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Published in J. Herbots editor / R. Blanpain general editor, International Encyclopaedia of Laws - Contracts, Suppl. 29 (December 2000) 1-192. Reproduced with permission of the publisher Kluwer Law International, The Hague.

[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).]

excerpt from

The 1980 United Nations Convention on Contracts
for the International Sale of Goods

Joseph Lookofsky

Article 67
Passage of Risk: Contracts Involving Carriage

IV.  Contracts Involving Carriage: the CISG Gap-Filling Role
V.   Goods Not Identified to the Contract

IV. Contracts Involving Carriage: the CISG Gap-Filling Rule

269. Most international sales contracts involve carriage of the goods. For such cases, but only insofar as the contract does not contain a trade term which prevails,[1] Article 67(1) of the CISG Convention provides the gap-filling rule:

'If the contract of sale involves carriage of the goods and the seller is not bound to hand them over at a particular place, the risk passes to the buyer when the goods are handed over to the first carrier for transmission to the buyer in accordance with the contract of sale. If the seller is bound to hand the goods over to a carrier at a particular place, the risk does not pass to the buyer until the goods are handed over to the carrier at that place. The fact that the seller is authorized to retain documents controlling the disposition of the goods does not affect the passage of the risk.'

In most sales contracts involving carriage of the goods, the seller is not bound to hand them over at any 'particular place,' so in most such carriage cases the risk passes to the buyer when the goods are 'handed over' to the first carrier.[2] In other words, in most carriage cases, transit risks fall on the buyer, and practical considerations accord with this general CISG rule: the buyer will be in a better position to inspect goods damaged by transit related risks and make claims against the carrier or insurer concerned.[3]

Goods are only considered as 'handed over to the first carrier' if that carrier is a third party; if the seller delivers using means of transportation and personnel under his own control,[4] the goods are not 'handed over [to a] carrier' in the Article 67(1) sense,[5] and the risk does not pass until the buyer actually 'takes over the goods.'[6] If the seller arranges for carriage by two successive (independent) carriers, the risk usually passes when the goods are handed over to the first of these; however, if the seller is contractually bound to hand the goods over at the transshipment point, the risk passes first at that 'particular place.'

1. See supra No. 267 et seq.
2. Regarding the seller's delivery obligation see supra No. 153 et seq. Compare, e.g. FOB and similar shipment terms (discussed supra No. 267), which require that the goods actually be placed 'on board.'
3. In documentary sales (supra No. 268) the buyer will normally be in possession of documents controlling and insuring the goods. See generally Honnold, Uniform Law (1999) at p. 400 [available at <http://www.cisg.law.pace.edu/cisg/biblio/honnold.html>].
4. See Hager in Schlechtriem, Commentary (1998) at p. 506.
5. See id.
6. Or when the goods are placed at the buyer's disposal. Regarding Article 69, see infra No. 273 et seq.

270. Article 67(1) concludes with the observation that the seller's retention of documents controlling the disposition of the goods does not affect the passage of the risk. However, since a trade term (Incoterm, etc.) will often be included in a [page 143] documentary sales contract,[1] Article 67(1) will not be likely to control the risk issue in such transactions.[2]

1. See supra No. 267.
2. See Berman, H. and Ladd, M., op. cit. at pp. 428-429 and supra No. 268. Compare Honnold, Uniform Law at pp. 406-407.

V. Goods Not Identified to the Contract

271. In certain situations, the buyer will deserve some assurance that the goods which have been damaged or lost were actually the same goods which the seller intended the buyer to receive: e.g. where the seller regularly ships large quantities of fungible goods, the buyer should only bear the risk if it is clear that the goods damaged in a given shipment were 'his.' Therefore, Article 67(1) operates only with respect to 'identified' goods; the risk does not pass to the buyer unless and until the goods are clearly 'identified' to the contract: by markings on the goods, by shipping documents, by notice given to the buyer or otherwise.[1] Thus, in sales involving the carriage of bulk goods, a particular buyer only bears the risk as to his undivided share in the bulk if that share has somehow been 'identified' to the contract in question.[2]

1. Article 67(2).
2. According to Professor Honnold (op. cit. at 408), a buyer should not be held to have agreed to share loss involving an unidentified 'bulk' absent express contractual provision to the contrary. However, if (as in Honnold's example at id.) buyer A agrees to buy one-half of the oil in a given (identified) shipment, and the whole cargo is destroyed, it is hard to see why A should not impliedly be held to bear half the total risk: for in such event it is clear that the goods destroyed included those intended for A.
[page 144]


Pace Law School Institute of International Commercial Law - Last updated April 5, 2005
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