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Article 85. Seller's Duty to Preserve Goods

TEXT OF ARTICLE 85

If the buyer is in delay in taking delivery of the goods or, where payment of the price and delivery of the goods are to be made concurrently, if he fails to pay the price, and the seller is either in possession of the goods or otherwise able to control their disposition, the seller must take such steps as are reasonable in the circumstances to preserve them. He is entitled to retain them until he has been reimbursed his reasonable expenses by the buyer.


OUTLINE OF ISSUES

Reproduced with permission of UNCITRAL

85A When buyer delays taking delivery or making concurrent price payment:

85B Seller in possession or controlling disposition of goods:

85B1 Must take reasonable steps to preserve goods

85B11 Reasonable steps: deposit in warehouse (art. 87)

85B2 Passage of risk to buyer irrelevant (see art. 69)

85C Right to retain goods until reimbursed for reasonable expenses

85D Other problems


DESCRIPTORS

Preservation of goods


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 reports seven cases in its Digest of Art. 85 case law: two each from Germany, the ICC and Russia, and one from Switzerland. The citations to these cases (each preceded by an asterisk) along with other Article 85 cases are listed below in chronological sequence, commencing with the most recent. 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 on the cases.
 

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

Italy 11 December 2008 Tribunale di Forli [District Court] (Mitias v. Solidea S.r.l.) [translation available]

United States 19 May 2008 U.S. District Court [California] (The Rice Corporation v. Grain Board of Iraq) 85B1
 

Germany 5 December 2006 Landgericht [District Court] Köln (Plastic faceplates for mobile telephones case) 85B1 [translation available]

China September 2006 CIETAC Arbitration Award [CISG 2006/08] (Air purifier case) [translation available]

Slovak Republic 26 May 2006 Supreme Court (Wafers case) [translation available]

Belgium 24 April 2006 Hof van Beroep [Appellate Court] Antwerpen (GmbH Lothringer Gunther Grosshandelsgesellschaft für Bauelemente und Holzwerkstoffe v. NV Fepco International) 85A [translation available]
 

Austria 8 November 2005 Oberster Gerichtshof [Supreme Court] [translation available]
 

Belgium 12 May 2003 Hof van Beroep [Appellate Court] Gent 85B
 

China 18 December 2002 CIETAC Arbitration Award [CISG 2002/14] (Sausage casing case) 85B [translation available]

Netherlands 15 October 2002 Netherlands Arbitration Institute Case No. 2319 [English text]

China 9 October 2002 CIETAC Arbitration Award [CISG 2002/13] (Elevator case) 85B [translation available]
 

Belgium 3 October 2001 Rechtbank van Koophandel [District Court] Kortrijk 85A
 

Russia 10 February 2000 Arbitration Award No. 340/1999 85B1 [translation available]
 

* Germany 28 October 1999 Oberlandesgericht [Appellate Court] Braunschweig [translation available]

China 20 July 1999 Supreme Court of the PRC (Zheng Hong Li Ltd. Hong Kong v. Jill Bert Ltd. Swiss) [translation available]

ICC March 1999 International Court of Arbitration, Case 9978
 

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

* ICC August 1998 International Court of Arbitration, Case 9574 85A ; 85C [English text]

China 22 June 1998 Shanghai Second Intermediate People's Court [District Court] (China Yitou Group Company. v. Germany Gerhard Freyso LTD GmbH & Co.) 85B [translation available]
 

ICC 1997 International Court of Arbitration, Case 8855
 

China 6 September 1996 CIETAC Arbitration Award [CISG/1996/42] (Engines case) [translation available]

China 27 February 1996 CIETAC Arbitration Award [CISG/1996/11] (Wool case) 85A ; 85B [translation available]

Russia 10 February 1996 Arbitration award 328/1994 85B1 [translation available]
 

* Russia 25 April 1995 Arbitration award 142/1994 85B11 [translation available]
 

* Russia 9 September 1994 Arbitration award 375/1993

* Switzerland 17 May 1994 Tribunal Cantonal [Appellate Court] Vaud [translation available]
 

* ICC 1992 International Court of Arbitration, Case 7197
 

ICC 1989 International Court of Arbitration, Case 6281


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/85 [8 June 2004]
Reproduced with the permission of UNCITRAL

[Text of Article 85
Digest of Article 85 case law
-    In general
-    Seller's obligation to preserve goods
-    Seller's right to retain goods until reimbursement
     for reasonable expenses of preservation]
ARTICLE 85

If the buyer is in delay in taking delivery of the goods or, where payment of the price and delivery of the goods is to be made concurrently, if he fails to pay the price, and the seller is either in possession of the goods or otherwise able to control their disposition, the seller must take such steps as are reasonable in the circumstances to preserve them. He is entitled to retain them until he has been reimbursed his reasonable expenses by the buyer.

