Go to Database Directory || Go to Information on other available case data
Search the entire CISG Database (case data + other data)

2,000 cases 7,500 case annotations

Article 58. Time for Payment

TEXT OF ARTICLE 58

(1) If the buyer is not bound to pay the price at any other specific time, he must pay it when the seller places either the goods or documents controlling their disposition at the buyer's disposal in accordance with the contract and this Convention. The seller may make such payment a condition for handing over the goods or documents.

(2) If the contract involves carriage of the goods, the seller may dispatch the goods on terms whereby the goods, or documents controlling their disposition, will not be handed over to the buyer except against payment of the price.

(3) The buyer is not bound to pay the price until he has had an opportunity to examine the goods, unless the procedures for delivery or payment agreed upon by the parties are inconsistent with his having such an opportunity.


OUTLINE OF ISSUES

Reproduced with permission of UNCITRAL

58A Buyer to pay when goods placed at buyer's disposition (art. 58(1))

58A1 Seller not obliged to hand over goods until buyer pays price

58B Contracts involving carriage (art. 58(2))

58B1 Seller may arrange for delivery in exchange for price

58B11 Place for documentary exchange

58C Buyer is entitled to examine goods before payment (art. 58(3))

58C1 Exception: agreed procedures are inconsistent with inspection


DESCRIPTORS

Price


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. 58, the UNCITRAL Digest cites seven cases from Germany and five cases from Switzerland.

Presented below is a composite list of Art. 58 cases reporting these UNCITRAL Digest cases and other Art. 58 cases. All cases are listed in chronological sequence, commencing with the most recent. Asterisks identify the UNCITRAL Digest cases, commencing with the 15 July 2003 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.
 

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

Netherlands 1 July 2009 Rechtbank [District Court] Rotterdam (Sarens N.V. v. Gemax D.O.O.)
 

Switzerland 26 November 2008 Handelsgericht [Commercial Court] Aargau (Fruit and vegetables case) [translation available]

Slovak Republic 19 June 2008 Supreme Court (Health care products case) 58A [translation available]

Slovak Republic 17 June 2008 District Court Dolny Kubin [translation available]

Slovak Republic 30 April 2008 Supreme Court (Health care products case) 58A [translation available]

Netherlands 31 January 2008 Rechtbank [District Court] Arnhem (CONERSA v. Grid-Solar B.V.)

Germany 14 January 2008 Oberlandesgericht [Appellate Court] Köln (Shoes case)
 

Switzerland 6 September 2007 Kantonsgericht [District Court] Appenzel Ausserhoden (Clothing case) [translation available]

Germany 6 July 2007 Amtsgericht [Lower Court] Freiburg (Shoe case) [translation available]

Slovak Republic 27 June 2007 Supreme Court Zilina [translation available]

Hungary 6 June 2007 Congrád County Court (Clothing case) [translation available]

Spain 16 May 2007 Tribunal Supremo [Supreme Court] (Water apparatus case)

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

Switzerland 20 December 2006 Bundesgericht [Supreme Court]

Switzerland 27 October 2006 Tribunal cantonal [Appellate Court] Valais (Bicycle and motorcycle parts case) [translation available]

Germany 19 October 2006 Oberlandesgericht [Appellate Court] Koblenz (T-Shirts case) [translation available]

Germany 19 October 2006 Oberlandesgericht [Appellate Court] München (Auto case)

Germany 20 September 2006 Landgericht [District Court] Krefeld (Charcoal case) 58A ; 58B [translation available]

Slovak Republic 27 June 2006 District Court Nitra (Children's equipment case) [translation available]

Switzerland 23 May 2006 Tribunal cantonal [Higher Cantonal Court] Valais (Suits case) [translation available]

Germany 3 April 2006 Oberlandesgericht [Appellate Court] Köln (Strawberry plants case) [translation available]

Mexico 24 March 2006 Superior Court of Baja California [Appellate Court] (Banks Hardwoods California LP v. Jorge Angel Kyriakidez Garcia)

Switzerland 9 March 2006 Kantonsgericht [District Court] Appenzell-Ausserhoden (Fitness equipment case) [translation available]

Germany 8 February 2006 Oberlandesgericht [Appellate Court] Karlsruhe (Hungarian wheat case) [translation available]
 

Austria 8 November 2005 Oberster Gerichtshof [Supreme Court] 58A ; 58C [translation available]

Slovak Republic 20 October 2005 Supreme Court (Polyethelene case) 58A [translation available]

Switzerland 19 September 2005 Kantonsgericht Wallis / Tribunal cantonal Valais [Canton Appellate Court]

Mexico 30 August 2005 Civil Court of Tijuana (Banks Hardwoods California LP v. Jorge Angel Kyriakidez Garcia) [5th Cir.] (Wood case) 58A [translation available]

Switzerland 23 May 2005 Kantonsgericht [District Court] Nidwalden [translation available]

Germany 13 April 2005 Landgericht [District Court] Bamberg (Furnishings case) [translation available]

China 7 April 2005 CIETAC Arbitration Award [CISG/2005/01] (Cotton gin motes case) [translation available]

Switzerland 25 January 2005 Handelsgericht [Commercial Court] Aargau (Floor tiles case) [translation available]
 

Switzerland 22 December 2004 Handelsgericht [Commercial Court] Bern (Watches case) [translation available]

Germany 22 July 2004 Oberlandesgericht [Appellate Court] Düsseldorf [translation available]

Germany 28 May 2004 Oberlandesgericht [Appellate Court] Düsseldorf [translation available]

Switzerland 23 May 2005 Kantonsgericht [District Court] Nidwalden

Italy 31 March 2004 Tribunale [District Court] Padova 58A [translation available]

Switzerland 12 March 2004 Amtsgericht [Lower Court] Willisau [translation available]

Italy 25 February 2004 Tribunale [District Court] Padova 58A [translation available]
 

