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Reproduced with the permission of Oceana Publications

excerpt from

INTERNATIONAL SALES LAW

United Nations Convention on Contracts for the International Sale of Goods

Convention on the Limitation Period in the International Sale of Goods

Commentary by
Prof. Dr. jur. Dr. sc. oec. Fritz Enderlein
Prof. Dr. jur. Dr. sc. oec. Dietrich Maskow

Oceana Publications, 1992

Article 48 [Seller's right to remedy failure to perform]

[TEXT OF THE UNIFORM LAW]

(1) Subject to article 49, the seller [1] may, even after the date for delivery [3], remedy [4] at his own expense any failure to perform his obligations [2], if he can do so without unreasonable delay [5] and without causing [8] the buyer unreasonable inconvenience [6] or uncertainty of reimbursement by the seller [7] of expenses advanced by the buyer. However, the buyer retains any right to claim damages [9] as provided for in this Convention.

(2) If the seller requests the buyer to make known [10] whether he will accept performance and the buyer does not comply with the request within a reasonable time [11], the seller may perform [13] within the time [12] indicated in his request. The buyer may not, during that period of time [14], resort to any remedy which is inconsistent with performance by the seller.

(3) A notice by the seller that he will perform within a specified period of time is assumed [15] to include a request, under the preceding paragraph, that the buyer make known his decision.

(4) A request or notice by the seller under paragraph (2) or (3) of this article is not effective unless received by the buyer [16].

[WORDS AND PHRASES, CONCEPTS

1. subject to article 49
2. seller's right to cure relates to all his obligations
3. cure of non-conformity: cross-reference
4. remedying the non-conformity: conditions
5. - without unreasonable delay
6. - without unreasonable inconvenience to buyer
7. - reimbursement of expenses advanced by buyer
8. - right to cure only if no circumstances lead to unreasonable inconvenience to buyer
9. buyer retains any right to damages
10. request that buyer make known whether he will accept cure
11. buyer given reasonable time to decide
12. seller must indicate period of time in which he will cure
13. buyer precluded from avoiding contract during period of time offered by seller
14. buyer bound to contract during this period
15. assumed intent of seller
16. receipt rule applies to seller's cure communication ]

[COMMENTARY]

[1] [subject to article 49]

The seller's right to remedy failure to perform is limited by avoidance of the contract by the buyer. If the buyer has already declared the contract avoided under Article 49, the seller can no longer remedy a defect in performing his duties. Bulgaria and the FRG suggested that the seller should always have the right to remedy a failure to perform, hence to exclude the reservation made in Article 49 (O.R. 351 fol). This was rejected because Article 49 presupposes a fundamental breach of contract and the seller's right to cure exists practically at all times (c. also Schlechtriem, 69).

The relationship between the seller's right to cure and the buyer's right to avoid the contract was often discussed (e.g. Honnold, 311 fol). This would be of interest in a situation where the buyer could avoid the contract under Article 49 but has not done so yet, and the seller has offered to cure the defect. Honnold (312) believes that the right to remedy failure to perform should have priority. It was, in his view, more specific than the buyer's right to avoidance; and the more specific right would always prevail over a more general one. Furthermore, the offer to cure would prevent a non-conformity becoming fundamental. See here also note 10.

According to Will (BB, 349 fol), the seller's right to cure is ever more suppressing the buyer's right to avoidance. When the buyer, because of prior experience with the seller, is aware that the latter can cure a defect, even if a fundamental breach of contract is involved, he is not allowed to avoid the contract.

Will's (BB, 351) reference to general conditions of the contract seems to us out of place because there is a contractual agreement in existence which prevails over the provisions of the CISG.

The right to cure is often called second tender (see Schlechtriem, 68; v. Hoffmann/Freiburg, 298). This term is actually justified only in the case of non-conformity since there was no first tender where a delay in delivering goods is concerned. [page 185]

The right of the seller to cure, limits the rights of the buyer insofar as he may not draw all consequences from the breach of contract as long as the seller has the right to remedy a failure (according to Welser/Doralt, 124).

[2] [seller's right to cure relates to all his obligations]

The seller's right to cure relates to all his obligations. Thus he can deliver missing parts or documents, compensate for a deficiency in quantity, delivers substitute goods to replace non-conforming goods or repair the latter.

The seller can cure the lack of conformity after the time of delivery has elapsed. In doing so, he may choose whether he repairs the defective goods or delivers substitute goods (v. Hoffmann/Freiburg, 298), and he can make up the delivery as a whole.

According to Honnold (310) the wording "any failure to perform" is broad enough to include a delay. There is, however, hardly any incentive because either the buyer has already declared the contract avoided or the seller has had to suppose so; hence there is no need for "cure". He holds that time which has passed cannot be recalled and therefore a delay cannot be remedied. Will (BB, 353) rightly turns against this because the question is not to cure a delay but a non-performance.

[3] [cure of non-conformity: cross-reference]

As to the curing of non-conformity before the time of delivery, compare Articles 34 and 37.

[4] [remedying the non-conformity: conditions]

The conditions to be fulfilled for the seller to remedy a failure to perform are: (a) the contract must be in existence, i.e. the buyer must not have exercised his right to avoid the contract; and (b) the cure must not cause unreasonable inconvenience to the buyer .

According to the Secretariat's commentary (O.R., 4O) there is another condition still: The seller must be able to perform without such delay as will amount to a fundamental breach of contract. We believe that this third condition is included under (b).

