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Article 47. Notice Fixing Additional Final Period for Performance

TEXT OF ARTICLE 47

(1) The buyer may fix an additional period of time of reasonable length for performance by the seller of his obligations.

(2) Unless the buyer has received notice from the seller that he will not perform within the period so fixed, the buyer may not, during that period, resort to any remedy for breach of contract. However, the buyer is not deprived thereby of any right he may have to claim damages for delay in performance.


CROSS-REFERENCE

For the parallel counterpart remedy for sellers (seller's notice fixing additional final period for performance), go to the Annotated text of Article 63 CISG.


OUTLINE OF ISSUES

Reproduced with permission of UNCITRAL

47A Buyer's right to fix additional period for performance

47A1 Manifestation of buyer's concern over delay in delivery

47A2 Basis for avoidance for delay in delivery under art. 49(1)(b)

47A3 Content of notice as basis for avoidance

47A31 Must set reasonable, specific and final period

47B Buyer's remedies during period (art. 47(2))

47B1 No resort to any remedy for breach of contract unless:

47B11 Seller states that he will not comply with notice

47B2 Buyer not deprived of right to damages for delay

47C Other issues

[Seller has comparable remedies under arts. 63(1) & 64(1)(b)]


DESCRIPTORS

Nachfrist


CASE ANNOTATIONS: UNCITRAL DIGEST CASES PLUS ADDED CASES

UNCITRAL has identified relevant cases in Digests containing case annotations for each article of the CISG. For Art. 47, the UNCITRAL Digest cites twelve cases: 10 from Germany and one each from France and Spain.

Presented below is a composite list of Art. 47 cases reporting the UNCITRAL Digest cases and other Art. 47 cases. All cases are listed in chronological sequence, commencing with the most recent. Asterisks identify the UNCITRAL Digest cases, commencing with the 27 April 1999 citation reported below. Cases are coded to the UNCITRAL Thesaurus.

English texts and full-text English translations of cases are provided as indicated. In most instances researchers can also access UNCITRAL abstracts and link to Unilex abstracts and full-text original-language case texts sourced from Internet websites and other data, including commentaries by scholars to the extent available.

There are scholars who believe that there are circumstances in which the UNIDROIT Principles of International Commercial Contracts may be used to interpret or supplement this Article of the CISG. See match-up of this Article with counterpart provisions of the Principles and commentary on this subject. To the extent this reasoning fits, cases on the counterpart provisions of the UNIDROIT Principles may be relevant. To the extent available, such cases may be found on the Unilex website.
 

Netherlands 29 July 2009 Rechtbank [District Court] Arnhem (___ v. Omnibus Trading B.V.)

Netherlands 3 February 2009 Gerechtshof [Appellate Court] Leeuwarden (JPB Industrial Services B.V. v. Buchen Industrial Services N.V.) 47A2 [translation available]
 

Netherlands 7 October 2008 Gerechtshof [Appellate Court] Arnhem (Arens Sondermachinen GmbH v. Smit Draad / Draad Nijmegen B.V.) 47A3 [translation available]

France 27 May 2008 Cour d'appel [Appellate Court] Rennes (Brassiere cups case) 47A3 [translation available]
 

Germany 21 November 2007 Oberlandesgericht [Appellate Court] Koblenz (Shoes case) 47C [translation available]

United States 19 July 2007 Federal Court of Appeal [3d Circuit] (Valero Marketing & Supply Company v. Greeni Trading Oy) 47A

Switzerland 25 June 2007 Handelsgericht [Commercial Court] Zürich (Printed materials case) [translation available]

Switzerland 27 April 2007 Tribunal cantonal [Appellate Court] Valais (Oven case) [translation available]
 

Switzerland 20 December 2006 Bundesgericht [Federal Supreme Court] (Machines case) 47A [translation available]

Switzerland 8 November 2006 Zivilgericht [Civil Court] Basel-Stadt (Packaging machine case)

United States 4 April 2006 Federal District Court [New Jersey] (Valero Marketing v. Green Oy) 47A

Russia 1 March 2006 Arbitration Award 101/2005 [translation in process]
 

Netherlands 31 August 2005 Gerechtshof [Appellate Court] Leeuwarden (Auto-Moto Styl S.R.O. v. Pedro Boat B.V.) [translation available]

China 13 June 2005 CIETAC Arbitration Award [CISG 2005/12] (Industrial general equipment case) 47A2 [translation available]

Spain 29 March 2005 Juzgado de Primera Instancia [Court of First Instance] Tudela 47A [translation available]

Italy 11 January 2005 Tribunale [District Court] Padova (Rabbit case) [translation available]
 

Germany 10 December 2004 Landgericht [District Court] Bayreuth

Russia 2 November 2004 Arbitration Award 188/2003 47A [translation available]

France 26 October 2004 Cour d'appel [Appellate Court] Poitiers 47A [translation available]

Belgium 11 October 2004 Hof van Beroep [Appellate Court] Ghent (NV Frans Bijttebier-Bouckaert v. BV Nooteboom International) [translation available]

China 29 September 2004 CIETAC Arbitration Award [CISG 2004/05] (India rapeseed meal case) [translation available]

Germany 6 September 2004 Landgericht [District Court] Hamburg 47A [translation available]

Germany 20 July 2004 Oberlandesgericht [Appellate Court] Karlsruhe (Shoes case) 47A [translation available]

Russia 28 May 2004 Arbitration Award 175/2003 47A [translation available]

Germany 21 April 2004 Oberlandesgericht [Appellate Court] Düsseldorf [15 U 88/03] 47A2 ; 47B11 [translation available]

Ukraine 15 April 2004 Tribunal of International Commercial Arbitration, Ukrainian Chamber of Commerce & Trade [translation available]

Switzerland 27 January 2004 Kantonsgericht [District Court] Schaffhausen 47A [translation available]
 

France 18 December 2003 Cour d’appel [Appellate Court] Lyon 47B

Spain 5 November 2003 Audiencia Provincial [Appellate Court] Vizcaya

Germany 25 March 2003 Landgericht [District Court] Köln 47A [translation available]

Switzerland 10 March 2003 Kantonsgericht [District Court] Appenzell Auserrhoden

Netherlands 29 January 2003 Rechtbank [District Court] Zwolle
 

Germany 19 December 2002 Oberlandesgericht [Appellate Court] Karlsruhe 47C [translation available]

China 8 November 2002 CIETAC Arbitration Award [CISG/2002/05] (Canned asparagus case) 47A [translation available]

China 21 October 2002 CIETAC Arbitration Award [CISG 2002/16] (Engraving machine case) [translation available]

Germany 1 July 2002 Oberlandesgericht [Appellate Court] München 47A [translation available]

Switzerland 23 April 2002 Kantonsgericht [District Court] Schaffhausen 47A [translation available]

Switzerland 25 February 2002 Kantonsgericht [District Court] Schaffhausen [translation available]

Germany 20 February 2002 Landgericht [District Court] München 47A [translation available]

Belgium 15 January 2002 Tribunal de commerce [District Court] Namur [translation available]
 

Germany 12 November 2001 Oberlandesgericht [Appellate Court] Hamm (Memory module case) 47A [translation available]

Italy 28 September 2001 Milan Arbitration proceeding (Steel wire case) [English text]

France 14 June 2001 Cour d'appel [Appellate Court] Paris [translation available]

Germany 12 March 2001 Oberlandesgericht [Appellate Court] Stuttgart 47A [translation available]
 

Germany 12 October 2000 Landgericht [District Court] Stendal 47A2 [translation available]

Austria 28 September 2000 Oberlandesgericht [Appellate Court] Graz (Computer telephone board case) 47A [translation available]

Switzerland 15 September 2000 Bundesgericht [Federal Supreme Court] [4C.105/2000] 47A [translation available]

Germany 6 April 2000 Landgericht [District Court] München 47A [translation available]
 

ICC August 1999 International Court of Arbitration, Case 9083 [translation available]

ICC August 1999 International Court of Arbitration, Case 9887 [English text]

ICC July 1999 International Court of Arbitration, Case 9448 [English text]

* Germany 27 April 1999 Oberlandesgericht [Appellate Court] Naumburg 47A ; 47A2 [translation available]
 

* Germany 29 December 1998 Hamburg Arbitration award [translation available]

Germany 24 September 1998 Landgericht [District Court] Regensburg 47A2 [translation available]

Germany 22 September 1998 Oberlandesgericht [Appellate Court] Oldenburg 47A [translation available]

Russia 5 March 1998 Arbitration award 160/1997 47A [translation available]

* France 29 January 1998 Cour d'appel [Appellate Court] Versailles 47A3 [translation available]
 

China 19 December 1997 CIETAC Arbitration Award [CISG/1997/36] (Steel case) 47A [translation available]

* Spain 3 November 1997 Audiencia Provincial [Appellate Court] Barcelona 47A

* Germany 4 July 1997 Oberlandesgericht [Appellate Court] Hamburg 47A [translation available]