DIGEST OF ARTICLE 85 CASE LAW

In general

1. Article 85 creates both an obligation and a right, applicable to sellers that have retained possession or control of goods either because the buyer has delayed taking delivery or because the buyer has failed to make a payment due concurrently with delivery. Under the first sentence of article 85, such a seller must "take such steps as are reasonable in the circumstances" to preserve the goods. Under the second sentence of article 85, such a seller has the right to retain the goods until the buyer reimburses the seller's reasonable expenses of preservation. Article 85 has been cited in relatively few decisions, most of which have focused on the seller's right to reimbursement for the expenses of preserving the goods.

Seller's obligation to preserve goods

2. A small number of decisions have dealt with the seller's article 85 obligation to preserve goods. That obligation has been invoked to justify a seller's actions after a buyer demanded that a seller stop making deliveries of trucks covered by a contract for sale: an arbitral tribunal stated that, because the buyer unjustifiably refused delivery, the seller had the right to take reasonable steps toward preserving the goods, including depositing them in a warehouse.[1] In another proceeding, a buyer sought interim relief in the form of an order preventing the seller from selling a key component of industrial machinery. The seller had retained the component after the buyer failed to make full payment for the machinery, and the seller planned to transfer the machinery to another warehouse and re-sell it. Because the proceeding focused on interim relief, the court applied the national law of the forum rather than the CISG, holding that the seller could move the goods to a new warehouse, but (despite art. 87) it would have to advance the warehouse expenses itself, and (despite art. 88) it would be restrained from exporting or re-selling the component.[2]

Seller's right to retain goods until reimbursed for reasonable expenses of preservation

3. A number of decisions have held breaching buyers liable for expenses that an aggrieved seller incurred to preserve the goods. These decisions usually (although not always) cite article 85 in support of the award,[3] but they frequently characterize the award as damages recoverable under article 74 of the CISG.[4] One court has stated that "when applying the CISG, the [buyer's] duty to pay damages is based on article 74, in part also on article 85."[5] The preservation costs for which sellers have successfully claimed reimbursement have generally been incurred after the buyer unjustifiably refused to take delivery,[6] although in one case they were incurred after the buyer failed to open a letter of credit required by the sales contract.[7] In several cases, an award of the seller's expenses for preserving the goods was made only after the tribunal expressly determined the costs were reasonable.[8] Where the seller was in breach and the buyer properly avoided the contract, however, it was found that the prerequisites for the seller to claim, under either article 74 or article 85, reimbursement for expenses of storing and re-selling the goods were not met because the buyer did not breach its obligations to pay the price or take delivery; the seller's claim was therefore denied.[9] And even where a buyer was found liable for seller's costs of storing the goods in a warehouse, an arbitral tribunal denied seller's claim for damage to the goods resulting from prolonged storage, because risk of loss had not passed to the buyer under applicable rules.[10] Finally, the principle of the second sentence of article 85 that, in proper circumstances, a seller can retain goods until reimbursed for the reasonable costs of preserving them has also been invoked to support the idea that, unless otherwise agreed, a seller is not obligated to make delivery until the buyer pays the price.[11]


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. [RUSSIA Arbitration Award case No. 200/1994 of 25 April 1995; available online at <http://cisgw3.law.pace.edu/cases/950425r1.html>].

2. CLOUT case No. 96 and No. 200 [SWITZERLAND Tribunal [Appellate Court] Vaud 17 May 1994, available online at <http://cisgw3.law.pace.edu/cases/940517s1.html>] (both abstracts dealing with the same case).

3. See CLOUT case No. 361 [GERMANY Oberlandesgericht [Appellate Court] Braunschweig 28 October 1999, available online at <http://cisgw3.law.pace.edu/cases/991028g1.html>] (citing art. 85 and awarding the seller's costs for cold storage of meat) (see full text of the decision); [ICC Court of Arbitration, case No. 9574 of August 1998, available online at <http://cisgw3.law.pace.edu/cases/989574i1.html>] (citing art. 85 and awarding the seller's costs for storing and transporting equipment and spare parts); [RUSSIA Arbitration Award case No. 200/1994 of 25 April 1995; available online at <http://cisgw3.law.pace.edu/cases/950425r1.html>] (citing art. 85 and awarding the seller's costs for storing trucks in warehouse); CLOUT case No. 104 [ICC Court of Arbitration, case No. 7197 of 1992, available online at <http://cisgw3.law.pace.edu/cases/927197i1.html>] (citing art. 85 and awarding the seller's costs for storing goods in a warehouse). But see [RUSSIA Arbitration Award case No. 375/1993 of 9 September 1994; available online at <http://cisgw3.law.pace.edu/cases/940909r1.html>] (apparently not citing art. 85 in awarding seller's costs for storing goods). See also CLOUT case No. 96 and No. 200 [SWITZERLAND Tribunal [Appellate Court] Vaud 17 May 1994, available online at <http://cisgw3.law.pace.edu/cases/940517s1.html>] (both abstracts dealing with the same case) (citing art. 85, but applying national law of the forum to deny seller an interim order requiring the buyer to pay the costs of transporting the goods to a new warehouse) (see full text of the decision).