Germany 27 October 2003 Oberlandesgericht [Appellate Court] Rostock 58A [translation available]

Germany 10 September 2003 Landgericht [District Court] Hamburg

Switzerland 19 August 2003 Tribunal Cantonal [Appellate Court] Valais [translation available]

* Germany 15 July 2003 Landgericht [District Court] Mönchengladbach [translation available]

Switzerland 30 April 2003 Cantonal [Appellate Court] Valais (Furniture case) [translation available]

Germany 27 February 2003 Landgericht [District Court] Nürnberg Fürth

Switzerland 11 February 2003 Handelsgericht [Commercial Court] St. Gallen [translation available]
 

Germany 17 December 2002 Landgericht [District Court] Giessen [translation available]

* Switzerland 5 November 2002 Handelsgericht [Commercial Court] des Kantons Aargau 58A [translation available]

* Germany 11 April 2002 Amtsgericht [Lower Court] Viechtach [translation available]

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

Germany 20 February 2002 Landgericht [District Court] München 58A [translation available]
 

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

Australia 12 October 2001 Supreme Court of Queensland, Court of Appeal (Downs Investments v. Perwaja Steel)
 

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

Mexico 14 July 2000 Juzgado de Primera Instancia [Court of First Instance] Tijuana 58A [translation available]

Germany 13 April 2000 Amtsgericht [Lower Court] Duisburg [translation available]
 

Germany 12 October 1999 Amtsgericht [Lower Court] Stendal

Germany 25 May 1999 Landgericht [District Court] Berlin [translation available]

China 8 April 1999 CIETAC Arbitration Award [CISG/1999/21] (New Zealand raw wool case) [translation available]

Germany 24 March 1999 Landgericht [District Court] Flensburg [translation available]
 

Switzerland 30 November 1998 Handelsgericht [Commercial Court] Zürich [translation available]

Austria 15 October 1998 Oberster Gerichtshof [Supreme Court] [translation available]

Italy 7 August 1998 Corte Suprema di Cassazione [Supreme Court] [translation available]

Switzerland 30 June 1998 Kantonsgericht Wallis / Tribunal cantonal Valais [Canton Appellate Court] (Granite stones case) [translation available]

Germany 23 June 1998 Oberlandesgericht [Appellate Court] Hamm [translation available]

Germany 24 March 1998 Landgericht [District Court] Berlin (Knitwear case) [translation available]

Italy 20 March 1998 Corte di Appello [Appellate Court] Milano [translation available]

Austria 11 March 1998 Oberlandesgericht [Appellate Court] Graz

Germany 21 January 1998 Oberlandesgericht [Appellate Court] München 58A
 

* Switzerland 12 August 1997 Kantonsgericht [District Court] St. Gallen 58A

Germany 9 July 1997 Oberlandesgericht [Appellate Court] Köln 58A [translation available]

Hungary 1 July 1997 Fovárosi Bíróság [Metropolitan Court] [translation available]

Germany 10 June 1997 Landgericht [District Court] Paderborn

Germany 24 April 1997 Oberlandesgericht [Appellate Court] Düsseldorf 58A [translation available]
 

* Germany 3 April 1996 Bundesgerichtshof [Federal Supreme Court] [translation available]

Switzerland 11 March 1996 Tribunal Cantonal [Appellate Court] Vaud [01 93 0661]

Switzerland 11 March 1996 Tribunal Cantonal [Appellate Court] Vaud [01 93 1061] [translation available]

Germany 15 February 1996 Landgericht [District Court] Kassel [11 O 4187/95] [translation available]

* Switzerland 18 January 1996 Bundesgericht [Federal Supreme Court]
 

Germany 12 December 1995 Landgericht [District Court] Marburg [translation available]

Germany 6 October 1995 Amtsgericht [Lower Court] Kehl [translation available]

* Germany 27 July 1995 Oberlandesgericht [Appellate Court] Rostock [translation available]

Switzerland 30 June 1995 Gerichtskommission [Judicial Commission] Oberrheintal (Sliding doors case) 58A ; 58C [translation available]

Germany 12 May 1995 Amtsgericht [Lower Court] Alsfeld [translation available]

* Germany 8 March 1995 Bundesgerichtshof [Supreme Court] [translation available]

ICC March 1995 International Court of Arbitration, Case 7645 58A [English text]

China 4 January 1996 CIETAC Arbitration Award [CISG/1995/02] (Shirts case) 58B [translation available]
 

* Switzerland 20 December 1994 Tribunal Cantonal [Appellate Court] Valais 58A [translation available]

Germany 14 December 1994 Oberlandesgericht [Appellate Court] Hamburg

Austria 10 November 1994 Oberster Gerichtshof [Supreme Court] [translation available]

Austria 15 June 1994 Vienna Arbitration award, Case SCH-4366 [translation available]

China 30 March 1994 CIETAC Arbitration Award [CISG/1994/04] (Cow's liver fungus case) [translation available]

Germany 2 March 1994 Oberlandesgericht [Appellate Court] München [translation available]

Germany 24 January 1994 Kammergericht [Appellate Court] Berlin [translation available]

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

Switzerland 6 December 1993 Tribunal Cantonal [Appellate Court] Vaud [translation available]

Netherlands 6 May 1993 Arrondissementsrechtbank [District Court] Roermond 58A

Germany 8 February 1993 Landgericht [District Court] Verden 58A
 

Germany 20 November 1992 Oberlandesgericht [Appellate Court] Karlsruhe (Frozen chicken case) [translation available]
 

* Germany 13 June 1991 Oberlandesgericht [Appellate Court] Frankfurt

Argentina 20 May 1991 Juzgado Nacional de Primera Instancia en lo Comercial [National Commercial Court of First Instance] [translation available]

Germany 31 January 1991 Amstgericht [Lower Court] Frankfurt 58B [translation available]
 

Germany 26 September 1990 Landgericht [District Court] Hamburg

Germany 2 May 1990 Landgericht [District Court] Frankfurt


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/58 [8 June 2004]
Reproduced with the permission of UNCITRAL

[Text of Article 58
Digest of Article 58 case law
-    Introduction
-    The principle of simultaneous payment of the price and
      handing over of the goods or documents (Article 58(1))
-    Sales involving a transport contract (Article 58(2))
-    The buyer right to examine the goods in advance (Article 58(3))]
ARTICLE 58

     (1) If the buyer is not bound to pay the price at any other specific time, he must pay it when the seller places either the goods or documents controlling their disposition at the buyer disposal in accordance with the contract and this Convention. The seller may make such payment a condition for handing over the goods or documents.  

