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Article 82. Buyer's Inability to Return Goods in Same Condition

TEXT OF ARTICLE 82

(1) The buyer loses the right to declare the contract avoided or to require the seller to deliver substitute goods if it is impossible for him to make restitution of the goods substantially in the condition in which he received them.

(2) The preceding paragraph does not apply:

(a) if the impossibility of making restitution of the goods or of making restitution of the goods substantially in the condition in which the buyer received them is not due to his act or omission;

(b) if the goods or part of the goods have perished or deteriorated as a result of the examination provided for in article 38; or

(c) if the goods or part of the goods have been sold in the normal course of business or have been consumed or transformed by the buyer in the course of normal use before he discovered or ought to have discovered the lack of conformity.


OUTLINE OF ISSUES

Reproduced with permission of UNCITRAL

82A Buyer would have right to avoid contract except:

82A1 Inability to return goods in same condition (art. 82(1))

82B Loses right to avoid unless:

82B1 Inability not due to buyer's act or omission (art. 82(2)(a)) or:

82B2 Goods modified as result of examination (art. 82(2)(b)) or:

82B3 Goods sold or transformed by buyer in normal use (art. 82(2)(c)):

82B31 Before discovery of lack of conformity

82C Compare restitution of benefits (art. 84(2))

82D Other problems


DESCRIPTORS

Avoidance ; Restitution


CASE ANNOTATIONS: UNCITRAL DIGEST CASES PLUS ADDED CASES

UNCITRAL has identified relevant cases in Digests containing case annotations for each article of the CISG. UNCITRAL cites nine cases in its Digest of Art. 82 case law: one each from Austria and the Netherlands, and seven from Germany.

Presented below is a composite list of Art. 82 cases reporting UNCITRAL Digest cases and other Art. 82 cases. All cases are listed in chronological sequence, commencing with the most recent. Asterisks identify the UNCITRAL Digest cases, commencing with the 29 June 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.

For a case annotated analysis of issues associated with Consequences of Avoidance of the Contract, go to CISG-Advisory Council Opinion No. 9, dated 15 November 2008. Rapporteur: Professor Michael G. Bridge. Opinion unanimously adopted by the CISG-AC: Eric E. Bergsten (Chair); Michael Joachim Bonell, Michael G. Bridge, Alejandro M. Garro, Roy M. Goode, John Y. Gotanda, Sergei N. Lebedev, Pilar Perales Viscasillas, Jan Ramberg, Ingeborg Schwenzer, Hiroo Sono, Claude Witz (Members); Sieg Eiselen (Secretary)

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.
 

Switzerland 18 May 2009 Bundesgerichtshof [Federal Supreme Court] (Packaging machine case)

Austria 2 April 2009 Oberster Gerichtshof [Supreme Court] (Boiler case)
 

Switzerland 26 September 2008 Appellationsgericht [Appellate Court] Basel-Stadt (Packaging machine case)

Germany 14 February 2008 Oberlandesgericht [Appellate Court] Karlsruhe (Antique Jaguar sport car case) 82B3 [translation available]
 

Slovak Republic 25 October 2007 Regional Court [District Court] Zilina (Elastic fitness clothing case) 82A [translation available]

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

Austria 4 July 2007 Oberster Gerichtshof [Supreme Court] (Auto case) [translation available]

Slovak Republic 27 June 2007 Supreme Court Zilina (Elastic fitness clothing case) [translation available]
 

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

Austria 23 January 2006 Oberlandesgericht [Appellate Court] Linz (Auto case) 82A1 [translation available]
 

Russia 18 October 2005 Arbitration Award 21/2005 (Varnish and paint machine case) 82B [translation available]

Austria 23 May 2005 Oberster Gerichtshof [Supreme Court] [translation available]

Switzerland 21 February 2005 Kantonsgericht [Appellate Court] Valais / Wallis (CNC machine case) [translation available]
 

China 31 December 2003 CIETAC Arbitration Award [CISG/2003/03] (Clothes case) 82B [translation available]

Switzerland 24 October 2003 Handelsgericht [Commercial Court] Zürich [translation available]

Netherlands 23 April 2003 Gerechtshof [Appellate Court] 's-Gravenhage 82A [translation available]

