[For more current case annotated texts by this author, see Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed. (2003) and Lookofsky, Understanding the CISG in the USA, 2d ed. (2004).]
F. Time of Payment
243. The buyer is obligated to pay at the time designated in the contract.[l] For cases where the contract is silent, Article 58(1) provides the general gap-filling rule:
244. In a bilateral contract, unless otherwise agreed, the parties are to exchange their performance obligations at the same point in time: i.e., payment and delivery are constructive conditions concurrent.[l] The seller has no obligation to extend credit, so the buyer must pay when the seller makes the goods available, either by placing the goods or the documents controlling them at the buyer's disposal. Conversely, the buyer need not pay until the goods actually are made available.
G. Contracts Involving Carriage
245. In an international sales context, the contract will ordinarily involve carriage of the goods. For these cases, where the parties deal at a distance, Article 58(2) provides the necessary modification to the 'construction conditions concurrent' rule in paragraph (1):
Where the contract involves 'carriage' (by an independent carrier), Article 58(2) permits the seller to protect its interests while proceeding to dispatch the goods: absent contrary contractual provision, and at seller's election, the terms of carriage may provide that an exchange of goods (or documents) against payment will take place when the goods are handed over to the buyer.
246. Article 58 deals with the time, not the place for exchange. In the paragraph (2) situation, when the seller elects to ship under terms whereby the goods (or documents) are to be handed over to the buyer against payment, the CISG default rule calls for payment to be made where the handing over takes place. On the other hand, the seller may not wish to ship under such terms without some assurance that the ultimate exchange will proceed as planned. In practice, the contract will often require the buyer to arrange for the issuance of a letter of credit in the seller's favour; in this case, payment will be made - in exchange for documents - in the seller's locale, by the local (confirming) bank concerned.
H. Buyer's Right to Inspect Before Payment
247. The buyer has no obligation to make (full) payment for goods which do not conform to the contract.[l] Before making payment, and before accepting delivery, the buyer is entitled (though not obligated) to examine the goods. Article 58(3) provides:
In the Article 58(2) situation, when the seller elects to ship under terms whereby the goods (or documents) are to be handed over to the buyer against payment, the seller must preserve the buyer's right to inspect, e.g., by arranging for buyer's access to the goods at the point of destination.
The right of inspection under Article 58(3) is only a gap-filling rule, so (it goes without saying that) the buyer has no right to inspect if the parties agree on other delivery or payment procedures. The quotation of the price on CIF terms is a common example of an agreement inconsistent with inspection prior to payment.