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

Digest of Article 86 case law [reproduced with permission of UNCITRAL] [*]

Article 86

(1) If the buyer has received the goods and intends to exercise any right under the contract or this Convention to reject them, he must take such steps to preserve them as are reasonable in the circumstances. He is entitled to retain them until he has been reimbursed his reasonable expenses by the seller.

(2) If goods dispatched to the buyer have been placed at his disposal at their destination and he exercises the right to reject them, he must take possession of them on behalf of the seller, provided that this can be done without payment of the price and without unreasonable inconvenience or unreasonable expense. This provision does not apply if the seller or a person authorized to take charge of the goods on his behalf is present at the destination. If the buyer takes possession of the goods under this paragraph, his rights and obligations are governed by the preceding paragraph.

OVERVIEW

1. Article 86 governs a buyer's obligation to preserve goods if the goods are subject to the buyer's control and the buyer intends to reject them. Article 86(1) closely parallels for buyers the provisions of article 85 applicable to sellers: article 86(1) imposes a duty on a buyer who has received goods and intends to reject them to take such steps to preserve them as are reasonable in the circumstances.[1] Furthermore, article 86(1) gives a rejecting buyer a right to retain rejected goods until the seller reimburses reasonable preservation expenses. If a buyer who intends to reject goods has not "received" them within the meaning of article 86(1), but the goods have nevertheless reached their destination and been placed at the buyer's disposition, article 86(2) requires the buyer to take possession of the goods "on behalf of the seller." A buyer that takes possession under these circumstances is subject to the rights and obligations relating to preservation provided for in article 86(1).

Applications

2. Article 86 has been cited or involved in a small number of decisions. Most of those decisions have focused on a buyer's claim for the recovery of expenses of preserving goods that it wished to reject.[2] Thus article 86 has been invoked as the basis for a buyer's recovery of the cost of preserving delivered goods after the buyer justifiably avoided the contract.[3] On the other hand, costs incurred by the buyer, after timely and proper avoidance, for storing rejected air conditioner compressors were treated as damages recoverable under article 74, without citation of article 86.[4] A buyer's failure to meet its obligation under article 86(1) to take reasonable steps to preserve a shipment of non-conforming chemicals (as well as its failure to sell the chemicals as required by article 88(1)) caused a court to deny, in large part, the buyer's claim for the expenses of nearly three years of warehousing the goods.[5] Where a buyer unjustifiably demanded that the seller stop delivering the goods, and the buyer did not qualify for an exemption for non-performance under article 79 CISG, its claim for the costs of storing goods that the seller delivered was denied.[6] Finally, a buyer who allegedly received "excess" goods beyond the quantity called for in the contract was found to have an obligation either to return them or pay for them; in response to the buyer's argument that article 86(1) permits a buyer to retain goods that it intends to reject until the seller reimburses the buyer's expenses of preserving them, the court noted that the buyer had not come forward with any allegation that it had incurred such expenses.[7]


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. As was the case with the seller's article 85 obligation to preserve goods, a rejecting buyer's duty of preservation is further elaborated in article 87 (which permits goods to be preserved by being deposited in a warehouse at the other party's expense) and article 88 (which in certain circumstances permits — or even requires — goods to be sold by the party obligated to preserve them). See [SLOVENIA Higher Court in Lujubljana 14 December 2005 (Door and door jamb case)] (where a seller did not wish to take back delivered goods (doors and door jambs) after the buyer had properly avoided the contract, the court, citing article 88(1) (but not article 86), held that the buyer properly resold the goods in order to reduce storage costs); [SPAIN Appellate Court of Barcelona 11 March 2002 (G & D Iberica S.A. v. Cardel)] where the court applied domestic law that allowed the deposit of the goods with the court for the benefit of the seller, suggesting that that under articles 86 and 87 CISG depositing the goods with the court may also be carried out for the benefit of the buyer.

2. CLOUT case No. 867 [ITALY Tribunale di Forlí 11 December 2008 (Mitias v. Solidea S.r.l.)] (allowing the buyer to recover the reasonable costs of storing goods after properly avoiding the contract; citing article 85 rather than article 86). But see CLOUT case No. 594 [GERMANY Oberlandesgericht Karlsruhe 19 December 2002], where the court noted that the buyer's obligation under article 86 to take reasonable steps to preserve goods was limited to periods when the goods were in the buyer's possession, and did not impose on the buyer responsibility for transporting non-conforming goods back to a seller who had agreed to remedy the lack of conformity (see full text of the decision).

3. CLOUT case No. 867 [ITALY Tribunale di Forlí 11 December 2008 (Mitias v. Solidea S.r.l.)] (allowing the buyer to recover the reasonable costs of storing goods after properly avoiding the contract; citing article 85 rather than article 86); CLOUT case No. 304 [ICC Arbitration Court of the International Chamber of Commerce, 1994 (Arbitral award No. 7531) (Scaffold fittings case)] .

4. CLOUT case No. 85 [UNITED STATES U.S. District Court, Northern District of New York, 9 September 1994] (characterizing recovery of preservation costs as "consequential damages"), affirmed in relevant part in CLOUT case No. 138 [UNITED STATES U.S. Court of Appeals for the Second Circuit 6 December 1995, 3 March 1995] (characterizing recovery of preservation costs as "incidental damages") (see full text of the decision).

5. [CHINA International Economic and Trade Arbitration Commission, People's Republic of China, 6 June 1991].

6. [BULGARIA Arbitration Court attached to the Bulgarian Chamber of Commerce and Industry, 12 February 1998 (Arbitral award No. 11/1996)].

7. CLOUT case No. 155 [FRANCE Cour de Cassation 4 January 1995] (see full text of the decision).


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