2012 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods
Digest of Article 69 case law [reproduced with permission of UNCITRAL] [*]
[Text of article
Taking over goods at seller's place of business
Taking over goods at other locations
Identification of the Goods]
(1) In cases not within articles 67 and 68, the risk passes to the buyer when he takes over the goods or, if he does not do so in due time, from the time when the goods are placed at his disposal and he commits a breach of contract by failing to take delivery.
(2) However, if the buyer is bound to take over the goods at a place other than a place of business of the seller, the risk passes when delivery is due and the buyer is aware of the fact that the goods are placed at his disposal at that place.
(3) If the contract relates to goods not then identified, the goods are considered not to be placed at the disposal of the buyer until they are clearly identified to the contract.
1. Article 69 provides residual rules on the time of passing of risk in cases not covered by the preceding two articles of the Convention. The consequence of the passing of the risk on the buyer's obligation to pay is dealt with in article 66. The effect of seller's fundamental breach on the passing of risk is addressed in article 70.
2. Article 69 applies only if the preceding two articles of the Convention do not apply. Article 67 governs cases where the contract of sale involves carriage of goods, and cases falling within that provision are thus beyond the scope of article 69. If the contract of sale is silent as to the carriage of goods, however, article 69 rather than article 67 will govern the passing of risk. This is the case even if the buyer arranges for subsequent transportation of the goods by a third-party carrier. Which article applies in a particular case often turns on the interpretation of the parties' agreement. A court concluded that a contract term "list price ex works" was not inconsistent with article 67(1) where the goods were to be taken by a third-party carrier from Japan. An arbitral tribunal also applied article 67(1) to a contract providing that "the buyer has to pick up the fish eggs at the seller's address and take the goods to his facilities in Hungary" and that the price was "FOB Kladovo" (Kladovo being the seller's address). On the other hand, with respect to a contract where the seller agreed to deliver the goods under the "DAF" ("Delivered at Frontier") term in accordance with Incoterms 1990 (under Incoterms 2010, "DAF" is subsumed under "DAP" ("Delivered at Place")), an arbitral tribunal found that article 69 rather than article 67 (or the DAF term itself) governed the issue of when the risk passes. For more cases, see the digest to article 67.
3. Article 69(1) covers cases where delivery is to take place at the seller's place of business, while article 69(2) addresses all other cases. If the loss or damage occurred after the buyer took over the goods, some decisions apply Article 69 without specifying whether they are applying paragraph (1) or (2).
Taking over Goods at Sellerís Place of Business
4. When goods are to be delivered at the seller's place of business, article 69(1) provides that the risk passes to the buyer when it takes over the goods. The buyer's use of a carrier to take over the goods does not prevent the passing of risk even when it was agreed that the goods were to be taken over by the buyer. A court has applied article 69(1) to a contract between an individual and an auctioneer where the individual ordered the auctioneer to sell by auction a painting.
5. If the buyer fails to take over the goods, paragraph (1) provides that the risk passes at the point when two requirements have been satisfied: 1) the goods have been placed at the buyer's disposal, and 2) the buyer's failure to take them over constitutes a breach of contract. One court found that the goods had not been placed at the buyer's disposal when they were stored in the manufacturer's warehouse, rather than in the seller's warehouse where the delivery to the buyer was to be made.
Taking over Goods at Other Locations
6. Paragraph (2) of article 69 addresses the passing of risk in cases where the buyer is bound to take over the goods at a place other than the seller's place of business. In these cases, the risk passes when the buyer is aware that the goods are placed at its disposition and delivery is due.