     (2) If the contract involves carriage of the goods, the seller may dispatch the goods on terms whereby the goods, or documents controlling their disposition, will not be handed over to the buyer except against payment of the price.

     (3)  The buyer is not bound to pay the price until he has had an opportunity to examine the goods, unless the procedures for delivery or payment agreed upon by the parties are inconsistent with his having such an opportunity. 

DIGEST OF ARTICLE 58 CASE LAW

Introduction

1. Article 58 defines the moment when the price becomes due in the absence of any particular contractual stipulation to that effect.[1] In fixing the time at which payment of the price may be demanded, article 58 also determines the point in time at which interest based on article 78 of the Convention starts to accrue, a point that has been made in a number of court decisions.[2]

The principle of simultaneous payment of the price and
handing over of the goods or documents (Article 58 (1))

2. The Convention does not mean to oblige the seller, in the absence of a particular agreement on the subject, to grant credit to the buyer. Article 58(1) establishes the principle of simultaneous handing over of the goods or documents controlling their disposition and payment of the price: the buyer must pay the price when the seller places either the goods or documents controlling their disposition at his disposal. As is stated in the second sentence of article 58(1), the seller may refuse to hand over the goods or documents controlling their disposition to the buyer if the latter does not pay the price at that time. The seller thus enjoys the right to retain the goods or documents controlling their disposition in these circumstances.

3. The inverse of the principle established in article 58(1) also applies: the buyer is not bound to pay the price until the goods or documents controlling their disposition have been handed over. Article 58(3) grants the buyer the complementary right of prior examination of the goods, though only to the extent that contractual provisions concerning handing over and the modalities of payment make this possible.[3]

4. Contractual terms as well as international usage and practices established between the parties may derogate from the principle of simultaneous performance in handing over the goods and paying the price, a principle which applies only f the buyer is not bound to pay the price at any other specific time according to the terms of article 58(1). One court affirmed that the parties had derogated from the principle of simultaneous performance in a case where they had agreed on payment of 30 per cent of the price upon ordering of the goods, 30 per cent at the beginning of assembly, and 30 per cent at the completion of installation, the final 10 per cent to be paid after successful start-up of the facility.[4]

5. The place of handing over of the goods or of documents depends on the relevant terms of the contract and, where no such terms exist, on the rules established by the Convention (article 31). For the sale of goods at a particular place (article 31(b) and (c)), the price becomes payable when the seller has placed the goods at the disposal of the buyer in the agreed place or at its place of business and has given the buyer the opportunity to examine the goods. Article 58(2) covers the case of sales involving a transport contract.[5]

6. Article 58(1), like article 58(2), puts delivery of the goods and handing over of documents controlling their disposition on the same level, anticipating that they will have the same effect. One court found that the handing over of documents controlling the disposition of the goods to the buyer caused the price to become due, as provided in article 58(1).[6] The question, however, is to know what exactly is meant by ocuments controlling the disposition of the goods It has been decided that certificates of origin and quality,[7] and also customs documents,[8] do not constitute documents controlling the disposition of the goods within the meaning of article 58(1) and that their non-delivery could therefore not be taken to justify refusal on the part of the buyer to pay the price.

Sales involving a transport contract (Article 58(2))

7. Article 58(2) deals with the case of a sale involving a transport contract. Under this provision, the seller may dispatch the goods on terms whereby the goods, or documents controlling their disposition, will not be handed over to the buyer except against payment of the price. Thus, article 58(2) does not entitle the seller to let the handing over of goods to the carrier depend on advance payment of the price by the buyer, in the absence of a particular contractual provision to that effect. The buyer is accordingly not required to pay the price until the moment when the goods or documents controlling their disposition are handed over to him by the carrier.

The buyer right to examine the goods in advance (Article 58(3))

8. In principle the buyer is not bound to pay the price until he has had an opportunity to examine the goods. Prior examination may be excluded by a contractual stipulation to that effect or by modalities of delivery or payment which are incompatible with such examination, such as clauses involving ayment against handing over of documents or ayment against handing over of the delivery slip

9. The provision says nothing about whether the buyer is entitled to suspend payment of the price in the event that examination reveals that the goods are not in conformity with the contract. There are not yet any court decisions which have addressed this issue.


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. [GERMANY Landgericht [District Court] Mönchengladbach 15 July 2003, available online at <http://cisgw3.law.pace.edu/cases/030715g1.html>]; [SWITZERLAND Kantonsgericht [District Court] Schaffhausen 25 February 2002, available online at <http://cisgw3.law.pace.edu/cases/020225s1.html>]; CLOUT case No. 197 [SWITZERLAND Tribunal [Appellate Court] Valais 20 December 1994, available online at <http://cisgw3.law.pace.edu/cases/41220s1.html>].

