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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 65 [Specification by seller] [1]

[TEXT OF THE UNIFORM LAW]

(1) If under the contract the buyer is to specify [2] the form, measurement or other features of the goods and he fails to make such specification either on the date agreed upon [3] or within a reasonable time after receipt of a request from the seller [4], the seller may, without prejudice to any other rights [5] he may have, make the specification himself [6] in accordance with the requirements of the buyer that may be known to him [7].

(2) If the seller makes the specification himself [6], he must inform the buyer of the details thereof and must fix a reasonable time [8] within which the buyer may make a different specification [9]. If, after receipt of such a communication, the buyer fails to do so within the time so fixed [10], the specification made by the seller is binding [11].

[WORDS AND PHRASES, CONCEPTS

1. seller's right to make the specification in the event the buyer fails to do so
2. if under the contract the buyer is to specify…
3. … and [buyer] fails to make such specification … on the date agreed upon …
4. … or within a reasonable time after receipt of a request from the seller …
5. … the seller may without prejudice to any other rights …
6. if the seller makes the specification himself …
7. the seller may … make the specification himself in accordance with the requirements of the buyer that may be known to him
8. if the seller makes the specification himself, he must inform the buyer of the details thereof and must fix a reasonable time …
9. … within which the buyer may make a different specification
10. if, after receipt of such a communication, the buyer fails to do so within the time so fixed …
11. … the specification made by the seller is binding

[COMMENTARY]

[1] [seller's right to make the specification in the event the buyer fails to do so]

This article provides for the seller's right to specification as a specific legal consequence of a case where the buyer does not perform his obligation to specify the goods. This is to avoid difficulties which might follow if damages would have to be calculated in a specification sale (v. Caemmerer/Dölle, 394; Honnold, 365). A more convincing argumentation is, however, that in this way problems are circumvented which would arise in the event of a right to performance of a specification obligation not only under common law (Article 28) (v. Caemmerer/Dölle, 393 fol). A procedure, which in spite of some inconsistencies, is effective if substantiated herewith which allows a regular continuation of the contractual relationship also in the event of non-specification by the buyer. It should be mentioned, finally, that the effectiveness of a specification sale is underlined in this rule.

[2] [if under the contract the buyer is to specify …]

It has to be assumed generally that the party who has to perform is entitled to specify that performance further in the framework of his contractual obligations (Tercier/Lausanne, 140). Where no specification of generally determined goods is made yet in the contract, it may have been agreed that the buyer has to perform that specification. Such agreements are made, for instance, in trading textiles and leather goods, but also bulk goods. It makes no sense, in our view, to differentiate in the typical cases whether there is a right or an obligation of the buyer as does the Secretariat's Commentary (O.R., 51). Where it is not clearly visible that something different is meant, e.g. a sales option, in the event of a contract without specification, a right of the buyer to specification will at the same time have to be interpreted as his obligation for specification (obtaining the same result Knapp/BB, 482).

One could refer to a right to specification when the buyer can modify until a later date a specification already made in the contract. If he does not make use of this right, it will lapse and the agreed specification is retained. Then Article 65 does not come into play.

[3] [… and [buyer] fails to make such specifications … on the date agreed upon …]

The right to specification of the seller emerges when the date agreed is missed by the buyer (but concerning the mandatory nature of the specification by the seller see note 11). When the seller does not receive the specification by the buyer in time, there will practically be no problems because a specification which arrives later can be considered as a reaction by the buyer under paragraph 2 and/or he can repeat the specification. It would, in our view, constitute a breach of the principle of good faith if the buyer relied on Article 27 even though it can be seen from the reaction of the seller that he did not receive the specification. [page 249]

[4] [… or within a reasonable time after receipt of a request from the seller]

The seller can, on the other hand, invite the buyer to make the specification, which assumes practical relevance when no time was agreed. The latter then would have to specify the goods within a reasonable time after he received the invitation (Article 27 does not apply in this case). The room left for the parties' discretion in terms of reasonableness can be exhausted by the buyer for he is the one who has to act. In doing so he has to take account of the motives because of which the parties had planned specification without setting a date, and of the relationship between the dates on which specification is required; on the one hand, and on which the contract has been concluded and/or is to be performed, on the other. 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. As regards the reaction of the buyer, Article 27 is applied. As a result, the seller cannot exactly determine the date until which he would have had to receive the specification.

The interpretation given here is guided by the text and is comprehensible in substance in spite of the many uncertainties it involves for the seller. Another interpretation, which was given in the similar wording of ULIS (v. Caemmerer/Dölle, 395), assumes that the seller may fix the buyer a reasonable Nachfrist. In that case, he could reduce the buyer's time for reflexion and invite him to make a specification immediately upon the conclusion of the contract. This could be taken into account, however, in calculating the additional period. Generally speaking, this interpretation is preferable for reasons of substance. The wording and function of this rule could perhaps be brought into line as follows: When the seller fixes a Nachfrist at first, the buyer is considered obligated to contradict it if he regards it as unreasonable, and/or the additional period fixed by the seller is being taken into consideration when judging the reasonableness of the period's length.

Another corrective in the event of discrepancies in the case of both interpretations is offered by the procedure of self-specification by the seller (para. 2).

