Cite as Knapp, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 475-482. Reproduced with permission of Dott. A Giuffrè Editore, S.p.A.
1. History of the provision
2. Meaning and purpose of the provision
3. Problems concerning the provision
(1) If under the contract the buyer is to specify the form, measurement or other features of the goods and he fails to make such specification either on the date agreed upon or within a reasonable time after receipt of a request from the seller, the seller may, without prejudice to any other rights he may have, make the specification himself in accordance with the requirements of the buyer that may be known to him.
(2) If the seller makes the specification himself, he must inform the buyer of the details thereof and must fix a reasonable time within which the buyer may make a different specification. If, after receipt of such a communication, the buyer fails to do so within the time so fixed, the specification made by the seller is binding.
1. History of the provision
1.1. - The antecedent of Article 65 is to be found in Article 67 of ULIS which read as follows:
(1) If the contract reserves to the buyer the right subsequently to determine the form, measurement or other features of the goods (sale by specification) and he fails to make such a specification either on the date expressly or impliedly agreed upon or within a reasonable time after receipt of a request from the seller, the seller may declare the contract avoided, provided he does so promptly, or make the specification himself in accordance with the requirements of the buyer in so far as these are known to him.
(2) If the seller makes the specification himself, he shall inform the buyer of the details thereof and shall fix a reasonable period of time within which the buyer may submit a different specification. If the buyer fails to do so, the specification made by the seller shall be binding.
1.2. - There are only a few differences between the wording of Article 67 of ULIS and Article 65 of the present Convention. [page 475]
First, Article 65 does not mention expressly the seller's right to declare the contract avoided. There is however no real difference as to this point because this right now follows from Article 64(1)(a) of the Convention (see § 2.7., infra). However, the Convention no longer requires that a seller who wishes to declare the contract avoided do so promptly. .
The most important difference between Article 65 and its predecessor concerns the seller's knowledge of the buyer's requirements. Under Article 67 of ULIS the seller was obliged to respect them only in so far as these requirements were known to him, whereas Article 65 of the Convention obliges him to take them into account in so far as they may be known to him (see § 2.10., infra).
1.3. - In spite of this precedent, the question of whether it was necessary and useful to deal with the specification by the buyer of the goods ordered was the focus of much discussion at the Vienna Conference. Deletion of Article 61 of the UNCITRAL Draft Convention dealing with this matter was proposed. It was objected that such a provision gives a privilege to the seller which was not offset by any recognized right of the buyer, that the principles behind the proposed article were not in line with international trading practice, and that the seller was in this respect adequately protected by the provisions relating to fundamental breach. Nonetheless, the majority of participants at the Vienna Conference considered the article useful and worthy of being retained. The proposal to delete it was rejected, and the proposed text, with some insubstantial amendments, was adopted as Article 65 of the Convention.
2. Meaning and purpose of the provision
2.1. - Article 65 of the Convention deals with contracts leaving detailed specification of the goods to a subsequent unilateral act of the buyer. That means that for some reason the buyer prefers to leave open, at the conclusion of the contract, one or more features of the goods ordered and specify it or them later in accordance with his actual business needs.
For example, on April 1 the buyer might order 1000 pairs of shoes at a certain price for delivery on or before October 1 and [page 476] the contract might state that the buyer will specify the styles and sizes to the seller on or before September 1. The seller may be a merchant who will assemble the quantity to be delivered from inventory or he may be a manufacturer who will, subsequent to the notification by the buyer, manufacture the goods according to the buyer's specification.
2.2. - The features of the goods to be specified by the buyer must be expressly described in the contract. A general clause in the contract that the buyer will specify the goods ordered would be insufficient and would have no legal effects.
2.3. - The term for the buyer's specification may be fixed in the contract either as a certain day, for example September 1, or more commonly, as a deadline such as «before September 1» or «not later than August 31» or «at least one month before the date of delivery». Or, the obligation of the buyer to specify the goods may fall due on request of the seller, i.e., within a reasonable time after receipt of such request (see § 2.8., infra).