[5] [ - without unreasonable delay]

It is generally assumed that a delay is unreasonable when it amounts to a fundamental breach of contract (as states the Secretariat's commentary, O.R., 40). In this case the seller cannot assert his right to cure against the will of the buyer; he needs the buyer's agreement. [page 186]

[6] [ - without unreasonable inconvenience to buyer]

It cannot generally be said what unreasonable inconvenience means; this can only be decided on a case-by-case basis. The Secretariat's commentary (O.R., 40) mentions the case of resold goods of which the buyer has declared a price reduction (but see Article 50, note 6) or the need to have broad access to the buyer's production facilities.

[7] [ - reimbursement of expenses advanced by buyer]

At first it seems quite natural that the seller must bear the costs involved in remedying a failure to perform. However, the buyer may incur expenses, for instance when he has to send back exchanged goods. What matters is not the amount of the expenses, but irrespective of that, the uncertainty of reimbursement, e.g. the risk that the seller is insolvent or not willing to reimburse expenses incurred by the buyer (Will/BB, 353).

[8] [ - right to cure only if no circumstances lead to unreasonable inconvenience to buyer]

The seller has the right to cure only if there are no circumstances which could be summed up under the notion unreasonable inconvenience. Will (BB, 352), too, considers the conditions to be mentioned below as examples of inconvenience.

[9] [buyer retains any right to damages]

The right to claim damages, e.g. as a result of delay, does not lapse on the ground that the seller has performed in the end. But the curing of a failure to perform may have an influence on the amount of the damage claimed. Also in the case of a cure, damage may be claimed to compensate for a possible stoppage in production (v. Hoffmann/Freiburg, 298).

[10] [request that buyer make known whether he will accept cure]

Insofar as the seller has the right to cure there should be no need to request information as to whether the buyer will accept performance. The buyer is in that case obliged to accept the cure. If he refuses to do so, he loses the right to reduction in price (c. Article 50, 2nd sentence) in the case of non-conformity of the goods. The right to cure may well be doubtful and, in particular, the period of time which the seller offers for performance may reinforce that doubt (c. note 5).

In the event of a fundamental breach of contract, that request also refers to whether or not the buyer will assert his right to declare the contract avoided. The right to avoidance prevails (c. note 1 and Article 49). When the buyer has the right to avoid a contract but does not exercise it, the seller is left with uncertainty. He may end this uncertainty, requesting the buyer to communicate whether he accepts performance. [page 187]

The buyer may temporarily renounce his right to avoidance and declare his agreement with performance. If the seller does not perform nonetheless, the right to avoid the contract will, of course, persist. The buyer may lose his right to avoidance also when he does not answer to the request of the seller (c. note 11) or when he does not declare the contract avoided within a reasonable time in case he rejects performance (Article 49, note 13).

Should the buyer in the event of a fundamental breach of contract require delivery of substitute goods under Article 46, paragraph 2, the seller may nevertheless offer him repair. The buyer may request repair and the seller offer substitute goods. It depends on the circumstances of each and every case which right will prevail; but the buyer's obligation to mitigate losses under Article 77 has to be taken into account (O.R., 334).

According to Will (BB, 354) paragraphs 2-4 do not describe the way in which to exercise the right to cure under paragraph 1; rather they offer an independent second way of curing to the seller. Also according to Honnold (313) paragraph 2, does not duplicate para. 1. In para. 2, the seller is not confined to the circumstances under paragraph 1. He can offer a period for late performance which may well result in an unreasonable delay. If the buyer keeps silent, he may later not invoke paragraph 1.

The buyer may reject cure. Welser (Doralt, 125) holds, however, that the buyer, in refusing the offer of cure, may not thwart the right of the seller to remedy his failure. If the buyer refuses to accept and the seller insists on performance it will have to be decided in a legal dispute whether the conditions were given for a second tender (ibid). This does not seem conclusive to us. The right of the seller to cure is given under the conditions of paragraph 1. This right cannot be thwarted by the buyer in the case of a non-fundamental breach of contract. But under paragraph 2, the seller has the right to cure only when the buyer agrees or remains silent.

[11] [buyer given reasonable time to decide]

This time can be very short. The buyer must be in a position to decide promptly. This time must be shorter than the period of time offered for cure. Article 27 applies where the communication of the buyer is concerned, i.e. in contrast to the request or notice by the seller (c. paragraph 4), dispatch will be sufficient.

[12] [seller must indicate period of time in which he will cure]

It does not suffice that the seller states his readiness to deliver or to cure only in general terms. He has to indicate an envisaged period of time, which is a condition for the buyer to take his decision or to be obligated to accept performance if he keeps silence. [page 188]

[13] [buyer precluded from avoiding contract during period of time offered by seller]

In this way the buyer is, at least temporarily, deprived of his right to avoid the contract. He cannot declare the contract avoided during the period of time offered by the seller.

[14] [buyer bound to contract during this period]

The buyer is thus bound to the contract for this period of time (c. Article 47, note 5). During the said period he can neither avoid the contract nor declare a reduction in price. This rule clearly shows the underlying concept of the CISG, i.e. to keep to the contract, if possible.

[15] [assumed intent of seller]

This assumed interest of the seller also serves to retain the contract. The buyer has to respond to the communication of the seller, even if no request in accordance with paragraph 2 was added to it.

[16] [receipt rule applies to seller's cure communication]

In contrast to Article 47, paragraph 4, the buyer must receive the request or notice by the seller. Hence, unlike in the event of the buyer's notice (note 11), it is not Article 27 which applies here, but Article 24 which, even if expressly conceived for Part II of the CISG, is applied analogously.

Here the general principle obviously is to place the risk of transmission always on the party which has committed a breach of contract (Honnold, 314). [page 189]

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Pace Law School Institute of International Commercial Law - Last updated August 14, 2002
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