* Germany 24 April 1997 Oberlandesgericht [Appellate Court] Düsseldorf 47A1 [translation available]

* Germany 28 February 1997 Oberlandesgericht [Appellate Court] Hamburg 47A [translation available]

Switzerland 20 February 1997 Bezirksgericht [District Court] Saane [translation available]

Germany 31 January 1997 Oberlandesgericht [Appellate Court] Koblenz [translation available]

ICC January 1997 International Court of Arbitration, Case 8786 [English text]
 

China 15 November 1996 CIETAC Arbitration Award [CISG/1996/52] (Oxtetrecycline case) 47A [translation available]

Finland 5 November 1996 [District Court] Kuopio 47A [translation available]

China 30 July 1996 CIETAC Arbitration Award [CISG/1996/32] (Molybdenum iron case) 47B2 [translation available]

China 29 March 1996 CIETAC Arbitration Award [CISG/1996/15] (Caffeine case) 47A [translation available]

Germany 21 March 1996 Hamburg Arbitration award 47A [translation available]
 

Germany 23 October 1995 Landgericht [District Court] Hamburg

Germany 11 October 1995 Landgericht [District Court] Düsseldorf 47A [translation available]

Egypt 3 October 1995 Arbitration award (Cairo Chamber of Commerce & Industry) [translation available]

Germany 20 September 1995 Oberlandesgericht [Appellate Court] Nürnberg

* Germany 21 August 1995 Landgericht [District Court] Ellwangen 47A ; 47A2 [translation available]

Germany 23 June 1995 Amtsgericht [Lower Court] München 47A [translation available]

* Germany 24 May 1995 Oberlandesgericht [Appellate Court] Celle 47A31 [translation available]

China 18 April 1995 CIETAC Arbitration Award [CISG/1995/06] (Clothes case) 47A [translation available]

ICC March 1995 International Court of Arbitration, Case 7645 47A [English text]

Germany 15 February 1995 Bundesgerichtshof [Federal Supreme Court] [translation available]

ICC 1995 International Court of Arbitration, Case 8128 [translation available]
 

China 19 September 1994 CIETAC Arbitration Award [CISG/1994/11] (Steel case) 47A [translation available]

China 5 September 1994 CIETAC Arbitration Award [CISG/1994/10] (Weaving machines, tools and accessories case) 47A [translation available]

Germany 26 July 1994 Landgericht [District Court] Nürnberg-Fürth

China 7 March 1994 Guadong Higher People's Court (Zhanjiang Textiles v. Xian Da Fashion)

* Germany 22 February 1994 Oberlandesgericht [Appellate Court] Köln [translation available]

* Germany 10 February 1994 Oberlandesgericht [Appellate Court] Düsseldorf [6 U 119/93] 47A [translation available]

Germany 18 January 1994 Oberlandesgericht [Appellate Court] Frankfurt 47A [translation available]

ICC 1994 International Court of Arbitration, Case 7565 [English text]
 

Germany 18 November 1993 Oberlandesgericht [Appellate Court] Düsseldorf

Germany 14 April 1993 Amtsgericht [Lower Court] Cloppenburg
 

China 30 October 1991 CIETAC Arbitration award 47A [translation available]
 

* Germany 24 April 1990 Amtsgericht [Lower Court] Oldenburg (Fashion textiles case) 47A3 [translation available]


CASE DIGEST AND ANALYSIS
-   UNCITRAL's case law digest; and
-   An analysis of CISG jurisprudence

The UNCITRAL Digest of case law on the United
Nations Convention on the International Sale of Goods
[*]

A/CN.9/SER.C/DIGEST/CISG/47 [8 June 2004]
Reproduced with the permission of UNCITRAL

[Text of Article 47
Digest of Article 47 case law
-   Meaning and purpose of the provision
-   Fixing of additional period of time (Article 47(1))
-   Effect of fixing an additional period of time (Article 47(2))]
ARTICLE 47

      (1) The buyer may fix an additional period of time of reasonable length for performance by the seller of his obligations.

      (2) Unless the buyer has received notice from the seller that he will not perform within the period so fixed, the buyer may not, during that period, resort to any remedy for breach of contract. However, the buyer is not deprived thereby of any right he may have to claim damages for delay in performance.

DIGEST OF ARTICLE 47 CASE LAW

Meaning and purpose of the provision

1. Article 47(1) entitles the buyer to fix an additional period of time within which the seller is requested finally to perform its obligations. The provision thus complements the right to require performance under article 46, but it is particularly relevant for the right to terminate the contract under article 49. In fact the provision has practical importance only under the latter provision since article 49(1)(b) provides that once the additional period of time fixed in accordance with article 47 expires, the buyer can declare the contract avoided. Thus the fixing of an additional period of time paves the way for the termination of the contract. It has, however, to be noted that this mechanism only works in case of non-delivery.[1]

2. Article 47(2) states that the buyer who fixes an additional period of time binds itself not to resort to other remedies except damages during that period. This binding effect is intended to protect the seller who may prepare the performance -- even at considerable expense -- and should be entitled to expect that the buyer will accept the requested performance if it is not otherwise defective.[2] Only if the seller informs the buyer that it will not perform during the additional period will the buyer be free to resort to any other available remedy since in that case the seller needs no protection against such change.

3. Article 47 allows the buyer to fix an additional period of time for any obligation the seller has thus far not performed. Like article 46(3) the provision thus refers to all obligations the seller has agreed to fulfill. But in order to function as a stage prior to avoidance, the additional time period is not a consideration unless the seller has violated its duty to deliver the sold goods.

Fixing of additional period of time (Article 47(1))

4. The buyer is entitled, but not obliged, to fix an additional period for performance.[3] In case of non-delivery of the goods, however, the buyer can benefit from this the mechanism in that it clarifies whether late delivery justifies the termination of the contract.[4] There are cases stating that where the buyers had not granted an additional period of time, they had no right to avoid the contract.[5]

5. The buyer must fix an additional period of time of reasonable length. A period of two weeks for the delivery of three printing machines from Germany to Egypt was deemed to be too short, whereas a period of seven weeks was regarded as reasonable.[6] In a Danish-German car sale a period of three to four weeks was found to be reasonable.[7] If the buyer fixes an unreasonably short period courts have decided instead that a reasonable period for delivery is applicable.[8] Courts have also found the reasonability requirement satisfied if the buyer having previously fixed an unreasonably short period then waits with its notice of avoidance until a reasonable period time has expired.[9]

6. Where the buyer fixes a certain date or a certain period of time, the buyer must make clear that the seller has to perform within that time in order for the buyer to be entitled to avoid the contract.[10] A clear expression that a final deadline is granted is necessary (e.g. "final delivery date: 30 September 2002").[11] It has therefore been decided that a mere reminder demanding prompt delivery does not suffice, since no additional time period for delivery had been fixed.[12] On the contrary, for the purposes of article 47(1) it has been held to be sufficient if the buyer accepts a new delivery date offered by the seller when the buyer makes clear at the same time that performance until that date is of essential importance.[13] The same result was reached in a case where the buyer accepted several requests of the seller to extend the time for delivery.[14] Where a buyer tolerated the late delivery of several instalments of an instalment sale, it was held that the buyer's behaviour compared to the granting of an additional period of time.[15]

7. There is generally no requirement as to the form of the granting of the additional period of time, consistent with article 11; however, where an article 96 reservation is applicable, a form requirement may have to be met. In the absence of such an applicable reservation, the issue of whether the time extension has been communicated in writing or orally or has been made impliedly is irrelevant.[16]

Effect of fixing an additional period of time (Article 47(2))

8. The fixing of an additional period of time for performance assists at first the seller who gains an extension of time for performance. According to article 47(2) the buyer may not claim avoidance or price reduction as long as the additional period of time lasts, unless the seller has declared that it is not able or willing to not perform [17] or has made its performance dependant of conditions not stipulated in the contract.[18] If the seller performs during the additional period of time the buyer must accept the performance. The buyer nevertheless retains the right to claim any damages caused by the delay of performance. If the seller does not perform the buyer may resort to any available remedy including avoidance.


FOOTNOTES

* The present text was prepared using the full text of the decisions cited in the Case Law on UNCITRAL Texts (CLOUT) abstracts and other citations listed in the footnotes. The abstracts are intended to serve only as summaries of the underlying decisions and may not reflect all the points made in the digest. Readers are advised to consult the full texts of the listed court and arbitral decisions rather than relying solely on the CLOUT abstracts.

[Citations to cisgw3 case presentations have been substituted [in brackets] for the case citations provided in the UNCITRAL Digest. This substitution has been made to facilitate online access to CLOUT abstracts, original texts of court and arbitral decisions, and full text English translations of these texts (available in most but not all cases). For citations UNCITRAL had used, go to <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.]

