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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 67 [Passing of risk when the sale involves carriage]

[TEXT OF THE UNIFORM LAW]

(1) If the contract of sale involves carriage of the goods [1] and the seller is not bound to hand them over at a particular place [2], the risk passes to the buyer when the goods are handed over [5] to the first carrier [3] for transmission to the buyer [4] in accordance with the contract of sale. If the seller is bound to hand the goods over [7] to a carrier at a particular place [6], the risk does not pass to the buyer until the goods are handed over to the carrier at that place [5]. The fact that the seller is authorized to retain documents controlling the disposition of the goods does not affect the passage of the risk [8].

(2) Nevertheless, the risk does not pass to the buyer until the goods are clearly identified to the contract [9], whether by markings on the goods [10] , by shipping documents [11], by notice given to the buyer [12] or otherwise [13].

[WORDS AND PHRASES, CONCEPTS

1. if the contract of sale involves carriage of the goods
2. and the seller is not bound to hand them over at a particular place
3. the risk passes to the buyer when the goods are handed over to the first carrier
4. when the goods are handed over to the first carrier for transmission to the buyer
5. the risk passes to the buyer when the goods are handed over
6. if the seller is to hand the goods over to a carrier at a particular place
7. if the seller is to hand the goods over to a carrier
8. the fact that the seller is authorized to retain documents controlling the disposition of goods does not affect the passage of the risk
9. nevertheless, the risk does not pass to the buyer until the goods are clearly identified to the contract
10. whether by markings on the goods
11. by shipping documents
12. by notice given to the buyer
13. or otherwise ]

[COMMENTARY]

[1] [if the contract of sale involves carriage of the goods ]

Compare note 4 of Article 31 concerning the same wording.

The contract requires carriage when the goods are at a place other than the place of destination as it follows from the contract and when no such conditions for delivery apply which exclude carriage. The requirement of carriage thus is the rule and, for lack of rules to the contrary, comes into existence, in particular, when the mailing address of the buyer or ways of dispatch are mentioned. Being a bit more strict, Hellner (Dubrovnik, 344 fol) demands that the seller must have assumed the contractual obligation to transport the goods; without such clues there would only be an Ex Works contract. In agreeing to customary trade terms, like in particular the Incoterms, a carriage requirement is expressed in most cases. But [page 264] this could also allude to other kinds of risk passing than the one envisaged here.

[2] [ and the seller is not bound to hand them over at a particular place ]

Compare sentence two and note 7 in regard to this case.

[3] [ the risk passes to the buyer when the goods are handed over to the first carrier ]

     [3.1] Reference is made here, and there is overwhelming agreement among the commentators (e.g. Honnold, 374 fol; Sevón/Lausanne, 199; Bucher/Lausanne, 214; Nicholas/BB, 490; Hager/Freiburg, 392, and already Neumayer/Dolle, 615 on ULIS; doubting Schlechtriem, 80 fol) which we share, to an independent carrier and not to the seller himself in his capacity as carrier. A point in favour of the interpretation that the seller acting as carrier has to bear the risk himself is that he regularly will be protected against all risks through his global insurances. Furthermore, this will help to increase his eagerness in meeting his obligation to keep the goods, and disputes on whether he breached it causing damage are restricted because he is always responsible. The counter arguments by von Hoffmann (Dubrovnik, 287) that this would serve to counteract a less expensive and more rapid transportation by the seller himself are in no way convincing for the above mentioned reasons.

     [3.2] We are of the opinion that there is no reason to assume that the risk is not passed where goods are handed over to so-called local carriers as von Hoffmann (Dubrovnik, 286) offers as the uniform view (Neumayer/Dölle, 615 on ULIS, tends in the same direction, in spite of the same kind of rules in the Scandinavian sales law in regard to the CISG with the opposite trend Sevón/Lausanne, 200). This is justified neither by the wording nor the genesis of the Convention and also not desirable from the legal policy point of view. To provide the goods with uniform insurance, it is not necessary to include the transport distance covered by the seller, but that of all other carriers. It would indeed be extremely complicated to make a distinction between local and international carriers. Is the train carrying the goods to the national port a local carrier or is it a motor traffic company carrying the goods from the factory to the train which also carries out international motor traffic transportation?