7. Paragraph (2) covers a variety of cases, including cases involving delivery of goods stored in a third party's warehouse, delivery at some place other than the seller's or buyer's place of business, and delivery at the buyer's place of business. In one case, a court found that the risk that furniture stored in a warehouse would be lost had not passed to the buyer; the buyer had been issued storage invoices but delivery was not yet due because, by the parties' agreement, delivery was due only on the buyer's demand and it had not yet made a demand. Another case found, however, that risk of loss had passed when the seller delivered raw salmon to a third party processor because the buyer acquiesced in the delivery and delivery was due. In another case, an arbitral tribunal found that the seller, who had stored the goods following the buyer's failure to open an agreed letter of credit, bore the risk of loss because the seller had not delivered the goods "DAF" ("Delivered at Frontier") as agreed, nor had the seller placed the goods at the buyer's disposal.
Identification of the Goods
8. For the same reasons that justify paragraph (2) of article 67, paragraph (3) of article 69 provides that, in case of a sale of goods not identified when the contract is concluded, the goods are considered not to have been placed at the disposal of the buyer until they are clearly identified to the contract. Consequently, the risk of loss does not pass under either paragraphs (1) or (2) of article 69 until that time. One court applying article 69(2) held that the requirement that the goods be clearly identified was satisfied by storing the goods in a warehouse separately from other goods.
* 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. CLOUT case No. 360 [GERMANY Amtsgericht Duisburg 13 April 2000] (article 69(1) applies only if preceding two articles do not apply) (see full text of the decision).
2. CLOUT case No. 283 [GERMANY Oberlandesgericht Köln 9 July 1997].
3. CLOUT case No. 163 [HUNGARY Választottbíróság csatolták a Magyar Kereskedelmi és Iparkamara 10 December 1996].
4. CLOUT case No. 104 [ICC Arbitration Court of the International Chamber of Commerce, 1993 (Arbitral award No. 7197)].
5. See [UNITED STATES U.S. District Court, Colorado, 6 July 2010 (Alpha Prime Development Corp. v. Holland Loader)].
6. [AUSTRIA Oberlandesgericht Linz 23 January 2006] (article 69 referred to during application of article 36; however, applicability of the CISG denied upon appeal in [AUSTRIA Oberster Gerichtshof 4 July 2007]; CLOUT case No. 995 [DENMARK Randers Byret 8 July 2004] (agricultural machine to be delivered in Buyer's country, a few kilometers from the field where it was intended to be used).
7. [GERMANY Oberlandesgericht Schleswig-Holstein 29 October 2002 (Stallion case)].
8. [NETHERLANDS Arrondissementsrechtbank Arnhem 17 July 1997 (Kunsthaus Math. Lempertz OHG v. Wilhelmina van der Geld)], affirmed on other grounds, [NETHERLANDS Gerechtshof Arnhem 9 February 1999] (Convention not applicable).
9. [GERMANY Landgericht Paderborn 10 June 1997 (Furniture case)] (although the upper court in CLOUT case No. 338 [GERMANY Oberlandesgericht Hamm 23 June 1998], applied paragraph (2) of Article 69).
10. [SWITZERLAND Cour de Justice [Appellate Court] de Genève 20 January 2006 (Paper products case)] (delivery at buyer's President's private residence — obiter dictum); [SWITZERLAND Appelationshof Bern 11 February 2004 (Wire and cable case)] (delivery at buyer's address although there is no explicit citation of article 69(2)); [BELGIUM Rechtbank van Koophandel Ieper 18 February 2002] (delivery at buyer's place); CLOUT case No. 360 [GERMANY Amtsgericht Duisburg 13 April 2000] (paragraph (2) covers cases where buyer takes over goods at a place other than seller's place of business; in this particular case, the place of delivery was buyer's place of business).
11. CLOUT case No. 338 [GERMANY Oberlandesgericht Hamm 23 June 1998].
12. CLOUT case No. 340 [GERMANY Oberlandesgericht Oldenburg 22 September 1998].
13. CLOUT case No. 104 [ICC Arbitration Court of the International Chamber of Commerce, 1993 (Arbitral award No. 7197)] (see full text of the decision).
14. [GERMANY Oberlandesgericht Hamburg 14 December 1994 (Cobalt sulphate case)] (affirmed in CLOUT case No. 171 [GERMANY Bundesgerichtshof 3 April 1996] without explicit mention of this issue).