2. See [GERMANY Landgericht [District Court] Mönchengladbach 15 July 2003, available online at <http://cisgw3.law.pace.edu/cases/030715g1.html>]; [GERMANY Amtsgericht [Lower Court] Viechtach 11 April 2002, available online at <http://cisgw3.law.pace.edu/cases/020411g1.html>]; CLOUT case No. 228 [GERMANY Oberlandesgericht [Appellate Court] Rostock 27 July 1995, available online at <http://cisgw3.law.pace.edu/cases/950727g1.html>]; CLOUT case No. 123 [GERMANY Bundesgerichtshof [Appellate Court] 8 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950308g3.html>] (see full text of the decision); CLOUT case No. 79 [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 18 January 1994, available online at <http://cisgw3.law.pace.edu/cases/940118g1.html>] (see full text of the decision); CLOUT case No. 1 [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 13 June 1991, available online at <http://cisgw3.law.pace.edu/cases/910613g1.html>] (see full text of the decision).

3. See infra, para. 8 et seq.

4. CLOUT case No. 194 [SWITZERLAND Bundesgericht [Supreme Court] 18 January 1996, available online at <http://cisgw3.law.pace.edu/cases/960118s1.html>] (see full text of the decision). See also [SWITZERLAND Handelsgericht [Commercial Court] Aargau 5 November 2002, available online at <http://cisgw3.law.pace.edu/cases/021105s1.html>].

5. See infra, para. 7.

6. CLOUT case No. 216 [SWITZERLAND Kantonsgericht [District Court] St. Gallen 12 August 1997, available online at <http://cisgw3.law.pace.edu/cases/970812s1.html>].

7. CLOUT case No. 171 [GERMANY Bundesgerichtshof [Supreme Court] 3 April 1996, available online at <http://cisgw3.law.pace.edu/cases/960403g1.html>].

8. CLOUT case No. 216 [SWITZERLAND Kantonsgericht [District Court] St. Gallen 12 August 1997, available online at <http://cisgw3.law.pace.edu/cases/970812s1.html>].


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

[...]

3. Time of Payment: Article 58

Courts interpreting Article 58 have focused the identity of the documents controlling the disposition of the goods. Academics commenting on Article 58 have noted the uncertainty associated with specific identification of these documents. One commentator has concluded that this reference is extremely broad and is not necessarily limited to negotiable documents of title.[447] Rather, other documents, such as insurance policies and certificates of origin, may also relate to the goods and affect the buyer's ability to accept their delivery.[448] Under such circumstances, the delivery of such documents must be part of the seller's performance in order to trigger the buyer's payment obligation.[449] By contrast, the buyer would be required to pay the purchase price upon the seller's failure to deliver other documents of less importance to the consummation of the transaction. [450] Under such circumstances, the buyer may still avail itself of legal or equitable remedies, such as specific performance, in the appropriate national court.[451]

It is clear from the opinions to date that, in the absence of specific provisions within the contract establishing the time for the buyer's payment of the price, payment is due upon delivery.[452] In addition, as a general rule, documents controlling the disposition of the goods are to be procured by the party responsible for their exportation.[453] It is important to note that this [page 375] does not necessarily refer to the seller in every case. [454] Rather, in the one case addressing this issue, the court held that the seller was responsible for procuring customs documents only if so provided by the sales contract.[455] The absence of a developed body of case law surrounding this issue perhaps suggests that the uncertainty is more of an academic interest rather than one presenting practical difficulties for businesses operating in the global marketplace.

[...]


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.

[...]

447. See Schlechtriem, Uniform Sales Law, supra note 107, at 81 n.327.

448. Id.

449. Id.

450. Id.

451. Id.

452. See, e.g., KG St. Gallen, Gerichtskommission Oberrheintal, OKZ 93- 1, Jun. 30, 1995 (Switz.), available at <http://cisgw3.law.pace.edu/cases/950630s1.html> (holding that the buyer was obligated to pay for gates upon their delivery and installation upon the buyer's premises).

453. See, e.g., KG St. Gallen, 3 ZK 96-145, Aug. 12, 1997 (Switz.), available at <http://cisgw3.law.pace.edu/cases/970812s1.html> (rejecting the claim of a Swiss buyer that it was not obligated to pay the purchase price for clothing delivered by a German seller due to the seller's failure to obtain necessary documents to allow the goods to clear Swiss customs).

454. Id.

455. Id.

[...]

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


ANNOTATED COMPARATIVES
-  PECL comparative

Comparison between provisions of the CISG regarding time for payment (Art. 58) and the counterpart provisions of the PECL (Arts. 7:102 and 7:104)

John Felemegas [*]
February 2005

  1. Introduction
  2. Exchange of goods for price: the principle of simultaneous payment
    of the price and handing over of the goods (CISG Art. 58(1))
  3. Contracts involving carriage of goods (CISG Art. 58(2))
  4. The buyer's right to examine the goods in advance (CISG Art. 58(3))
  5. Conclusion

I. Introduction

CISG Article 58 is located in the Convention's Part III "Sale of Goods", Chapter III "Obligations of the Buyer", Section I "Payment of the Price"; the stated provision governs the time for the buyer's payment of the purchase price in relation to performance by the seller.[1]

In essence, CISG Art. 58 regulates the important matter of when must the buyer pay the price for the purchased goods. There are, however, several related questions concerning payment that are answered in Art. 58; e.g., is the seller obliged to hand over the goods before he is paid, how does a contract which calls for carriage of the goods affect the payment of the price against the handing over of the goods, and whether the seller may require the buyer to pay the purchase price before the latter has an opportunity to examine the goods.[2]

The counterpart provisions of the PECL dealing with similar matters are located in the Principles Chapter 7 "Performance", Articles 7:102 "Time of Performance", and 7:104 "Order of Performance".

II. Exchange of goods for price: the principle of simultaneous payment of the price and handing over of the goods (CISG Art. 58(1))

The general rule stated in CISG Art. 58(1), first sentence, is that, subject to a contrary arrangement agreed by the parties to the contract, the buyer is obliged to pay the price at the time the seller makes the goods available to the buyer, by placing either the goods or documents controlling their disposition at the buyer's disposal.[3]

Furthermore, it is stated in Art. 58(1), second sentence, that the seller "may make such payment a condition for handing over the goods." From this follows that if the buyer does not pay at that time, the seller may refuse to hand over the goods (or documents controlling their disposition[4]).

