Cite as Lando, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 249-256. 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
If the seller is not bound to deliver the goods at any other particular place, his obligation to deliver consists:
(a) if the contract of sale involves carriage of the goods -- in handing over the goods to the first carrier for transmission to the buyer;
(b) if, in cases not within the preceding subparagraph, the contract relates to specific goods, or unidentified goods to be drawn from a specific stock or to be manufactured or produced, and at the time of the conclusion of the contract the parties knew that the goods were at, or were to be manufactured or produced at, a particular place -- in placing the goods at the buyer's disposal at that place;
(c) in other cases -- in placing the goods at the buyer's disposal at the place where the seller had his place of business at the time of the conclusion of the contract.
1. History of the provision
1.1. - The 1905-1907 Scandinavian Uniform Sale of Goods Act first codified the concept of delivery (levering, avlämnande). The Act does not define delivery. However, from the provisions of the Act one may conclude, as did the Swedish author Almen, that delivery consists of the acts which the seller must perform in order for the buyer to acquire proper possession of the goods. Thus the seller must hand over the goods to the carrier if they are to be carried to the buyer, or hand them over to the buyer if the latter is to come and get them. Delivery is significant in [page 249] several respects. The risks of loss and deterioration lie, in general, with the seller until the goods are delivered, and from then on with the buyer. The cost of carrying the goods to the place where they are to be delivered rests with the seller, and the cost of carriage from thereon with the buyer. A seller who does not deliver at the proper time and at the proper place does not perform his obligations under the contract. The quality and the quantity of the goods tendered by the seller are to be determined at the moment when risk passes, and, consequently, in most cases, at the moment of delivery.
1.2. - In his writings, the German author Rabel advocated the use of the concept of delivery. However, «handing over» of the goods was not always required. Delivery could also be effected by placing the goods «at the disposal» of the buyer, as when timber is cut and stacked in the woods to be fetched by the buyer. Rabel's concept was adopted in the 1939 Draft and 1951 Draft. ULIS, however, defined delivery as the handing over of goods, and added, «which conforms with the contract» (Article 19(1)). This addition led to various complications (see commentary on Article 30, supra, § 1.2.).
1.3. - Like the UNCITRAL Draft Convention, the present Convention departs from the system adopted in ULIS in several respects. First, it defines the concept of delivery differently from Article 19(1) of ULIS. Article 31 of the Convention sets out those acts of which the seller's obligation to deliver the goods consist. These may include handing over the goods to the carrier or placing the goods at the buyer's disposal. Thereafter, the buyer must take delivery. Second, the passing of risk is not tied to delivery. Thus the risk in goods which are placed at the buyer's disposal at the seller's place of business passes when the buyer takes over the goods or when he fails, to take them over in due time, and commits a breach of contract by failing to take delivery (see Article 69). Third, tender of conforming goods is not necessary to effect delivery, nor is it, a requirement for the passing of risk.
2. Meaning and purpose of the provision
2.1. - Article 31 determines how the seller performs his obligation to deliver the goods. When delivery involves carriage of the [page 250] goods the seller has to hand over the goods to the first carrier for transmission to the buyer; in other cases he has to place them at the buyer's disposal. In these latter cases Article 31 also provides where the goods are to be delivered.
2.2. - Article 31 applies if the seller is not bound to deliver the goods at any other place.
Most international contracts of sale contain provisions on these issues. This reduces the practical importance of Article 31. The parties very often use trade terms such as EX WORKS, F.O.B., C.&F. and C.I.F. The meaning of these terms may vary from country to country. Thus in some countries the terms C.&F. and C.I.F. impose upon the seller the duty to bring the goods on board a ship, even if they first have to be carried over land. In other countries the seller is obliged only to hand over the goods to the first (inland) carrier who will bring them on board a ship. Such divergencies may raise questions as to which meaning will prevail.
Questions concerning interpretation of the parties' statements are governed by Article 8. It may happen that the offeree knew or could not have been unaware of the meaning of a trade term contained in the offer he accepted. In that case this interpretation will prevail (see Article 8(1)). If at the offeror's suggestion the parties have agreed upon the application of the law of a certain country to govern the contract, the offeree should understand that the interpretation of the trade term used must be determined by the law of that country. This happens for example, when parties agree upon the Economic Commission for Europe General Conditions for the Supply of Plant and Machinery No. 574 (hereinafter «Economic Commission for Europe 574»). Clause 13(2) of Economic Commission for Europe 574 provides that unless otherwise agreed the contract shall be governed by the law of the seller's country. Clause 6(1) provides that when no indication is given in the contract or the form of sale the plant shall be deemed to be sold EX WORKS. Economic Commission for Europe 574 makes no reference to INCOTERMS, as, e.g., does Economic Commission for Europe 188. Consequently, the law of the seller's country must determine the meaning of the term EX WORKS.