4. See CLOUT case No. 361 [GERMANY Oberlandesgericht [Appellate Court] Braunschweig 28 October 1999, available online at <http://cisgw3.law.pace.edu/cases/991028g1.html>] (see full text of the decision); CLOUT case No. 104 [ICC Court of Arbitration, case No. 7197 of 1992, available online at <http://cisgw3.law.pace.edu/cases/927197i1.html>] (see full text of the decision).

5. CLOUT case No. 361 [GERMANY Oberlandesgericht [Appellate Court] Braunschweig 28 October 1999, available online at <http://cisgw3.law.pace.edu/cases/991028g1.html>] (see full text of the decision).

6. [RUSSIA Arbitration Award case No. 200/1994 of 25 April 1995; available online at <http://cisgw3.law.pace.edu/cases/950425r1.html>]; CLOUT case No. 361 [GERMANY Oberlandesgericht [Appellate Court] Braunschweig 28 October 1999, available online at <http://cisgw3.law.pace.edu/cases/991028g1.html>] (see full text of the decision); [ICC Court of Arbitration, case No. 9574 of August 1998, available online at <http://cisgw3.law.pace.edu/cases/989574i1.html>]; [RUSSIA Arbitration Award case No. 375/1993 of 9 September 1994; available online at <http://cisgw3.law.pace.edu/cases/940909r1.html>].

7. CLOUT case No. 104 [ICC Court of Arbitration, case No. 7197 of 1992, available online at <http://cisgw3.law.pace.edu/cases/927197i1.html>] (see full text of the decision).

8. [RUSSIA Arbitration Award case No. 200/1994 of 25 April 1995; available online at <http://cisgw3.law.pace.edu/cases/950425r1.html>]; CLOUT case No. 361 [GERMANY Oberlandesgericht [Appellate Court] Braunschweig 28 October 1999, available online at <http://cisgw3.law.pace.edu/cases/991028g1.html>] (see full text of the decision); [RUSSIA Arbitration Award case No. 375/1993 of 9 September 1994; available online at <http://cisgw3.law.pace.edu/cases/940909r1.html>].

9. CLOUT case No. 293 [GERMANY Hamburg Arbitration award case of 29 December 1998 available online at <http://cisgw3.law.pace.edu/cases/981229g1.html>] (see full text of the decision).

10. CLOUT case No. 104 [ICC Court of Arbitration, case No. 7197 of 1992, available online at <http://cisgw3.law.pace.edu/cases/927197i1.html>] (see full text of the decision).

11. CLOUT case No. 96 and No. 200 [SWITZERLAND Tribunal [Appellate Court] Vaud 17 May 1994, available online at <http://cisgw3.law.pace.edu/cases/940517s1.html>] (both abstracts dealing with the same case) (see full text of the decision).


ANNOTATED COMPARATIVES

Preservation of the Goods: Comparison of Articles 85-88 CISG and
counterpart provisions of the Principles of European Contract Law

Francesco G. Mazzotta [1]

May 2004

1. Preservation of the goods under the CISG
     -  Seller's duty to preserve the goods (Art. 85)
     -  Buyer's duty to preserve the goods (Art. 86)
     -  Provisions common to both parties: Deposit in Warehouse
        (Art. 87) and Sale of Goods (Art. 88)
2. Preservation of the goods under PECL (Arts. 7:110 - 7:112)
     -  Situations where PECL Article 7:110 may be helpful in construing
        the meaning of the counterpart provisions of the CISG
3. Conclusion

1. Preservation of the goods under the CISG

As a general rule, Section VI of Chapter V of the CISG requires that the party left in possession of, or otherwise in control of the disposition of the goods has the duty to protect and preserve the goods. This duty, which applies to any party to the transaction, "is an expression of the general obligation to cooperate, as it can be deduced from this provision [CISG Article 85] or that provision of the CISG as one of the Convention's underlying principles." [2]

     -  Seller's duty to preserve the goods (Article 85)[3]

The scope of the provision comprises two situations: first, where the buyer is in delay in taking the goods [4] and, second, where the buyer fails to pay the price when payment is to be made concurrently with delivery.[5] In these cases, the seller is obligated to take measures to preserve the goods.