The converse of the general rule - i.e., that, unless otherwise agreed, the buyer is not obliged to pay the price until the seller places either the goods (or documents controlling their disposition) at the buyer's disposal - also follows as a logical corollary of the stated general rule.[5]

It must be noted, however, that, besides the effect of contrary contractual terms, international usages and practices established between the parties may also derogate from the principle of simultaneous performance in handing over the goods and paying the price.[6]

It must further be noted that the buyer is not obliged to pay the price until he has had an opportunity to examine the goods (see CISG Art. 58(3), discussed infra: IV. The buyer's right to examine the goods in advance).

The Convention's principle of simultaneous performance of the parties' obligations is also entrenched in the counterpart provisions of PECL Art. 7:102 [7] and Art. 7:104.[8]

Pursuant to PECL Art. 7:102,[9] a party (the buyer, in the context of CISG Art. 58) has to perform its obligations:

  1. if a time is fixed by or determinable from the contract, at that time
  2. if a period of time is fixed by or determinable from the contract, at any time within that period, unless the circumstances of the case indicate that the other party (the seller in the Convention) is to choose the time
  3. if no time of performance is agreed, within a reasonable time after the conclusion of the contract

First, the rule in PECL Art. 7:201(1) follows from the parties' freedom of contract. Thus, both under the Principles and the Convention (CISG Art. 6; Art. 33(a); Art 58(1), first sentence), the terms of the contract control the time of performance in the first instance and only when the contract is silent do the corresponding provisions of the counterpart instruments become applicable.

Secondly, the rule in PECL Art. 7:201(2) permits the possibility that, in an appropriate case, the creditor (the seller, in the context of CISG Art. 58) may choose the time for performance by the debtor (the buyer, in the context of CISG Art. 58).[10]

Pursuant to CISG Art. 58(1), second sentence, and Art. 58(2), the seller may refuse to hand over the goods or documents controlling their disposition to the buyer if the latter does not pay the price at that time.[11] In effect, the seller enjoys the right to retain the goods or documents controlling their disposition in these circumstances and, thus, the seller (the "other party" in the context of PECL Art. 7:201(2)) may require payment for the goods (i.e., performance by the debtor) upon dispatch of the goods (or documents controlling their disposition) to the carrier.

Last, the default rule in PECL Art. 7:201(3), when no time of performance has been agreed between the parties, is based on the application of the concept of reasonableness, which is also one of the general principles upon which the Convention is based.[12]

III. Contracts involving carriage of goods (CISG Art. 58(2))

The general rule stated in CISG Art. 58(1), which is based on the principle of simultaneous payment of the price and handing over of the goods, is also applicable to contracts involving carriage of goods -- such an arrangement is common in international sales.

Where a contract involves carriage of goods, CISG Art. 58(2) provides that a seller may dispatch the goods on terms whereby the goods will not be handed over to the buyer except against payment of the price. In effect, the seller may deliver the goods to the carrier in exchange for documents controlling the disposition of the goods[13] -- "usually a bill of lading providing that the goods will only be delivered in exchange for the surrender of the document".[14] It follows that, in the absence of contractual terms to that effect, the seller cannot act on the above assumption; accordingly, in the absence of particular terms, the buyer is not obliged make payment until the moment when the goods or documents controlling their disposition are handed over to him by the carrier.

Because of the importance of the particular questions, the contract will usually contain specific provisions on the mode[15] and place of payment. In the absence of an express provision in the contract between the parties, the relevant questions must be answered via an interpretation of the Convention's provisions.

Exchanging the goods for the price brings into operation also CISG Art. 57(1), which provides a rule regarding the place at which payment of the price is to be made.[16]

CISG Art. 57(1)(a) states the general rule that if the buyer is not obliged to pay the price at any other particular place (i.e., in the absence of specific contractual provisions on the mode and place of payment) he must pay the price at the seller's place of business.

Regarding cases in which payment is to be made against the handing over of the goods or of documents, CISG Art. 57(1)(b) provides that payment must be made at the place where the handing over takes place.[17]

IV. The buyer's right to examine the goods in advance (CISG Art. 58(3))

CISG Art. 58(3) provides that as a general rule the buyer is not obliged to pay the price unless he has had an opportunity to examine the goods.[18]

In implementing this rule, it is commented that it is the seller's obligation "to provide a means for the buyer's examination prior to payment and handing over".[19]

The buyer, however, loses the right to examine the goods prior to payment where the procedures for delivery or payment agreed upon by the parties are inconsistent[20] with the buyer having had such an opportunity.[21] It must be stressed, however, that, even in such cases, the buyer does not lose his right to examine the goods prior to payment where the contract provides that he must pay the price against the handing over of the documents after the arrival of the goods.[22] In other words, prior examination of the goods by the buyer may be excluded by a contractual stipulation to that effect or by modalities of delivery or payment which are incompatible with such examination (e.g., clauses involving payment against handing over of documents or payment against handing over of the delivery slip).[23]

V. Conclusion

The Convention's provisions regarding the time when the buyer must pay for the goods are based upon the principle of simultaneous performance of the parties' obligations. The same principle is also entrenched in the counterpart provisions of the PECL.

The primary rule in both sets of counterpart provisions follows from the parties' freedom of contract. Thus, both under the Principles and the Convention the terms of the contract concluded between the parties control the time of performance in the first instance and only when the contract is silent do the corresponding provisions of the counterpart instruments become applicable.

The default rule in the Principles, when no time of performance has been agreed between the parties, is based on the application of the concept of reasonableness, which is also one of the general principles upon which the Convention is based.


