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CISG number

Arts. 41, 42 and 43

210. The text of article 25, as adopted by the Working Group on the International Sale of Goods, is as follows: "The seller must deliver goods which are free from the right or claim of a third person, unless the buyer agreed to take the goods subject to such right or claim."

211. The Committee established a Special Working Group consisting of the representatives of Finland, German Democratic Republic, Ghana, India, Japan and Mexico to prepare a revised article 25 to cover situations in which the goods sold were subject to a right or claim of a third party based on industrial or intellectual property.

212. The text of article 25, as proposed by the Special Working Group, is as follows:

CISG number

Art. 42

CISG number

Art. 41

Paragraph (1)

213. The Committee noted that paragraph (1) reproduced in principle the text of article 25 as adopted by the Working Group on the International Sale of Goods with the exception that claims based on industrial or intellectual property were expressly excluded as they were to be dealt with in articles 25(2) to 25(4).

214. The Committee adopted paragraph (1).

CISG number

Art. 42

Paragraph (2)

215. The Committee noted that the Special Working Group had two major objectives in formulating paragraph (2). The first was to define the limits of the seller's responsibility to supply goods which were free from any right or claim of a. third party based on industrial or intellectual property. The objective was achieved by making the seller responsible for those rights or claims of which, at the time of the conclusion of the contract, he knew or could not have been unaware. The second objective was to indicate which industrial or intellectual property laws were relevant in determining whether the seller had breached his obligation to supply goods free from the industrial or intellectual property rights or claims of a third party. This was achieved by selecting the law of the State where the goods would be used, if use in that State was, contemplated by the parties at the time of the conclusion of the contract or, in any other case, under the law where the buyer had his place of business.

216. Although there was general support for the text proposed by the Special Working Group, two representatives reserved their position in relation to this paragraph and to [page 40] paragraphs (3) and (4). One representative indicated that he was not prepared to discuss the substantive rules contained in articles 25(2) to 25(4) because the regulation of industrial or intellectual property rights was too complex a matter to be resolved in the context of a draft Convention on the International Sale of Goods. Another representative stated that industrial or intellectual property rights should be regulated in a separate instrument and not in a draft Sales Convention.

217. An observer, while not objecting to the fact that industrial or intellectual property rights were dealt with in the Convention, objected to the substance of the rules contained in paragraphs (2) to (4) since, in his view, they would encourage the breach of existing international Conventions which regulated industrial or intellectual property rights.

218. The Committee adopted a proposal to make it clear that the seller had breached his obligation if, because of the right or claim of the third party, the buyer was precluded from reselling the goods as well as if he was precluded from using them.

219. The Committee considered, but did not retain, the following proposals to amend article 25 (2):

Limits to paragraph (2)

220. It was noted that the Special Working Group did not deal with the question of breaches of administrative regulations which might restrict the use or sale of goods and consequently, this matter was to be regulated by national law.

Paragraph (3)

221. The Commission noted that the objective of the Special Working Group in relation to paragraph (3) was to state limits to the responsibility of the seller in terms of the knowledge of the buyer. The general notion was that the seller would not be liable under paragraph (2) if the buyer knew or could not have been unaware at the time of the conclusion of the contract of the existence of those rights or claims or where the right or claim resulted from the seller's compliance with technical drawings, designs, formulae or other such specifications furnished by the buyer.

CISG number

Art. 43

Paragraph (4)

222. The Committee noted that the objective of the Special Working Group in relation to paragraph (4) was to regulate the consequences of failure by the buyer to give notice of a right or claim of a third party based on industrial or intellectual property.

223. There was considerable discussion on whether both paragraphs (1) and (2) of article 23 should apply to a right or claim based on industrial or intellectual property. It was generally considered that the two-year period during which notice had to be given in accordance with article 23(2) was inappropriate in relation to article 25(4).

224. The Committee, in order to clarify the situation, decided to incorporate as nearly as possible the text of the notice requirements of article 23(1) into article 25(4).

225. The Committee decided to separate the proposed article 25 into two provisions. Article 25 (1) would become a separate article, numbered article 25, referring to third party rights or claims other than those based on industrial or intellectual property. Paragraphs (2) to (4) of article 25 would be contained in a separate article (article 26) dealing with industrial or intellectual property claims. The Committee also decided to broaden the title of section II of chapter III of the Convention so that it would refer to claims of third persons.

Relationship to article 7

226. As a consequence of adopting article 26 the Committee deleted article 7(2).

Recommendation of the Drafting Group [g]

g. See para. 9 above.