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2008 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods

Digest of Article 41 case law [reproduced with permission of UNCITRAL] [*]

Article 41

The seller must deliver goods which are free from any right or claim of a third party, unless the buyer agreed to take the goods subject to that right or claim. However, if such right or claim is based on industrial property or other intellectual property, the seller's obligation is governed by article 42.

OVERVIEW

1. Article 41 governs the seller's duty to ensure that the goods it delivers are not subject to rights or claims by a third party. Freedom from such rights or claims permits the buyer to enjoy undisturbed possession and ownership of the goods. Under article 4(b) of the Convention, questions concerning "the effect which the contract may have on the property in the goods sold" are beyond the scope of the CISG. Article 41, however, makes it clear that the seller's obligation to give the buyer clear property rights in the goods -- so that the buyer is free from third party rights or claims -- is a matter governed by the Convention: the seller will be in breach of its duties under the Convention if it does not meet the requirements imposed by article 41. The basic statement of the seller's obligation is found in the first sentence of article 41: the seller must deliver goods that "are free from any right or claim of a third party ...". An exception to this obligation arises, however, if the buyer "agreed to take the goods subject to that right or claim." The second sentence of article 41 mandates a distinction between third party rights or claims based on "industrial or other intellectual property" and other rights or claims of third parties. Only the latter are within the scope of article 41, whereas the former are governed by article 42 of the Convention.

Application of Article 41

2. There have been relatively few decisions applying article 41; they have tended to focus on what constitutes a breach of the seller's obligations under the provision. In one, the court stated that a seller would violate article 41 if it delivered goods subject to a restriction, imposed by the seller's own supplier, on the countries in which the buyer could resell the goods, unless the buyer had previously consented to the restriction.[1] In another, an arbitration panel indicated that article 41 required a seller to arrange for its wholly-owned subsidiary, which had obtained a court order putting under arrest the vessel in which the goods were loaded, to avoid or lift the effects of the order.[2]


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_second_edition.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 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.

In addition, this presentation introduces each section of the UNCITRAL Digest with a Google search button. This is to help you access doctrine (relevant material from the over 1,200 commentaries, monographs and books on the CISG and related subjects that we present on this database) as well as the texts of the cases that UNCITRAL cites in its Digests and that we present in our updates to UNCITRAL's Digests.

1. [AUSTRIA Oberster Gerichtshof 6 February 1996 (Propane case)] (see full text of the decision).

2. [ICC International Court of Arbitration, Award 8204 of 1995].


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