1. See Digest, art 49.

2. See Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980 (United Nations publication, Sales No. E.81.IV.3), 39-40.

3. [GERMANY Oberlandesgericht [Appellate Court] Hamburg 4 July 1997, available online at <http://cisgw3.law.pace.edu/cases/970704g1.html>].

4. See article 49(1)(b).

5. See, e.g., CLOUT case No. 7 [GERMANY Amtsgericht [Lower Court] Oldenburg in Holstein 24 April 1990, available online at <http://cisgw3.law.pace.edu/cases/900424g1.html>]; CLOUT case No. 82 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 10 February 1994, available online at <http://cisgw3.law.pace.edu/cases/940210g2.html>]; CLOUT case No. 120 [GERMANY Oberlandesgericht [Appellate Court] Köln 22 February 1994, available online at <http://cisgw3.law.pace.edu/cases/940222g1.html>].

6. CLOUT case No. 136 [GERMANY Oberlandesgericht [Appellate Court] Celle 24 May 1995, available online at <http://cisgw3.law.pace.edu/cases/950524g1.html>].

7. CLOUT case No. 362 [GERMANY Oberlandesgericht [Appellate Court] Naumburg 27 April 1999, available online at <http://cisgw3.law.pace.edu/cases/990427g1.html>] (see full text of the decision).

8. CLOUT case No. 136 [GERMANY Oberlandesgericht [Appellate Court] Celle 24 May 1995, available online at <http://cisgw3.law.pace.edu/cases/950524g1.html>] (see full text of the decision); [GERMANY Landgericht [District Court] Ellwangen 21 August 1995, available online at <http://cisgw3.law.pace.edu/cases/950821g2.html>]; CLOUT case No. 362 [GERMANY Oberlandesgericht [Appellate Court] Naumburg 27 April 1999, available online at <http://cisgw3.law.pace.edu/cases/990427g1.html>] (see full text of the decision).

9. [GERMANY Landgericht [District Court] Ellwangen 21 August 1995, available online at <http://cisgw3.law.pace.edu/cases/950821g2.html>]; CLOUT case No. 362 [GERMANY Oberlandesgericht [Appellate Court] Naumburg 27 April 1999, available online at <http://cisgw3.law.pace.edu/cases/990427g1.html>] (see full text of the decision).

10. See Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980 (United Nations publication, Sales No. E.81.IV.3), 39, paras. 6-7.

11. Id., para. 7.

12. CLOUT case No. 275 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 24 April 1997, available online at <http://cisgw3.law.pace.edu/cases/970424g1.html>].

13. CLOUT case No. 277 [GERMANY Oberlandesgericht [Appellate Court] Hamburg 28 February 1997, available online at <http://cisgw3.law.pace.edu/cases/970228g1.html>] (see full text of the decision).

14. CLOUT case No. 225 [FRANCE Cour d'appel [Appellate Court] Versailles 29 January 1998, available online at <http://cisgw3.law.pace.edu/cases/980129f1.html>].

15. CLOUT case No. 246 [SPAIN Audiencia Provincial [Appellate Court] Barcelona 3 November 1997, available online at <http://cisgw3.law.pace.edu/cases/971103s4.html>].

16. See the decisions cited in the preceding paragraph.

17. See CLOUT case No. 293 [GERMANY Hamburg Arbitration Award case of 29 December 1998, available online at <http://cisgw3.law.pace.edu/cases/981229g1.html>].

18. Id.


ANALYSIS OF CISG CASE LAW

Reprinted by special permission of Northwestern University School of Law. 34 Northwestern Journal of International Law and Business (Winter 2004) 299-440.[*]

excerpt from

The Interpretive Turn in International Sales Law:
An Analysis of Fifteen Years of CISG Jurisprudence

Larry A. DiMatteo, Lucien Dhooge, Stephanie Greene,
Virginia Maurer and Marisa Pagnattaro

[...]

1. Nachfrist Notice: Article 47

Article 47 gives the buyer the right to grant additional time to the seller for performance. The failure of the seller to perform within this additional period of time permits the buyer to avoid the contract. This request for additional time, known as nachfrist notice in German law, is commonly found in the civil law legal systems.[480] The underlying premise behind the concept is that delayed performance does not necessarily translate into a material breach. National courts called upon to interpret the CISG's provisions with respect to breach of contract have concentrated on two issues raised by Article 47. The first issue is what constitutes a reasonable period of time granted by the buyer in order for the seller to complete performance? The time extension must be reasonable in length in order to prevent buyers from avoiding contracts on the basis of inconsequential delays in performance.

The three national courts that have addressed this issue have taken somewhat different approaches. One German court focused upon the need for specificity in setting the time extension.[481] A buyer granted an eleven [page 378] day extension to a seller to deliver all components of the printing machinery that was the subject matter of the contract. In upholding the buyer's right to declare the contract to be in breach, the court held that the specific period of additional time established by the buyer for performance was not unreasonable. Thus, the buyer was entitled to avoid performance of the contract. Other courts have permitted buyers to avoid sales contracts on the basis of notices that were not specific with respect to the additional period of time granted to the sellers for performance. A French court for example, permitted a buyer to avoid performance of a sales contract for high technology machinery on the basis that the seller advised the buyer of its intent to repair the machinery subsequent to its delivery.[482] The failure of the seller to effect adequate repairs pursuant to its promise justified the buyer's attempt to avoid the contract even in the absence of a specific time granted by the buyer for such repairs.[483] Under this version of Article 47, the time extension need not be precise but rather only capable of judicial interpretation as reasonable. [484]

The second issue addressed by the courts is the effect of the buyer's failure to grant the seller additional time for performance under Articles 47. Decisions on this issue have varied depending on whether the buyer ultimately seeks equitable or legal relief. The buyer may be barred from declaring contract avoidance by its refusal to grant the seller additional time [485] However, the buyer has been allowed to declare the contract to be avoided in two circumstances. First, the buyer is free to declare the contract avoided if the seller notifies the buyer that it does not intend to perform the contract regardless of whether the buyer grants an additional period of time for performance. [486] Second, the buyer may declare the contract to be avoided in the absence of a grant of additional time if the seller promises to [page 379] perform the contract but only upon terms inconsistent with the existing agreement between the parties or upon a renegotiation of the contract. [487]

The buyer's failure or refusal to grant the seller additional time does not prevent him from obtaining legal as opposed to equitable remedies.[488] Buyers are free to seek any number of damage awards against breaching sellers. For example, an injured buyer may seek compensatory damages resulting from the seller's breach of its obligations.[489] Buyers are also free to recover additional costs associated with obtaining substitute performance, such as the difference between the contract price and the price ultimately paid by the seller to obtain substitute goods.[490] In the absence of a substitute purchase, the buyer's recovery is calculated as the difference between the contract price and the current price of the goods at the time of the seller's breach by the buyer. [491] Finally, the buyer may seek consequential damages consisting of lost profits assuming that proper proof thereof is presented to the court.[492] [ page 380]

[...]


FOOTNOTES

* For a subsequent text on this subject by these authors, see Larry A. DiMatteo, Lucien Dhooge, Stephanie Greene, Virginia Maurer & Marisa Pagnattaro, "International Sales Law: A Critical Analysis of CISG Jurisprudence", Cambridge University Press (2005) 241 p.

[...]

480. See generally, Larry A. Dimatteo, The Law Of International Business Transactions 229-31 (2003).

481. See OLG Celle 20 U 76/94, May 24, 1995 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/950524g1.html> [English translation by André Corterier, translation edited by Dr. John Felemegas].

482. See Giustina Int'l Sp.A. v. Perfect Circle Europe SARL, CA Versailles, 1e ch. Jan. 29, 1998, supra note 377.

483. Id. See also, LG Ellwangen 1 KfH O 32/95, Aug. 21, 1995 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/950821g2.html> [English translation by Ruth M. Janal, translation edited by Camilla Baasch Andersen] (German court determined that the period of time established by a German buyer for delivery of conforming goods by a Spanish seller of paprika was reasonable on the basis that the buyer only declared the contract to be avoided two weeks after the expiration of the original additional period of time to perform).

484. Furthermore, even if the initial period of time granted by the buyer is not reasonable, it may be rendered reasonable by delays in the buyer's declaration of avoidance. However, buyers would be wise to note that general demands to the seller to perform "promptly" or "as soon as possible" may be insufficient to meet the requirements of Article 47.

485. See, e.g., LG Düsseldorf 2 O 506/94, Oct. 11, 1995 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/951011g1.html> [English translation by Dr. Peter Feuerstein, translation edited by Ruth M. Janal].

486. See OLG Hamburg 1 U 143/95, Jul. 4, 1997 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/970704g1.html> [English translation by Julian Waiblinger]. However, the seller's statement that it could not presently perform the contract does not constitute a definitive refusal to perform.