The standard to be applied is that the seller is required to take any reasonable step under the circumstances to preserve the goods, which will often be decided based on usage.[6] Failure to fulfill this duty may give rise to stringent consequences especially in those cases where the risk of loss has already passed to the buyer although the seller still has control over the disposition of the goods.[7] In fact, a seller's failure to preserve the goods releases the buyer from liability arising from loss even though the risk has already passed to the buyer,[8] "regardless of whether or not the property in the goods has passed"[9] to the buyer. This is the "substance" of the obligation to preserve the goods.[10] If, however, the risk of loss has not passed to the buyer, even though found liable for preservation costs, the seller is not entitled to damages to the good for prolonged storage.[11]

Moreover, it must be noted that "reasonable circumstances and reasonable expenses are common law notions which provide standards according to which a judge or arbitrator can evaluate the necessary steps and expenses."[12]

The CISG does not state the length of the obligation to preserve the goods. However, "[i]t follows from Article 88(1) that the seller is quite entitled to limit the period of preservation and that upon certain conditions [Article 88], he may at any time proceed to sell the goods, provided that he has previously informed the buyer of that intention."[13] The seller may also be freed from the obligation to preserve the goods when he avoids the contract under Article 64.[14] In addition, it must be noted that the seller's obligation to preserve the goods does not end if the seller brings an action to require the buyer to pay the price.[15]

The seller is responsible for the costs arising from reasonable measures to be taken to preserve the goods;[16] however, the seller can sell the goods and retain from the proceeds an amount equal to the reasonable expenses incurred in preserving the goods and seller also has the right to retain the goods until those expenses are paid.[17] However, according to many authors,[18] "the buyer will have to be allowed a right to satisfy the right of retention by providing reasonable security."[19]

The Article 85-88 provisions on the preservation of the goods may be easily overcome by means of interim relief procedural tools, which are governed by domestic law.[20]

Courts often regard damages arising from preserving the goods pursuant to Article 85 as damages recoverable under CISG Article 74.[21]

     -  Buyer's duty to preserve the goods (Article 86)[22]

The buyer, similar to the seller, is bound to preserve the goods when (i) after receiving them, (ii) he intends to exercise the right to reject them. If both requirements are met, the buyer must take such reasonable[23] measures as the case may be. The buyer is, however, entitled to retain the goods until the seller reimburses the buyer for the reasonable expenses incurred in preserving the goods.[24] Failure to take reasonable measures regarding the goods may result in denial of a claim for warehouse expenses (Article 86(1)).[25]

The rejection may be exercised from the time the right to reject[26] arises until it expires.[27] While the period to decide whether to reject the goods is running, the buyer still has a duty to preserve the goods,[28] which continues until the duty has been discharged pursuant to Articles 87 and 88.[29]

If the goods have been dispatched to the buyer and placed at his disposal without having physical possession of them, the buyer, in order to be able to reject the goods, must take them into custody on behalf of the seller as long as it can be done without the payment of the price and without unreasonable inconveniences or unreasonable expenses (Article 86(2)). Of course, this rule does not apply if the seller or a person authorized by the seller to take charge of the goods is present at the place of destination of the goods.

Articles 85 and 86 establish the duty to preserve the goods. As already mentioned, a party may discharge his duty by (i) depositing the goods in a warehouse and/or (ii) selling the goods.

     -  Deposit in Warehouse (Article 87)

The deposit of the goods in a warehouse[30] (of a third person, if necessary) will be at the expense of the other party. However, unless otherwise provided, the party who deposits the goods is primarily liable to the warehouse although he may seek reimbursement from the other party to the sale contract.[31] To be recoverable, depositing expenses must be reasonable.[32] It should be noted that unreasonable expenses only affect the depositing party's right to obtain full reimbursement. The right of reimbursement exists only in regards to those expenses that are proportionate.[33] Moreover, "[t]he incurring of unreasonable expense does not lead to the risk of storage in a warehouse being transferred to the other party."[34]

Two issues may give rise to some uncertainty as they are not regulated by the CISG: (i) the relationship between the parties to the storage contract and the parties to the sale of goods contract, which, as it has been suggested, should be "governed by the domestic law applicable in each particular case"[35] and (ii) the legal consequences to the sale contract of the deposit of the goods in a warehouse: whether the deposit in a third person's warehouse is to be qualified as a substitute for the original obligation. It should not be deemed to constitute an exemption from the original obligation [36] unless the property involved is money.

     -  Sale of the Goods (Article 88)

Article 88(1) allows the party who is bound to preserve the goods to sell them if the other party fails to take action in a reasonable time (also known as self-help sale). It is an option (not an obligation).[37] There are only two requirements the selling party must comply with to exercise such an option: (i) unreasonable delay by the other party in taking the property,[38] and (ii) reasonable notice to the other party of the intention to sell the goods.[39] This notice does not need to be in a specific form: it needs only to be appropriate under the circumstances.

