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CISG number

Art. 55

323. The text of article 36, as adopted by the Working Group on the International Sale of Goods, is as follows:

324. This article, which was the subject of considerable discussion, was examined under the following major headings: (i) deletion of article 36; (ii) various proposals for the amendment of article 36; (iii) proposal for placing article 36 in square brackets.

(i) Deletion of article 36

325. Support for the proposal to delete the article was based on the fact that price was an essential element of a contract of sale and there could be no contract between the parties unless a price had been determined or was determinable from the agreement between the parties. If the price was not ascertainable in this way, the Courts should not impose a price on the, parties. This was a commercially sound rule since it would be a very rare case where there was in fact a concluded agreement but no express or implied agreement on the price. Under another view, article 36 related to matters of formation and validity of contracts and it was thus inappropriate to include it in a Convention on Sales but the question should rather be dealt with in the future Convention on Formation and Validity. Finally it was noted that many legal systems considered that a determined or determinable price was an essential ingredient of a contract and accordingly article 36 would have no application in those legal systems. It was thus more appropriate to leave the question of price determination in such agreements to those legal systems which recognized the validity of those agreements.

326. In support of the retention of article 36, it was stated that the article did not confer validity on an agreement in which the price was neither determined nor determinable. The article merely provided a uniform method for the calculation of the price if the applicable law enabled the agreement in question to constitute a valid contract. It was useful to have such a rule since some goods, for instance spare parts, were frequently ordered, and later dispatched, without reference to price. If such a transaction was valid by the applicable law, it would be preferable to have a common provision for the determination of price rather than leave the matter to widely differing national law rules governing the determination of price. It was also, stated that as the future Convention on Formation and Validity was not yet finalized, it was very important to retain article 36 to determine the price in agreements without a determined or determinable price which are considered valid by the applicable law.

327. The Committee, after discussion, by a narrow majority retained article 36.

(ii) Various proposals for amendment of article 36

(a) Limitation of application to valid agreements

328. In view of the lack of consensus to retain article 36, there was considerable support in the Committee for a number of proposals which sought to have a clear statement in article 36 that the provision only operated if the agreement was otherwise valid pursuant to the applicable national law. There was, [page 48] however, some opposition to the inclusion of this express statement in article 36. This view was based on the fact that the entire draft Convention proceeded on the assumption that there was a valid contract in existence. Accordingly, the introduction of an express statement to this effect in only one provision could well cause difficulties of interpretation in relation to other provisions.

329. The Committee, after deliberation, decided to introduce an express statement into article 36 to make it clear that the provision only applied to agreements which were considered valid by the applicable law. The precise wording of this statement was referred to the Drafting Group.

330. One representative expressed a reservation in respect of this decision.

(b) Change in criteria for determining price

331. It was suggested that it would be more equitable to make as the primary rule for price determination the price generally prevailing at the time of the conclusion of the contract for substitute goods sold under comparable circumstances. Only if there was no such price should the determination of the price be made by reference to that generally charged by the seller at the conclusion of the contract.

332. Under another view, the existing text of article 36 was preferable. Since the buyer had chosen to deal with that particular seller, it should be assumed that the buyer anticipated that he would pay the price generally charged by that seller. This assumption was strengthened by the fact that no price was stated in the agreement. This was particularly important where the seller was marketing goods at a comparatively low price.

333. The Committee, after deliberation, retained the original order of methods used for calculation of the price, i.e. the primary rule was the price generally charged by the seller at the time of the conclusion of the contract and only if no such price was determinable would the price be determined by reference to the market price.

334. The Commission did not retain a suggestion that the choice between the two methods of price determination be resolved in favour of the method which produced the lower price.

335. The Committee also considered the following proposals, which did not attract sufficient support for retention:

(iii) Proposal for placing article 36 in square brackets

336. It was proposed that, in view of the narrow majority for the retention of article 36, it would better accord with the Commission's principle of arriving at decisions by consensus if the text of the article were placed in square brackets. However, under another view the question of the size of the majority was not decisive since a number of provisions had been retained by small majorities. It was also stated that it would be preferable to propose a text for the consideration of the diplomatic conference rather than place the provision in square brackets which would indicate that no agreement had been possible.

337. The Committee, after deliberation, did not retain the proposal to place article 36 in square brackets.

Reservations

338. The representatives of Ghana, the Philippines and of the Soviet Socialist Republics expressed their formal reservation to article 36 and requested that these reservations together with the names of those delegations be recorded not only in the report but also in a footnote to the text of article 36 of the draft Convention.

339. An observer also expressed his disagreement with article 36.

Decision

340. The Committee decided to introduce an express statement into the article to make it clear that it only applied to agreements which were considered valid by the applicable law. It therefore recommends that the Commission should adopt the following text, now renumbered as article 37:

"Article 37

"If a contract has been validly concluded but does not state the price or expressly or impliedly make provision for the determination of the price of the goods, the buyer must pay the price generally charged by the seller at the time of the conclusion of the contract. If no such price is ascertainable, the buyer must rely the price generally prevailing at the aforesaid time for such goods sold under comparable circumstances." [page 49]

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