487. See Schiedsgericht der Handelskammer [Arbitral Tribunal] Hamburg, Partial Award of March 21, 1996, CLOUT Case No. 166, available at <http://cisgw3.law.pace.edu/cases/960321g1.html> [English translation by ICCA]. The buyer is not required to grant the seller additional time to perform as a precondition to declaring the contract to be avoided if the seller states that it will only perform upon the buyer's satisfaction of additional terms not within the parties' original agreement or upon a renegotiation of the contract between the parties.

488. See, e.g., AG München 271 C 18968/94, June 23, 1995 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/950623g1.html> [English translation by ICCA].

489. Id. (permitting a German buyer to seek compensation for the cost of treatment and remediation of defective chemicals delivered by an Italian seller).

490. See, e.g., OLG Hamburg 1 U 143/95, Jul. 4, 1997, supra note 486.

491. Id.

492. See, e.g., SA P. v. AWS, Trib. de Commerce Namur [District Court], RG. 985/01, Jan. 15, 2002 (Belg.), available at <http://cisgw3.law.pace.edu/cases/020115b1.html> [English translation by Charles Sant 'Elia, translation edited by Thalia Kruger].

[...]

Go to complete text of Analysis of Fifteen Years of CISG Jurisprudence


ANNOTATED COMPARATIVES
-  UNIDROIT Principles
-  
PECL comparative

Commentary on Whether the UNIDROIT Principles
of International Commercial Contracts May Be
Used to Interpret or Supplement Articles 47 and 49 of the CISG

Robert Koch [*]
December 2004

I.   Introduction
II.  Avoidance Based on Non-Compliance with a Nachfrist
     1. Scope of Article 47 and 49(1)(b) CISG/Article 7.1.5 of the UNIDROIT Principles
          a. Restriction to Non-Delivery
 aa. Article 47 and 49(1)(b) CISG
 bb. Article 7.1.5 of the UNIDROIT Principles
          b. No Extension to Cases of Non-Conformity by Analogy
          c. Qualification of Aliud-Delivery
     2. Requirements for an Effective Nachfrist Notice
          a. Content of the Notice
          b. Determination of Nachfrist's reasonable length
          c. Consequences in Case of Unreasonable Length
 aa. Article 47(1) and 49(1)(b) CISG
 bb. Article 7.1.5(3) of the UNIDROIT Principles
     3. Effects of a Nachfrist
          a. Article 47(2) CISG
          b. Article 7.1.5(2) UNIDROIT Principles
     4. Seller's Non-Compliance with the Buyer's Nachfrist Ultimatum
          a. Article 49(1)(b) CISG
          b. Article 7.1.5(3) of the UNIDROIT Principles
III. Time Limitations on the Right of Avoidance
     1. Article 49(2) CISG
          a. Late Delivery
          b. Other Types of Breach
 aa. Article 49(2)(b)(i) CISG
 bb. Article 49(2)(b)(ii) CISG
 cc. Article 49(2)(b)(iii) CISG
     2. Article 7.3.2 of the UNIDROIT Principles
IV. Conclusions

I. Introduction

Article 49 CISG regulates a buyer's right of avoidance in case of breach of contract by the seller. While paragraph (1) lays down the conditions under which the buyer is entitled to declare the contract avoided, paragraph (2) provides for situations where he loses the remedy of avoidance. Due to the harsh consequences of this remedy for the seller,[1] the remedy is limited to two situations. Subparagraph (1)(a) gives the buyer the right to avoid the contract where seller's breach amounts to a fundamental breach of the contract in terms of Article 25 CISG. Subparagraph (1)(b) deals with late delivery and cases where the seller does not deliver the goods at all. Even if late delivery or non-delivery does not per se qualify for fundamental breach but only if timely delivery is of the essence of the contract,[2] the buyer can declare the contract avoided, where the seller fails to deliver the goods within an additional period ("Nachfrist") set by the buyer in accordance with Article 47(1) CISG.[3] The avoidance regime under the UNIDROIT Principles too distinguishes between termination based on fundamental non-performance (Article 7.3.1 of the UNIDROIT Principles), the UNIDROIT Principles counterpart to fundamental breach, and a termination in case of late delivery due to non-compliance with a Nachfrist (Article 7.1.5 of the UNIDROIT Principles). In the following, only the latter ground for avoidance/termination under both instruments will be compared since the concept of fundamental breach, including the relationship between seller's right to cure under Article 48 CISG and the avoidance remedy, has been discussed in detail in the present writer's remarks on the manner in which the UNIDROIT Principles may be used to interpret or supplement Article 25 CISG.[4]

II. Avoidance Based on Non-Compliance with a Nachfrist

    1. Scope of Article 47 and 49(1)(b) CISG/Article 7.1.5 of the UNIDROIT Principles

        a. Restriction to Non-Delivery

            aa. Article 47 and 49(1)(b) CISG

Article 47(1) CISG provides that

"[t]he buyer may fix an additional period of time of reasonable length for performance by the seller of his obligations."

By its terms, Article 47(1) CISG is not limited to non-delivery but also applies to cases of non-conforming delivery, when the buyer notifies the seller of the defect and demands for repair within the Nachfrist pursuant to Articles 46(3) CISG. In context with Article 49(1)(b) CISG, however, it becomes clear that fixing of a Nachfrist is only of relevance in cases of non-delivery, and where the buyer wants to provide the basis for avoidance without proof that the delay constitutes a fundamental breach should the seller fail to comply with a Nachfrist. Non-delivery thus needs to be distinguished from the delivery of non-conforming goods. While delivery is not defined under the Convention, it follows from Articles 30-34 CISG that delivery consists in the act which the seller is obliged to perform in order to give the buyer possession of the goods.[5] Therefore, not only the seller's failure to hand over the goods in question but also his failure to deliver documents is to be considered as non-delivery if documents of title are concerned, such as bills of lading or warehouse receipts.[6] On the other hand, the delivery of a faulty Certificate of Origin or of Quality cannot be regarded as non-delivery. If they are faulty, to such documents the same principles apply which apply to the goods themselves: once the documents have been handed over to the buyer, they are "delivered" with the consequence that neither Article 47(1) nor Article 49(1)(b) CISG applies.[7]

            bb. Article 7.1.5 of the UNIDROIT Principles

Article 7.1.5(1) of the UNIDROIT Principles, the counterpart to Article 47(1) CISG, provides that

"[i]n a case of non-performance the aggrieved party may by notice to the other party allow an additional period of time for performance."

While Article 7.1.1 of the UNIDROIT Principles defines non-performance as a "failure by a party to perform any of its obligations under the contract, including defective performance or late performance", it follows from the reference to "a case of delay" in the opening phrase of sentence 1 of Article 7.1.5(3) of the UNIDROIT Principles [8] that the UNIDROIT Principles Nachfrist, too, is only of relevance in situations where the seller performs late or not at all.

        b. No Extension to Cases of Non-Conformity by Analogy

There has been some scholarly discussion of whether Article 49(1)(b) CISG could/should be applied by analogy to cases of lack of conformity of the goods where the seller did not fulfill buyer's request to repair the goods under Article 46(3) CISG within the Nachfrist.[9] It was argued that the buyer should have some recourse when the seller does not fulfill his obligation to repair the goods in question.[10] Leaving aside the question of whether such interpretative technique is admitted under the CISG, from the present writer's Civil Law perspective, in order to apply a rule of law by analogy there must a gap to be filled. Legislative history shows, however, that it was the conscious decision of the drafters not to broaden the scope of Article 49(1)(b) CISG to defective performance.[11] There is thus no room under the CISG for an analogy.[12] In such cases, the remedies of the buyer are limited to reduce the price or to utilize the non-conforming goods as well as possible and liquidate the resulting damages.

        c. Qualification of Aliud-Delivery

From a factual perspective, the delivery of an aliud (delivery of the wrong goods) is to be distinguished from the delivery of a peius (delivery of non-conforming goods). This distinction gives rise to the question of whether the aliud-delivery can be qualified as non-delivery. The Convention does not specifically address this problem. The very fact, however, that the relevant CISG provisions dealing with seller's obligations do not differentiate between the delivery of an aliud or peius allows the conclusion that both have to be treated equally. Consequently, scholars take the view that the delivery of an aliud cannot be qualified as non-delivery but as delivery of defective goods.[13] Recent German[14] and Austrian[15] case law confirm this view. According to the German Supreme Court, non-delivery could only be assumed in very blatant and obvious cases of divergence between the goods agreed upon and the goods delivered.[16] In such situations, however, in the present writer's view, no distinction would be necessary since they qualify for fundamental breach.[17] It is further to be noted that Article 49(1)(b) CSIG is applicable to cases of late delivery of substitute goods requested by the buyer under Article 46(2) CISG, because the substitute delivery is to be regarded as delivery under Articles 30-34 CISG.[18]