FOOTNOTES

* Doctorate in Law; Fellow, Pace Law School Institute of International Commercial Law; Lecturer, Faculty of Law, University of Technology, Sydney.

1. CISG Art. 33 and PECL Art. 7:102 set out rules for ascertaining the time for delivery by the seller, and require the seller to deliver on time. CISG Art. 52(1) CISG and PECL Art. 7:103 provide rules regarding early delivery by the seller.

For a comparative analysis of the two instruments, see Ying C., "Comparison between provisions of the CISG (Articles 33 and 52(1)) and the counterpart provisions of the PECL (Articles 7:102 and 7:103)", available online at <http://cisgw3.law.pace.edu/cisg/biblio/ying.html>. Ying concludes in his analysis that"

"(a) the counterpart provisions of the first match-up (time for delivery) are virtually identical in all material respects and both should have the same legal effect; and
"(b) regarding early delivery by the seller, (i) the Convention appears not to qualify the buyer's right to accept or reject the seller's early delivery, while the PECL does so, and (ii) The Convention is silent on the effect of early delivery by the seller on the time for payment by the buyer, while the PECL provides that a party's acceptance of early performance does not affect the time for the performance of its own obligations."

2. See Honnold J.O., Uniform Law for International Sales, Kluwer Law International, 3rd ed. (1999), at 363:

"Procedures for payment are of concern to the parties and usually are dealt with in the contract; Article 58 provides answers only when the contract is silent (Art. 6). [...] Article 58 is designed to minimize risks for both parties -- risk to the seller from the delivery before payment and risk to the buyer from payment for defective goods."

3. See the Text of the Secretariat Commentary on Art. 54 of the 1978 Draft [draft counterpart of CISG Art. 58], available online at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-58.html>.

Comment 2. "[Article 58(1)] recognizes that, in the absence of an agreement, the seller is not required to extend credit to the buyer."

CISG Art. 58 is substantially the same as Art. 54 of the Draft Convention; therefore, the Secretariat Commentary on 1978 Draft Art. 54 should be relevant to the interpretation of CISG Art. 58. See corresponding match-up, available at <http://cisgw3.law.pace.edu/cisg/text/matchup/matchup-d-58.html>.

For case law confirming that pursuant to CISG Art. 58(1), in the absence of specific provisions within the contract establishing the time for the buyer's payment of the price, payment is due upon delivery, i.e., that payment was to be effected when the seller placed the goods at the buyer's disposal, see

   -     Switzerland 20 December 1994 Tribunal Cantonal [Appellate Court] Valais (Marmipedretti Graniti S.r.l. v. Nichini S.A. Pierres naturelles et artificielles), CLOUT abstract no. 197, case presentation including English translation available at <http://cisgw3.law.pace.edu/cases/941220s1.html>;
   -     Switzerland 30 June 1995 St. Gallen Gerichtskommission Oberrheintal, CLOUT abstract no. 262, case presentation available at <http://cisgw3.law.pace.edu/cases/950630s1.html>.

4. The expression "documents controlling [the] disposition [of the goods]" was not clarified at the Vienna Diplomatic Conference. There is still uncertainty among commentators regarding the precise meaning of the expression as well as the type of documents that satisfy that meaning for the purposes of CISG Art. 58. See Sevón L., "Obligations of the Buyer under the Vienna Convention on the International Sale of Goods", 106 Juridisk Tidskrift (Suomen Lainopillinen Yhdistys) 335 (1990), available online at <http://cisgw3.law.pace.edu/cisg/biblio/sevon.html>:

"The expression 'documents controlling their disposition' clearly covers the situation where the goods are to be delivered only against surrender of the documents. This would be the case with a bill of lading where the carrier may only deliver the goods to the person presenting the bill of lading. The expression would also seem to cover a warehouse receipt entitling the holder to claim the goods. It is uncertain whether the expression covers international way bills issued under the CMR and CIM Conventions governing carriage by road and rail respectively. Under these documents the carrier is required to deliver the goods to the consignee named in the document. The sender may appoint another consignee. However, he may do so only if he can produce the relevant copy of the way bill. Having acquired the way bill, the consignee/buyer is thus protected against dispositions by the sender/seller. As the handing over of the relevant copy of the way bill has the effect that the consignor can no longer alter the consignee to whom the goods are to be handed over, the holder of that copy controls the disposition of the goods in a manner which would seem sufficient for the purposes of Article 58(1)."

See also Schlechtriem P.,Uniform Sales Law -- The UN-Convention on Contracts for the International Sale of Goods, Manz, Vienna (1986), at 82, fn 327; also available online at <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem-art58.html>:

"The expression concerns chiefly negotiable documents of title and is therefore unsuitable for its function in Article 58. [...] It is not just a matter of delivery of the goods (and the documents controlling them), but rather of performance of the seller's principal obligations. Insurance policies, certificates of origin, etc. relate to the goods and, when in doubt, their delivery must be part of the seller's performance even when they are not always necessary for the further disposition of the goods. The fact that Article 58 is designed to regulate the time of payment and to give the seller the right to withhold the goods until they are paid for justifies the view that 'controlling' documents should be interpreted in the sense of Articles 30 and 34. Therefore, even if an insurance policy, for example, is not required for the disposition of the goods, nevertheless, the seller has not placed the goods at the buyer's disposal, according to Article 58(1) sentence 1, until he tenders the policy together with the goods. Moreover, under Article 58(2), the seller has the right to withhold the insurance policy until the buyer pays. For the application of Article 58(1) and (2) to the insurance policy, one need only imagine the case in which the purchased goods are destroyed after the contract has been concluded and the risk of loss has passed to the buyer. For unimportant documents that nevertheless relate to the goods, Article 58(1) and (2), interpreted in the light of Article 7(1), would permit Article 71(1) -- concerning the suspension of performance where one party has failed to perform 'a substantial part of his obligations' -- to be used as a yardstick: If unimportant documents are missing or withheld, the buyer must pay, but he can sue for damages or specific performance."