Netherlands 29 January 2003 Rechtbank [District Court] Zwolle
 

Germany 19 December 2002 Oberlandesgericht [Appellate Court] Karlsruhe 82B1 [translation available]

China 11 November 2002 CIETAC Arbitration Award [CISG 2002/26] (Platform case) 82A [translation available]

Germany 22 August 2002 [District Court] Freiburg 82B1 [translation available]

China 12 July 2002 CIETAC Arbitration Award [CISG 2002/18] (Printing equipment case) 82A [translation available]

United States 28 March 2002 U.S. District Court [Illinois] (Usinor Industeel v. Leeco Steel Products) 82C3

ICC 2002 International Court of Arbitration, Case 10377 (Textile product machines case) 82A1 [English text]
 

Germany 12 March 2001 Oberlandesgericht [Appellate Court] Stuttgart 82A1 ; 82B [translation available]
 

* Austria 29 June 1999 Oberster Gerichtshof [Supreme Court] 82B [translation available]

ICC March 1999 International Court of Arbitration, Case 9978 [English text]
 

Russia 17 November 1998 Arbitration award 164/1996 82A1 [translation available]

Russia 22 October 1998 Arbitration award 196/1997 [translation available]

China 25 September 1998 CIETAC Arbitration Award [CISG 1998/12] (Health supplement case) 82A1 [translation available]
 

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

* Germany 25 June 1997 Bundesgerichtshof [Federal Supreme Court] 82B2 [translation available]
 

* Netherlands 21 November 1996 Arrondissementsrechtbank [District Court] Rotterdam 82A1
 

Germany 19 December 1995 Landgericht [District Court] Krefeld

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

* Germany 21 August 1995 Landgericht [District Court] Ellwangen 82B31 [translation available]
 

* Germany 4 May 1994 Amtsgericht [Lower Court] Charlottenburg 82A [translation available]

* Germany 10 February 1994 Oberlandesgericht [Appellate Court] Düsseldorf [6 U 119/93] 82A1 [translation available]
 

China Post-1992 CIETAC Arbitration Award [CISG/1993/14] (White cardboard scrap paper case) 82B [translation available]
 

* Germany 27 September 1991 Oberlandesgericht [Appellate Court] Koblenz 82A [translation available]

* Germany 17 September 1991 Oberlandesgericht [Appellate Court] Frankfurt 82A [translation available]


UNCITRAL CASE DIGEST

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

A/CN.9/SER.C/DIGEST/CISG/82 [8 June 2004]
Reproduced with the permission of UNCITRAL

[Text of Article 82
Digest of Article 82 case law
-    Overview
-    Article 82 in general
-    Article 82(1)
-    Article 82(2)(a)
-    Article 82(2)(b)
-    Article 82(2)(c)]
ARTICLE 82

(1) The buyer loses the right to declare the contract avoided or to require the seller to deliver substitute goods if it is impossible for him to make restitution of the goods substantially in the condition in which he received them.

(2) The preceding paragraph does not apply:

     (a) if the impossibility of making restitution of the goods or of making restitution of the goods substantially in the condition in which the buyer received them is not due to his act or omission;

     (b) if the goods or part of the goods have perished or deteriorated as a result of the examination provided for in article 38; or

     (c) if the goods or part of the goods have been sold in the normal course of business or have been consumed or transformed by the buyer in the course of normal use before he discovered or ought to have discovered the lack of conformity.

DIGESTOFARTICLE 82 CASE LAW

Overview

1. Whereas article 81(2) gives the parties to an avoided contract a claim for restitution of whatever such party has supplied or paid under the contract, article 82 deals with the effect of an aggrieved buyer's inability to make restitution of goods substantially in the condition in which they were delivered. Specifically, article 82(1) conditions an aggrieved buyer's right to declare the contract avoided, as well as its right to require that the seller deliver substitute goods, on the buyer having the ability to return whatever goods have already been delivered under the contract substantially in the condition in which the buyer received them.[1] Article 82(2), however, creates three very broad exceptions to the rule of article 82(1): a buyer is not precluded from avoiding the contract or demanding substitute goods if its inability to return the goods to the seller substantially in their original condition was not the result of the buyer's own act or omission (art. 82(2)(a)), if it occurred as a consequence of the examination of the goods provided for in article 38 (art. 82(2)(b)), or if it arose from buyer's resale, consumption or transformation of the goods in the normal course and "before [the buyer] discovered or ought to have discovered the lack of conformity" (art. 82(2)(c)).

