1. Mr. REISHOFER (Austria) stressed that the working group set up at the previous meeting to work out a compromise text taking into account the various amendments proposed to article 51 [became CISG article 55 ] should bear in mind the close connection between that article and article 12 [became CISG article 14 ]. The ad hoc working group on article 12 [became CISG article 14 ] had put forward a text (A/CONF.97/C.1/L.103) that would enable contracts of sale to be concluded in cases where the price had not been fixed or determined, but that proposal had been rejected by a small majority. He felt that decision was an unfortunate one in terms of the future prospects for acceptance of the Convention, and welcomed the opportunity to make a second effort to reconcile articles 51 and 12 [became CISG article 55 and CISG article 14 ]. The problem was exceedingly important, particularly for States intending to adhere to both Parts of the Convention, namely the Part concerning sales as well as the Part concerning formation of contracts.
2. Mr. DATE-BAH (Ghana) urged that no change should be made to article 12 [became CISG article 14 ], and that the working group should deal simply with article 51 [became CISG article 55 ]. If article 12 [became CISG article 14 ] was changed, some States might be unwilling to accept not only Part II of the Convention, but the Convention as a whole.
3. The CHAIRMAN did not think it was appropriate for the Committee to enter into a discussion of article 12 [became CISG article 14 ] at that stage; the matter could be taken up again in plenary. The Austrian representative had been concerned that the working group on article 51 [became CISG article 55 ] should not overlook the importance of the relation between that article and article 12 [became CISG article 14 ]. However, it was for the working group itself to decide on that matter, since it had received no specific terms of reference in that regard.
4. Mr. GHESTIN (France) emphasized that there should be no misunderstanding regarding the task of the working group. In endeavouring to harmonize the two provisions, the group should assume that article 51 [became CISG article 55 ] was to be brought into line with article 12 [became CISG article 14 ] and not vice versa, since article 12 [became CISG article 14 ] had already been adopted. There could be no question of changing the wording of article 12 [became CISG article 14 ] to bring it into line with that of article 51 [became CISG article 55 ].
5. The CHAIRMAN said that that statement would be noted.
6. Mr. FELTHAM (United Kingdom), introducing the joint proposal by the ad hoc working group (A/CONF.97/C.1/L.214) said the object of the proposal was to make clearer the distinction between the need for goods to conform to the express obligations of a contract, and the need for goods to conform to obligations arising out of surrounding circumstances, such as, for example, the indication by the seller of a particular item as a sample or model. With that aim in view, the group had agreed that the second sentence of paragraph 1 of the existing text should be modified to bring it into line with the language used in the first sentence. The only difficulty had been that the proposed wording had proved difficult to render appropriately in Russian.
7. Mr. OLIVENCIA RUIZ (Spain) said that the introductory clause of the new paragraph 2 caused difficulties in the Spanish version also, chiefly because of the double negative it contained.
8. Mr. HERBER (Federal Republic of Germany) did not think the word "require" in the proposed new paragraph 2 of article 33 [became CISG article 35 ] was appropriate. He suggested that the word "provide" would be preferable.
9. Mr. ZIEGEL (Canada) wondered whether the proviso "where the contract does not require otherwise" was necessary at all, since article 5 [became CISG article 6 ] of the Convention already made clear that everything in Part III might be varied or excluded by agreement between the parties. It would be confusing if later articles of the Convention introduced qualifications and exceptions, since that might imply that some provisions were not subject to exclusion and variation by such agreement between the parties. Apart from that consideration, the proviso was ambiguous. It could be taken as implying either that the contract might derogate from the presumptions of paragraph 2 or as implying that the parties might have agreed on a higher standard than that put forward in paragraph 2.
10. He proposed that the introductory clause of paragraph 2 should be deleted.
11. Mr. FELTHAM (United Kingdom) replied that the words "where the contract does not require otherwise" could be interpreted in either sense. The parties could be taken to be agreeing on either a higher or a lower standard. He appreciated the point raised by the Canadian representative; in provisions relating to conformity there might be some merit in making clear that those provisions were subject to contrary agreement. It was for that reason that the working group had kept fairly closely to the original text. He himself would have preferred the word "provide" to the word "require", but the group had decided on "require" as a compromise solution.
12. Mr. INAAMULLAH (Pakistan) shared the Canadian view. The phrase "where the contract does not require otherwise" was different in substance from the original phrase "except where otherwise agreed". The change was not one of drafting.