See also relevant case law on what constitute "documents controlling the disposition of the goods" within the meaning of CISG Art. 58(1):

   -     Switzerland 12 August 1997 Kantonsgericht [District Court] St. Gallen, CLOUT abstract no. 216, case presentation also available at <http://cisgw3.law.pace.edu/cases/970812s1.html>. In short, the court found that the handing over of documents controlling the disposition of the goods to the buyer caused the price to become due, as provided in CISG Art. 58(1). Note, however, that customs documents necessary to clear the importation of the goods into the buyer's country were held not to constitute "documents controlling the disposition of the goods". Furthermore, the court held that the procurement of customs documents is incumbent upon the seller, only if so provided in the contract between the parties;
   -     Germany 3 April 1996 Bundesgerichtshof [Federal Supreme Court], CLOUT abstract no. 171, case presentation including English translation available at <http://cisgw3.law.pace.edu/cases/960403g1.html>. In short, the court held that certificates of origin and quality do not constitute "documents controlling the disposition of the goods". Furthermore, the delivery of wrong certificates of origin and of quality did not amount to a fundamental breach of contract since the buyer could obtain correct documents from other sources. Accordingly, the court held that the buyer could not justifiably refuse payment under CISG Art. 58.

5. See Text of Secretariat Commentary, op. cit., Comment 3. See also Honnold, op. cit., at 364: "In short, goods are to be exchanged for the price."

6. See Switzerland 18 January 1996 Bundesgericht [Federal Supreme Court], CLOUT abstract no. 194, case presentation available at <http://cisgw3.law.pace.edu/cases/960118s1.html>. In short, the court held that in the absence of a contrary agreement between the parties, payment of the price was to be made at the seller's place of business (CISG Art. 57(1)(a)), and not at the place of delivery of the goods (CISG Art. 57(1)(b)). The latter rule applies only when payment is to be made against the handing over of the goods or documents. The court held that this happens only when the respective obligations of the buyer and the seller have to be simultaneously fulfilled (CISG Art. 58(1)) and not when, as in the case at hand, the buyer is entitled to pay part of the price after performance by the seller (delivery and installation). The court, thus, held that the parties had derogated from the principle of simultaneous performance.

7. See Lando O. & Beale H., eds., Principles of European Contract Law: Parts I and II, Kluwer Law International (2000) 332, Comments on PECL Art. 7:102. Comment B, also available online at <http://cisgw3.law.pace.edu/cisg/text/peclcomp58.html#7:102>: "B. Concurrent performance of the parties' obligations: It is the general rule that the two performances have to be rendered simultaneously, so that each party can withhold its performance until the other performs."

8. PECL Art. 7:104 [Order of Performance] reads:

"To the extent that the performances of the parties can be rendered simultaneously, the parties are bound to render them simultaneously unless the circumstances indicate otherwise."

See Lando & Beale, op. cit., at 335-336:

"Article 7:104 provides that in general performances should be rendered simultaneously. This is because, if one party is to perform first, it will necessarily have to extend credit (in one form or another) to the other party, thereby incurring a risk that the other will default when the time for its performance comes. This additional risk is avoided if the performances are made simultaneously. Thus it is the general rule in sales contracts that, unless otherwise agreed, delivery and payment are to be simultaneous."

9. PECL Art. 7:102 mirrors, in terms of structure as well as substance, another provision of the Convention (Art. 33), which deals with the time for performance of the seller's obligation to deliver the goods.

See Ying, op. cit.:

"Article 7:102 PECL is virtually identical to Article 33 CISG in all material respects, if one treats the CISG seller as the PECL party required to perform, and the CISG buyer as the PECL 'other party'. The same three situations in the CISG are dealt with in the PECL using the same terminology."

10. See Lando & Beale, op. cit., at 333:

"If the contract or the circumstances do not indicate that the receiving party is to choose the time of performance, it is for the party which has to make the performance to choose the time. [...] It may follow from the circumstances of the case that the period of the time fixed for the performance begins as soon as the contract is made and as soon as the creditor -- or in an appropriate case the debtor -- requires performance."

11. See Schlechtriem, op. cit., at 82:

"In principle, the seller may demand immediate payment upon delivery. Thus, as long as the contract does not obligate the seller to perform first, the seller can make payment a condition precedent to a transfer of the goods or documents controlling their disposition (Article 58(1) sentence 2 and 58(2))."

12. See Lando & Beale, op. cit., at 333:

"What is reasonable time is a question of fact depending upon the nature of the goods or services to be performed and the circumstances, see Article 1:302."

PECL Art. 1:302 provides the definition of "reasonableness" in the Principles:

"Under these Principles reasonableness is to be judged by what persons acting in good faith and in the same situation as the parties would consider to be reasonable. In particular, in assessing what is reasonable the nature and purpose of the contract, the circumstances of the case and the usages and practices of the trades or professions involved should be taken into account."

"Reasonableness" is also regarded as a general principle of the CISG. See Kritzer A.H., Overview Comments on Reasonableness, available online at <http://cisgw3.law.pace.edu/cisg/text/reason.html>.

13. See the Text of Secretariat Commentary, op. cit., Comment 4:

"[CISG Art. 58(2)] states a specific rule in implementation of [CISG Art. 58(1)]. [...] The goods may be so dispatched unless there is a clause in the contract providing otherwise, in particular by providing for credit."

See also Sevón, op. cit, at 336:

"Article 58(2) deals with the situation where the contract involves carriage of the goods. This expression covers cases where the seller is required or authorized to ship the goods. The contract does not involve carriage if the buyer takes delivery at the seller's place of business and is to make arrangements for the goods to be shipped. Where the contract involves carriage, the seller must dispatch the goods but he may do so on terms according to which the goods or documents controlling their disposition will not be handed over to the buyer except against payment of the price. The impact of the provision with reference to the time of payment seems to be that the seller may not, unless agreed upon in the contract, make dispatch dependant on previous receipt of payment. On the other hand, the provision states that an arrangement whereby the seller dispatches the goods but does so on terms enabling him to retain control over them until payment is made, does not amount to a breach of contract."