Article 82 in general

2. The provisions in Chapter V Section V of the CISG, which include article 82, have been cited in support of the proposition that avoidance of contract is "a constitutive right of the buyer, which changes the contractual relationship into a restitutional relationship."[2] Article 82 has also been characterized as part of the Convention's "risk distribution mechanism" for avoided contracts, under which "the seller alone bears the risk of chance accidents and force majeure".[3] In line with this view, this decision found that a buyer is not liable for loss or damage to the goods that occurred while they were being transported back to the seller following the buyer's justified avoidance of the contract.[4] The court reasoned that this "one-sided or predominant burdening of the seller with the risks of restitution" of the goods is explained by the fact that the seller caused these risks by breaching the contract.[5]

Article 82(1)

3. Article 82(1) imposes a requirement that, in order to preserve its right to avoid the contract or require the seller to deliver substitute goods, an aggrieved buyer must retain the ability to make restitution of goods that the buyer received under the contract "substantially in the condition in which [the buyer] received them". Several decisions have denied a buyer the right to avoid the contract because it could not meet this requirement. Thus where a buyer attempted to avoid a contract for the sale of flower plants because the delivered plants allegedly were defective in appearance and color, a court noted that the buyer had lost the right to avoid under article 82(1) because it had discarded some plants and resold others.[6] A buyer of textiles, some of which did not conform to a pattern specified in the contract, was also found to have lost the right to avoid because it resold the goods.[7] And another buyer lost its right to avoid the contract because, after it discovered that marble slabs delivered by the seller were stuck together and broken, it cut and processed the slabs, thus making it impossible to return them substantially in the condition in which they were received.[8]

4. On the other hand, a decision has noted that article 82 does not prevent a buyer from avoiding the contract where no claim was made that buyer could not return the goods substantially in the condition in which they were received[9] -- suggesting that the party resisting avoidance bears the burden of going forward with evidence that article 82 precludes the remedy. The same decision also indicates that article 82 only encompasses loss of or deterioration in the goods that occurs before the declaration of avoidance is made.[10] It has also been found that a buyer did not lose the right to avoid under article 82 merely by announcing, prior to trial, that it was attempting to resell the goods (an attempt that the court characterized as an effort to mitigate damages): the court indicated that article 82 would prevent the buyer from avoiding only if it had actually resold the goods before it declared the contract avoided.[11] Several other decisions have refused to deny a buyer the right to avoid, even though the buyer could not make restitution of the goods substantially in the condition in which they were received, because the requirements of one or more of the exceptions in article 82(2) were satisfied.[12]

Article 82(2)(a)

5. Even if a buyer is unable to give restitution of previously-delivered goods substantially in the condition in which they were received, article 82(2)(a) provides that the buyer retains the right to avoid the contract or to require the seller to deliver substitute goods if the buyer's inability to make restitution is not due its own act or omission. This provision was cited by a court in holding that a buyer was not liable for damage to goods that occurred while they were being transported back to the seller following the buyer's justified avoidance of contract: the seller itself conceded that the damage occurred while the goods were in the hands of the carrier, and thus could not have been caused by the buyer's act or omission.[13] On the other hand, article 82(2)(a) did not protect the avoidance rights of a buyer who cut and processed non-conforming marble slabs before avoiding the contract, because the buyer's inability to make restitution of the goods substantially in the condition in which they were received was indeed due to its own acts.[14]

Article 82(2)(b)

6. Article 82(2)(b) preserves an aggrieved buyer's right to avoid the contract or to demand substitute goods where the buyer's inability to make restitution of the goods substantially in the condition in which they were received arose as a result of the examination of the goods provided for in article 38. This provision has been invoked to preserve the avoidance rights of a buyer that processed wire before discovering that it did not conform to the contract: the court found that defects in the wire could not be detected until it was processed.[15] The court also determined that the rule of article 82(2)(b), which by its terms applies if the goods "have perished or deteriorated" because of the article 38 examination, applied even though the processing of the wire actually enhanced its value.[16] On the other hand, a court has held that the substantial change in condition of marble slabs that occurred when the buyer cut and processed them did not result from the article 38 examination, and thus the buyer's avoidance rights were not preserved under article 82(2)(b).[17]

