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Reproduced with the permission of Oceana Publications

(1) The buyer may require [1] performance by the seller of his obligations unless the buyer has resorted to a remedy which is inconsistent [2] with this requirement.

(2) If the goods do not conform [3] with the contract, the buyer may require delivery of substitute goods [4] only if the lack of conformity constitutes a fundamental breach of contract [5] and a request for substitute goods is made either in conjunction with notice given under article 39 or within a reasonable time thereafter [6].

(3) If the goods do not conform with the contract, the buyer may require the seller to remedy the lack of conformity by repair [7], unless this is unreasonable [8] having regard to all the circumstances. A request for repair must be made either in conjunction with notice given under article 39 or within a reasonable time thereafter [6].

[WORDS AND PHRASES, CONCEPTS

[COMMENTARY]

[1] [buyer's right to performance of contract]

This Article stipulates the right of the buyer to performance of a contract, i.e. is an expression of the maxim pacta sunt servanda. The right to require performance is laid down in many legal systems; but under the common law the primary remedy in the case of a breach of contract is not performance but the claim for damages. In practical terms, however, there is only a small difference between civil-law countries and common-law countries. While the United States Uniform Commercial Code in sec. 2-716 grants the right to performance (so that there is a right to specific performance if the compensation for damages offered to the damaged party provides no adequate protection, Honnold, 300), claims for performance are rare in civil law countries.

The buyer's right to performance by the seller is, however, restricted by Article 28 (and therefore, may be unenforceable by the courts, Schlechtriem, 66) and will remain without much practical effect in large parts of the world (Will/BB, 334). The right for performance will not hinder the buyer from resorting to other claims later. [page 177]

Pursuant to Article 46 of the CISG, the buyer can insist on performance as long as the seller has not delivered. The right to performance also covers the event in which the seller has delivered only part of the goods or delivered goods to the wrong place (c. Article 31) or in which documents are lacking (Article 34). If he has delivered, but the goods do not conform with the contract, paras. 2 and 3 provide remedies for specific claims for performance. The requirement of performance also relates to such cases where goods are not free from third party rights or claims (c. Articles 41 and 42). According to Honnold (302), the right to require performance under Article 46, paragraph 1, is completely impractical and meaningless, whereas the rights under paras. 2 and 3 are in the interest of the seller.

[2] [performance remedy available unless the buyer has resorted to a remedy which is inconsistent]

The buyer may not demand performance and at the same time avoid the contract under Article 49. This appears to be a matter of course. Avoidance of contract frees both parties from the requirement to fulfil their obligations (c. Article 81, paragraph 1). Equally incompatible are the claims for performance and price reduction pursuant to Article 50 which would re-establish equivalence. But claims for damages remain untouched. Therefore, compensation for damages suffered through delay is frequently asked for apart from the claim for performance.

[3] [non-conformity of goods: scope of this term]

Non-conformity of goods not only comprises defective quality and deficiencies in quantity but also wrong deliveries (c. Article 35). Goods do not conform with the contract when they are not free from third party rights or claims (c. Articles 41 and 42; Schlechtriem, 56 fol; v. Hoffmann/Freiburg, 294; Moecke/Doralt, 150). However, the buyer may require performance of the contract only under the condition that he has given notice within the required periods (c. Articles 39 and 43).

According to Will (BB, 336), delivery of an aliud comes under paragraph 2, non-conformity of the goods, and always constitutes a fundamental breach of contract (337) so that the buyer may invoke his right to declare the contract avoided in accordance with Article 49. If an aliud were not to be considered a fundamental breach, the buyer would only have the right to repair; which would seem a rather senseless demand in the case of an aliud.

[4] [buyer may request delivery of substitute goods]

The buyer may request delivery of substitute goods. Also, in the case of a fundamental breach of contract, he can decide in favour of repair (Welser/Doralt, 119). The right to delivery of substitute goods may be excluded because the buyer cannot restitute the goods in their original condition (c. Article 82). [page 178]

Even if the buyer is not allowed to require delivery of substitute goods, the seller may deliver such goods if this is more favourable to him (unless such substitution of goods is an unreasonable inconvenience to the buyer, Welser/Doralt, 119).

Substitute goods only serve the interest of the buyer if they are delivered within a reasonable time. Hence the seller does not have unlimited time to deliver such substitute goods. On the other hand, in the event that the buyer has required delivery of substitute goods, for which he may set the seller a reasonable time limit, the former is bound to his decision during this time and cannot declare avoidance of the contract. We believe that this follows from paragraph 1, whereas Will (BB, 338) wants to deduce this from the application of Article 47. During this time the buyer may, however, agree to accept a repair of the goods.