2.4. - The specification duly made by the buyer makes the contract concrete as to the goods to be delivered and is obligatory for the seller. It is binding on the buyer as well. The buyer may not change the specification once made.
However, Article 65 rejects any suggestion that the contract is not complete until the buyer has notified the seller of the specification or that the buyer's notification of the specification is a condition to the seller's right to deliver the goods and demand payment of the price.
2.5. - If the buyer fails to make the specification in due time the seller is authorized to make the specification himself as well as to exercise any other rights he may have under the contract and this Convention for the buyer's breach. Therefore, in place of, or in addition to, making the specification himself under Article 65, the seller could:
|-||avoid the contract under Article 64(1)(a) if the delay in making the specification by the buyer amourits to a fundamental breach of contract; [page 477]|
|-||sue for damages under Article 61(1)(b) and Articles 74 et seq.|
2.6. - If the buyer has not performed his obligation to make the specification under Article 65, the seller may invite him to do so within an additional period of time. Contrary to the interpretation given in the Secretariat's Commentary (Official Records, I, 51), it appears that the buyer's failure solely to perform his obligation to make the specification within the additional period of time so fixed by the seller or the buyer's notifying the seller that he will not make the requested specification within this period of time will not justify avoidance of the contract by the seller. Under Article 64(1)(b) the right of avoidance of the contract is granted to the seller exclusively in cases of the buyer's failure to pay the price or to take over the goods.
2.7. - If the seller chooses to exercise his right to make the specification himself pursuant to Article 65(1), he may do so immediately upon the passing of the date agreed upon in the contract as the date by which the buyer would make the specification. If no date of specification by the buyer be agreed upon, the seller is obliged to request according to the date in the contract or, if such a date has not been agreed upon, within a reasonable time before the date of delivery specified in the contract. In the latter case the seller must wait a reasonable time after the buyer has received the request from the seller before he can make the specification himself.
2.8. - Article 65 imposes three obligations on the seller who intends to make the specification himself:
(a) to make the specification «in accordance with the requirements of the buyer that may be known to him»;
(b) to inform the buyer of the details of the specification made by the seller; and
(c) to fix a reasonable time within which the buyer may make a different specification.
2.9. - The seller's obligation to make the specification in accordance with the buyer's requirements arises not only if the seller knew those requirements but also if he might have known [page 478] them. The Convention is not quite consistent as to this terminology and uses in Article 64 the expressions «has become aware» and «ought to have known» (see commentary on Article 64, supra, § 3.17.). It seems however that there is no difference intended in the meanings ot «has become aware», «ought to have known» and «may have known». So, under Article 65 the seller «may have known» the requirements of the buyer even if he did not in fact know them but, having regard to all circumstances of the given case he was in a position to learn them. The seller may not neglect a possibility for acquainting himself with the buyer's requirements, to know them, for example, from previous correspondence with the buyer or from personal negotiations. However, mere knowledge by the seller of the buyer's business conditions at the time for the specification does not justify a conclusion that the seller might have known the requirements of the buyer. It is obvious that the seller who did not know and could not know the requirements of the buyer is not bound to consider them. It follows however from Article 73 by analogy that he might, even in this case, proceed taking into account the nature and the circumstances of the case and the justified interest of the buyer which might be known to him. For example, the seller may not, even if he does not know and may not known the requirements of the buyer, deliver to the buyer outmoded goods in order to rid himself of them.
2.10. - If the seller in making the specification himself fails to take account of the requirements of the buyer he knows or he may have known; the specification made by the seller will not be binding on the buyer and the case will be considered as one of non-conforming goods under Articles 35 et seq.
2.11. - The same effects will be produced if the seller who made the specification under Article 65 fails to inform the buyer of its details. It would not be enough for the seller to inform the buyer that he has made the specification without informing him of its details. Article 65(2) does not provide for any period of time within which the seller must inform the buyer. In conformity with the aim of this provision, it should be done within a period that would leave the buyer enough time to make a different specification under Article 65(2). [page 479]
2.12. - The seller is also called on to fix a reasonable period of time within which the buyer may make a different specification. The reasonableness of that period is measured from the time the buyer receives the specification. If the specification is never received by the buyer, it never becomes binding on him. The requirement that the buyer must have received the specification from the seller places the risk of trasmission on the sender of the notice. This is an exception to the general rule of Article 27.