Article 82(2)(c)

7. Under article 82(2)(c), a buyer retains its right to avoid the contract or to demand that the seller deliver substitute goods even though it is unable to make restitution of the goods substantially in their delivered condition, provided that the goods were "sold in the normal course of business or have been consumed or transformed by the buyer in the course of normal use before he discovered or ought to have discovered the lack of conformity". Under this provision, a buyer who resold paprika in its ordinary course of business before discovering that the goods contained ethylene oxide in amounts that exceeded domestic legal limits retained its right to avoid the contract under which it purchased the paprika.[18] On the other hand, the requirements for this exception were not satisfied when a buyer resold textiles that were, in part, of a different pattern than that called for in the contract, and the buyer lost its right to avoid because it could not make restitution of the goods as required by article 82(1).[19] And a buyer that cut and processed marble slabs after discovering that they were non-conforming did not meet the requirements of article 82(2)(c) and did not have the right to avoid the contract.[20] It has also been suggested that a buyer's resale of the goods after declaring the contract avoided is beyond the scope of article 82.[21]


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. Thus, although it is located in the part of the CISG entitled "Effects of avoidance" (Chapter V Section V), article 82 is not limited to situations where a buyer seeks to avoid the contract or some part thereof under article 49, 51, 72 or 73: it also applies when a buyer does not avoid the contract and instead invokes the substitute goods remedy in article 46(2). Whereas article 81(2) clearly requires an avoiding buyer to make restitution of goods delivered under the avoided contract, article 46(2) does not expressly state that a buyer who wishes to require the seller to deliver substitute goods must return the original goods, except insofar as use of the term "substitute goods" suggests such an obligation. Article 82, however, indicates that a buyer seeking substitute goods must in fact give back the originals substantially in the condition in which it received them, unless one of the exceptions in article 82(2) applies.

2. [GERMANY Landgericht [District Court] Düsseldorf 11 October 1995, available online at <http://cisgw3.law.pace.edu/cases/951011g1.html>].

3. [AUSTRIA Oberster Gerichtshof [Supreme Court] 29 June 1999, available online at <http://cisgw3.law.pace.edu/cases/990629a3.html>].

4. Id.

5. Id.

6. [NETHERLANDS Rechtbank [District Court] Rotterdam 21 November 1996, available online at <http://cisgw3.law.pace.edu/cases/961121n1.html>]. Presumably the resale occurred after the buyer discovered or ought to have discovered the alleged lack of conformity.

7. CLOUT case No. 82 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 10 February 1994, available online at <http://cisgw3.law.pace.edu/cases/940210g2.html>]. Again, the resale presumably occurred after the buyer discovered or ought to have discovered the alleged lack of conformity.

8. CLOUT case No. 316 [GERMANY Oberlandesgericht [Appellate Court] Koblenz 27 September 1991, available online at <http://cisgw3.law.pace.edu/cases/910927g1.html>].

9. CLOUT case No. 2 [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 17 September 1991, available online at <http://cisgw3.law.pace.edu/cases/910917g1.html>] (see full text of the decision).

10. Id.

11. [GERMANY Amtsgericht [Lower Court] Charlottenburg 4 May 1994, available online at <http://cisgw3.law.pace.edu/cases/940504g1.html>]. The court also indicated that the buyer would lose the right to avoid only if the resale occurred before the buyer discovered the lack of conformity. Article 82(2)(c), however, preserves the buyer's right to avoid unless the resale (or other ordinary course consumption or transformation of the goods by the buyer) occurs after the buyer discovers or ought to have discovered the lack of conformity.

12. CLOUT case No. 235 [GERMANY Bundesgerichtshof [Supreme Court] 25 June 1997, available online at <http://cisgw3.law.pace.edu/cases/970625g2.html>] (article 82(2)(b) satisfied); [GERMANY Landgericht [District Court] Ellwangen 21 August 1995, available online at <http://cisgw3.law.pace.edu/cases/950821g2.html>] (article 82(2)(c) satisfied). For discussion of the exceptions in article 82(2), see infra paras. 5-7.