    2. Requirements for an Effective Nachfrist Notice

        a. Content of the Notice

The Nachfrist notice does not have to meet any formal requirements. While in theory, even an oral notice suffices,[19] from the practitioner's viewpoint a written notice is more than advisable since in case of a dispute it is up to the buyer to prove that seller has received the notice.[20] The notice must contain a specific demand for performance[21] and a fixed (given date) or determinable (e.g., four weeks from today) deadline when performance will be accepted at the latest.[22] A general demand by the buyer that the seller perform or that he perform "promptly" or the like is not a fixing of a period of time under Article 47(1) CISG.[23]

        b. Determination of Nachfrist's reasonable length

The Nachfrist must be "of reasonable length". In the absence of an express agreement between the parties, the determination of whether the Nachfrist is "reasonable" must be made in light of the circumstances of the case at hand. Special consideration may be given to the period of time originally set for delivery, the buyer's need for quick delivery of the goods, the nature of the goods to be delivered, and the event which caused the delay.[24]

        c. Consequences in Case of Unreasonable Length

aa. Article 47(1) and 49(1)(b) CISG

Court practice shows that the Nachfrist fixed by the buyer often is not of reasonable length, namely too short. Fixing of a period that is too short triggers the question about the consequences to the Nachfrist notice. The prevailing opinion among scholars is that Article 47(1) and 49(1)(b) CISG should be interpreted so that a Nachfrist of unreasonable length does not make the notice ineffective but initiates a period of reasonable length.[25] This view is confirmed by case law.[26] Some commentators take a different view. They argue that Article 47(1) and 49(1)(b) CISG (by reference to Article 47(1) CISG) require a period of reasonable length and conclude from that language that an unreasonable period - either too short or too long - makes the notice ineffective. Consequently, the buyer would not be entitled to declare the contract avoided after the Nachfrist had expired but would have to serve a new notice and to fix a new Nachfrist of reasonable length.[27] The latter view lacks of persuasion since it cannot be supported by the rules of interpretation under Article 7(1) CISG. Neither the language of Article 47(1) and 49(1)(b) CISG nor legislative history, their context within the CISG's remedial system or their objectives preclude the extension of an unreasonable Nachfrist.[28]

Moreover, this view does not seem to give appropriate account to the "observance of good faith in international trade" as an aid to statutory interpretation.[29] In this regard, it is to be noted that reasonableness is not only to be considered as general principle in terms of Article 7(2) CISG but also as concretization of the good faith requirement under Article 7(1) CISG.[30] In light of the negative consequences of an ineffective notice for both parties, a narrow interpretation of Article 47(1) and 49(1)(b) CISG seems unreasonable. An ineffective notice would not only impose on the buyer the extra burden of fixing a new Nachfrist but also allow him to resort to other remedies since the restriction of Article 47(2) CISG would not apply. Such a consequence is not in the interests of the seller because it would frustrate his efforts to effect delivery. His expenses incurred in attempting to perform would be wasted, and even if one qualified the declaration of avoidance upon the expiration of a too short Nachfrist as breach of contract,[31] not necessarily (fully) recoverable under Article 74 CISG.

bb. Article 7.1.5(3) of the UNIDROIT Principles

Sentence 2 of Article 7.1.5(3) of the UNIDROIT Principles expressly states that

"[i]f the additional period allowed is not of reasonable length it shall be extended to a reasonable length."

The UNIDROIT Principles, therefore, follow a slightly different approach than the CISG. Unlike Article 47(1) CISG, they do not require from the buyer to fix a Nachfrist of reasonable length, but they limit his right to exercise the avoidance remedy if the Nachfrist is of unreasonable length. Notwithstanding that difference, the approach taken by the UNIDROIT Principles confirms the present writer's view that only an extension to a reasonable length is in itself reasonable. Sentence 2 of Article 7.1.5(3) of the UNIDROIT Principles thus can be seen as exemplification of the principle of reasonableness in international trade. As pointed out before, reasonableness is also a general principle under the CISG. Even if one is not willing to follow the present writer's conclusion that the observance of good faith requires to interpret Article 47(1) and 49(1)(b) CISG in the sense of sentence 2 of Article 7.1.5(3) of the UNIDROIT Principles, such interpretation would therefore follow from Article 7(2) CISG. According to that provision "[q]uestions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which is based…".[32]

    3. Effects of a Nachfrist

        a. Article 47(2) CISG

The effects of a Nachfrist are described in Article 47(2) CISG. It provides that

"[u]nless the buyer has received notice from the seller that he will not perform within the period so fixed, the buyer may not, during that period, resort to any remedy for breach of contract. However, the buyer is not deprived thereby of any right he may have to claim damages for delay in performance."

According to Article 47(2) CISG, during the Nachfrist the buyer may not resort to any remedy for breach of contract (except for damages for delay in performance). As a consequence, even if the late delivery qualifies for fundamental breach under Article 49(1)(a) CISG, the buyer cannot avoid the contract if he fixed a Nachfrist.[33] The purpose of Article 47(2) CISG is to protect the seller, who is relying on the buyer's declaration when trying to cure the defect, possibly at considerable expense.[34] The only situation in which avoidance is possible before the expiry of the Nachfrist is the case where the seller declares an ultimate refusal to perform within the period fixed.[35]

        b. Article 7.1.5(2) UNIDROIT Principles

Article 7.1.5(2) UNIDROIT Principles states that

"[d]uring the additional period the aggrieved party may withhold performance of its own reciprocal obligations and may claim damages but may not resort to any other remedy. If it receives notice from the other party that the latter will not perform within that period, or if upon expiry of that period due performance has not been made, the aggrieved party may resort to any of the remedies that may be available under this Chapter."

Except for the right to withhold performance, Article 7.1.5(2) UNIDROIT Principles is substantively identical to Article 47(2) CISG. The right to withhold performance of its own reciprocal obligations during the Nachfrist, however, follows under the Convention from Article 58 CISG. According to Article 58(1) CISG the buyer, in the absent of any stipulation to the contrary, is not obliged to pay the price until the seller places the goods at the buyer's disposal.[36] Moreover, according to Article 58(3) CISG, the buyer in general is not bound to pay the price until he has had an opportunity to examine the goods. If the buyer has agreed to pay before receiving in the goods but, prior to the time for payment, it becomes apparent that the seller will not deliver the goods, the buyer is entitled to suspend payment pursuant to Article 71(1) CISG.[37]

    4. Seller's Non-Compliance with the Buyer's Nachfrist Ultimatum

        a. Article 49(1)(b) CISG

Article 49(1)(b) CISG provides that if the seller fails to perform within the Nachfrist, the buyer may declare the contract avoided. Article 49(1)(b) CISG also provides an alternative condition under which the buyer may avoid the contract, which is a declaration or indication by the seller that he will ignore the Nachfrist notice. The buyer may already in its notice provide that if the other party fails to perform within the period allowed by the notice the contract shall automatically avoid.[38]

        b. Article 7.1.5(3) of the UNIDROIT Principles

Sentence 1 of Article 7.1.5(3) of the UNIDROIT Principles is substantively identical with Article 49(1)(b) CISG.[39] Sentence 3 expressly states that "[t]he aggrieved party may in its notice provide that if the other party fails to perform within the period allowed by the notice the contract shall automatically terminate."

III. Time Limitations on the Right of Avoidance

    1. Article 49(2) CISG

Article 49(2) CISG provides for certain circumstances, under which the buyer may lose his right to avoid the contract. Subparagraph (a) deals with late delivery, whereas subparagraph (b) applies to other cases of breach of contract.

        a. Late Delivery

In the case of late delivery, Article 49(2)(a) CISG states that

"[w]here the seller has delivered the goods, the buyer loses the right to declare the contract avoided unless he does so: (a) in respect of late delivery, within a reasonable time after he has become aware that delivery has been made […]"

It is to be noted that Article 49(2)(a) CISG is only applicable to late delivery (even if late delivery qualifies for fundamental breach [40]) but not to non-delivery. Before delivery has been effected the buyer may, without limits on time, avoid the contract. Once the goods have been delivered he must avoid the contract within a reasonable time. What is "reasonable" depends upon the circumstances. Has the buyer already obtained substitute goods from another source, in the present writer's view, he must declare the avoidance of the contract without unnecessary delay. If the goods are perishable or subject to price fluctuations (e.g., oil), notice must be given almost instantaneously. Where the buyer has not made a substitute purchase and must make enquiries as to whether he can obtain substitute performance from other sources the reasonable period of time will be longer.[41]

        b. Other Types of Breach

In cases of fundamental breach of any of the seller's obligations other than delivery, Article 49(2)(b) CISG provides that the buyer loses the right to avoid the contract if he fails to do so

"within a reasonable time
(i) after he knew or ought to have known of the breach;
(ii) after the expiration of any additional period of time fixed by the buyer in accordance with paragraph (1) of article 47, or after the seller has declared that he will not perform his obligations within such an additional period; or
(iii) after the expiration of any additional period of time indicated by the seller in accordance with paragraph (2) of article 48, or after the buyer has declared that he will not accept performance."

