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

Digest of Article 59 case law [reproduced with permission of UNCITRAL] [*]

Article 59

The buyer must pay the price on the date fixed by or determinable from the contract and this Convention without the need for any request or compliance with any formality on the part of the seller.

INTRODUCTION

1. Article 59 clearly sets out the rule whereby the buyer must pay the price as soon as it becomes due, without the need for any request or compliance with any other formality by the seller. Article 59 can accordingly be distinguished from those national legal systems under which settlement of a debt is due only if a notice to pay or other formal demand has first been served by the creditor on the debtor.[1]

Dispensing with formalities prior to payment of the price

2. The sale price becomes due automatically on the date specified in the contract or, failing that, at a specific time in accordance with the rules set forth in article 58.[2] Because it relieves the seller of the requirement to issue a demand or comply with any other formality in order for the price to become payable, article 59 is frequently cited by judges and arbitrators.[3] Article 59 is referred to more rarely in other contexts.[4]

3. The rule that the price becomes due automatically without any request or formality on the part of the seller is subject to various limits. As was observed in one court decision, the price is not automatically payable if at the due date the buyer does not know the exact amount of the price.[5] Also, a requirement that the seller send an invoice in advance to the buyer frequently derives from the contract or from usages.[6] The Incoterms all set forth the rule that the seller must provide a commercial invoice to the buyer.[7] Subject to these exceptions, the principle under which the obligation to pay the price is not conditional on the issuance of an invoice remains applicable.[8]

4. The buyer's failure to pay the price at the due date entitles the seller to resort to the various remedies for breach of contract by the buyer, as provided in the Convention, without any prior demand for payment. Such remedies include the seller's right to interest on any sum owed by the buyer (article 78). As noted in many court decisions which refer to article 59 in that regard, the interest provided for under article 78 begins to accumulate as soon as the price becomes due.[9]

Dispensing with formalities prior to settlement of other monetary obligations

5. It is generally accepted that article 59 expresses a general principle (within the meaning of article 7(2)) that is applicable to the different types of monetary claims made by one party to a sales contract against the other.[10] Such claims include payment of interest on the price or on any sum that is in arrears (article 78), damages claims arising from, inter alia, penalty clauses,[11] claims for restitution of the price or payment of interest or benefits following contract avoidance (article 81(2) and article 84(2)), claims for reimbursement of the difference between the price paid and the price reduced in accordance with article 50, and reimbursement of expenses incurred for preservation of the goods (articles 85 and 86). In order for article 59 to be applicable in these different cases, however, it is necessary for the debtor to know the amount of the sum owed.


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 Secretariat Commentary to article 55 of the draft Convention.

