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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 54 [Obligation to pay the price] [1]

[TEXT OF THE UNIFORM LAW]

The buyer's obligation [7] to pay the price includes [2] taking such steps [3] and complying with such formalities [4] as may be required under the contract or any laws and regulations [5] to enable payment to be made [6].

[WORDS AND PHRASES, CONCEPTS

1. activities which make up buyer's obligation to pay the price
2. further activities not excluded
3. measures buyer has to take on a commercial basis
4. complying with such formalities as may be required
5. laws and regulations: currency regulations
6. taking steps / complying with formalities: activities buyer must undertake; place and date of the steps and formalities
7. parallel obligations of the seller ]

[COMMENTARY]

[1] [activities which make up buyer's obligation to pay the price]

This article generally determines the specific activities which make up the obligation to pay the price. The parties, however, usually make detailed arrangements in the contract. Articles 55 and 56 stipulate how the price is calculated; place of payment is determined in Article 57 and date of payment in Articles 58 and 59. [page 205]

[2] [further activities not excluded]

This means that further activities may be necessary and are not excluded (Article 53, note 4.2.).

[3] [measures buyer has to take on a commercial basis]

If nothing is agreed to the contrary, the measures which the buyer has to take on a commercial basis include, above all, the transfer of a sum through the customary way, e.g. bank transfer order, and handing over of a cheque or payment in cash. Where the provision of payment guarantees is planned, those measures comprise the provision of such guarantees, above all from which payment is to be made directly (letter of credit, indemnity). We believe that the buyer should generally have the obligation to ensure the success of such activities, i.e. to actually provide a letter of credit (not clearly expressed in the Secretariat's Commentary, O.R. 45; accurate Huber, 511), unless this fails because the buyer, in spite of making all the required efforts, cannot create the prerequisites which concern relations to the authorities. Depending on the terms of payment, several other activities may have to be undertaken by the buyer (e.g. acceptance of a bill of exchange).

[4] [complying with such formalities as may be required ]

Mentioning the formalities that may be required by any laws and regulations, the CISG refers, and this is the only place where it is done so clearly, to foreign trade regulations, concretely to foreign exchange regulations. It is taken for granted in this context that keeping with those regulations is necessary for the payment to be made. Their observance becomes a contractual obligation of the parties. Those regulations are recognized as being a fact. This is also in line with the Uniform Rules for Collections according to which the sums collected have to be transferable at once under the foreign exchange control regulations (Articles 11, 12).

The formalities to be complied with can be extremely different and extensive so that the substance of the term, in quite a number of cases in the context of the regulations, goes far beyond the proper sense of the term. They cover the mere registration of payment claims, the depositing of the respective contracts (e.g. at the central bank) and even the obtainment of payment permits and furnishing of deposits in cash, to mention only a few examples. The buyer insofar has to undertake all the activities which are dependent on him; fulfilment of information obligations, making of applications, and probably invoking of remedies. And he also has to create all the conditions in his area of competence for the required decisions to be taken. But he cannot be made responsible, for the considerations made in note 6.1., for the success of his activities (likewise Tallon/Parker, 7-6; in less detail Plantard/Lausanne, 112). Granting the buyer the reasons for exemption under Article 79 would lead to the same result. There is an essential difference in the substance of the obligations of the buyer on a commercial basis and the relations with [page 206] the authorities. This difference is not apparent when the seller relies on the failure caused by the other party under Article 80. He can do so when the buyer in the end is refused transfer of foreign currency.

[5] [laws and regulations: currency regulations]

It is not said which country's currency regulations are referred to. The statute of the contract is insofar not invoked in accordance with a widely held opinion which we share. The rule obviously proceeds on the assumption that all provisions of payment will have to be complied with by the buyer. These provisions will be those of his country and/or of the country from which the payment is to be made, because the payment of a sum generally requires greater formalities than the receipt of the sum. Where there are such formalities at the place of payment in another country (seller's country), they will have to be observed by the buyer (but see note 7).

[6] [taking steps / complying with formalities: activities buyer must undertake; place and date of the steps and formalities]

      [6.1] For the payment to be made, the buyer has to undertake activities both on a commercial basis and vis-a-vis the authorities. Those obligations in our view vary as to their substance. The activities on a commercial basis are generally foreseeable in detail. The buyer has to be considered obligated to create the necessary conditions for their fulfilment, including recourse to third parties such as banks. In most of the cases, he will have alternatives at his disposal, e.g. engaging of another bank. In a vertical plane, the commercial partners cannot always foresee the prerequisites for the obtainment of the necessary decisions, for they depend on the judgement of the authorities concerned in accordance with the concrete political or economic situation. The commercial partners and, even more, the buyer alone can influence a positive decision, apart from keeping with procedural requirements, only if the prerequisites are defined, which is not always the case. Mostly there is no alternative when the authority concerned does not take a positive decision.

      [6.2] If the place and date of the steps and formalities are not determined, they can be inferred from the substance. The place of the steps to be taken depends on their nature and can be the same as the place of payment. It can also be the result of the kind of the agreed payment security. The place where formalities have to be fulfilled can be deduced from the relevant laws and regulations and the competence defined therein. The date of the steps and formalities has to be chosen in such a way as to effect payment in time. Legal processing or processing time required as from experience has to be taken into account. [page 207]

[7] [parallel obligations of the seller]

Insofar as formalities for the payment to be made can be complied with only by the seller, e.g. applications with his authorities to open an account for the receipt of foreign currency; he will have to be considered as obligated to do so. This follows from Article 7 (good faith), and probably also from Article 9. If the seller failed to do so, the buyer could rely on Article 80.

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Pace Law School Institute of International Commercial Law - Last updated September 25, 2002
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