13. The CHAIRMAN put to the vote the Canadian oral amendment to delete the words "where the contract does not require otherwise" in paragraph 2 in the joint proposal (A/CONF.97/C.1/L.214).
14. The proposal was rejected.
15. Mr. LEBEDEV (Union of Soviet Socialist Republics) said that his delegation, like several others, had had misgivings about the use in the joint proposal (A/CONF.97/C.1/L.214) of the verb "require" in the crucial proviso of paragraph 2. He suggested that that verb should be replaced by the much more appropriate "provide". The opening words of the paragraph would thus read: "Except where the contract does not provide otherwise . . .". His remark applied to both the English and the Russian texts.
16. Mr. GORBANOV (Bulgaria) noted that in the French version the term used was "prévoit", which corresponded exactly to the suggestion made by the previous speaker.
17. Mr. FELTHAM (United Kingdom) said it would be helpful if the Committee took a vote on the USSR suggestion. A decision would help to avoid a very long discussion at a later stage in the Drafting Committee. His delegation regretted that it had had to abstain when the Committee took a decision on the text of the introductory words of paragraph 2 as contained in the joint proposal. He would gladly support the USSR representative's suggestion.
18. Mr. ZIEGEL (Canada) said that his delegation had been in favour of deleting the initial proviso of the new paragraph 2 but had no objection to the remainder of the proposal.
19. Mr. KHOO (Singapore) said that, although a member of the ad hoc working group, he had been unable to support the introductory words in paragraph 2 proposed by the group because the discussion had shown that there were strong arguments against that wording. In the USSR suggestion, the use of the word "provide" seemed to imply that the matters in question must be provided for in writing in the contract. That being the case, he was concerned at the fact that the suggested wording would leave outside its scope two situations which frequently occurred in practice. The first was the case in which usage provided otherwise than specified in the various subparagraphs of article 33(1) [became CISG article 35(1) ]. The second case was where an oral agreement between the parties -- legally valid under the draft Convention -- had a similar effect. Since the amendment by the USSR representative seemed much too narrow, he urged that the formula in the original draft "except where otherwise agreed" should be kept.
20. Mr. OLIVENCIA RUIZ (Spain) said that he wished to raise a point of procedure. It was impossible to discuss a proposal on the wording of a provision without having a written text available in all official languages. He urged the Committee to bring to an end a pointless multilingual discussion and request the working group to prepare two or more alternative forms of the words, to be submitted to the Committee in writing in all official languages.
21. After a procedural discussion in which Mr. KHOO LEANG HUAT (Singapore), Mr. DATE-BAH (Ghana), Mr. FARNSWORTH (United States of America) and Mr. KOPAC (Czechoslovakia) took part, the CHAIRMAN put the joint proposal (A/CONF.97/C.1/L.214) to the vote.
22. There were 10 votes in favour and 10 against.
23. The proposal was not adopted.
24. After a discussion as to the exact meaning and bearing of the vote, a discussion in which Mr. ZIEGEL (Canada), Mr. INAAMULLAH (Pakistan), Mr. FELTHAM (United Kingdom), Mr. ROGNLIEN (Norway), Mr. DATE-BAH (Ghana) and Mr. LEBEDEV (Union of Soviet Socialist Republics) took part, the CHAIRMAN explained that the vote had the effect of retaining the text of article 33 [became CISG article 35 ] in its original form, since the reformulation in three paragraphs put forward in the joint proposal had been turned down.
25. The only question outstanding was that of the opening proviso of the second sentence of article 33(1) [became CISG article 35(1) ]. The rewording in the joint proposal, "Where the contract does not require otherwise", had been rejected. The original language "Except where otherwise agreed" would thus appear in principle to have been retained. The USSR delegation, however, had suggested the use of the term "provide", which would be a halfway house between the original term "agreed" and the language used in the joint proposal. He suggested that the Drafting Committee should be requested to find the best form of words for that proviso in all the official languages.
26. It was so agreed.
27. Mr. KLINGSPORN (Federal Republic of Germany), introducing his delegation's amendment (A/CONF.97/C.1/L.182), said that under paragraph 1(a) of article 53 [became CISG article 57 ] in the draft, the buyer was required to pay the price to the seller at the seller's place of business. In many countries, national law conferred jurisdiction upon the courts of place of performance of obligation. A claim for payment of price could, under that system, be brought before the courts of the country where the obligation to pay that price had to be performed. Since in principle the place of performance was the locality where the debtor had his place of business, it followed that the proper forum was the court of that place of business.
