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CISG number

Art. 46

238. The text of article 27 as adopted by the Working Group on the International Sale of Goods is as follows:

Paragraph (1)

(i) Cover purchase

239. The Committee considered a proposal that the buyer has no right to require performance if "it is reasonably possible for the buyer to purchase goods to replace those to which the contract relates." In support of this proposal, which adopted the approach of article 25 of ULIS, it was stated that if the buyer could easily purchase substitute goods it would be unreasonable to compel the seller to supply such goods when this may involve him in great expense. It was stated that the proposal was a particular application of the principle of mitigation of damages set forth in article 59 and accorded with commercial practice since rights to specific performance would usually be ineffective because of the delay in obtaining such relief from a court.

240. The contrary view was expressed that the proposal, if accepted, would unjustifiably restrict the rights of the buyer to require performance of the contract. The interests of the seller would be adequately protected under article 59 which imposed on the party who relies on a breach of contract the duty to mitigate the loss resulting from the breach. Furthermore, it was not equitable to compel the innocent party, i.e. the buyer, to go to the trouble of obtaining replacement goods. There was also the danger that the proposal, if adopted, might be abused by a seller anxious to avoid his contractual obligations. Finally, the proposal could complicate calculation of damages pursuant to article 56.

241. The Committee, after discussion, did not retain the proposal. [page 42]

(ii) Non-delivery

242. The Committee also considered, but did not retain, a proposal that in case of non-delivery the buyer should be able to require the seller to deliver the goods only if he presents his request within a reasonable time after the last deadline for delivery.

Paragraphs (1) and (2)

Buyer's right to require repair

243. The Committee considered a number of proposals whose objective was to make it clear that article 27 authorized the buyer to demand that the seller remedy any defects in the goods.

244. There was general agreement that article 27 included the right of the buyer to require that defects in the goods be remedied but there was difference pf opinion on whether this should be explicitly stated.

245. It was stated that some legal systems did not recognize the right to demand cure. Accordingly, if this result were to be achieved under the Convention, the right to demand cure should be made explicit in the text. However, under another view the present text of article 27 was clear and the complex changes proposed would only confuse the situation.

246. There was also diff6rence of opinion on whether there should be any limitations on the exercise of the buyer's right to demand cure.

247. Under one view, the right to require cure should be limited to cases of fundamental breach and, if the goods had been delivered, the cure should not cause the seller unreasonable inconvenience or unreasonable expense. A prerequisite for the exercise of the right to demand cure should be that such demand be made in conjunction with the notice of conformity under article 23 or within a reasonable time thereafter. It was important to set out carefully the limits to the buyer's right to demand cure because national rules on specific performance differed widely. It was also noted that these limitations should be broadly similar to those governing the right to demand substitute goods pursuant to article 27(2).

248. Another view was that there should be no limitations on the right of the innocent party to require the party in breach to perform the contract.

249. It was generally agreed that it may be possible to reexamine this question if all the proposals and suggestions were submitted to a Special Working Group whose task was to submit a unified text.

250. The Committee accordingly referred the matter to a Special Working Group consisting of the representatives of Australia, Chile, Germany, Federal Republic of Ghana, Japan, Norway and Yugoslavia.

251. The text submitted by the Special Working Group is as follows:

Discussion of text submitted by Special Working Group

252. The Special Working Group reported that the words in square brackets were a further attempt by some members of the Special Working Group to deal with the problem of cover purchase. These words were not retained by the Committee in view of its previous deliberations on the matter (see paras. 239 and 240 above).

253. The Special Working Group reported that the proposed paragraph (2) made it clear that repair of defective goods was encompassed within article 27. The provision also regulated the conditions under which repair of defects in the goods could be required. The objective of the proposed paragraph (3) was to regulate the conditions under which the buyer can require delivery of substitute goods. In addition to the requirement in the present text of article 27(2) that the defect constitute a fundamental breach, a requirement that the delivery of substitute goods also be "reasonably practicable" for the seller was added. The proposed paragraph (4) dealt with notice requirements in the same way as was done in the latter part of article 27(2), with the exception that the notice requirement was extended to specifically include cases of repair.

254. In support of the proposed text, it was stated that it was realistic to limit the right of the buyer to require specific performance because frequently the seller would not be able to perform. Limiting the right to require specific performance also accorded with the practice of most jurisdictions which had such a remedy. Furthermore, if the costs to the seller of curing defects, or supplying substitute goods, were prohibitive, the buyer should be compelled to accept damages. This rule would coincide with the principle of mitigation of damages set out in article 59.

255. In support of proposed paragraph (2), it was stated that without such an express provision a number of legal systems would not permit the buyer to compel the seller to cure defects in goods which had been delivered. Accordingly, the proposal would ensure a similar result to that obtained in those legal systems which consider the concept of requiring "performance" to encompass cure of defective goods.

256. In opposition to the proposed article, it was stated that as the seller was in breach the buyer must have the right to compel performance. This right to demand performance of the contract should not be subject to any pre-conditions. Prior to the breach the buyer had a right to expect performance and accordingly this right should not be lessened by the fact of breach. Further, it was stated that the proposal placed the determination of whether the seller should perform the contract, prima facie, in the hands of the seller which could compel the innocent party to litigate to determine whether he had a right to compel performance. It was also noted that while it was clear that in many cases specific performance would be impossible and that the buyer would have to accept damages, the statement of general principle in the Convention should be that the buyer is entitled to performance of the contract.

257. The Committee, after deliberation, did not retain the proposed text of the Special Working Group. In view of this decision, the Committee did not consider a number of proposals which sought to amend the proposed text submitted by the Special Working Group.

258. Two representatives stated that as consequence of failing to deal specifically with cure, a buyer seeking redress in the courts of their legal systems would not be able to demand cure of defective goods under article 27(1). One representative stated that, in his view, the right to demand cure was encompassed within the concept of requiring "performance" contained in article 27(1).

Decision

259. The Committee concludes that no change of substance is called for in respect of this article, now renumbered as article 28. It therefore recommends that the Commission should adopt the following text:

"Article 28

"(1) The buyer may require performance by the seller of his obligations unless the buyer has resorted to a remedy which is inconsistent with such requirement. [page 43]
"(2) If the goods do not conform with the contract, the buyer may require delivery of substitute goods only if the lack of conformity constitutes a fundamental breach and a request for substitute goods is made either in conjunction with notice given under article 23 or within a reasonable time thereafter."

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