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2012 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods

Digest of Article 45 case law [reproduced with permission of UNCITRAL] [*]

[Text of article
Introduction
Non-performance of an obligation as a prerequisite for remedies
Rights under articles 46-52
Claim of damages
Cumulation of remedies (45(2))
No grace periods (45(3))
Further questions
Burden of proof]

Article 45

(1) If the seller fails to perform any of his obligations under the contract or this Convention, the buyer may:
(a) exercise the rights provided in articles 46 to 52;
(b) claim damages as provided in articles 74 to 77.

(2) The buyer is not deprived of any right he may have to claim damages by exercising his right to other remedies.

(3) No period of grace may be granted to the seller by a court or arbitral tribunal when the buyer resorts to a remedy for breach of contract.

INTRODUCTION

1. This provision gives an overview of the remedies available to the buyer when the seller has committed a breach by non-performance of any of its duties under the contract or the Convention.[1] In its paragraph (1)(a), the provision simply refers to other provisions, namely articles 46-52, which specify the conditions under which the rights provided by those provisions may be exercised. On the other hand, article 45(1)(b) constitutes the basis for the buyer's right to claim damages and as such has great practical importance.[2] As far as the amount of damages is concerned, it is to be adjudicated according to articles 74-76. Article 45(2) allows the combination of the right to damages with other remedies. Article 45(3) limits the ability of courts and arbitral tribunals to grant periods of grace; such grace periods would interfere with the remedial system of the Convention. However, under article 47 the buyer itself is entitled to fix an additional period of time for performance.

2. Article 45 does not enumerate the buyer's remedies exhaustively. The Convention provides for further remedies, e.g., in articles 71-73 or 84 (1). Nevertheless, article 45 is exhaustive in the sense that it pre-empts the buyer from invoking remedies for breach of contract otherwise available under the applicable domestic law, since the Convention excludes recourse to domestic law where the Convention provides a solution.[3]

Non-performance of an Obligation as a Prerequisite for Remedies

3. The availability of any remedy to the buyer presupposes that the seller has failed to perform an obligation deriving either from the contract, from trade usages, from practices between the parties or from the Convention.[4] Even if an additional duty not specifically addressed in the Convention — for instance, the duty to extend a bank guaranty in favour of the buyer[5] — has been breached, the buyer is entitled to the remedies available under the Convention. The extent of the seller's failure to perform is irrelevant for the purposes of deciding whether the buyer is entitled to remedies. Of course, some remedies are available to the buyer only where the breach is fundamental. Generally, the reasons for the seller's breach are irrelevant, except to the extent the seller can claim an exemption under article 79(5). In particular, article 45(1) does not require that the seller have acted with negligence, fault or intent in order for the buyer to claim the remedies mentioned in the provision.[6]

4. However, if the seller's responsibility for a remedy for a breach depends on further conditions — in particular, on a timely and proper notice by the buyer (see articles 38, 39, 43) — then the additional conditions must be satisfied in order for the buyer to preserve its right to the remedy.[7]

Rights Under Articles 46-52

5. Article 45(1) (a) merely refers to articles 46-52. Although all the remedies provided for in these articles require that a breach of an obligation has occurred, the provisions make distinctions as to the kind of breach. Thus articles 46(2), 49(1) (a)and 51(2) require a fundamental breach. Article 49(1) (b) applies only in case of non-delivery, and it is doubtful whether article 50 applies to cases other than delivery of non-conforming goods. Article 51 addresses partial non-performance; article 52 deals with early delivery and excess delivery.

Claim of Damages

6. Article 45(1)(b) lays down the substantive conditions for a claim to damages by the buyer.[8] In case of breach of a contractual obligation of any sort by the seller, the buyer who has suffered loss as a result of that breach can claim damages. Thus, for example, the buyer can claim damages for losses caused by the delivery of defective goods.[9] A buyer can also claim damages for an ensuing loss when the seller declares in advance that it will be unable to deliver on time, thereby committing an anticipatory breach of contract in the sense of article 71.[10] However, if the contract or the Convention imposes further conditions on the buyer's entitlement to damages — such as the requirement of notice under articles 38, 39, and 43 — these conditions must also be satisfied.[11]

7. In contrast to many national systems, the right to claim damages under the Convention does not depend on any kind of fault, breach of express promise, or the like; it presupposes merely an objective failure of performance.[12] Only under the conditions described in article 79 or in a case falling within article 80 is the seller exempted from liability for damages.[13]

8. Articles 74-77 to which article 45(1) (b) refers provide rules for the calculation of the amount of damages, but those provisions do not form a basis for a claim of damages.[14]

9. The decisions that have applied article 45(1) (b) evidence no difficulty with the application of this provision as such.[15] Problems may arise as to the existence and extent of an obligation of the seller or to the amount of damages, but since both aspects are dealt with by other provisions (articles 30-44 and 74-77 respectively), article 45(1) (b)is merely referred to in these cases, generally without being discussed in detail.[16]