The parties also choose the law governing the interpretation of a trade term when they agree to submit their disputes to the courts or an arbitration tribunal sitting in a certain country, [page 251] provided, however, that the submission and arbitration clause can be regarded as a tacit choice of the law of the forum country.
More frequently, however, the offeror is unable to prove that the offeree knew or could not have been unaware of the offeror's interpretation when the offeree accepted the offer. Then Article 8(2) applies, and the question will be what understanding a reasonable person of the same kind as the offeree would have had in the same circumstances. In determining this understanding, due consideration is to be given to all relevant circumstances of the case induding the negotiations between the parties, any practices which the parties have established between themselves, usages and subsequent conduct of the parties (see Article 8(3)).
To avoid divergencies of interpretation the International Chamber of Commerce has set up uniform rules on the seller's and the buyer's duties and risks under the most used trade terms. The first edition of these INCOTERMS was published in 1936; and the latest in 1980 comprises fourteen terms. The INCOTERMS have been incorporated into a great number of widely used standard contract forms made or recommended by trade organizations. They are frequently used in contract forms employed by individual enterprises. Their application in international trade has become so widespread that in some instances national courts and international arbitration tribunals have applied them in cases in which the parties had not referred to them.
There are arguments against the application of the INCOTERMS to cases of divergent meaning of a trade term. They were only meant to be applied when the parties made express reference to them. Their application can hardly yet be said to have become an international usage, nor can it be based on any of the other «relevant circumstances» to be considered under Article 8(3) (the negotiations, practices between the parties, and subsequent conduct of the parties). However, the list of relevant circumstances in Article 8(3) is not meant to be exhaustive. Several authors advocated the application of INCOTERMS even before the Convention was signed. Further, a paramount consideration behind the interpretation of the Convention is to promote uniformity (see Article 7(1), (2)). INCOTERMS are a widely used set of rules of interpretation. They are especially aimed at resolving conflicts between divergent meanings of trade terms. These circumstances are to be considered in favour of applying the [page 252] INCOTERMS. However, if a trade term is ambiguous, then the rules in Article 31 apply to fill in the gaps.
2.3. - Under the Convention the seller has performed his duty to deliver the goods even where they do not meet their description or are defective in other respects. However, a seller who does not perform the acts required, who for instance does not put the goods at the buyer's disposal as provided in paragraphs (b) and (c), has not delivered. This may have the consequence that risk does not pass to a buyer who does not take delivery (see § 2.7., infra).
2.4. - When the contract «involves carriage of the goods» the obligation of the seller to deliver consists in handing over the goods to the first carrier for transmission to the buyer. In this case the initiative is on the seller. The typical act envisaged by Article 31(a) is the seller's taking the goods to the carrier's premises and putting them into the carrier's possession there. However, the seller's duty may also be discharged by other arrangements, such as the carrier's agreeing to come to the seller's premises to take the goods from a stockpile which the seller has indicated to him in advance.
Article 31(a) applies when the goods are to be carried by an enterprise which is different from the seller and the buyer. Whether a forwarding agent is a carrier depends, it is submitted, upon the law of this place of business. Under the law of some countries (e.g., Federal Republic of Germany) he is a carrier, under the law of other countries (e.g., Sweden, United Kingdom) he may be a carrier depending upon his contract with the person who engages him.
The first carrier is also the «place of performance» when the trade terms «free carrier ... named point» and «freight carriage ... paid to (without and with insurance)» are used. When the terms F.O.B., C.&F. and C.I.F. are applied the place of delivery is the ship's rail even though the carriage by sea is not the first carriage. In some countries, when the (first) carriage is by sea, delivery is not effected until the goods have passed the ship's rail. Such rules may be applicable as usage (see Article 9(2)).