2.13. - The seller fails in his obligation to fix a reasonable time within which the buyer may make a different specification if he has not fixed any period of time for making this specification or if the period of time fixed by the seller is not reasonable, i.e., inadequately short. In such a case the specification made by the seller, even if made in accordance with the requirements of the buyer that might have been known to the seller and even if received by buyer, will not be binding on him. The resulting situation is a lack of conformity of the goods with the contract under Articles 35 et seq.
2.14. - When the seller does not fix a reasonable time within which the buyer may make a different specification, the buyer may nevertheless do so because the specification made by the seller was not binding. On the contrary, the different specification made by the buyer will be binding on the seller. The buyer is however not obliged to do so and he will not lose his rights under Articles 35 et seq. for failing to do so. It could, however, be considered as a failure to take measures to mitigate the loss under Article 77.
2.15. - In conclusion, the seller's specification will not be binding unless the last condition of Article 65(2) has been satisfied, namely, the buyer's failure to make his different specification within the period of time fixed by the seller. Of course, the specification made by the seller will become binding if the buyer agrees to it. On the other hand, the buyer is not precluded from making his specification even if he is in delay in making it originally and the seller has made his specification, unless the seller's specification has become binding. [page 480]
2.16. - If under the contract the buyer has the right to make specifications of several features of the ordered goods and he fails to do so for some of them, the preceding conclusion apply analogously to the partial failure.
3. Problems concerning the provision
3.1. - The intention of Article 65 is to protect the seller against the buyer's delay in specifying the goods ordered and to ensure the seller a sufficient period of time to comply with the buyer's specifications. However, the wording of Article 65(1), that the buyer «is to specify» the goods, is capable of differing interpretations.
3.2. - The Secretariat's Commentary (Official Records, I, 51) interprets the expression «is to specify» in such a way that, under the contract, the buyer may have the right and at the same time the obligation to specify the goods ordered, or in the alternative only the right to specify them without having any obligation to do so. This latter interpretation would lead to absurd consequences.
3.3. - It is certain that if the buyer has not only the right to specify the goods ordered but also an obligation to the seller to do so, and he has not complied with this obligation, a breach of contract by the buyer arises. In this situation the seller has the right to resort to the remedy provided in Article 65 without prejudice to any other rights he may have, i.e., the right to claim damages which might have occurred.
3.4. - But what if under the contract the buyer has only the right to specify the goods without a corresponding obligation to do so? In such a case, if the buyer does not make the specification in due time, it would be merely a non-execution of his right, but not a breach of contract. The seller, therefore, would have no remedy whatsoever. The placement of Article 65 in Section III of Part III, Chapter III, under the heading «Remedies for breach of contract by the buyer» leaves no doubt that Article 65 is considered as providing such a remedy and that its application [page 481] supposes a breach of contract by the buyer. A mere non-execution of a right would not, however, constitute a breach of contract.
3.5. - Yet, it must be taken into account that Article 65 is meant to be interpreted in connection with Article 60(a) which imposes a general obligation on the buyer to do everything which could be reasonably expected of him in order to enable the seller to make delivery. A due specification by the buyer, even if stipulated in the contract only as his right, is an indispensable condition of a due delivery by the seller. Having in mind the buyer is obliged to perform his obligations under the contract and this Convention, one could conclude that lack of specification or, as the case may be, a late specification constitutes a breach of contract by the buyer. If such a breach of contract is fundamental, the seller is authorized to resort to the appropriate remedies available to him. Regardless of whether this breach of contract amounts to a fundamental breach, it may be assumed that the seller is authorized, even in this case, to resort, at least by analogy, to the procedure of Article 65.
3.6. - Thus it may be concluded that, as to the applicability of Article 65, there is no difference between cases in which the buyer's right to specify the goods is stipulated in the contract as both his right and obligation, and those calling it his right only. [page 482]