.
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See id.
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In the case of the reluctant buyer (not unlikely, given his refusal to
co-operate), it may be regarded as an element of anticipatory breach under
Article 72. See CISG, supra note 1, art. 72.
href=”#r85″> alt=”Click here to return to the footnote reference.” v:shapes=”_x0000_s1109″>n85.
An alternative interpretation of “without prejudice to any other rights he may
have”, as used in Article 65, is that it applies to the seller’s use of those
specifications even after they become binding. This interpretation must be
incorrect. At this stage where the seller is in a position to perform a binding
contract, he must do so or be in breach of contract. The exception is where,
along with other factors, the buyer’s non-co-operation can be taken to indicate
that the buyer “will not perform a substantial part of his obligations” or as
amounting to an anticipatory fundamental breach of contract. On making a
specification under Article 65, the seller will similarly be bound to perform
should the buyer provide an alternative specification under paragraph 2 sentence
1. For more on the above reasoning, see Enderlein & Maskow, supra note 18, at
251.
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Secretariat Commentary, supra note 17, art. 63 P 1.
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See id. P 7.
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CISG, supra note 1, art. 64(1)(b).
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See id.
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Secretariat Commentary, supra note 17, art. 64 P 6.
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See, e.g., Knapp, supra note 7, at 478 and Enderlein & Maskow, supra note 18, at
251 (the reference to Article 64(1) in the Secretariat Commentary is
inaccurate). But see J. Honnold, supra note 14, at 440 and 448.
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