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Excerpt from John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed. (1999), pages 378-383. Reproduced with permission of the publisher, Kluwer Law International, The Hague.

Article 62

Seller's Right to Compel Performance

A. Factual Settings
B. Domestic Rules
C. Compulsory Price Payment Under the Convention
      (1) Applicability of Limits of Domestic Law: Article 28
      (2) Other Limiting Provisions

§345 A. Factual Settings

The buyer’s duty (or "obligation") to pay the price was defined in Articles 53 to 59. This duty may, of course, be broken after the buyer receives the goods but the more difficult questions concern the seller’s remedy to force the buyer to pay the price when the buyer has not received the goods and claims that it is not obliged to proceed with the contract.

Article 62 [1]

"The seller may require the buyer to pay the price, take delivery or perform his other obligations, unless the seller has resorted to a remedy which is inconsistent with this requirement."

Article 62 states that the seller "may require the buyer to pay the price [and] take delivery." This remedy given to the seller is similar to the buyer’s remedy under Article 46 to "require performance by the seller." Much of the discussion under Article 46 (§§279-286, supra) will be relevant here although the commercial settings are different.

When the buyer has received and retains the goods, enforcing the buyer’s obligation to pay the price does not create the practical problems that arise from attempts to force an unwilling party to deliver goods.[2] When the buyer has accepted the goods the seller’s legal remedy to recover the price normally resembles an action to collect a debt implemented by execution on the debtor’s property. In addition, in some legal systems (other than common law) the failure by a buyer to pay may give the seller the right to recover the goods. This remedy is granted by Article 81(2), §444, infra, but may be ineffective when the rights of the buyer’s creditors intervene.[3] [page 378]

When a buyer refuses to receive the goods the seller’s action under Article 62 to require the buyer "to pay the price" and "take delivery" resembles a buyer’s action under Article 46 to require the seller to deliver goods but has this difference of substance: the seller is not seeking possession of a commodity (raw materials, machinery) that the seller needs in its current operations. Nonetheless, both are remedies to "require" performance and hence are subject to the concession to domestic law provided by Article 28 (§§191-199). The impact of Article 28 will be considered at §348, infra.

§346 B. Domestic Rules

The (U.S.A.) Uniform Commercial Code states:

Section 2–709 Action for the Price

"(1) When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under the next section, the price

(a) of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and

(b) of goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing."

[NB: The Sales Article (2A) of the UCC is in a late stage of revision.]

The most common situation qualifying for an action for the price falls under UCC 2–709(1)(a): the buyer has "accepted" the goods, usually after their receipt and inspection (UCC 2–606). Price recovery in this setting is of the first type just mentioned (§345)—a remedy that resembles the collection of a debt rather than a remedy that compels the consummation of a transaction including receipt of the goods.

This second type of remedy is provided by UCC 2–709(1)(b) when the seller is "unable after reasonable efforts to resell [the goods] at a reasonable price..."—a rule that reflects the principle that it is usually more efficient for a seller in possession of the goods to resell the goods and claim for any resulting loss than to use the processes of the law to force goods on an unwilling buyer. However, the second type of action for the price would be available when the seller has manufactured goods to the buyer’s special specifications (White & Summers §7–5, pp. 298–299) or, [page 379] especially in international sales, when a buyer wrongfully rejects goods after their arrival at a distant port where the seller lacks facilities for sale.[4]

The seller may also have recourse to the "principles of law and equity" (UCC 1–103); this latter body of remedial law authorizes an equity decree for specific performance when recovery of damages (the usual remedy "at law") is not adequate. Assume that a buyer repudiates a long-term contract for purchase of the seller’s output or for supplying the buyer’s requirements; in these settings a claim for damages may not provide an adequate remedy because of difficulty in assessing the seller’s loss in future months or years.[5] One will note that the grounds for compelling a buyer to receive and pay for goods are not as broad as the seller’s right under UCC 2–716 to compel the seller to deliver the goods [6]—a difference that reflects a judgment that a buyer’s need to obtain goods not readily obtainable elsewhere is greater than a seller’s need to force goods on an unwilling buyer.