Article 88(2) requires the party who is bound to preserve the goods to sell them when the "goods are perishable or their preservation would involve unreasonable expenses" (also known as emergency sale). In this case, selling the goods is a duty. Failure to sell the goods in an emergency situation may give rise to a right to the other party to seek damages.[40]

Two issues arise in connection with Article 88(1) and 88(2) not dealt with by the CISG: (i) legal consequences of failure to give notice and, (ii) whether the other party may object. As to the first, however, it has been suggested that "a party who performs a self-help sale, without giving notice of his intention to do so, breaches an ancillary contractual obligation and will be under an obligation to compensate the other party for any resultant damage."[41] On the other hand, in an emergency sale situation, a claim for lack of notice may be difficult to bring it successfully. As to the second issue, some authors believe that the sale can be made regardless of any objection made by the other party,[42] although the other party may bring an action for breach of an obligation to proceed based on reasonableness standard.

     -  Article 88(3)

Whether it has been a self-help or emergency sale, the party may retain from the proceeds of the sale the reasonable expenses incurred in preserving and selling the goods and require the other party to pay the balance. There is no reference in the CISG regarding (i) how any objections in connection with the reasonable expenses standard may be raised, (ii) whether the party who sold the goods may retain damages from the proceeds, as some authors have suggested and (iii) how the balance should be returned to the other party. However, based on the general principles behind the rules on the preservation of goods, as well as the other principles on which the CISG is based, it may be possible to assume that: (i) Claims regarding the proper application of the reasonableness standard may be brought as damages for breach of a secondary obligation; (ii) As the provision clearly states that the party may retain the costs to preserve the goods and the costs to sell the same, there should not be any doubt that the balance must be accounted for by the other party.[43] This does not mean, however, that the party may not bring an action for damages setting off his claim from the proceeds;[44] and (iii) the balance should be paid at the other's party place of business. If the party still refuses to take the money back, it may be useful to resort to a solution similar to PECL Article 7:111 (depositing the money to the order of the other party in accordance with the law where the payment is due).

2. Preservation of the goods under PECL (Articles 7:110- 7:112)[45]

PECL Article 7:110 considers mainly three cases: (i) buyer refuses to take deliver of goods; (ii) the buyer rejects the goods and seller refuses to take them back; and (iii) the contract has been terminated and the goods must be returned to the other party who refuses to take them back. Article 7:110 may be helpful, as the issue is not dealt with by the CISG.

The substance of PECL Article 7:110 [46] is, therefore, very similar to CISG Articles 85-88. Thus, what it has been said about the CISG also applies under the PECL with the following distinctions. First, the main difference between the two sets of rules concerns the structure: PECL Article 7:110 comprises both the seller's and buyer's duty to preserve the goods in only one provision, whereas the CISG considers both parties' duties separately. The other difference concerns the wording: PECL outlines more simply than the CISG regarding how the party left in possession of the goods may discharge its duty.

     -  Situations where PECL Article 7:110 may be helpful in construing the meaning of the counterpart provisions of the CISG

(1) Preservation of money. PECL specifically deals with the case where the property to be protected and preserved is money (Article 7:111), a case not specifically dealt with by the CISG and, therefore, it may be of help when applying the CISG in such instances. Specifically, the provision applies where the debtor attempts to perform a primary (e.g. payment of the goods) or secondary (e.g., repayment of money received or payment of damages under Chapter 9 Section 5) duty to pay.[47]

Pursuant to Article 7:111, the debtor discharges its duty to pay by "depositing the money to the order to the first party [creditor] in accordance with the law of the place where payment is due,"[48] after giving the creditor a reasonable notice. By dong so, the debtor may also prevent claims by the creditor concerning interest on the sum to be held on behalf of the creditor.

(2) Avoidance and preservation of goods. Reading Articles 81 and 86 CISG, with the guidance of PECL, one should draw the conclusion that, where the contract has been avoided, the buyer must arrange the restitution of them to the seller as the former cannot keep those goods nor can he destroy or let them being destroyed. While the party is in possession of goods to be taken by the other party, the very same party must also arrange a way to preserve them pursuant to Articles 87-88.[49]

As to the seller, if (i) the seller still has possession of, or control of, the goods, and (ii) the contract has been avoided, the seller cannot claim expenses for preserving the goods from the buyer.

The PECL, contrary to CISG, does clearly deal with the case just mentioned, which makes Article 7:110 useful when dealing with restitution and preservation of the goods when the contract has been avoided.

3. Conclusions

PECL's language is very similar to CISG. However, one feature makes PECL Articles 7:110 and 7:111 very useful when dealing with preservation of money, and preservation of goods as result of the avoidance of the contract, as these situations are not directly dealt with by the CISG.