14. Honnold, op. cit., at 364, with further references therein to

   -     Incoterms (1990), in which C.I.F., C.P.T. & C.I.P. terms call for the seller to provide the "usual transport document" that may be a "negotiable bill of lading"; and
   -     (U.S.A.) U.C.C. 2-310(b), which provides that seller may ship the goods "under reservation".

15. In the Information Age, electronic processes are speeding the transmission of funds and documents; e.g., payment might be made by letter of credit issued and dispatched electronically. The Convention does not refer to the use of letters of credit.

16. The interplay between CISG Art. 57 and Art. 58 has practical consequences for documentary exchanges. Sevón has commented on that interplay:

"In conjunction with Article 58, Article 57 states that if there is a delay in the transfer of the amount to the place where payment is to be made, e.g. due to lack of the authorization of transfer by the appropriate authorities or to a mistake by the buyer's bank, having the effect that the amount is not available at the place of payment in time, there is a breach of contract on part of the buyer."

See also Honnold, op. cit., at 364-367, where the author informatively discusses the interplay between those two provisions of the Convention, before concluding at 367:

"In short, it is possible to satisfy the standards of Article 58 for a mutually safe exchange of the goods and the price in a manner that is consistent with the rule of Article 57(1)(a) on the place of payment."

For an illustration of step-by-step performance implementing the principle of concurrent exchange of the goods for the price, in the setting of a typical international contract of sale involving payment by letter of credit, see Honnold, op. cit., at 368-369.

17. See the Text of the Secretariat Commentary on Art. 53 of the 1978 Draft [draft counterpart of CISG Art. 57], available online at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-57.html>.

The Commentary states that the rule in CISG Art. 57(1)(b)

"will be applied most often in the case of a contract stipulation for payment against documents. The documents may be handed over directly to the buyer, but they are often handed over to a bank which represents the buyer in the transaction. The 'handing over' may take place in either the buyer's or the seller's country or even in a third country."

CISG Art. 57 is virtually identical to Art. 53 of the Draft Convention; therefore, the Secretariat Commentary on 1978 Draft Art. 53 should be relevant to the interpretation of CISG Art. 57. See corresponding match-up, available at <http://cisgw3.law.pace.edu/cisg/text/matchup/matchup-d-57.html>.

18. See Enderlein F. & Maskow D., International Sales Law, Oceana (1992), p. 226; also available online at <http://cisgw3.law.pace.edu/cisg/biblio/enderlein-art58.html>:

"This right to examine the goods in substance is not identical to the obligation of examination under Article 38. Even when the buyer pays the price after having examined the goods for the first time, he does not lose the possibility to examine the goods more carefully under Article 38 and to possibly claim a lack of conformity."

19. Text of Secretariat Commentary, op. cit., Comment 5. See also Comment 6 of the Secretariat Commentary:

"Where the contract of sale involves carriage of the goods and the seller wishes to exercise his right under [CISG Art. 58(2)] to ship the goods on terms whereby neither the goods nor the documents will be handed over to the buyer prior to payment, the seller must preserve the buyer's right to examine the goods. Since the buyer normally examines the goods at the place of destination [CISG Art. 38(2)] the seller may be required to make special arrangements with the carrier to allow the buyer access to the goods at the destination prior to the time the goods or documents are handed over in order to allow for the buyer's examination."

20. See the Text of Secretariat Commentary, op. cit., Comment 7, which explains:

"[The] Convention does not set forth which procedures for delivery or payment are inconsistent with the buyer's right to examine the goods prior to payment. However, the most common example is the agreement that payment of the price is due against the handing over of the documents controlling the disposition of the goods whether or not the goods have arrived. The quotation of the price on CIF terms contains such an agreement."

See also Sevón, op. cit., at 336, where the author explains:

"Normally, goods which have arrived at their destination cannot be sold there to another buyer at a price corresponding to the contract price. Some buyers may use this fact as a means to force the seller to accept a reduction of the price by refraining from taking delivery of the goods on the alleged ground of non-conformity. The seller may protect himself against such claims by a provision in the contract specifying a procedure for delivery according to which the buyer may not inspect the goods until payment has been made."

21. See Enderlein & Maskow, op. cit., at 227:

"Where the terms of payment already preclude the possibility for examination, it is irrelevant to search the terms of delivery for such an opportunity. Hence, this is only of importance when the terms of payment offer such an opportunity."

22. See the Text of Secretariat Commentary, op. cit., Comment 8:

"Since payment is to take place after the arrival of the goods, the procedure for payment and delivery are consistent with the right of examination prior to payment. Similarly, the buyer does not lose his right to examine the goods prior to payment where the seller exercises his right under [CISG Art. 58(2)] to dispatch the goods on terms whereby the documents controlling the disposition of the goods will be handed over to the buyer only upon the payment of the price" [emphasis added].

See also Honnold, op. cit., at 368:

"Article 38 establishes a duty to inspect: '(1) The buyer must examine the goods ... within as short a period as is practicable ...' -- a preface to Article 39 whereby a buyer may lose the right to rely on lack of conformity of the goods by failure to notify the seller within 'a reasonable time'. In sharp contract, Article 58(3) gives the buyer a privilege to inspect before payment -- a privilege that the buyer may forego without violating any obligation to the seller."

23. See the UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods, para 8, available online at <http://cisgw3.law.pace.edu/cisg/text/anno-art-58.html#art583>.


Pace Law School Institute of International Commercial Law - Last updated September 1, 2009
Go to Database Directory || Go to Information on other available case data
Comments/Contributions