As was noted under Articles 28 and 46, supra, in civil law legal theory one may "require" the performance of obligations. However, as Professor Treitel observes, courts seldom physically coerce the performance of obligations, and the principle that performance may be "required" is subject to exceptions that in practice "are far more important than the general rule." Indeed, when a buyer refuses to accept goods held by the seller, the "enforcement" of the buyer’s obligation to pay the price may consist of the resale of the goods for the buyer’s account, supplemented by an action to recover any deficiency—action that hardly "requires" the buyer to "take delivery" and "pay the price."[7] Under Article 75 of the Convention, if the seller avoids the contract (as he may and normally would do when the buyer refuses to accept and pay for the goods) the seller may resell the goods and "recover the difference between the contract price and the price in the substitute transaction" plus any additional damages he has suffered. A similar remedy is provided in (U.S.A.) UCC [page 380] 2–706 as an alternative means for measuring the seller’s damages and not as a device to "require" the buyer to pay the price.

§347 C. Compulsory Price Payment Under the Convention

When the buyer has received and accepted the goods, Article 62 of the Convention will apply with full force: "The seller may require the buyer to pay the price..." But when the seller is in possession of the goods, other provisions of the Convention may bear on the question whether the seller may force the buyer to "take delivery" and "pay the price."

§348 (1) Applicability of Limits of Domestic Law: Article 28

Under Article 28 (§§192-199, supra) a court "is not bound to enter a judgement for specific performance unless the court would do so under its own law". At §281 we examined the impact of Article 28 on the buyer’s right under Article 46 to "require performance by the seller"; we now face the impact of Article 28 on Article 62.

Article 28, above, is written in terms of whether a court is "bound to enter a judgement of specific performance".

Legal systems that stem from English law do not refer to an action to recover the full price from the buyer as "specific performance"; this terminology is normally reserved for orders that resemble the decrees that were traditionally issued by courts of equity—decrees that could be enforced by various penalties, including imprisonment for "contempt of court." Requiring a seller to deliver goods (Art. 46) would be described as requiring "specific performance".[8]

When the buyer has not received or accepted the goods and does not wish to receive or accept them, recovering the full price is functionally the equivalent of compelling the buyer to consummate the transaction; this is the approach of the Convention. As was noted above, the statement in Art. 62 that the seller "may require the buyer to pay the price [and] take delivery" parallels the statement in Article 46 that the buyer may "require [page 381] performance by the seller." Both remedies are subject to the concession to domestic law set forth in Article 28: Although, under provisions of the Convention, "one party is entitled to require performance" by the other, the restrictions on this remedy under the domestic law of the forum will apply. See the discussion of Art. 28 at §§194-195.

The point is important: When a seller seeks to force an unwilling buyer to receive goods by an action under Art. 62 to "require the buyer to pay the price," the limitations on this remedy under the domestic law of the forum may be decisive. And, as careful students of the civil law have shown, these limitations are not confined to the common law. As has just been noted, jurists of common law persuasion do not think of an action to recover the price as comparable to an action to require delivery of the goods. But one cannot be tied to local terminology in construing the Convention. See Art. 7, supra at §87. The significance of the parallel language of Articles 46 and 62, just mentioned, is confirmed by the Convention’s structure and its legislative history, discussed in a note."[9] In all legal systems an action under Article 62 to "require the buyer to pay the price" is subject to the concession to the domestic rules of the forum provided by Article 28.

§349 (2) Other Limiting Provisions

The discussion of Article 28, supra at §193, and Article 46, supra at §285, referred to other provisions of the Convention that restrict coercion [page 382] of performance. Two of these, Articles 85 and [88] (§§454, 457, infra) have special relevance if a seller, who is in possession of goods, should seek to hold the goods indefinitely at the buyer’s risk and expense. Under Article 85, "If the buyer is in delay in taking delivery" (which would include delay after a refusal to accept the goods) a seller who has possession or control of the goods "must take such steps as are reasonable in the circumstances to preserve them." This leads into an important provision in Article 88(2): when such goods "are subject to loss or rapid deterioration or their preservation would involve unreasonable expense" the seller "must take reasonable measures to sell them." It would seem that even when "deterioration" would not be "rapid," prolonged retention would inevitably involve "loss" through wasteful storage costs.