As a general rule, for all of the other general legal issues herein mentioned not directly solved by the CISG, it may be appropriate to first resort to the general principles of the CISG, unless the matter is clearly outside the scope of the CISG (e.g., storage agreement). The otherwise applicable domestic law, however, should control all of the more technical and detailed questions of substantive and, of course, procedural law.


FOOTNOTES

1. The author is an Associate of the Institute of International Commercial Law of the Pace University School of Law (New York).

2. See Fritz Enderlein & Dietrich Maskow, INTERNATIONAL SALES LAW, UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS - CONVENTION ON THE LIMITATION PERIOD IN THE INTERNATIONAL SALE OF GOODS, Oceana Publications 351 (1992). Available at <http://cisgw3.law.pace.edu/cisg/biblio/enderlein.html>.

3. For literature specifically relevant to the provisions of Article 85, see <http://cisgw3.law.pace.edu/cisg/text/mono85.html>. See also Harry Flechtner, in THE DRAFT UNCITRAL DIGEST AND BEYOND: CASES, ANALYSIS AND UNRESOLVED ISSUES IN THE U.N. SALES CONVENTION, 861 (Franco Ferrari, Harry Flechtner, Ronald A. Brand eds. 2004) [hereinafter UNCITRAL Digest].

4. See Hans E. Eberstein, Annotations 1-18 on Article 85, in COMMENTARY ON THE UN CONVENTION ON THE INTERNATIONAL SALE OF GOODS (CISG) 663, 667 (Peter Schlechtriem, ed. 1998) [hereinafter Annotations 85]; Herbert Bernstein & Joseph Lookofky, UNDERSTANDING THE CISG IN EUROPE 103 (2003) [hereinafter CISG in Europe]; Flechtner, UNCITRAL DIGEST, supra note 3. But see ICC Arbitration Case No. 7197 of 1992 available at <http://cisgw3.law.pace.edu/cases/927197i1.html> [the preservation costs were awarded as result of failure of opening a letter of credit].

5. This language is also explained in a colloquy at the 1980 Vienna Diplomatic Conference available at <http://cisgw3.law.pace.edu/cisg/text/link85.html>. Official Records of United Nations Conference on Contracts for the International Sale of Goods, Vienna, March 10 - April 11, 1980, A/CONF. 97/19 (hereinafter Official Records). See also Jorge Barrera Graf, in COMMENTARY ON THE INTERNATIONAL SALES LAW 614, 613-619 (Massimo C. Bianca and M. Joachim Bonell eds., 1987); Eberstein, Annotations 85, supra note 4, at 667; Bernstein & Lookofky, CISG in Europe, supra note 4 at 103; Flechtner, UNCITRAL DIGEST, supra note 4. See also Hamburg Arbitration proceeding, Germany, December 29, 1998, available at <http://cisgw3.law.pace.edu/cases/981229g1.html>.

6. Eberstein, Annotations 85, supra note 4, at 664 and 668.

7. See Peter Schlechtriem, UNIFORM SALES LAW - THE UN CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS, Manz: Vienna 108 (1986). Available at <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem.html>.

8. See the Secretariat Commentary on Article 74 of the 1978 Draft [draft counterpart of CISG article 85] reprinted in Official Records, supra note 5, at 62, available at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-85.html>; see Schlechtriem, supra note 7; John O. Honnold, UNIFORM LAW FOR INTERNATIONAL SALES UNDER THE 1980 UNITED NATIONS CONVENTION, 3d ed., 519 (1999); Harry M. Flechtner, Remedies Under the New International Sales Convention: The Perspective from Article 2 of the U.C.C., 8 JL&C 53, 104 (1988) [available at < http://cisgw3.law.pace.edu/cisg/biblio/flecht.html>] [hereinafter "Remedies"]; and Jelena Vilus, Provisions Common to the Obligations of the Seller and the Buyer, in INTERNATIONAL SALES OF GOODS: DUBROVNIK LECTURES, Oceana Publications 259, 237-264 (Petar Sarcevic & Paul Volken eds., 1986) [available at < http://cisgw3.law.pace.edu/cisg/biblio/vilus.html>].

9. Eberstein, Annotations 85, supra note 4, at 665.

10. See Enderlein & Maskow, supra note 2, at 352.

11. ICC Arbitration case, No. 7197 of 1992, available at <http://cisgw3.law.pace.edu/cases/927197i1.html>.

12. See Vilus, supra note 8; see also Enderlein & Maskow, supra note 2, at 352, "[w]hat is to be considered as steps that are reasonable in the circumstances will have to be determined using the measure which the CISG applies to flesh out such vague descriptions. It amounts to taking such steps that they would be taken by a reasonable person in the same circumstances;" Carlo Scognamiglio, NUOVE LEGGI CIVILI COMMENTATE 326, 325-342 (Massimo C. Bianca ed., 1989). For the definition of reasonableness under the CISG and PECL and references to reasonableness in continental and common law domestic rules, doctrine and case law, visit <http://cisgw3.law.pace.edu/cisg/text/reason.html#overv>. As to case law, see Oberlandesgericht Braunschweig, Germany, October 28, 1999, available at <http://cisgw3.law.pace.edu/cases/991028g1.html>; Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, April 25, 1995, case 142/1994, available at <http://cisgw3.law.pace.edu/cases/950425r2.html>.