13. [AUSTRIA Oberster Gerichtshof [Supreme Court] 29 June 1999, available online at <http://cisgw3.law.pace.edu/cases/990629a3.html>].

14. CLOUT case No. 316 [GERMANY Oberlandesgericht [Appellate Court] Koblenz 27 September 1991, available online at <http://cisgw3.law.pace.edu/cases/910927g1.html>].

15. CLOUT case No. 235 [GERMANY Bundesgerichtshof [Supreme Court] 25 June 1997, available online at <http://cisgw3.law.pace.edu/cases/970625g2.html>].

16. Id. (see full text of the decision).

17. CLOUT case No. 316 [GERMANY Oberlandesgericht [Appellate Court] Koblenz 27 September 1991, available online at <http://cisgw3.law.pace.edu/cases/910927g1.html>].

18. GERMANY Landgericht [District Court] Ellwangen 21 August 1995, available online at <http://cisgw3.law.pace.edu/cases/950821g2.html>].

19. CLOUT case No. 82 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 10 February 1994, available online at <http://cisgw3.law.pace.edu/cases/940210g2.html>].

20. CLOUT case No. 316 [GERMANY Oberlandesgericht [Appellate Court] Koblenz 27 September 1991, available online at <http://cisgw3.law.pace.edu/cases/910927g1.html>].

21. [GERMANY Amtsgericht [Lower Court] Charlottenburg 4 May 1994, available online at <http://cisgw3.law.pace.edu/cases/940504g1.html>] (stating that they buyer would have lost the right to avoid the contract under article 82(1) only if it had resold by the time of its letter declaring the contract avoided. The court also indicated that the buyer would retain the right to avoid unless the resale occurred before the buyer discovered the lack of conformity. Article 82(2)(c), however, preserves the buyer's right to avoid unless the resale (or other ordinary course consumption or transformation of the goods by the buyer) occurs after the buyer discovers or ought to have discovered the lack of conformity.


ANNOTATED COMPARATIVES
-  PECL comparative

Commentary on CISG Article 82 and PECL Article 9:309

Francesco G. Mazzotta [*]
February 2003

  1. The operation of CISG Article 82
  2. The operation of PECL Article 9:309
  3. Differences between the two regimes
  4. Conclusions

1. The operation of CISG Article 82

Article 82 of the Convention belongs to Section IV of the Convention, entitled Effects of avoidance.[1] According to the provisions contained in CISG Article 82,[2] the buyer loses the right to avoid the contract or to demand substitute goods when it is impossible[3] for him to make restitution of the goods in a condition substantially [4] similar to that in which he received them.[5] However, the buyer retains the right to avoid the contract if: the damages to the goods are not due to the buyer's act or omission [Article 82(2)(a)]; the deterioration or consumption of the goods results from the examination as required by CISG Article 38 [see Article 82(2)(b)]; or the goods are sold in the normal course of business or consumed or transformed by him in the normal course of use before he discovered, or should have discovered, their lack of conformity [(Article 82(2)(c)].

The general rule of the Convention, i.e., that the contract may be avoided only if the goods can be returned substantially in the condition in which the buyer received them, is stated in Article 82(1).[6] However, Article 82(2), provides three considerable exceptions to that rule. Paragraph 2 in Article 82, therefore, deals with the allocation of the risk of loss of the goods before avoidance.[7]

In particular, according to Article 82(2)(a), the seller, whose breach determined the exercise of the buyer's right to avoid the contract, is responsible for any circumstances that lead to the loss of the goods, unless these circumstances are due to the buyer's act or omission.[8]

Under Article 82(2)(b), if the contract is avoided due to the seller's breach, the seller bears the risk and consequences of the examination made according the relevant provisions contained in CISG Article 38.[9]

Under Article 82(2)(c), the seller bears the risk of the resale, consumption or transformation of defective goods.[10] However, in this case, the seller bears the risk only until the time the buyer discovered or should have discovered the defect. In this case, the provisions of Article 84(2) also apply. There are no express rules as to the loss and impairment of the goods after the avoidance. However, it is understood that once the buyer is aware or should be aware of the lack of conformity he is also responsible for the goods that he received.[11]