aa. Article 49(2)(b)(i) CISG

Generally, the buyer must declare the avoidance of the contract in accordance with Article 49(2)(b)(i) CISG, that is, within a reasonable time after he knew of the breach or could have been aware of it. In case of the delivery of non-conforming goods, the time limit begin to run at the moment when the buyer discovered or ought to have discovered the lack of conformity on examination of the goods in accordance with Article 38 CISG.[42] As with Article 49(2)(a) CISG, the length of "reasonable time" under Article 49(2)(b)(i) CISG in particular depends on the nature of the goods. In cases of delivery of non-conforming goods, however, the reasonable period of time, in general, will be longer than in case of late delivery since the determination of whether a given defect qualifies for fundamental breach requires extra time (e.g., for seeking legal advice).[43] For the latter reason, it is true that the time limits for notice of avoidance and notice of the defect under Article 39(1) CISG begin to run simultaneously, but only in exceptional cases coincide in length.[44]

bb. Article 49(2)(b)(ii) CISG

Article 49(2)(b)(ii) CISG deals with the situation where the buyer fixed a Nachfrist for remedying the defective performance in accordance with Article 47(1) CISG. The time for avoidance starts to run when the seller does not perform within the Nachfrist (including a second and any further Nachfrist [45]), or when the buyer has received seller's declaration that he will not perform within that period.

cc. Article 49(2)(b)(iii) CISG

Article 49(2)(b)(iii) CISG deals with the situation where an additional period of time has not been fixed by the buyer but has instead been proposed by the seller under Article 48(2) CISG. The time for avoidance starts to run when the seller has not remedied his defective performance within that period or when the buyer has declared that he will not accept performance.

    2. Article 7.3.2(2) of the UNIDROIT Principles

The counterpart to Article 49(2) CISG can be found in Article 7.3.2(2) of the UNIDROIT Principles. The latter states that

"[i]f performance has been offered late or otherwise does not conform to the contract the aggrieved party will lose its right to terminate the contract unless it gives notice to the other party within a reasonable time after it has or ought to have become aware of the offer or of the non-conforming performance."

Article 7.3.2 of the UNIDROIT Principles covers late delivery as well as defective performance. It is substantively identical to Article 49(2)(a) and Article 49(2)(b)(i) CISG.

IV. Conclusions

The requirements for avoidance for non-delivery or late delivery under the CISG and the UNIDROIT Principles do not differ in substance. With regard to the effect of a Nachfrist of unreasonable length, the solution provided in sentence 2 of Article 7.1.5(3) of the UNIDROIT Principles may be used to supplement Article 47(1) and 49(1)(b) CISG.


FOOTNOTES

* Professor in Commercial Law, Corporate Law and International Trade Law, Institute of Business Law, Nürtingen University (Germany).

1. See, e.g., Schlechtriem, Uniform Sales Law in the Decisions of the Bundesgerichtshof, in: 50 Years of the Bundesgerichtshof [Federal Supreme Court of Germany], A Celebration Anthology from the Academic Community [English translation of this text] (2001), at III.1, online available at <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem3.html> (emphasizing that avoidance of the contract, with the necessary return shipment of the goods, regularly entails storage and transport costs in addition to the associated risks for the goods).

2. See relevant case law:

    -     Germany 20 February 2002 Landgericht [District Court] München, case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/020220g1.html> (stating that "[t]he failure to meet a delivery deadline cannot, as a rule, be regarded as a fundamental breach of contract within the meaning of Art. 25 CISG; reasons for an exception such as the stipulation of a transaction for which time is of the essence were not put forward");
    -     Germany 24 April 1997 Oberlandesgericht [Appellate Court] Düsseldorf, case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/970424g1.html> (stating that "[t]he particular importance of the date of delivery can result from the contract itself, as for example in the case of a transaction where time is of the essence, as well as from the circumstances, e.g., in the case of delivery of seasonal items").

3. This requirement is inspired by the German concept of Nachfrist although similar results are obtained by different conceptual means in other legal systems. See Treitel, "Remedies for Breach of Contract", in: Int´l Encyclopedia of Comparative Law , Chapter 16 (Tübingen, Mouton, The Hague, Paris: J.C.B. Mohr, 1976) § § 149-151 (discusses the Nachfrist provision in German law and similar provisions in other legal systems).

4. See Koch, Commentary on Whether the UNIDROIT Principles of International Commercial Contracts May Be Used to Interpret or Supplement Article 25 CISG, available online at <http://cisgw3.law.pace.edu/cisg/text/e-text-25.html>.

5. For a similar statement see Huber, U., in: Schlechtriem ed., Commentary on the U.N. Convention on the International Sale of Goods (Oxford: Clarendon Press: 1998), Art. 30 Comment 5; Plate, "The Buyer's Remedy of Avoidance under the CISG: Acceptable from a Common Law Perspective?", 6 Vindobona Journal of International Commercial Law and Arbitration (2002) 57, at 67, available online at <http://cisgw3.law.pace.edu/cisg/biblio/plate.html>.

6. See Schlechtriem, Uniform Sales Law: the UN Convention on Contracts for the International Sale of Goods (Vienna: Manz 1986), at 77 (stating that "by analogy, the provision [Art. 49(1)(b) CISG) also applies to the failure to transfer documents of title"), available online at <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem.html>; Schnyder/Straub, in: Honsell ed., Kommentar zum UN-Kaufrecht [CISG article by article commentary] (Berlin/Heidelberg/New York: Springer 1997), Art. 49, Comment 100; Jafarzadeh, Buyer's Right to Withhold Performance and Termination of Contract: A Comparative Study Under English Law, Vienna Convention on Contracts for the International Sale of Goods 1980, Iranian and Shi'ah Law, at Part Two, 2.2.2.2, available online at <http://cisgw3.law.pace.edu/cases/960403g1.html>.

7. For such a statement, see Germany 3 April 1996 Bundesgerichtshof [Federal Supreme Court); case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/960403g1.html>.

8. See infra II.4.b.

9. See Transcript of a Workshop on the Sales Convention: Leading CISG scholars discuss Contract Formation, Validity, Excuse for Hardship, Avoidance, Nachfrist, Contract Interpretation, Parol Evidence, Analogical Application, and much more, 18 Journal of Law & Commerce (1999) 191, at 201 et seq.; available at <http://cisgw3.law.pace.edu/cisg/biblio/workshop.html>.

10. See Yoshino, in: Transcript of a Workshop on the Sales Convention, supra note 9, at 213.

11. For an overview see Jafarzadeh, supra note 6, at Part Two, 2.2.2.

12. See Schlechtriem and Flechtner, in: Transcript of a Workshop on the Sales Convention, supra note 9, at 251 (the former stressing that there was a conscious decision by the drafters of the CISG to limit the availability of avoidance using the so-called Nachfrist procedure and emphasizing that in the predecessor Hague Sales Convention, the additional-period-of-time procedure for avoidance was allowed in cases of non-conformity).

13. See Honnold, Uniform Law for International Sales Under the 1980 United Nations Convention (3rd ed., The Hague: Kluwer 1999), at § 256.1; Karollus, Judicial Interpretation and Application of the CISG in Germany 1988-1994, Cornell Review of the Convention on Contracts for the International Sale of Goods (1995) 51-94, at Article 49, available online at <http://cisgw3.law.pace.edu/cisg/biblio/karollus.html>; Schlechtriem, supra note 1; Plate, supra note 5, at 67.

14. See relevant case law:

    -     Germany 3 April 1996 Bundesgerichtshof [Federal Supreme Court], case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/960403g1.html> (stating an aliud delivery, at least generally, does not constitute a non-delivery);
    -     Germany 12 March 2001 Oberlandesgericht [Appellate Court] Stuttgart, case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/010312g1.html> (stating that the delivery of an aliud in any case does not constitute a non-delivery in the meaning of Art. 49(1)(b) CISG);
    -     Germany 11 April 2002 Amtsgericht [Lower Court] Viechtach, case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/020411g1.html> (stating that Art. 35(1) CISG intentionally affords parity treatment to a defect and the delivery of an aliud in order to avoid difficulties in distinguishing between the two and that this aim would be foiled if one chose to e x tend the sphere of non-delivery, because the difficulty in distinguishing between aliud and defect would be shifted to the distinction between delivery and non-delivery).

For a different view, see

    -     Germany 10 February 1994 Oberlandesgericht [Appellate Court] Düsseldorf, case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/940210g2.html> (stating that [i]nsofar as the [seller] delivered textiles in a color not ordered by the [buyer], [seller] effected the delivery of an aliud, which led to a partial non-performance).

15. See Austria 29 June 1999 Oberster Gerichtshof [Supreme Court], case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/990629a3.html>.

16. See Germany 3 April 1996 Bundesgerichtshof [Federal Supreme Court), case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/960403g1.html> (stating an aliud delivery does, at least generally, not constitute a non-delivery, leaving the question open for the case of an especially blatant deviation of the goods from the qualities required by the contract).