2. See the Digest for article 58.

3. See, for example, [NETHERLANDS Rechtbank Rotterdam 1 July 2009]; [GERMANY Landgericht München 18 May 2009]; [SERBIA Foreign Trade Court of Arbitration at the Serbian Chamber of Commerce 16 March 2009]; [SWITZERLAND Tribunal cantonal du Valais 28 January 2009]; [SWITZERLAND Appellationsgericht Basel-Stadt 26 November 2008]; [SLOVAKIA Okresný súd Bratislava III, 22 May 2008]; [SLOVAKIA Najvyšší súd Slovenskej republik 30 April 2008]; [SLOVAKIA Okresný súd Banská Bystrica 29 April 2008]; [SLOVAKIA Okresný súd Banská Bystrica 7 March 2008]; [SLOVAKIA Okresný súd Bardejov, 29 October 2007]; [SLOVAKIA Najvyšší súd Slovenskej republiky 27 June 2007]; [HUNGARY Csongrád Megyei Bíróság 6 June 2007]; [MEXICO Tribunal de Apelación de Baja California 24 March 2006]; [RUSSIA Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry 13 February 2006]; [CHINA New Pudong District People's Court, People's Republic of China, 23 September 2005]; [CHINA International Economic and Trade Arbitration Commission, China, 2 September 2005]; [CHINA Shànghi shì dì èr zhngjí rénmín fyuàn, People's Republic of China, 24 June 2005]; [RUSSIA Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry 20 April 2004]; [ITALY Tribunale di Padova 25 February 2004]; [CHINA International Economic and Trade Arbitration Commission, China, 18 December 2003]; [SWITZERLANDTribunal cantonal du Valais 19 August 2003]; CLOUT case No. 634 [GERMANY Landgericht Berlin 21 March 2003]; CLOUT case No. 882 [SWITZERLAND Handelsgericht Aargau 5 November 2002]; CLOUT case No. 636 [ARGENTINA Cámara Nacional de Apelaciones en lo Comercial de Buenos Aires 21 July 2002]; [SWITZERLAND Kantonsgericht Schaffhausen 25 February 2002]; CLOUT case No. 986 [CHINA International Economic and Trade Arbitration Commission, People's Republic of China, 4 February 2002]; [RUSSIA Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry 22 January 2002]; CLOUT case No. 432 [GERMANY Landgericht Stendal 12 October 2000]; [SERBIA Foreign Trade Court of Arbitration at the Serbian Chamber of Commerce, 24 September 2001]; CLOUT case No. 805 [CHINA International Economic and Trade Arbitration Commission, People's Republic of China, 31 December 1999]; CLOUT case No. 333 [SWITZERLAND Handelsgericht Aargau 11 June 1999]; CLOUT case No. 297 [GERMANY Oberlandesgericht München 21 January 1998] (see full text of the decision); [SWITZERLAND Tribunal cantonal du Vaud 28 October 1997]; CLOUT case No. 273 [GERMANY Oberlandesgericht München 9 July 1997]; CLOUT case No. 163 [HUNGARY Arbitration Court attached to the Hungarian Chamber of Commerce and Industry 10 December 1996] (see full text of the decision); CLOUT case No. 854 [CHINA International Economic and Trade Arbitration Commission, People's Republic of China, 15 February 1996]; [GERMANY Amtsgericht Augsburg 29 January 1996]; CLOUT case No. 197 [SWITZERLAND Tribunal cantonal du Valais 20 December 1994] (see full text of the decision); [GERMANY Landgericht Hannover 1 December 1993]; [GERMANY Amtsgericht Ludwigsburg 21 December 1990]; CLOUT case No. 7 [GERMANY Amtsgericht Oldenburg in Holstein 24 April 1990] (see full text of the decision); CLOUT case No. 46 [GERMANY Landgericht Aachen 3 April 1990] (see full text of the decision).

4. See the following decisions, which cited article 59 as a textual basis for an action for payment: [GERMANY Oberlandesgericht Hamm 12 November 2001]; [RUSSIA Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry 25 September 2001]; CLOUT case No. 256 [SWITZERLAND Tribunal Cantonal du Valais 29 June 1998] (the decision cited article 59 as the sole textual basis of the payment claim); [RUSSIA Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry 25 May 1998]; [GERMANY Landgericht Marburg 12 December 1995];; CLOUT case No. 135 [GERMANY Oberlandesgericht Frankfurt am Main 31 March 1995]. See also the following decision, which referred, inter alia, to article 59 to establish the seller's place of business as the place for performance of the obligation to the pay the price: [SWITZERLAND Handelsgericht St. Gallen 29 April 2004]. And see the following decision, which overturned a lower-court decision that had referred to article 59 in connection with the allocation of payments: CLOUT case No. 911 [SWITZERLAND Cour de Justice de Genève 12 May 2006].

5. CLOUT case No. 273 [GERMANY Oberlandesgericht München 9 July 1997] (the court stated that, because the defendant had been unaware, at the due date, of the exact amount of the price, the invoices had to be paid, at the latest, at the time of their presentation in the course of the proceedings).

6. See, by way of illustration, [GERMANY Oberlandesgericht Köln 3 April 2006] (the court interpreted the contract as establishing an obligation to provide an invoice and added, in support, that the buyer was required to have an invoice in its dealings with its country's tax authorities). See also the Digest for article 58, paragraph 4.

7. See Incoterms 2010, the seller's obligations, A 1.

8. See [SLOVAKIA Najvyšší súd Slovenskej republiky 3 April 2008] ("the obligation to pay the purchase price is not subject to the drawing of an invoice").