While the construction of Article 82(2)(b)[12] and 82(2)(c)[13] is rather straightforward, some explanation is required as to Article 82(2)(a). It is generally understood that under Article 82(2)(a), the buyer is responsible for damages caused by acts or omissions by his personnel and by third persons, if he made it possible, by means of acts or omissions, for them to damage the goods.[14] In particular, as to damages provoked by third persons, it is deemed that "that the buyer must not merely have provided the opportunity for third persons or force majeure to affect the goods, but also have increased this chance by his act or omission".[15]

Finally, it must be noted that the buyer will retain other remedies even he loses his right to avoid the contract.[16]

2. The operation of PECL Article 9:309

PECL Article 9:309, entitled Recovery for Performance that Cannot be Returned, belongs to the Principles of European Contract Law, in Chapter 9, entitled "Particular Remedies for Non-Performance", under Section 3, entitled Termination of the Contract.[17]

According to PECL Article 9:309, recovery for performance that cannot be returned, is subject to the following requirements: (i) that there is a termination of the contract; (ii) that a party has rendered performance and has not received payment or counter-performance for it; and (iii) that performance cannot be returned by the other party.

If those requirements are met, the entitled party may recover a reasonable amount for the value of the performance rendered to the other party. In calculating this amount, the PECL Comment on Article 9:309 provides that, upon termination of a contract, the party that received the benefit, which cannot be returned and was not paid for, "should not be required to pay the cost to the other of having provided it, if the net to it is less, since it is only enriched by the latter amount,"[18] whereas, if the net benefit to the recipient is greater than the cost of providing it, the recipient "should not be liable under this article for more than an appropriate part of the contract price."[19]

3. Differences between the two regimes

The two sets of rules contained in the respective regimes of the Sales Convention and the Principles of European Contract Law are quite different. CISG Article 82 deals exclusively with whether avoidance is still possible even when goods cannot be returned. As a general rule in the Convention, avoidance of the contract is not possible, unless one of the exceptions listed in CISG Article 82(2) occurs. As already mentioned earlier, avoidance of a contract is available regardless of whether the party which rendered the goods received the performance or other counter-performance.

On the other hand, as a general rule the PECL "only give a restitutionary remedy after termination, where one party has conferred a benefit on the other party, but has not received the promised counter-performance in exchange. The benefit may consist of money paid (Article 9:307), other property which can be returned (Article 9:308) or some benefit which cannot be returned, e.g., services or property which has been used up (9:309)."[20] In particular, PECL Article 9:309 provides that, when restitution cannot be made, the party who delivered the goods may recover a reasonable amount for the value of the goods to the other party if it has not received payment for them or counter-performance. Therefore, PECL Article 9:309 addresses the issue of restitution, but only to set the rules on how to calculate the amount of recovery.

4. Conclusions

Pursuant to CISG, if the buyer cannot make restitution for what he received, the contract cannot be avoided unless one of the exceptions set by CISG Article 82(2) is met. The PECL do not require any restitution as a condition for avoidance. Therefore, while under the CISG restitution is an obligatory step toward the avoidance of a contract, under the PECL restitution is only a possible consequence of the avoidance of a contract. In fact, a restitution remedy arises only where there was a performance for which payment was not made. Thus, PECL Article 9:309 cannot be used as an aid to construe CISG Article 82 because the two sets of rules adopt different approaches to the issue of avoidance. However, although PECL Article 9:309 cannot be useful for that purpose, it is arguable that limiting the recovery where the party did not get what it bargained for may be a good way to reduce possible disputes between parties over issues related to restitution and/or the reasonable amount of the value of performance.[21]


FOOTNOTES

* The author is an Associate in the New York office of Zini & Associates and an Associate of the Institute of International Commercial Law of the Pace University School of Law.

1. In that Section of the CISG, the basic rule on contractual avoidance is contained in CISG Article 81, which provides that an avoidance of the contract allows parties to terminate their respective obligations arising out of the contract. Note, however, that is "subject to any damages that may be due" [Article 81(1)]. Section IV of the Convention also includes the provisions of Article 82 (which deals with issues and effects of impossibility of restitution by buyer), Article 83 (preserving "all other remedies under the contract and the [CISG]" for a buyer who lost the right to avoid the contract) and Article 84 (obligating the seller to pay interest on the refund of price and the buyer to account for any benefits derived from the goods).