13. Eberstein, Annotations 85, supra note 4, at 668.

14. Eberstein, Annotations 85, supra note 4, at 669. If a contract has been avoided, the seller may not claim reimbursement of expenses incurred in preserving the goods: Hamburg Arbitration proceeding, Germany, December 29, 1998, available at <http://cisgw3.law.pace.edu/cases/981229g1.html>.

15. Honnold, supra note 8, at 520.

16. Eberstein, Annotations 85, supra note 4, at 669.

17. See Oberlandesgericht Braunschweig, Germany, October 28, 1999, available at <http://cisgw3.law.pace.edu/cases/991028g1.html>; Tribunal Cantonal Vaud, Switzerland, 17 May 1994, available at <http://cisgw3.law.pace.edu/cases/940517s1.html>.

18. Eberstein, Annotations 85, supra note 4, at 669; Enderlein & Maskow, supra note 2, at 353.

19. Eberstein, Annotations 85, supra note 4, at 669.

20. See Tribunal Cantonal Vaud, Switzerland, May 17, 1994, available at <http://cisgw3.law.pace.edu/cases/940517s1.html> where the court states: "[t]he Vienna Convention ... rules only on substantive issues. Therefore it does not exclude that a different solution may be given in the frame of provisional measures."

21. See, e.g., Oberlandesgericht Braunschweig, Germany, October 28, 1999, available at <http://cisgw3.law.pace.edu/cases/991028g1.html>, where the court also stated "[w]hen applying the CISG, the duty to pay damages is based on Article 74, in part also on Article 85"; Delchi v. Rotorex, Federal Appellate Court 2nd Circuit, USA, December 6, 1995, available at <http://cisgw3.law.pace.edu/cases/951206u1.html> Federal District Court, New York, USA, September 9, 1994, available at <http://cisgw3.law.pace.edu/cases/940909u1.html>; ICC Arbitration case, No. 7531 of 1994, available at <http://cisgw3.law.pace.edu/cases/947531i1.html>; ICC Arbitration Case No. 7197 of 1992 available at <http://cisgw3.law.pace.edu/cases/927197i1.html>.

22. For selected texts specifically relevant to the provisions of Article 86, visit <http://cisgw3.law.pace.edu/cisg/text/mono86.html>. See also Bernstein & Lookofsky, CISG in Europe, supra note 4; Flechtner, UNCITRAL DIGEST, supra note 3, at 864.

23. See supra note 12.

24. See Cour de Cassation, France, January 4, 1995, case 92-16.993, available at <http://cisgw3.law.pace.edu/cases/950104f1.html>; ICC Arbitration Case No. 7531 of 1994 available at <http://cisgw3.law.pace.edu/cases/947531i1.html>.

25. China International Economic and Trade Arbitration Commission [CIETAC] - Shenzhen Commission, (June 6, 1991, arbitration proceeding 164/1996, available at <http://cisgw3.law.pace.edu/cases/910606c1.html>): the court stated that warehouse expenses, which almost amounted the price of the contract, were unreasonable. The court also noted that the extend deposit caused the goods to decompose.

26. See, e.g., Articles 46(1), 46(2), 49(1)(a), 49(1)(b) and maybe a right to reject exist under Articles 52 and 71. See Hans E. Eberstein, Annotations 1-26 on Article 86, in COMMENTARY ON THE UN CONVENTION ON THE INTERNATIONAL SALE OF GOODS (CISG) 671 (Peter Schlechtriem, ed., 1998) [hereinafter Annotations 86].

27. It can be exercised even at a later time after receiving the goods - e.g., non-conforming goods must be rejected within a reasonable time after the buyer discovers or should have discovered the defects.

28. See Honnold, supra note 8, at 524; See also Eberstein, Annotations 86, supra note 26, at 671; Fritz Enderlein, Dietrich Maskow and Heinz Strohbach, INTERNATIONALES KAUFRECHT, Article 86, note 3.2 (1991).

29. It has been suggested that the buyer has no duty to take the goods in possession when he rejected them at earlier stage (see Secretariat Commentary on Article 75 of the 1978 Draft [draft counterpart of CISG article 86] reprinted in Official Records, supra note 5, at 62, available at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-86.html>; Rolf Herber and Beate Czerwenka, INTERNATIONALES KAUFRECHT, Article 86, paragraph 6 (1991). However, the provisions do not support such view as once the goods are the buyer's disposal whether he rejects them or only intends to reject them, he is still bound to preserve the goods pursuant to Articles 87 and 88. See also Eberstein, Annotations 86, supra note 26, at 675; Enderlein/Maskow/Strohbach, supra note 28, at Art. 8, note 7.