Cumulation of Remedies (45(2))

10. The right to claim damages is the remedy that is always available to the buyer if a breach of contract has caused the buyer any damage. This right can be invoked along with any other remedy in order to compensate for losses that occur despite the other remedy.[17] The amount of damages, however, depends on the other remedy to which the buyer has resorted.[18]

No Grace Periods (45(3))

11. Article 45(3) limits the ability of courts and arbitral tribunals to grant a period of grace and to extend the time for performance when the buyer holds the seller liable for a breach of contract.[19] Although this possibility could be regarded as a matter of procedural law and therefore outside the Convention's scope of application, article 45(3) nevertheless explicitly excludes it. The provision is addressed to courts and arbitral tribunals. The parties themselves are free to extend or otherwise modify the period for performance at any time.

Further Questions

12. The place of performance for all rights and claims under article 45 follows the place of performance of the primary obligation — to deliver, to hand over documents, etc. — which has been breached.[20] Therefore it is important to determine the place of performance of the primary obligation.

13. The Convention does not deal with the statute of limitations.[21] The prescription period applicable to the rights and claims provided for in article 45 must thus be determined by reference to the applicable national law or — where it governs — to the Convention on the Limitation Period in the International Sale of Goods.[22]

Burden of Proof

14. Because the other parts of article 45 do not grant concrete rights on the basis of which the buyer can sue, the question of the burden of proof under the provision is only relevant for a claim to damages under article 45(1) (b). For damage claims the burden is on the buyer, who must prove a breach of an obligation by the seller as well as the losses caused by that breach.[23] According to article 79, the burden is on the seller to prove any exempting circumstances.[24]


NOTES

* This presentation of the UNCITRAL Digest is a slightly modified version of the original UNCITRAL text at <http://www.uncitral.org/pdf/english/clout/CISG-digest-2012-e.pdf>. The following modifications were made by the Institute of International Commercial Law of the Pace University School of Law:

   -    To enhance access to contents by computer search engines, we present in html rather than pdf;
 
   -    To facilitate direct focus on aspects of the Digests of most immediate interest, we inserted linked tables of contents at the outset of most presentations;
 
   -    To support UNCITRAL's recommendation to read more on the cases reported in the Digests, we provide mouse-click access to (i) CLOUT abstracts published by UNCITRAL (and to UNILEX case abstracts and other case abstracts); and also (ii) to full-text English translations of cases with links to original texts of cases, where available, in [bracketed citations] that we have added to UNCITRAL's footnotes; and
 
   -    To enable researchers to themselves keep the case citations provided in the Digests constantly current, we have created a series of tandem documents, UNCITRAL Digest Cases + Added Cases. The new cases and other cases that are cited in these updates are coded in accordance with UNCITRAL's Thesaurus.

1. See Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980 (United Nations publication, Sales No. E.81.IV.3), 37 ("index to the remedies available to the buyer").

2. See, e.g., CLOUT case No. 85 [UNITED STATES U.S. District Court, Northern District of New York, 9 September 1994], affirmed in part and reversed in party by CLOUT case No. 138 [UNITED STATES U.S. Court of Appeals for the Second Circuit 6 December 1995]; CLOUT case No. 140 [RUSSIA Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry 16 March 1995 (Arbitral award No. 155/1994)]; [EGYPT Cairo Regional Centre for Commercial Arbitration (CRCICA) 3 October 1995]; CLOUT case No. 166 [GERMANY Schiedsgericht der Handelskammer Hamburg 21 March, 21 June 1996] (see full text of the decision); [ICC Court of Arbitration of the International Chamber of Commerce, June 1996 (Arbitral award No. 8247)]; CLOUT case No. 236 [GERMANY Bundesgerichtshof 23 July 1997]; CLOUT case No. 248 [SWITZERLAND Bundesgericht 28 October 1998] (see full text of the decision); CLOUT case No. 1022 [SERBIA Foreign Trade Court of Arbitration attached to the Serbian Chamber of Commerce 23 January 2008]. See also the Digest for article 74, paragraph 10.

3. [UNITED STATES U.S. District Court, Southern District of New York, 10 May 2002 (Geneva Pharmaceuticals Tech. Corp. v. Barr Labs. Inc.)]; [UNITED STATES U.S. District Court, Eastern District of Kentucky, 18 March 2008 (Sky Cast, Inc. v. Global Direct Distribution, LLC)].

4. See, e.g., CLOUT case No. 331 [SWITZERLAND Handelsgericht des Kantons Zürich 10 February 1999]; CLOUT case No. 724 [GERMANY Oberlandesgericht Koblenz 14 December 2006] (delivery of insuffiently packaged goods); CLOUT case No. 850 [SPAIN Audiencia Provincial de Madrid, sección 14ª, 20 February 2007] (goods with excess humidity).