2. In general, among others, for monographs and anthologies that should be considered in construing the meaning and operation of CISG Article 82, visit < http://www.cisg.law.pace.edu/cisg/text/mono82.html>.

3. It has been suggested that "[t]he possibility for the buyer of making restitution must be apprised objectively, according to the understanding of the reasonable person referred to in Article 8(2)" (footnote omitted), see Hans G. Leser, Annotations 1-29 on Article 82, in COMMENTARY ON THE UN CONVENTION ON THE INTERNATIONAL SALE OF GOODS 632, 645 (Peter Schlechtriem, ed.) (1998).

4. See Commentary on the Draft Convention on Contracts for the International Sale of Goods, prepared by the Secretariat, article 67 [draft counterpart of CISG article 82], Pace Law School Institute on International Commercial Law, Guide to CISG Article 82, at <http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-82.html> (visited October 27, 2001): "It is not necessary that the goods be in the identical condition in which they were received; they need be only in 'substantially' the same condition. Although the term is not defined, it indicates that the change in condition of the goods must be of sufficient importance that it would no longer be proper to require the seller to retake the goods as the equivalent of that which he had delivered to the buyer even though the seller had been in fundamental breach of the contract." See also Denis Tallon, COMMENTARY ON THE INTERNATIONAL SALES LAW 601, 608 (Massimo C. Bianca & Michael Joachim Bonell eds.) (1987); Hans G. Leser, supra note 3, at 646.

5. See M.C. Capponi, Comment on Article 81, in COMMENTARIO BREVE AL CODICE CIVILE 1443, 1531(Guido Alpa & Paolo Zatti eds., 1999), who states as follows: "L'adozione del principio per cui la possibilità di operare la restituzione della prestazione ricevuta costituisce presupposto necessario della risolubilità del contratto è sembrata ispirarsi alla Saldotheorie tedesca." (The adoption of the rule that requires restitution as a necessary requirement for avoidance of a contract seems to be drawn from the German Saldotheorie). See also Giardina, in Nuove Leggi Civili Commentate 322 (1989). For relevant jurisprudence see, e.g., LG Ellwangen, 21 August 1995, infra note 10; BGH, 25 June 1997, infra note.

6. See, e.g., Germany, 10 February 1994 Appellate Court Düsseldorf [6 U 119/93], CLOUT Case No. 82, also at <http://cisgw3.law.pace.edu/cases/940210g2.html >, where it was held that the buyer had lost the right to declare the contract avoided on the ground that he had sold further the goods bought, thus having made restitution of the goods impossible (article 82(1) CISG).

7. Hans G. Leser, supra note 3, at 644.

8. See, e.g., Germany, 27 September 1991 Appellate Court Koblenz, CLOUT Case No. 316, also available at <http://cisgw3.law.pace.edu/cases/910927g1.html>. In this case, the change in the condition of the goods (marble slabs) had been caused by the buyer's own act and had not been the result of the examination of the goods under article 38 CISG; rather it had arisen after the discovery of lack of conformity (the buyer had started to work on and with the marble plates after discovery of lack of conformity of the goods). Thus, the Court held that the buyer had lost its right to declare the contract avoided (article 49 CISG) pursuant to article 82(1) CISG. Furthermore, the buyer had not met the requirements of article 82(2) CISG in order to exclude the application of article 82(1).

For a mention of this case in the context of a an excellent discussion of the right of avoidance under the CISG, see Anna Kazimierska, "The Remedy of Avoidance under the Vienna Convention on the International Sale of Goods", Pace Review of the Convention on Contracts for the International Sale of Goods, Kluwer (1999-2000) 79-192, also at <http://www.cisg.law.pace.edu/cisg/biblio/kazimierska.html>.

9. See, e.g., Germany, 25 June 1997 Supreme Court, CLOUT Case No. 235, also available at <http://cisgw3.law.pace.edu/cases/970625g2.html>, where the impossibility of restoring the goods to their original condition did not disqualify the buyer from avoiding the contract under article 82(1) CISG. Both parties were aware that the goods had to be processed before any non-conformity could be discovered. Moreover, the buyer was entitled to declare the contract avoided if upon examination it was discovered that the goods had perished or deteriorated [(CISG article 82(2)(b)].