28. By specifying that the buyer must pay the price at the seller's place of business, paragraph 1(a) of draft article 53 [became CISG article 57 ] deviated from that principle since the seller's place of business could be regarded as the place of performance. In his delegation's view, the result would be unjustly to the disadvantage of the buyer. His delegation was of the firm opinion that proceedings for payment must always be brought in at the courts of the debtor's place of business.
29. Since article 53 [became CISG article 57 ] did not cover the point, his delegation proposed to add a new paragraph 3 embodying an explicit rule to the effect that jurisdiction of the courts at the seller's place of business could not be derived from the provision of paragraph 1(a) of article 53 [became CISG article 57 ] whereby payment had to be made at the seller's place of business.
30. Mr. BOGGIANO (Argentina) said that, without prejudice to his delegation's position on the substance of the rule proposed, he wished to express his misgivings at what seemed to him a sweeping proposal on a subject which was alien to the subject matter of the draft Convention and which might therefore well be outside the terms of reference of the Conference.
31. The proposed rule would affect the whole system of rules of private international law on the subject of jurisdiction. In particular, it would affect the autonomy of the will of the parties regarding choice of forum. It would, moreover, impinge on important rules of jurisdiction in the national legislation of individual countries.
32. Mr. FOKKEMA (Netherlands) supported the proposal of the Federal Republic of Germany. For the reasons already given, he strongly favoured a proposal which would have the effect of protecting the buyer from an unjustified result of the existing terms of article 53 [became CISG article 57 ].
33. Mr. KUCHIBHOTLA (India) opposed the proposal. Rules of jurisdiction did not come under the purview of the draft Convention under discussion. None of the articles of the draft dealt with jurisdiction. Furthermore, the proposal by the Federal Republic of Germany could have the undesirable effect of impinging upon national rules on jurisdiction.
34. The CHAIRMAN said that as the majority appeared to oppose the proposal by the Federal Republic of Germany, he would, if there were no objection, consider the proposal rejected.
35. It was so agreed.
The meeting was suspended at 11.20 a.m. and resumed at 11.40 a.m.
36. Mrs. SOARES (Portugal), introducing the joint proposal by Argentina, Spain and Portugal (A/CONF.97/C.1/L.189), said that the proposed opening proviso in paragraph 1 corresponded to the opening proviso "in article 53(1) of the draft Convention" [became CISG article 57(1) ]. It was necessary, for the sake of symmetry and to avoid difficulties of interpretation.
37. The proposed change in the last sentence of the paragraph was intended to bring out better the meaning of the rule embodied in the last sentence which was an expression of the exceptio non adimpleti contractus. That wording was also better suited to the non-imperative character of the rule. In the present text the use of the word "condition", which had a precise legal connotation, could be misleading.
38. Mr. VINDING KRUSE (Denmark) said that his delegation supported both amendments but thought that the wording should be revised by the Drafting Committee.
39. Mr. KRISPIS (Greece) said that the first amendment seemed superfluous because the matter was already covered by articles 5 and 8 [became CISG article 6 and CISG article 9 ]. He supported the second amendment, which he considered an improvement on the existing wording.
40. Mr. GHESTIN (France) said that the French delegation too could approve both proposals. The first brought the text of article 54 [became CISG article 58 ] into line with that of article 53 [became CISG article 57 ] and the second clarified the meaning of the article.
41. Mr. BENNETT (Australia) also supported both proposals, the first of which made the text consistent with that of article 53 [became CISG article 57 ]. He was not sure whether or not such introductory words were necessary, but if they existed, they should exist in both articles. The proposed wording of the last sentence of paragraph 1 gave a better definition of what was involved in the provision than the existing wording, although he would like clarification of the meaning of the words "in this case".
42. Mr. ROGNLIEN (Norway) said that his delegation would not support the first amendment, which it considered unnecessary. It also preferred the existing text of the last sentence of paragraph 1 because the handing over of the goods and payment should be simultaneous and concurrent. It was not correct to state that the seller could just sit and await payment by the buyer.
43. Mr. ZIEGEL (Canada) agreed with the Greek representative that the point made in the first amendment had already been made in other articles. His delegation was opposed to the second amendment because it overlooked the possibility that the seller might have agreed to give the buyer credit. He would also like clarification of the phrase "in this case".
44. The CHAIRMAN said that he took it that if the first amendment was adopted, the Committee would wish to refer it to the Drafting Committee.