30. The term "warehouse" means "any place appropriate for the storage of goods of the type in question." Secretariat Commentary on Article 76 of the 1978 Draft [draft counterpart of CISG article 87], reprinted in Official Records, supra note 5, available at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-87.html>.

31. Honnold, supra note 8, at 525. As to case law, see ICC Arbitration Case No. 7531 of 1994, available at <http://cisgw3.law.pace.edu/cases/947531i1.html>; cf. Tribunal Cantonal Vaud, Switzerland, May 17, 1994, available at <http://cisgw3.law.pace.edu/cases/940517s1.html> [in the context of interim relief].

32. Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, April 25, 1995, case 142/1994, available at <http://cisgw3.law.pace.edu/cases/950425r2.html>.

33. Id.

34. See Hans E. Eberstein, Annotations 1-12 on Article 87, in COMMENTARY ON THE UN CONVENTION ON THE INTERNATIONAL SALE OF GOODS (CISG) 677 (Peter Schlechtriem, ed., 1998) [hereinafter Annotations 87] [footnote omitted].

35. Id. at 678. See also Enderlein & Maskow, supra note 2, at 357.

36. See Herber/Czerwenka, supra note 29, at Art. 87, paragraph 5; Eberstein, Annotations 87, supra note 34, at 678. But see Enderlein/Maskow/Strohbach, see supra note 28, at Art. 87, note 1.2.

37. See Honnold, supra note 8, at 526.

38. See Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, April 25, 1995, case 142/1994, available at <http://cisgw3.law.pace.edu/cases/950425r2.html>; ICC Arbitration Case No. 7531 of 1994, available at <http://cisgw3.law.pace.edu/cases/947531i1.html>.

39. Oberlandesgericht Braunschweig, Germany, October 28, 1999, available at <http://cisgw3.law.pace.edu/cases/991028g1.html>.

40. See Hans E. Eberstein, Annotations 1-32 on Article 88, in COMMENTARY ON THE UN CONVENTION ON THE INTERNATIONAL SALE OF GOODS (CISG) 683 (Peter Schlechtriem, ed., 1998) [hereinafter Annotations 88].

41. Id. at 682 [footnote omitted]; Scognamiglio, supra note 12, at 340.

42. Id.

43. See Ebersten, Annotations 88, supra note 40, at 684; Flechtner, Remedies, supra note 8, at 80; but see Scognamiglio, supra note 12, at 341; (as to ULIS) H.J. Mertens and E. Rehbinder, INTERNATIONALES KAUFRECHT, Articles 94 and 95, note 8 (1975).

44. See Secretariat Commentary on Article 77 of the 1978 [draft counterpart of CISG Article 88], reprinted in Official Records, supra note 5, at 63, available at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-88.html>. See also Flechtner, Remedies, supra note 8, at 81; Ebersten, Annotations 88, supra note 40, at 684 citing also Herber/Czerwenka, supra note 29, Art. 88, paragraph 8; Enderlein/Maskow/Strohbach, supra note 28, Art. 88, note 9.

45. For the full text of the Principles of European Contract Law, visit <http://cisgw3.law.pace.edu/cisg/text/textef.html>.

46. For the text of PECL Article 7:110, visit <http://cisgw3.law.pace.edu/cisg/text/textef.html#a7110>.

47. See Comment and Notes on Article 7:111 in PRINCIPLES OF EUROPEAN CONTRACT LAW: PARTS I AND II 352-357 (Ole Lando & Hugh Beale eds., 2000) available at <http://cisgw3.law.pace.edu/cisg/text/peclcomp85.html>.

48. See Oberster Gerichtsof, Austria, June 29, 1999, available at <http://cisgw3.law.pace.edu/cases/990629a3.html>, where the court dealing with the issues of determining the place of restitution as result of the avoidance of the sale contract (CISG Article 81), found that "[t]he CISG does not contain any provisions pertaining to the place of performance for restitution. Nevertheless, the gaps arising from the absence of relevant agreements within the framework of Art 7(2) CISG can be bridged without recourse to national provisions (Leser, op. cit., Art. 81 Annotation 17; Weber, op. cit., Art. 81 Annotation 21). The place of performance for the obligations concerning restitution should mirror the place of performance for the primary contractual obligations (Posch, in Schwimann, 2d ed., CISG Art. 81, Annotation 9)." I expect, however, that other courts may refer this issue to the law otherwise applicable to the contract.

49. ICC Arbitration Case No. 7531 of 1994, available at <http://cisgw3.law.pace.edu/cases/947531i1.html>.


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