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Published by Manz, Vienna: 1986. Reproduced with their permission.

excerpt from

Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods

Univ. Prof. Dr. Peter Schlechtriem [*]

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3. The Seller's Remedies for Breach by the Buyer (Articles 61-65)

As with the buyer's remedies, the seller's remedies are not categorized according to the kind of breach (cf. Article 61(1)). Article 64, however, contains special rules for the seller who wishes to avoid the contract when the buyer breaches his obligations to pay or to take delivery. In addition, for sales subject to the buyer's specifications, Article 65 provides, as a special remedy, the transfer to the seller of the right to specify the goods. The buyer's obligation to pay interest, provided for in Article 78 - one of the obligations in Chapter V which are common to both seller and buyer - is a special remedy for the seller when the buyer delays payment. The right to resell the goods, described in Article 88, is a remedy which becomes important to the seller when the buyer fails to take delivery of the goods. The seller's primary claim is for specific performance by the buyer (Article 62); however, Article 28 may limit the action.[333a] A notice extending the time to perform operates initially only as a bar to the seller's resort to other remedies for the duration of the extended time period, except for damages caused by the delay in performance (Article 63(2)), unless the buyer has refused to perform altogether (Article 63(2) sentence 1). In addition, the seller can claim damages together with specific performance or other remedies for the buyer's breach (Article 61(2)). Even if domestic law permits it, domestic courts and arbitral tribunals may not grant a grace period to the buyer - any more than they may grant one to the seller (Article 61(3)).

In principle, the seller may avoid the contract if the buyer's failure to perform his obligations constitutes a fundamental breach of contract.[334] The seller can resolve any doubt as to whether the buyer's delay in making payment or taking [page 84] delivery constitutes a fundamental breach by fixing an additional period of time for performance (Article 64(1)(b)). However, for obligations of the buyer other than those named in this provision, fixing an additional period of time for performance has only the consequences provided in Article 63(2) sentence 1.[335]

Although, in principle, the buyer's fundamental breach of contract permits the seller to avoid the contract, Article [64(2)] considerably restricts avoidance when the buyer has in fact paid. First, the buyer's delayed performance permits the seller to avoid the contract only if the seller was unaware that performance had been rendered. For breaches other than delay, the seller may not avoid the contract if he does not exercise the right within a reasonable time after the seller learns or ought to have learned of the breach (Article 64(2)(b)(i)), after any additional time period allowed for performance was expired, or after the buyer has declared that he will not perform his obligations (Article 64(2)(b)(ii)). In other words, once the price has been paid, even if the buyer has committed a fundamental breach of the contract - for example, the additional period of time for taking delivery has expired - the seller cannot wait and watch market developments before making his decision to avoid the contract.

The 1978 Draft Convention's text of Article 64(2) (Article 60(2) of the 1978 Draft Convention) was disputed in Vienna by those who wished to clarify that in the case of late payment - which, as such, already may constitute a fundamental breach and, consequently, a ground for avoidance - the seller loses the right to avoid the contract once he learns of the late payment.[336] In my opinion, late payment is covered by Article 64(2)(a) as well; hence, the right to repudiate the contract is lost as soon as the seller discovers that the payment was made. [page 85]

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FOOTNOTES

* The author of this book participated at the Conference as a member of the delegation from the Federal Republic of Germany. The views expressed here are personal to the author and do not necessarily represent the position of the F.R.G. or its delegation.

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333a. Whether an action for the price is a form of specific performance is controversial. See Ziegel, Remedial Provisions at 9-30 (with further references). In the end, it is merely a problem of denomination, because no one doubts that the action is enforceable against the buyer.

334. In the case of strongly fluctuating foreign-exchange markets, the date agreed upon for payment can be "of the essence". As far as the obligation to take delivery is concerned, the seller's need to clear his warehouse can, under some circumstances, make this an important duty, so that the failure to take delivery can constitute a fundamental breach.

335. But see Article 64(2)(b)(ii); and the accompanying text.

336. See A/Conf. 97/C.1/L.185 (= O.R. 124) (Norwegian proposal): A/Conf. 97/C.1/L.221 (= O.R. 125) (proposal of a working group). Unfortunately, all attempts to achieve a linguistically clearer formulation were unsuccessful. It is not clear whether the proposals were rejected because they were thought to represent merely changes in style, so that late payment is also to be understood as "late performance" in the sense of Article 64(2)(a), or whether, in the case of late payment, a right to avoid is always possible. Cf. A/Conf. 97/C.1/SR.33 at 6-7 (= O.R. 412) (discussion).

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Pace Law School Institute of International Commercial Law - Last updated June 7, 2000
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