45. It was so agreed.
46. Mr. HJERNER (Sweden) welcomed the attempt in the first amendment to bring the wording into line with that of article 53 [became CISG article 57 ] but considered the word "bound" inappropriate to a situation where the buyer had been granted credit. His delegation also had reservations on the reference to a "specific time", which need not necessarily form part of a credit agreement. The second amendment should be studied in conjunction with article 62 [became CISG article 71 ], paragraphs 1 and 2.
47. The CHAIRMAN invited the Committee to vote on the first amendment in document A/CONF.97/C.1/L.189.
48. The amendment was adopted.
49. The CHAIRMAN asked the sponsors if they agreed that the second amendment should be considered in conjunction with article 62 [became CISG article 71 ].
50. Mrs. SOARES (Portugal) confirmed that the sponsors agreed to postpone consideration of the second part of their proposal.
New article 55 bis (A/CONF.97/C.1/L.206)
51. Mr. OLIVENCIA RUIZ (Spain), introducing the proposal by the Argentine, Portuguese and Spanish delegations (A/CONF.97/C.1/L.206), said that the proposed new article covered matters which seemed to have been omitted from the draft Convention. Provisions concerning payment no doubt raised fewer problems than those relating to the obligation to deliver. Nevertheless it seemed desirable to include some traditional rules concerning the buyer's obligations in the Convention as had been done in the case of the seller. The provisions in question were generally accepted in international trade, and the sponsors proposed that they should be inserted either after article 55 [became CISG article 59 ] or at some other place the Committee might consider more appropriate.
52. Mr. MASKOW (German Democratic Republic) remarked that the Convention was designed to solve practical problems rather than to attain full symmetry between buyer and seller. Most of the problems referred to in the proposals were already solved in the Convention, notably in article 55 [became CISG article 59 ]. The remainder were not really practical problems. A seller was normally interested in being paid as soon as possible and it seemed unlikely that a buyer would be unwilling to withdraw his payment.
53. Mr. HONNOLD (United States of America) expressed doubts as to the need for the proposed new article in view of the opening sentence of article 54 [became CISG article 58 ].
54. The CHAIRMAN said that, in view of the lack of support for the proposed new article, he would, if there was no objection, consider the proposal rejected.
55. It was so agreed.
56. Mr. KRISPIS (Greece) said that he had supported the proposal because of its symmetry with article 47 [became CISG article 51 ], which dealt with partial performance but not with payment of part of the price.
New article 55 ter (A/CONF.97/C.1/L.206)
57. Mr. OLIVENCIA RUIZ (Spain) explained that the sponsors had not been inspired by a desire for symmetry but by a concern that the Convention as a whole should be homogeneous. The purpose was to present as complete as possible a set of regulations on contracts of sales. Similar problems were presented by early delivery and early payment but whereas the former might raise problems of storage, the latter might equally well raise problems of currency fluctuations. The seller should thus be given the right to accept or refuse payment before the appointed date. In view of the opposition to the proposed article 55 bis, the proposed article 55 ter would probably not meet with the approval of the Committee. However, he wished reference to the question to appear in the summary record so that it would be clear that the matters had not been overlooked but that reference to them had been considered unnecessary.
58. Mr. HJERNER (Sweden) said that the point was a practical one and deserved consideration. His delegation could support it provided that the word "refuse" meant immediate refusal. A seller might wish to refuse payment before the appointed date in the light of currency fluctuations.
59. Mr. MASKOW (German Democratic Republic) asked if the proposal meant that if premature payment had caused an actual loss to the seller, the latter was not entitled to claim damages.
60. Mr. OLIVENCIA RUIZ (Spain) said that, speaking for his own delegation, he agreed with the example given by the Swedish representative and also with his comment that refusal to accept payment should be immediate. If the seller agreed to the buyer paying the price before the appointed date, he would have no claim for damages or for further payment.
61. Mr. KOPAC (Czechoslovakia) said that he had doubts about the desirability of adopting the proposed article 55(ter) in view of the problem of its relationship with article 48 [became CISG article 52 ], paragraph 1. If the buyer accepted delivery before the appointed date, was the seller obliged to take the price, whatever the exchange rate of the money concerned?.
62. Mr. ROGNLIEN (Norway) observed that on the question of damages, reference should be made to article 57 [became CISG article 61 ], paragraph 2. If the seller refused to accept payment from the buyer there could be no claim for damages. If he accepted, it would depend upon the terms of acceptance. In theory, he might have a claim for damages on the grounds of breach of contract by the buyer in paying before the appointed date, but it would be unlikely to succeed in practice.