10. See, e.g., Germany, 21 August 1995 District Court Ellwangen, Case No. 1 KfH O 32/95, also available at <http://cisgw3.law.pace.edu/cases/950821g2.html>, where the Court discussed the operation of the rule in Article 82: "According to Art. 82(1) CISG, the buyer loses the right to declare the contract avoided if it is impossible for her to make restitution of the goods substantially in the condition in which she received them. This rule does not apply if the goods or part of the goods have perished or deteriorated as a result of the examination provided in Article 38 - or if the goods or part of the goods have been sold in the normal course of business or transformed by the buyer in the course of normal use before she discovered or ought to have discovered the lack of conformity (Art. 82(2)(b) and (c) CISG). These requirements are met in the present case. [] In the period between the delivery and the point in time when [buyer] obtained knowledge of the maintained non-conformity, the [buyer] packed the delivered goods in small amounts and delivered them to various warehouses (cf. [buyer's] notice to [seller's representative] in the letter of 16 January 1995). This conduct represents a normal course of business in the meaning of Art. 82(2) CISG."

11. H.G. Leser, supra note 3, at 647.

12. See, e.g., LG Ellwangen, 21 August 1995, supra note 10.

13. It has been noted that such an exception sounds surprising: in fact, the buyer retains the right to declare the contract avoided and claim for compensation even though the goods cannot be returned. In these cases the reason why buyer elects to avoid a contract rather than to recover damages should lie in the fact that, through Article 81, the buyer is enabled to obtain damages without proving them. See also Denis Tallon, supra note 4, at 609; John O. Honnold, UNIFORM LAW for INTERNATIONAL SALES UNDER THE 1980 INTERNATIONAL SALES LAW 502, 512 (3rd ed. 1999).

14. See Peter Schlechtriem, UNIFORM SALES LAW - THE UN CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS 106 (1986) also available at <http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem.html> .

15. Id. See also Denis Tallon, supra note 4; Hans G. Leser, supra note 3, at 648. It has been suggested that the standard to be used to establish whether an act or omission is wrongful should be based on the Convention rather than domestic tort law, see John O. Honnold, supra note 9, at 511.

16. See CISG Article 83, paragraph 2. See also Hans G. Leser, supra note 3, at 646.

17. The relevant provisions in the PECL that deal with the effects of termination are to be found in Articles 9:305 (effects of termination in general); 9:306 (property reduced in value); 9:307 (recovery of money paid); 9:308 (recovery of property) and 9:309 (recovery of performance that cannot be returned).

18. See Comment on PECL Article 9:309 available at Pace Law School Institute of International Commercial Law, Guide to CISG Article 82 <http://www.cisg.law.pace.edu/cisg/text/peclcomp82.html> (visited October 27, 2001).

19. Id.

20. See Comment PECL Article 9:307 available at Pace Law School Institute of International Commercial Law, Guide to CISG Article 81, at <http://www.cisg.law.pace.edu/cisg/text/peclcomp81.html> (visited October 27, 2001).

21. See PECL Article 9:309. For the definition of the term reasonableness recited in the Principles of European Contract Law and further references to the concept of reasonableness in Continental and Common Law domestic rules, doctrine and jurisprudence, go to PECL Article 1:302 and the Comment and Notes prepared for this provision, available at <http://www.cisg.law.pace.edu/cisg/text/reason.html#def>.

PECL Article 1:302, states: "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 one of the Convention's most recognised general principles; it is specifically mentioned in numerous provisions of the CISG and clearly alluded to elsewhere in the Uniform Sales Law. As a general principle of the Convention reasonableness is to be read into each Article of the CISG whether or not specifically mentioned in the CISG. For overview comments on reasonableness as a general principle of the CISG and further references and confirming citations (establishing an arguable correlation between the PECL's definition of reasonableness and the evident same meaning of this term in specific CISG provisions and as a general principle of the CISG), see Albert H. Kritzer, Editorial Remarks, available at <http://www.cisg.law.pace.edu/cisg/text/reason.html#over>.


Pace Law School Institute of International Commercial Law - Last updated September 2, 2009
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