When trade terms are used, Article 31(a) will, in general, add little, if anything, to the seller's duties. Furthermore, the above [page 253] mentioned trade terms cover several questions not covered by Article 31, such as whether the seller or the buyer is to provide the export license and pay export taxes. If no such trade term is used and the contract is silent the rule of most jurisdictions seems to be that the seller who is to dispatch the goods to a foreign country must also procure the necessary export license and pay the export taxes. The buyer, on the other hand, will have to provide the necessary import license and pay the import duties.
The passing of risk in cases in which the goods are to be handed over to the first carrier is regulated in Article 67.
Further duties of the seller connected with sales involving carriage of goods are provided in Article 32.
2.5. - If the contract does not involve carriage, the main rule is that provided in Article 31(c). The seller must place the goods at the buyer's disposal at the seller's place of business at the time of the conclusion of the contract. The initiative to get possession of the goods is on the buyer. If the seller has more than one place of business or if he does not have a place of business the rule in Article 10 will determine to which place Article 31(c) refers. On the passing of risk in these cases see Article 69(1).
2.6.1. - If the contract relates to specific goods, or unidentified goods to be drawn from a specific stock or to be manufactured or produced, and at the time of conclusion of the contract the parties knew that the goods were at, or were to be manufactured or produced at, a particular place, the seller is bound to place the goods at the buyer's disposal at that place (see Article 31(b)). In this situation the initiative to get the goods is also on the buyer.
Paragraph (b) covers several situations. One is that the goods are specified goods located at a place known to both parties. If, for example, the seller has taken the goods with him to an international market place and sold them to the buyer there, the place at which he has to deliver them is the market place. The place of delivery is also known when under the contract goods are to be manufactured at the seller's factory, the location of which is known to the buyer. The same is true when trade terms such as EX WORKS, F.A.S., EX SHIP and EX QUAY are used. It is recommendable to use these trade terms which also address other questions as those regulated by sub-paragraph (b). [page 254]
2.6.2. - The Secretariat's Commentary to the UNCITRAL Draft Convention maintains that paragraph (b) also applies to goods which are in transit (see Official Records, I, 29). However, this statement is to be understood with certain qualifications, as very often the parties do not know the exact location of the goods. Nevertheless, the seller will have to place the goods at the disposal of the buyer. He can do this, for instance, by endorsing the bill of lading to the buyer or by informing the carrier or the freight forwarder of the assignment of the cargo. On the passing of risk see Article 69(2), (3) and, for goods in transit, Article 68.
2.7. - For a long time it has been debated whether the seller's duty to deliver the goods could be discharged by a unilateral act (placing the goods at the buyer's disposal) or whether a bilateral act (handing over the goods) was required. ULIS favoured the bilateral act (see the definition of delivery in Article 19(1)). The Convention applies both concepts. The seller has the duty to hand over the goods to the first carrier (Article 31(a)) when the sale involves their carriage; he has to place them at the buyer's disposal (Article 31(b), (c)) when the buyer comes to collect them. Article 31 describes the usual situations: the seller takes the goods to the carrier and hands them over to him. Or the buyer comes to get the goods and the seller holds them ready so that the buyer can collect them. No active handing over will then be needed. However, this distinction between a unilateral and a bilateral act is not valid for all situations. On the one hand the duty to hand the goods over to the first carrier may in some situations be discharged by indicating to the carrier from which stockpile he can take the goods. On the other hand, placing the goods at the buyer's disposal may imply a duty to take the goods from the stock and turn them over to the buyer when he comes to get them.
In placing the goods at the disposal of the buyer the seller must give the buyer such notification as is necessary to enable him to take possession. In addition, the goods must be properly identified to the contract, and, if necessary, packed or contained as the contract may require. If these acts are not done the seller has not performed his obligation to deliver the goods and the risk will not pass to a buyer who does not take delivery (see Article 69). However, the buyer may choose to take delivery of «unready» goods. In that case the risk will pass to him. [page 255]
3. Problems concerning the provision
3.1. - As is seen from the foregoing, Article 31 does not solve some important questions relating to the seller's duty to deliver the goods. What happens if the parties have used a trade term which has a different meaning in the seller's and in the buyer's country (see § 2.2., supra)? Has the seller or the buyer the duty to provide an export license and to pay export taxes (see § 2.4., supra)? These are issues which should be solved by the judge or the arbitrator. In solving them he should, it is submitted, be guided by the need to promote uniformity (see also commentary on Article 9, supra, § 3.5.). [page 256]