[5] [limitation on right to require substitute goods]

Under the CISG, substitute goods can be requested by the buyer only when the non-conformity of the goods constitutes a fundamental breach of contract; hence not in the case of minor defects as was the case under ULIS. This is in line with Article 49 according to which avoidance of a contract (at first) can only be requested if a fundamental breach of contract is committed, for the economic consequences of a delivery of substitute goods may be the same for the seller as in the case of an avoided contract (O.R. 337). The Federal Republic of Germany had intended to facilitate claims for substitute goods, but for the above-mentioned economic reasons, the relevant proposal was not successful (Schlechtriem, 67).

The economic consequences could even surpass those of an avoidance of contract because the additional expenses incurred and the risks involved in transporting substitute goods are to be born by the seller (Honnold, 296).

There might be a dispute over whether or not the breach of contract is fundamental. A machine may be operational, for instance, but its performance may reach only 90 per cent of its specified capacity (v. Hoffmann/Freiburg, 295).

It was suggested at the diplomatic conference to stipulate a choice between the delivery of substitute goods and repair following other criteria (O.R., 335, 337). A solution which leaves the seller the choice between the delivery of substitute goods and repair also seems to us to be more appropriate.

Even when the buyer is not allowed to claim substitute goods, it is not excluded that in the event of non-conformity, the seller decides to deliver substitute goods if this is more favourable to him. [page 179]

If the delivery of non-conform[ing] goods is not a fundamental breach of contract, no delivery of substitute goods can be requested but, rather, only repair. Even if repair is not possible, the defect does not automatically turn into a fundamental breach of contract. The buyer is left only with the right to claim a reduction of the price and/or compensation for damages. This solution has been justly criticized, as believes Welser (Doralt, 119). On the other hand, the buyer can avoid any discussion on whether a breach of contract is fundamental when he confines himself from the very beginning to requiring compensation for damages.

[6] [request for substitute goods must be made either in conjunction with notice given under article 39 or within a reasonable time thereafter]

If the buyer does not through immediate notice request a delivery of substitute goods or repair, he has to do so within a reasonable time. The CISG is based on the assumption that this rule serves the interests of both parties. Usually the buyer is interested in receiving conform[ing] goods as quickly as possible, and the seller wants to know the claims of the buyer. It should be avoided in any case that the buyer can speculate on rising market prices. What is appropriate here is therefore to fix a short time and by no means another two-year period as allowed for under Article 39, paragraph 2 (Will/BB, 337).

[7] [buyer may require seller to remedy by repair]

Cure includes delivery of spare parts (O.R., 336), and substitution of parts as well as repair itself. This can be done at the buyer's place, but may also require sending the goods back to the place of manufacture. According to ULIS, repair could be claimed only if the seller was also the manufacturer of the goods. Under the CISG such right exists, no matter whether the seller is in a position to repair the goods by his own means (v. Hoffrnann/Freiburg, 296). If he is not in a position to do so, this could indeed amount to unreasonableness. The right to require repair must not be rejected under the circumstances of Article 29 (Schlechtriem, 66). Not only has the seller an obligation to repair defective goods, but he has to bear all costs involved in such repair.

If there is a third party right or claim in respect of the goods, the cure may be such that the seller buys a patent or a license, or redeems a pledge or other right in title.

[8] [unless claim for repair is unreasonable]

A claim for repair may be unreasonable if there is no reasonable ratio between the costs involved and the price of the goods or if the seller is a dealer who does not have the means for repair (Article 42 ULIS made a difference between producer and manufacturer, on the one hand, and distributor and dealer, on the other), or if the buyer himself can repair the goods at lesser cost (Honnold, 301). [page 180]

Repair may not only be unreasonable; it may be technically impossible (this could, however, constitute a fundamental breach of contract). The nature of some goods is such as to exclude repair at all, e.g. in the case of agricultural products. A repair can also be impractical, e.g. as with throw-away goods.

In such cases the buyer nevertheless retains the right to a reduction in price and compensation for damages (c. Article 50).

When judging what is unreasonable, all circumstances have to be taken into account. According to v. Hoffmann (Freiburg, 297) it is doubtful whether the (little) interest of the buyer in performance in conformity with the contract must be considered. As a matter of fact, there can be no doubt. The requirement of repair is a right and not an obligation of the buyer. When the buyer is not interested in having goods repaired, he will not require it. The little interest of the buyer could, however, constitute a problem of Article 48 when the seller of his own accord offers repair. [page 181]

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