63. Mr. KRISPIS (Greece) said that for reasons of interpretation, it was important to establish symmetry in the Convention in dealing with the respective obligations of seller and buyer. Refusal by the seller to accept premature payment might constitute an abuse of right but that aspect fell outside the scope of the draft Convention. He supported the joint proposal with the same qualification as the Swedish representative and would further suggest that the opening phrase should be modified to read "If the buyer likes to pay the price".
64. The joint proposal for a new article 55(ter) (A/CONF.97/C.1/L.206) was rejected by 21 votes to 20.
64a. Article 56 [became CISG article 60 ] was adopted.
64b. Article 57 [became CISG article 61 ] was adopted.
64c. Article 58 [became CISG article 62 ] was adopted.
64d. Article 59 [became CISG article 63 ] was adopted.
(A/CONF.97/C.1/L.185 and L.209)
65. Mr. ROGNLIEN (Norway), introducing his delegation's amendment (A/CONF.97/C.1/L.185), said that the basic principle in article 60(2) [became CISG article 64(2) ] was that the seller retained the right of avoidance without time-limit so long as the price remained unpaid. After the buyer had made payment, the situation rightly changed. The existing text of paragraph 2(a) was objectionable because the term "late performance" did not distinguish between paying the price and taking delivery. The text was open to two interpretations: one was that each delay was to be treated separately and independently of other aspects of performance. In that case, subsequent to the receipt of late payment, the seller could not avoid the contract on that ground in conjunction with tardiness in taking delivery. The seller would have to consider as a separate issue whether the buyer's failure to take delivery amounted to a fundamental breach of contract under paragraph 1 (a) or (b) of the article, and hence he retained the right of avoidance. The other interpretation was that the seller's right to avoid the contract was kept open until the buyer had completed performance in all respects both as regards payment and taking delivery. In such a case, since both payment and taking delivery would be involved, the right to avoid would not be subject to a time-limit before full performance had been completed. It could be possible to avoid the contract on the separate ground of the late receipt of payment as long as the buyer had not taken delivery.
66. The purpose of the Norwegian amendment was partly to limit in time the right of the seller to avoid the contract after the buyer had paid the price but had not taken delivery and partly to clarify the text. The seller would still have recourse to other remedies, such as damages, or under the provisions of article 76 [became CISG article 87 ] or 77 [became CISG article 88 ]. The Norwegian proposal would constitute a limitation in time of the Nachfrist provision in paragraph 1(b) but did not run counter to it. If the Committee preferred the former interpretation of paragraph 2, it should still consider the desirability of clarifying the text in that sense.
67. Mr. ADAL (Turkey), introducing his delegation's amendment (A/CONF.97/C.1/L.209), said that its intention was to clarify the text and co-ordinate it with paragraph 2 of article 45 [became CISG article 49 ]. In particular, it omitted from paragraph 2(b) the reference to "a reasonable time" which was liable to give rise to disputes.
68. Mr. HERBER (Federal Republic of Germany) agreed that the existing text of paragraph 2 was not particularly clear but thought that the proposed amendment was even less so. He also had a substantive objection to the Norwegian amendment: the right of the seller to avoid contract should not be automatically excluded in cases where the buyer had been late in paying the price and had not yet taken delivery of the goods. In cases of bulky material like coal occupying storage space which was required by a fixed date for another purpose, failure to take delivery might well constitute a fundamental breach of contract.
69. Mr. FELTHAM (United Kingdom) opposed the Norwegian amendments. The case mentioned by the representative of the Federal Republic of Germany should qualify for Nachfrist notice under paragraph 1(b), but the effect of the Norwegian proposal would be to prohibit that because no time-limit could be imposed for taking delivery, provided the buyer had paid the price. As he understood the present text, failure on the buyer's part to take delivery in due time would enable the seller to avail himself of an advantageous offer for the goods concerned without obliging him to account to the buyer as he was required to do under article 77 [became CISG article 88 ].
70. Mr. ZIEGEL (Canada) said that article 60 [became CISG article 64 ] might have important domestic consequences in common law systems. If, as he believed, it would permit the seller to avoid the contract after delivery of the goods on the grounds that the buyer had committed a fundamental breach of contract by, for example, failure to pay the price, the title to the goods would automatically revert to the seller under common law although under the terms of the contract he had purported to pass it to the buyer. He was aware that the Convention stated explicitly that it did not attempt to regulate matters of title. However, the attention of common law States proposing to adopt the Convention should be drawn to the possible need to adopt complementary national legislation.