6. See, e.g., CLOUT case No. 331 [SWITZERLAND Handelsgericht des Kantons Zürich 10 February 1999].

7. CLOUT case No. 1058 [AUSTRIA Oberster Gerichtshof 19 December 2007].

8. See, e.g., CLOUT case No. 331 [SWITZERLAND Handelsgericht des Kantons Zürich 10 February 1999]. A parallel provision, article 61(1)(b), entitles the seller to claim damages for any breach of contract by the buyer.

9. See for example CLOUT case No. 125 [GERMANY Oberlandesgericht Hamm 9 June 1995] (seller who had delivered and installed defective windows was held liable to compensate buyer's costs of replacing the defective windows).

10. [ICC Court of Arbitration of the International Chamber of Commerce, January 1997 (Arbitral award No. 8786)].

11. See, e.g., [ICC Court of Arbitration of the International Chamber of Commerce, June 1996 (Arbitral award No. 8247)]; CLOUT case No. 364 [GERMANY Landgericht Köln 30 November 1999]; CLOUT case No. 775 [GERMANY Landgericht Frankfurt 11 April 2005]; CLOUT case No. 721 [GERMANY Oberlandesgericht Karlsruhe 8 February 2006]; CLOUT case No. 723 [GERMANY Oberlandesgericht Koblenz 19 October 2006 (Tee shirts case)]; CLOUT case No. 825 [GERMANY Oberlandesgericht Köln 14 August 2006]. See also Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980 (United Nations publication, Sales No. E.81.IV.3), 34-36.

12. See Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980 (United Nations publication, Sales No. E.81.IV.3), 37 and, for instance CLOUT case No. 331 [SWITZERLAND Handelsgericht des Kantons Zürich 10 February 1999].

13. For an example in which the article 79 exemption was found not inapplicable, see CLOUT case No. 140 [RUSSIA Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry 16 March 1995 (Arbitral award No. 155/1994)].

14. See Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980(United Nations publication, Sales No. E.81.IV.3), 37. See also the Digest for article 74, paragraph 10.

15. See, e.g., the decisions cited in note 2 supra; see also, as a further example, [SWITZERLAND Bundesgericht 17 December 2009].

16. See as examples: CLOUT case No. 82 [GERMANY Oberlandesgericht Düsseldorf 10 February 1994] (see full text of the decision); CLOUT case No. 83 [GERMANY Oberlandesgericht München 2 March 1994] (see full text of the decision); CLOUT case No. 168 [GERMANY Oberlandesgericht Köln 21 May 1996 (Used car case)] (see full text of the decision); [ICC Court of Arbitration of the International Chamber of Commerce, June 1996 (Arbitral award No. 8247)]; CLOUT case No. 214 [SWITZERLAND Handelsgericht des Kantons Zürich 5 February 1997 (Sunflower oil case)]; CLOUT case No. 219 [SWITZERLAND Tribunal Cantonal Valais 28 October 1997]; CLOUT case No. 293 [GERMANY Schiedsgericht der Hamburger freundschatlichen Arbitrage 29 December 1998]; CLOUT case No. 348 [GERMANY Oberlandesgericht Hamburg 26 November 1999]; [GERMANY Oberlandesgericht München 5 March 2008 (Stolen car case)].

17. See, for example, CLOUT case No. 345 [GERMANY Landgericht Heilbronn 15 September 1997]; [CHINA International Economic and Trade Arbitration Commission, People's Republic of China, 24 July 2007]. See also the Digest for article 46, paragraph 9.

18. See the Digests for articles 74-76.

19. Granting such grace periods is possible, e.g., under article 1184 paragraph 3 and article 1244 of the French Code civil and in legal systems which have been influenced by the French civil code.

20. CLOUT case No. 268 [GERMANY Bundesgerichtshof 11 December 1996]; [NETHERLANDS Gerechtshof 's-Hertogenbosch 9 October 1995]; CLOUT case No. 244 [FRANCE Cour d'appel, Paris 4 March 1998]; CLOUT case No. 245 [FRANCE Cour d'appel, Paris 18 March 1998].

21. See [SWITZERLAND Bundesgericht 18 May 2009]. See also the Digest for article 4, paragraph 14.

22. CLOUT case No. 346 [GERMANY Landgericht Mainz 26 November 1998]; [SWITZERLAND Bundesgericht 18 May 2009].

23. See, e.g., [RUSSIA Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry 27 May 2005]; CLOUT case No. 721 [GERMANY Oberlandesgericht Karlsruhe 8 February 2006]; CLOUT case No. 723 [GERMANY Oberlandesgericht Koblenz 19 October 2006 (Tee shirts case)].

24. See the Digest for article 79, paragraph 20.


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