17. For a similar view see Schlechtriem, supra note 1 (emphasizing that "[t]he more extreme the deviation, the easier it will be to classify it as a fundamental breach of contract").

18. See Karollus, supra note 13. In contrast, see, Jafarzadeh, supra note 6 (overlooking that Art. 46(2) CISG is a request for substitute delivery).

19. See, e.g., Müller-Chen, in: Schlechtriem/Schwentzer eds., Kommentar zum Einheitlichen UN-Kaufrecht, (4th ed., München: Beck 2004), Art. 47, Comment 13.

20. See Plate, supra note 5, at 67.

21. This requirement has been stressed, e. g., by Honnold, supra note 13, at § 289.

22. See relevant case law:

    -     Germany 24 April 1997 Oberlandesgericht [Appellate Court] Düsseldorf, case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/970424g1.html> (stating that a Nachfrist notice "must contain a precise request for performance that is combined with the fixing of a specific deadline");
    -     Germany 11 October 1995 Landgericht [District Court] Düsseldorf, case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/951011g1.html> (stating that "[i]nsofar as the [buyer] has contended that [buyer] had reminded the [seller] several times about the delivery, it cannot be gathered from this general statement that the [buyer] has also fixed a deadline for the [seller]").

23. See Secretariat Commentary on Article 43(1) of the 1978 Draft [draft counterpart of Article 47(1)], Comment 7, available online at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-47.html>.

24. See e.g., Will in: Bianca & Bonell eds., Commentary on the International Sales Law, The 1980 Vienna Sales Convention (Milan: Giuffrè 1987), Art. 47, Comment 2.1.3.2.

25. For this view see Plate, supra note 5, at 68. Müller-Chen, supra note 19, Art. 47, Comment 9; Herber/Czerwenka, Internationales Kaufrecht [International Sales Law, article by article commentary on the CISG - in German] (München: Beck 1991), Art. 47, Comment 4; Magnus, "UN-Kaufrecht "[UN-Sales Law, article-by-article commentary - in German], in: Staudinger, Julius von Staudingers Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen (13th ed., Berlin: Sellier/de Gruyter 1995), Article 47, Comment 20; Huber, P., in: Münchener Kommentar zum Bürgerlichen Gesetzbuch, Vol. 3, Chapter on CISG [article-by-article commentary - in German] (4th ed., München: Beck 2004), Art. 47, Comment 11.

26. See relevant case law:

    -     Germany 27 April 1999 Oberlandesgericht [Appellate Court] Naumburg, case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/990427g1.html> (stating that the Court does not need to decide whether the additional period of time set by the buyer was too short, as in that instance a reasonable period of time would have started to run);
    -     Germany 24 May 1995 Oberlandesgericht [Appellate Court] Celle, case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/950524g1.html> (stating that a possibly too short Nachfrist does not make the notice ineffective where the notice has merely extended a period of time);
    -     ICC Arbitration Case No. 7645 of March 1995, case presentation available online at <http://cisgw3.law.pace.edu/cases/957645i1.html> (stating in obiter dictum that "irrespectively of these circumstances and of the delay of shipment of five days [buyer] could not have declared avoided the contract based on the delay of shipment alone, because the shipment occurred within the hypothetical additional period of time for performance which [buyer] would have had to fix to [seller]") [emphasis added].

27. See, e.g ., Schnyder/Straub, in: Honsell ed., Kommentar zum UN-Kaufrecht [CISG commentary] (Berlin/Heidelberg/New York: Springer, 1997), Art. 47, Comment 24, and Art. 49 Comment 102).

28. For an overview of the CISG's rules on interpretation with further references to scholarly writings, see, e.g., Koch, "The Concept of Fundamental Breach of Contract under the United Nations Convention on Contracts for the International Sale of Goods (CISG)", Pace Review of the Convention on Contracts for the International Sale of Goods (CISG) 1998, Kluwer Law International (1999), at 189 et seq.; also available online at <http://cisgw3.law.pace.edu/cisg/biblio/koch.html>.

29. For a concise and thorough analysis of the meaning of "good faith" as an instrument of interpretation, see Felemegas, "The United Nations Convention on Contracts for the International Sale of Goods: Article 7 and Uniform Interpretation", in Pace Review of the Convention on Contracts for the International Sale of Goods (CISG), Kluwer Law International (2000-2001) 115-265, at Chapter 3, 5(a), also available online at <http://cisgw3.law.pace.edu/cisg/biblio/felemegas.html#ch3>.

30. For the relationship between reasonableness and good faith, see Schlechtriem, supra note 6, at 39; Honnold, supra note 13, at § 95; for the relevance of the standard of reasonableness in determining good faith, see Kritzer's editorial remarks on "reasonableness", which include further citations and references, at <http://cisgw3.law.pace.edu/cisg/text/reason.html> (stating that "… regarding reasonableness as a fund a mental principle of the CISG and reading reasonableness into every article of the CISG, whether specifically mentioned in the article or not... is required by virtue of the good-faith and uniform-law mandate recited in Article 7(1) of the CISG."); Bonell, in: Bianca & Bonell eds., supra note 24, Art. 7, Comment 2.3.2.2 (sta t ing that "just as in interpreting specific terms and concepts adopted in the text of the Convention, also in specifying 'general principles' courts should, in accordance with the basic criteria of Article 7(1)...") and F e lemegas, supra note 29, at chapter 4, 5(a) (thoroughly and accurately analyzing Bonell's statement in that Bonell relies on the premise that, although there are principles, such as that of party autonomy and the dispatch rule, which can be directly applied, others, such as the principle of good faith and the concept of "re a sonableness", need further specification in order to offer a solution for a particular case).

31. See Plate, supra note 5, at 68-69; Müller-Chen, supra note 19, Art. 47, Comment 9 (both stating that if the buyer has fixed too short a period and accordingly declares the avoidance of the contract upon the expiration of that period, this constitutes a breach of contract itself).

32. Emphasis added.

33. See Plate, supra note 5, at 69; Müller-Chen, supra note 19, Article 47, Comment 14.

34. See Secretariat Commentary on Article 43(1) of the 1978 Draft [draft counterpart of Article 47(1)], supra note 22, Comment 9.

35. See Secretariat Commentary on Article 43(1) of the 1978 Draft [draft counterpart of Article 47(1)], supra note 22, Comment 9.

36. See relevant case law:

    -     Bundesgerichtshof [German Supreme Court), 3 April 1996, case presentation including English transl a tion available online at <http://cisgw3.law.pace.edu/cases/960403g1.html> (denying buyer's right of retention according to Art. 58(1) CISG, since the scope of this provision is limited to "so-called true transfer documents", besides this, also similar documents granting the buyer a right of disposition to the goods);
    -     ICC Arbitration Case No. 7645 of March 1995, case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/957645i1.html> (stating with regard to Article 58(1) CISG that the purchaser is not bound to pay the purchase price as long as the seller has not performed or at least adequately tendered correct performance);

See also Jafarzadeh, supra note 6, at Part Two, 1.2.2.

37. See, e.g., Germany 6 April 2000 Landgericht [District Court] München, case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/000406g1.html> (stating that buyer "had the right to stop payment of her cheque and to temporarily refuse the payment of the purchase price (Art. 71(1)(b) CISG), because [seller] did not deliver furniture in a material mix and combination in compliance with the terms set out in their sales contract), see also Kimbel, " Nachfrist Notice and Avoidance under the CISG", 18 Journal of Law and Commerce (1999) 301-331, at fn. 31 (stating failure to deliver satisfies the substantial part requirement under Article 71(1) CISG, and a party may suspend its performance during the Nachfrist period), available at <http://cisgw3.law.pace.edu/cisg/biblio/kimbel.html>; Jafarzadeh, supra note 6, at Part Two, 1.2.1.

38. See Müller-Chen, supra note 19, Art. 49, Comment 22; Plate, supra note 5, at 72; Herber/Czerwenka, supra note 25, Article 49, Comment 11; Magnus, supra note 25, Article 49, Comment 26; see also Austria 28 April 2000 Oberster Gerichtshof [Supreme Court], case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/000428a3.html> (stating that it is a question of interpretation of seller's Nachfrist notice [under Article 63(1) CISG] if the contract will be terminated upon expiration of the Nachfrist without further notice).

39. Sentence 1 of Article 7.1.5(3) of the UNIDROIT Principles reads as follows:

"Where in a case of delay in performance which is not fundamental the aggrieved party has given notice allowing an additional period of time of reasonable length, it may terminate the contract at the end of that period."

40. See Plate, supra note 5, at 69; Müller-Chen, supra note 19, Art. 49, Comment 27.

41. See Plate, supra note 5, at 69; Müller-Chen, supra note 19, Art. 49, Comment 29.

42. For a similar statement see Honnold, supra note 13, § 308; Will, supra note 24, Art. 49, Comment 2.2.2.1.

43. For a similar statement see Germany Oberlandesgericht [Appellate Court] Koblenz 31 January 1997, text of the decision [in German] available online at <http://www.cisg-online.ch/cisg/urteile/256.htm>; Plate, supra note 5, at 70; Huber, P., supra note 25, Art. 49, Comment 65.