9. See, for example, [SERBIA Foreign Trade Court of Arbitration at the Serbian Chamber of Commerce 16 March 2009]; [SWITZERLAND Tribunal cantonal du Valais 28 January 2009]; [GREECE Polimeles Protodikio Athinon 2009 (docket no. 4505/2009)]; [GREECE Monomeles Protodikio Thessalonikis 2008 (docket No. 43945/2007)]; [SWITZERLAND Kantonsgericht von Appenzell-Ausserrhoden 6 September 2007]; [SLOVAKIA Okresný súd Bardejov 9 March 2007]; [SLOVAKIA Krajský súd ilina 8 January 2007; [SWITZERLAND Tribunal cantonal du Valais 27 October 2006]; CLOUT case No. 930 [SWITZERLAND Tribunal cantonal du Valais 23 May 2006]; CLOUT case No. 911 [SWITZERLAND Cour de Justice de Genève 12 May 2006]; CLOUT case No. 907 [SWITZERLAND Tribunal cantonal du Valais 27 May 2005]; CLOUT case No. 906 [SWITZERLAND Kantonsgericht Nidwalden 23 May 2005]; [SWITZERLAND Handelsgericht Aargau 25 January 2005]; [SWITZERLAND Handelsgericht des Kantons Bern 22 December 2004]; [GERMANY Landgericht Bayreuth 10 December 2004]; [SERBIA Foreign Trade Court of Arbitration at the Serbian Chamber of Commerce 27 May 2004]; [ITALY Tribunale di Padova 31 March 2004]; CLOUT case No. 893 [SWITZERLAND Amtsgericht Willisau 12 March 2004]; CLOUT case No. 889 [SWITZERLAND Handelsgericht Zürich 24 October 2003]; [SWITZERLAND Handelsgericht St. Gallen 11 February 2003]; [GERMANY Oberlandesgericht Rostock 25 September 2002]. See also (implicitly), [BELGIUM Tribunal de commerce Namur 15 January 2002 (SA P. v. AWS)]; [BELGIUM Foreign Trade Court of Arbitration at the Serbian Chamber of Commerce Serbia, 12 April 2002]; [BULGARIA Arbitration Court attached to the Bulgarian Chamber of Commerce and Industry, 12 March 2001]; [GERMANY Landgericht München 6 April 2000]; CLOUT case No. 255 [SWITZERLAND Kantonsgericht Wallis 30 June 1998]; [GERMANY Landgericht Berlin 24 March 1998]; CLOUT case No. 833 [NETHERLANDS Hoge Raad 20 February 1998]; CLOUT case No. 254 [SWITZERLAND Handelsgericht Aargau 19 December 1997]; CLOUT case No. 283 [GERMANY Oberlandesgericht Köln 9 July 1997]; CLOUT case No. 215 [SWITZERLAND Bezirksgericht St. Gallen 3 July 1997]; CLOUT case No. 275 [GERMANY Oberlandesgericht Düsseldorf 24 April 1997]; [SWITZERLAND Tribunal Cantonal de Vaud 11 March 1996]; CLOUT case No. 211 [SWITZERLAND Tribunal cantonal du Vaud 11 March 1996]; CLOUT case No. 409 [GERMANY Landgericht Kassel 15 February 1996]; [GERMANY Landgericht München 25 January 1996]; [GERMANY Amtsgericht Kehl 6 October 1995]; CLOUT case No. 410 [GERMANY Amtsgericht Alsfeld 12 May 1995]; [BELGIUM Tribunal commercial de Bruxelles 5 October 1994]; CLOUT case No. 79 [GERMANY Oberlandesgericht Frankfurt 18 January 1994] (see full text of the decision); [GERMANY Landgericht Berlin 6 October 1992]; [GERMANY Landgericht Mönchengladbach 22 May 1992]; [ICC Arbitration Court of the International Chamber of Commerce, 1992 (Arbitral award No. 7153)]; CLOUT case No. 55 [SWITZERLAND Pretore della giurisdizione di Locarno Campagna 16 December 1991]; CLOUT case No. 7 [GERMANY Amtsgericht Oldenburg in Holstein 24 April 1990] (see full text of the decision).

10. See, in support of this interpretation, [GERMANY Oberlandesgericht Hamburg 25 January 2008] (after stating that article 59 was applicable to all monetary claims, the court implemented this principle in connection with a sum due under a penalty clause); cf. [UKRAINE Commercial Court of Donetsk Region 13 April 2007] (applying article 59 solely to the sale price owed, the court stated that the "money obligations" had to be fulfilled on the date fixed by the contract without the need for any request or compliance with any other formality on the part of the seller).

11. [GERMANY Oberlandesgericht Hamburg 25 January 2008] (after stating that article 59 was applicable to all monetary claims, the court noted that the amount of the penalty clause was payable without any request or formality on the creditor's part, thus causing interest as provided for under article 78 to accrue automatically).


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