For reasons suggested in discussing the buyer’s remedy to "require performance", Article 46, supra at §286, sellers will not frequently seek to use the broad language of Article 62 to force goods on an unwilling buyer. Compelling payment calls for holding the goods until the processes of the law finally force the buyer to accept and pay for the goods. Mounting storage costs and dangers of obsolescence and loss make this a risky remedy. Only in legal theory are legal "rights" fully realized; when litigation to force the buyer to accept and pay finally reaches its end (and litigation may be particularly protracted in an international setting) the seller may find that the reluctant buyer is in bankruptcy and the seller has only obsolete goods on his hands. In most cases, sellers can be expected promptly to reduce the amount at risk by reselling the goods (Art. 75); when loss results the seller may, of course, recover damages (Arts. 74, 76, 78, infra).[page 383]

FOOTNOTES: Chapter on Article 62

1. This article is the same as Art. 58 of the 1978 Draft. Cf ULIS 61 and 62 (payment of price), 70(2) (taking delivery and other obligations of buyer).

2. Avoidance of the contract by either party releases the buyer from its obligation to pay the price (Art. 81, §440, infra).

3. CISG 4 (§70, supra) limits the Convention’s rules to the "rights and obligations of the seller and buyer". Whether the seller’s rights to reclaim the goods under Article 81(1) would prevail over creditors depends on the rights of such a claimant against third persons under domestic law. See Flechtner, Pittsburgh Symposium 67.

Under (U.S.A.) U.C.C. in domestic transactions a seller’s right to reclaim (absent fraudulent acquisition) must rest on a written security agreement signed by the debtor; effectiveness against creditors depends, in most situations, on public filing. UCC 9–203(1), 9–302.

4. The seller’s problems of redisposition at a distant port and the possibility of abuse by the buyer of the seller’s awkward situation are discussed in Sevón, Dubrovnik Lectures 203, 216–217. See Atiyah 370. The above examples are only illustrative.

5. See Schwartz, The Case for Specific Performance, 89 Yale L. J. 271, 276 (1979); Kastely, The Right to Require Performance, 63 Wash. L. Rev. 607, 615 (1988); D. Dobbs, Remedies 885 n.7 (1973).

6. See the discussion of CISG 46 at §§279-286, supra.

7. Treitel, Remedies (Int. Enc.) §§10–29; Treitel, Remedies (1988), Ch. III; Zweigert & Kötz II (1987) 157–169; Dawson, Specific Performance in France and Germany, 57 Mich. L. Rev. 495 (1959); Hager 141–169.

8. At "common law," in the narrow sense that excludes law made by the separate courts of equity, recovery of the price would be sought in an action of "debt." This action was restricted to recovery of the price for things of value received by the defendant—more technically, where the defendant had received a quid pro quo. The defendant received the quid pro quo when he received the goods—and also when he received "property" in goods that still were in the possession of the seller. This tradition underlies the rule of (U.K.) SGA 49, supra, that the seller may recover the price when "the property in the goods has passed to the buyer."

9. Art. 28, invoking the remedial restrictions of the domestic law of the forum is placed in Part I, Chapter I—General Provisions; if it applied only to requiring performance by the seller it would have been placed in Chapter II, Obligations of the Seller, under Section III on the Remedies of the Buyer. This point is confirmed by the drafting history. The concession to the common law was initially incorporated into both of the two parallel remedies to "require performance"—the buyer’s recovery of the goods and the seller’s recovery of the price. Later, to avoid duplication, these parallel provisions were consolidated into one provision in Chapter I: General Provisions. W/G 5 para. 50 and Annex I, (text of Art. 42 (buyer’s remedy) and Art. 71 (seller’s remedy), V Yearbook 34, 56, Docy. Hist. 180, 202. The reference in Article 28 to "a judgment for specific performance" should not be limited in common law contexts to an equity decree since the Convention must be given the same functional effect in its various linguistic and legal settings. (In the French version the above language of Art. 28 is rendered "ordonner l’exécution en nature" and in Spanish "ordenar el cumplimento especifico.") Limiting this phrase to an equity decree in actions by the buyer would exclude actions such as detinue and replevin, and in common law settings would have little meaning in actions by the seller, although this provision was designed primarily as a concession to the common law. For strong support of this view see Kastely, The Right to Require Performance, 63 Wash. L. Rev. 607, 634 (1988).

Pace Law School Institute of International Commercial Law - Last updated March 1, 2005
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