44. For a similar statement see Will, supra note 24, Art. 49, Comment 2.2.2.1.

There is a controversial discussion among scholars whether or not seller's knowledge of a defect in the goods removes "reasonable time" limit on avoidance. For the different views see Honnold, supra note 13, § 308.1 (contra), and Will, supra note 24, Art. 49, Comment 2.2.2.2 (pro).

45. For a similar statement see Will, supra note 24, Art. 49, Comment 2.2.1.2.


PECL COMPARATIVE

Remarks on the manner in which the Principles of European Contract Law
may be used to interpret or supplement Articles 47 and 49(1)(b) CISG
[*]

Bruno Zeller
Victoria University of Technology, Melbourne, Australia

-- Scheme of CISG articles 47 and 49(1)(b)

CISG articles 47 and 49(1)(b) are part of the regime of remedies of breach of contract within the CISG, which in general can be divided into two categories: firstly, remedies where the contract can be terminated or avoided such as fundamental breach; and secondly, remedies where the contract is still in force such as damages.

Articles 47 and 49(1)(b) are provisions which span both remedies through the principle of "Nachfrist" which is the granting of additional time for delivery of goods. The principle has been mainly borrowed from German domestic law as well as from the French procedure of mise en demeure. However there are significant differences between the German and French treatment of Nachfrist and the one accorded to in the CISG. This is a good point to remind ourselves of the mandate of article 7(1) where uniformity of application demands the autonomous interpretation of the CISG, that is, without relying on principles founded in domestic law. In other words, German and French treatment of Nachfrist and mise en demeure must be ignored and cannot be used to explain the principle within the CISG despite significant similarities in doctrine and jurisprudence.

Common law attorneys may find the concept of Nachfrist foreign as this term has no direct common-law counterpart. In brief, the various Sale of Goods Acts do not rely on the principle of "fundamental breach"; they rather approach avoidance of contract through the breach of contractual terms, that is, breach of a major term or a condition. Breach of warranties (minor terms) only gives rise to a claim of damages. Common law in general holds parties strictly to their time commitments. A breach of a condition automatically allows the aggrieved party to repudiate the contract. There is no need to determine whether such a delay constitutes a fundamental breach or not, the question is one of breach of warranty or condition. The matter is clear, perhaps not flexible but certain. This does not mean that the buyer cannot give the seller additional time to perform its obligation. A waiver of the time obligation followed by a new notice making time of the essence would achieve in two steps what Nachfrist achieves in one.

The purpose behind the flexible remedy of Nachfrist is that the CISG, as one of its principles, attempts to keep the contract afoot as long as there is a possibility to perform contractual obligations. This is in line with the attempt to overcome some of the problems of distance, expense and time in having an international contract terminated where, operating under another general principle of the CISG, namely good faith, remedial action could have been possible, resulting in a win-win situation.

-- Meaning and purpose of Nachfrist

The idea behind Nachfrist is that the buyer should not be able to avoid the contract merely because the goods are not delivered on time. A contract can be avoided under the principle of fundamental breach pursuant to CISG article 25. Under certain circumstances, such as when time is of the essence, late delivery may become a fundamental breach. Article 47 in itself is not a remedy, it clarifies a situation which otherwise would be unclear. If the buyer is in a situation where there is uncertainty as to the existence of a reason to avoid the contract, he can overcome this by fixing a Nachfrist. As far as the seller is concerned the additional period is a final period, however, the buyer is not barred from fixing additional periods if he so wishes or if he wants to respond to the seller's request for additional time.

The importance the CISG places in reading provisions within the context of the Convention is clearly demonstrated in this instance. Article 47 is closely linked to article 49(1). In article 49(1)(a), the buyer is entitled to avoid the contract if the failure of the seller amounts to a fundamental breach. Late delivery, unless time is of the essence, does not amount to a fundamental breach. A buyer may not be certain whether late delivery may be construed as a fundamental breach but, by fixing a Nachfrist, this problem is overcome as the buyer now can rely on article 49(1)(b) which takes away the uncertainty. The only uncertainty is the question of "reasonable length" of the additional period of time fixed by the buyer. The buyer will have assistance in such a definition through article 9 (customary practices) or article 6 (additional time is a clause in the contract) as well as article 8 (previous conduct or statements made by parties). Most importantly, the buyer will rely on the general principle of reasonableness as well as the principle of good faith, which is contained in article 7. While the additional period is in existence the buyer can only rely on damages for late delivery but most importantly, the seller is protected while he is making efforts, perhaps at considerable expense to deliver the goods as requested.

-- Comparison of PECL article 8:106 with CISG articles 47 and 49(1)(b)

At first glance the two systems have a remarkable similarity but are also subtly different. The first point to note is that PECL also introduces Nachfrist as an important concept in contractual relations. The mere inclusion indicates that the CISG was correct in its assessment that the concept of Nachfrist is important in an international contractual relationship. The second point is a confirmation of the foresight of the CISG because PECL did not introduce major changes but as indicated above only subtle differences. From this we can deduce that the concept of Nachfrist as introduced by the CISG was correct and is of importance in international sales.

The CISG as well as PECL recognize the difference between non-performance which amounts to a fundamental breach and non-performance which is not serious enough to constitute a fundamental breach. PECL like the CISG allows the buyer who is not sure whether the non-performance amounts to a fundamental breach the ability to avoid the contract by allowing him to set an additional period of time to perform the contract. Both the CISG and PECL recognize that two conditions must be met. Firstly, the period must be fixed. A telephone call by the buyer to demand prompt delivery does not amount to a fixing of time pursuant to CISG article 47(1). Secondly, the period so fixed must be reasonable. The question to what amounts to a reasonable time is a question of fact and is left to the courts to decide. However good faith which is a principle in both the CISG and PECL will influence the court in its decision. However PECL in its Comment makes it clear that if less than reasonable time was fixed the aggrieved party "need not serve a second notice; it may terminate after a reasonable time has elapsed from the date of the notice." As far as the CISG is concerned, no jurisprudence has solved this issue; however, it can be argued that a court would invoke good faith and could set a date which fulfills the requirements of the principle of reasonableness.

The CISG in its jurisprudence indicates that Nachfrist is not only restricted to non-delivery, it also extends to faulty delivery. The question as to what amounts a fixing of an additional period has been interpreted by courts in a liberal sense, that is, with the principle of good faith in mind. A Spanish court held that the buyer's tolerance of late deliveries was equivalent to the granting of a Nachfrist. However a fixing of a period is not necessary if the seller manifests a clear intention not to deliver the goods and therefore the contract can be avoided pursuant to article 49.

One area of uncertainty within the CISG has been removed by clearly stating that the buyer may withhold his own performance while an additional period of time is fixed. Another point well worth noting is the different terms used. In the CISG under article 47 it is the buyer who may fix a time whereas in PECL it is the aggrieved party, which can be buyer or seller depending on the circumstances. Such a variance makes sense as unlike the CISG, PECL also covers contracts of service. Furthermore PECL has managed to cover in one article substance which in the CISG is contained in articles 47, 49(1)(b), 63 and 64(1)(b). In the CISG, the latter articles cover the remedies open to the seller and are reviewed in this database in the discussions on that subject.

-- Conclusion

The principle of Nachfrist must be viewed in two ways, firstly as a mandate within the CISG but secondly also as another example of the "sea change in the landscape of international trade." Not only is "additional period of time" contained in basically the same form in PECL but also in the UNIDROIT principles. It is the domestic systems of law and specifically the common law, which is out of step with international developments. The reality is that there is a drastic change in the market place for legal services. PECL in a subtle way will be shaping English common law practices and it will not be too far in the future when English courts need to deal with concepts such as Nachfrist. The fact that the concept of Nachfrist has been included in various international laws indicates that certainty now has a brother, namely flexibility.

Globalization requires that legal rules must be flexible in order to be applicable to changing circumstances and avoid costly disputes in circumstances, which could have been solved by an instrument like Nachfrist. Common law attorneys must become aware of the existence and basic content of different concepts contained in uniform international law, the CISG, and in international "Restatements" of the law, the PECL and UNIDROIT Principles, because they will be shaping the rules for contractual dealings in the future.


FOOTNOTE

* A match-up of CISG Articles 47 and 49(1)(b) and PECL Article 8:106 [Notice fixing additional period for performance] is available at <http://cisgw3.law.pace.edu/cisg/text/peclcomp47.html>. The match-up is accompanied by:

-   Comments on PECL 8:106 authored by the European Commission describing and illustrating the manner in which it is to be applied; and
-   Notes that compare this provision with continental and common law domestic rules, doctrine and jurisprudence.


Pace Law School Institute of International Commercial Law - Last updated September 14, 2009
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