[5] [… the seller may without prejudice to any other rights …]

Those other rights refer above all to the right to claim damages (Article 61, paragraph 1, subpara. (b) and paragraph; compare also Article 63, paragraph, sentence 2). Furthermore, the seller can, under Article 80, rely on failure caused by the creditor, e.g. delay in delivery because of non-specification. A more differentiated approach should be followed in regard to the right to avoid the contract. The seller has such a right when the non-keeping to the specification [page 250] date either from the beginning or after a certain time turns out to be a fundamental breach of contract. The seller, however, cannot exercise this right when he fixes a Nachfrist for the buyer to specify the goods (Article 63, paragraph 1, sentence 1), and also when he invites him to make a specification without fixing a date. The two are incompatible (Article 63, paragraph 2, sentence 1 by analogy or violation of the prohibition of a venire contra factum proprium and/or Article 65, paragraph 1). When the decisive period has elapsed in each case, the seller can avoid the contract if the breach of the obligation for specification is fundamental at that moment. But there is no right to avoid the contract in our view when one Nachfrist fixed for specification did not bring about such specification (this view was expressed at the diplomatic conference, O.R., 373; a different view is expressed in the Secretariat's Commentary on the draft, O.R., 51) because, unlike Huber (515, 518) and others, we do not consider the obligation for specification as a part of the obligation to take delivery of the goods but rather as an obligation to participate in the manufacture of the goods. Hence, Article 64, paragraph 1, subpara. (b) does not apply here (Knapp/BB, 478, reaches the same result, which is a certain contradiction to what is said in another place, 482, namely that the obligation to specify is conceived as part of the obligation to take delivery; undecided v. Caemmerer/Dölle, 394).

[6] [if the seller makes the specification himself …]

The seller has no obligation to make the specification himself (likewise Loewe, 83). If he specifies, nevertheless, he insofar removes for himself the right to avoid the contract. He must then accept a deviating specification by the buyer under paragraph 2, sentence 1. An obligation for the seller to make the specification himself can exceptionally follow from the obligation of the seller to mitigate losses (Article 77). Of great relevance in this context is to what extent the seller can assess the needs of the buyer (note 7). Specification on the part of the seller presupposes a breach of contract by the buyer, for which there are possibly reasons for exemption, which is irrelevant, however, for the seller's specification, and is to remove or mitigate its consequences. This constellation of interests is to be considered when interpreting the details.

The seller should specify early enough to leave the buyer a reasonable time to react before manufacture must commence. Where this is no longer possible, the seller will reflect on whether he exercises this right at all.

[7] [the seller may … make the specification himself in accordance with the requirements of the buyer that may be known to him]

      [7.1] The wording "may be known to him" does not require the seller, in our view, to make efforts to obtain such knowledge. But he must not ignore clues. [page 251]

      [7.2] To the extent to which the seller is not positively aware of the buyer's needs, he must not make any specification of which he knows that it will not meet the needs of the buyer. It is our belief that the requirement of taking into consideration probable or presumed needs of the buyer follows from the principle of good faith. The seller can, therefore, not take the chance to sell [non-saleable items] when he is aware of fashion trends in the buyer's country, even when he is not informed of the concrete needs of the buyer.

[8] [if the seller makes the specification himself, he must inform the buyer of the details thereof and must fix a reasonable time …]

      [8.1] Compare explanations given regarding the reasonableness in Article 63, notes 3 and 4; compare also note 10. This will be a short time in general because the buyer is already in breach of contract and he is only required to take a decision.

      [8.2] When the seller does not fix a reasonable time, the consequence is, in our view, not necessarily that the specification is not binding on the buyer. The latter will rather have to specify within a time that would be considered reasonable. If this is too late for the seller, he will have to bear the consequences. When the buyer does not react, however, even though a specification within the reasonable time could have been taken into consideration by the seller, the latter's specification becomes binding.

[9] [within which the buyer may make a different specification]

We believe that no express invitation is required to make a deviating specification. It is sufficient that there is a time fixed for it, e.g. in a letter of August 15, it is said: "We will start preparations for manufacture on October 10, according to the following specification."

[10] [if, after receipt of such a communication, the buyer fails to do so within the time so fixed …]

The seller thus has to take account of the postal handling time needed for the communication to reach the buyer. It is sufficient for the buyer to dispatch the communication within the time fixed (Article 27). Postal handling on the way back should not be considered in calculating the time. The risk of transmission is in both cases borne by the seller being the party keeping to the contract.

[11] [… the specification made by the seller is binding]

      [11.1] According to Knapp (BB, 479), the specification made by the seller will not become binding on the buyer when the former fails to take account of the requirements of the buyer. We are not convinced by that interpretation as plausible as it may appear at first sight. It rather has to be expected from the buyer that he guard his interests, than from the seller that he take care of the buyer's interests. All the more so when the former is the party breaching the contract. When the buyer thus permits a possibility for contradiction to pass unused, it should not be to the detriment of the seller. The specification should, therefore, be generally binding in this case. Insofar as the seller, however, has breached his obligations in regard to specification, [page 252] the buyer will have the right to claim damages (Article 45, paragraph 1, subpara. (b), which may be modified because of a prior breach of obligation of his own (Article 80)).

      [11.2] When the specification by the seller does not reach the buyer and therefore does not become binding, or when the seller does not receive a deviating specification by the buyer that was orderly dispatched and according to the rule obviously is to be binding, he will most likely manufacture the goods according to his own specification, which is not decisive. The buyer, as a consequence, can assert his rights under Article 45 fol because of lack of conformity. Such breach of contract in the end was caused, however, by a breach of contract of his own, so that it will have to be examined to what extent the seller may require the buyer to pay damages or, if this is excluded because of exemptions according to Article 79, can at least rely on failure caused by the other party under Article 80.

      [11.3] The exercise of the right to specification of the seller, generally speaking, harbours a number of risks for the seller which can be reduced by way of appropriate precise wording in the contract and effective commercial procedures.

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