     [3.3] It is sometimes pointed out that forwarding agents are not carriers (Sevón/Lausanne, 199). This is true only insofar as they have not assumed such obligations by self-execution of the contract of carriage: and/or act as forwarding agent working at fixed cost or on the basis of joint consignment (B. Wiesbauer, "Das Wiener Kaufrechtsübereinkommen aus der Sicht des Transportrechtes", Zeitschrift für den internationalen Eisenbahnverkehr, 1987/9/10, p. 97), which is what happens more frequently in connection with the development of modern container traffic. [page 265]

[4] [ when the goods are handed over to the first carrier for transmission to the buyer]

     [4.1] Hence, the goods have to be addressed to the buyer or his firm in the form that is customary for the respective way of transportation, or to an intermediary, e.g. forwarding agent, to be forwarded to the buyer. Observance of this criterion is not impaired by the naming of additional conditions for the delivery/handing over of the goods to the buyer, like payment of the price or proof of it (in this meaning expressly sentence 3).

     [4.2] The wording is also not to express that the first carrier has to transport the goods to the buyer and does, therefore, not exclude transportation by several carriers.

[5] [ the risk passes to the buyer when the goods are handed over ]

Since losses occur or damages are caused often, especially during the process of unloading, it may be necessary, as Sevón (Lausanne, 200) rightly points to, to define the handing over more clearly. It should be useful in our view to proceed on the assumption that the risk bearing becomes effective at the end of the handing over because it is more exactly stipulated than the beginning of that process. We hold that one should insofar follow directly or analogously the quite clear and worldwide recognized Incoterms rules. According to those rules, the handing over is generally ended when the goods are on the vehicle of the carrier taking them over and/or when the latter does the loading himself, the goods were provided ready for loading, or only handed over into the keeping of the carrier. Where the goods are composed of several units which are transported separately, nothing can be said against a risk passing per unit.

[6] [if the seller is to hand the goods over to a carrier at a particular place ]

The obligation to hand over at a particular place can also be substantiated by a party during the process of contract performance making use of a right to choice granted to him, e.g. "depending on the choice of the buyer, the goods are to be tendered for shipping either in Rostock or Szczecin."

But we believe that less unequivocal alternative clauses are sufficient here. Von Hoffmann (Dubrovnik, 289) is of the opinion in this context that the identification of the "particular place" depends on an act of the carrier (which in our view is in general not true), and he wants the risk not to pass at a later specified place, which is not correct, as we think. Of course, decisive are the detailed arrangements made. Only two standard cases can be presented here. In the event of a F.O.B. contract, the specification should generally be made by the buyer, and there is nothing which would speak against the risk passing at the port named by him. In a C.I.F. contract situation which is given as an example in the Secretariat's Commentary (O.R., 64, Article 79), the port of shipment is not even mentioned. Nevertheless, we see no problem in regard to the risk passing at a later, [page 266] here by the seller, specified port, all the more so since the latter is the one having to insure the goods until the named port of destination. This, however, is not so in the case of a CFR transaction. But we do not consider an exception justified insofar as the buyer under Article 32, paragraph 3, is entitled to request the information needed for the conclusion of a transport insurance.

[7] [if the seller is to hand the goods over to a carrier ]

     [7.1] According to the view most expressed in publications (Secretariat's Commentary, O.R., 64; Roth, 308 fol; Sevón/Lausanne, 199; von Hoffmann/Dubrovnik, 287 and others) this is the case when the seller is to tender the goods to the agreed, or later to be specified, carrier at a port or airport. It can also be a carrier who sends containers in multimodal transport and who has, therefore, tendered several batches of goods from different sales contracts. In that case, Incoterms clauses like FAS, FOB, and FCA are used. As regards alternative clauses compare note 1.

When customary trade terms are agreed, the risk bearing rules contained in those terms become effective too. And the Convention is pushed far into the background. But we could imagine that there are also cases for which a point of handing/taking over is agreed in situations which correspond to those aimed at in the trade terms without reference being made, so that the Convention comes into play again.

     [7.2] Honnold (376 fol) expresses an outsider opinion. According to him, the risk shall pass at a particular place only when the goods are handed over by the seller himself and not by another carrier to a second carrier. This interpretation is based, inter alia, on the fact that in Article 67, sentence 2 (by contrast to sentence 1), a handing over by the seller is mentioned. But this is not convincing, if only because the Convention in other places implies that the respective party can also instruct a third party to act on his behalf. This leads to a sharing of the risk of transportation, which in itself is not desirable, but it presupposes the handing over of the goods from one person to another. In so doing, the goods can generally be examined for damages that might have been caused by transportation. Therefore, risk sharing is also usual in these cases. Should it not be possible, as in container transportation, the parties should be recommended not to agree the handing over of the goods at a particular place on their way.

