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

Digest of Article 87 case law [reproduced with permission of UNCITRAL] [*]

Article 87

A party who is bound to take steps to preserve the goods may deposit them in a warehouse of a third person at the expense of the other party provided that the expense incurred is not unreasonable.

OVERVIEW

1. In certain circumstances, the CISG imposes upon sellers (article 85) and buyers (article 86) an obligation to take reasonable steps to preserve goods that are within the party's possession or control, along with a right to retain the goods until the party is reimbursed its expenses of preservation. Article 87 specifies one means by which a party can fulfil its obligation to preserve goods: it can store the goods in a third party's warehouse "at the expense of the other party provided that the expense incurred is not unreasonable".

Applications

1. Only a small number of decisions, generally involving a party's claim for reimbursement of the costs of storing goods in a warehouse, have applied article 87. Thus where a buyer refused to take delivery of trucks and the seller deposited them in a warehouse (before eventually reselling them to another buyer), an arbitral tribunal found that the seller's actions were justified under articles 85 and 87; after determining that the warehousing costs were reasonable, the tribunal awarded seller compensation for those expenses.[1] Similarly, article 87 has been cited in support of a buyer's recovery of the cost of storing delivered goods in a warehouse after the buyer justifiably avoided the contract.[2] Another arbitral tribunal held a breaching buyer liable for the seller's costs of storing the goods in a warehouse; however, the tribunal denied the 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.[3] Where the buyer had properly avoided the contract, a tribunal denied the seller's claim under article 87 (and article 85) for reimbursement of the expenses of warehousing the goods on the grounds that the buyer did not breach its obligations.[4] An avoiding buyer's costs of warehousing rejected air conditioner compressors have also been treated as damages recoverable under article 74, without any reference to article 87.[5] In a case where a buyer sought interim relief to prevent re-sale of a key component of industrial machinery, which the seller had retained after the buyer failed to make full payment, the court held that the seller was entitled to move the component to a warehouse, but the seller would itself have to advance the storage expenses because article 87 could not be relied upon in a proceeding involving interim measures of protection.[6] Another court referred to articles 86 and 87 in determining that a buyer who is bound to take steps to preserve the goods may deposit such goods with the court.[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. CLOUT case No. 141 [RUSSIA Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry 25 April 1995 (Arbitral award No. 200/1994)].

2. CLOUT case No. 304 [ICC Arbitration Court of the International Chamber of Commerce, 1994 (Arbitral award No. 7531) (Scaffold fittings case)] (see full text of the decision).

3. CLOUT case No. 104 [ICC Arbitration Court of the International Chamber of Commerce, 1993 (Arbitral award No. 7197)] (see full text of the decision).

4. CLOUT case No. 293 [GERMANY Schiedsgericht der Hamburger freundschatlichen Arbitrage 29 December 1998] (see full text of the decision).

5. 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" recoverable under article 74) (see full text of the decision), 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).

6. CLOUT case No. 96 and No. 200 [SWITZERLAND Tribunal Cantonal Vaud 17 May 1994] (both abstracts dealing with the same case) (see full text of the decision).

7. [SPAIN Appellate Court of Barcelona 11 March 2002 (G & D Iberica S.A. v. Cardel)]. 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.


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