     [7.3] Some authors become hesitant in regard to the application of Article 67, sentence 2, to a F.O.B. contract situation because Article 67, unlike Article 69, does not provide for the passing of the risk where the buyer does not make the means of transportation available in time, and want, therefore, to apply Article 69 (Nicholas/BB, [page 267] 506 fol -- in our view there is a contradiction to his explanations on page 492). We too believe that the risk should pass, provided the other conditions apply, when the means of transportation should have been made available. The reason for this is in our view an analogous application of Article 69, but we also consider possible the solution given by Schlechtriem to deduce a respective principle under Article 7, paragraph 2, from Articles 67 and 69 which would amount to the same (the principle formulated by Hager/Freiburg on page 401 goes, however, too far -- Article 69, note 5; of a different view Sevón/Lausanne, 201).

[8] [the fact that the seller is authorized to retain documents controlling the disposition of goods does not affect the passage of risk]

These documents are mainly the so-called documents of title (Article 57, note 8.1.). In accordance with their function, they do not accompany the goods, but reach the buyer via a bank or on a similar way because they are to ensure the payment or the use of payment guarantees. Their handing over is sometimes tied to the passing of property in the goods. It is expressly stated here that the passing of the risk is not affected by it whereby doubt is removed, for instance, where domestic stipulations to the contrary are concerned.

What is true of the documents of title is all the more true of such documents which contain less far reaching legal positions (Article 57, note 8.1.).

[9] [nevertheless, the risk does not pass to the buyer until the goods are clearly identified to the contract ]

This requirement is to prevent the seller from abusing the lacking identification to the contract in order to put the blame for losses or damages on a certain buyer. The requirements for an identification to the contract are determined by this function and hence must not be too strict in an abstract way.

[10] [ whether by markings on the goods ]

They include, in particular, markings which are directly on the goods because of contractual agreements or because of regulations valid for the individual categories of transportation, like the number of the contract on whose basis the delivery is made or also of the addressee. Packing lists which are added to the goods may also contain identifying information. Also copies, which usually exist, can prove the identification of the goods to the contract even if they are totally lost. It is clear that markings made by the seller, which point to the buyer, like his name, his trademarks or other means of advertising, also have an identifying effect.

[11] [ by shipping documents ]

One of the clearest forms of identification is certainly the addressing of the goods to the buyer, which is reflected above all in the carriage documents.

[12] [ by notice given to the buyer ]

Compare Article 32, notes 3 and 4. [page 268]

In sending bulk goods which are not marked as such, it is recommended to indicate not only the ship by which the goods are sent, but, as far as possible, that part of the ship where the batch of goods for the buyer is stored (c. note 13.2.).

[13] [ or otherwise]

     [13.1] The above enumeration (notes 10 to 12) is to serve as an example and concentrates on particularly evidential means of identification. The wording "otherwise" may, for example, indicate that the goods have been manufactured according to specific requirements requested by a certain buyer; that its quantity is exactly the one agreed with a certain buyer and/or also the time for delivery, other equally due orders lacking; that they are adapted to the technical standard of a country or a region when the seller has no other clients there; and, that a characteristic category of carriage was used, etc.

Where one or the other criterion in itself is not sufficient, several features taken together may permit an unequivocal identification. If such an identification cannot be made, the existing features might suffice to give rise to such a strong supposition that the burden of proof is reversed. (But then the buyer proves that the textiles marked with his trademark can nonetheless not been have handed over to the carrier for transmission to him because they were supposed to go to a place of destination and at a time other than those agreed.)

     [13.2] Identification becomes extremely difficult where the buyer is to be supplied goods from a totality of goods which is not separated during carriage, like for instance in the case of liquids which are supplied to the customer in tankers of a special transportation company. Under the Incoterms this can be done using the trade terms "carriage paid to" and "carriage and insurance paid to named place of destination" which include the same rule for the bearing of the risk. But they do not expressly solve the problem mentioned here so that the CISG has to be invoked. The latter, however, does not offer a solution, but because of its complexity and its principles, opens up greater possibilities of interpretation. We believe that in this case the risk should pass with the taking over of the liquid which is destined for several named addressees because it is clear that the goods intended for every one of these buyers is contained in it. Thus, when because of an accident, the liquid is spilled before even one of the buyers is supplied, there is no doubt that anyone of the buyers is affected (in this sense, even though in another context, Neumayer/Dölle, 640; Neumayer, 984). In the event that only part of the liquid is spilled, it has to be assumed, so we believe, that the buyers not supplied yet (insofar as one has already been supplied, there has been a clear identification for him, [page 269] and the matter is closed for him) bear the risk pro rata of their part in the delivery. The remaining goods would have to be delivered accordingly (similarly as here Neumayer/Dölle, 640; holding a different view Sevón/Lausanne, 202).

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