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

Digest of Article 55 case law [reproduced with permission of UNCITRAL] [*]

[Text of article
Introduction
Priority of the intention of the parties
Salvage of a contract specifying no price
Determining the price under article 55]

Article 55

Where a contract has been validly concluded but does not expressly or implicitly fix or make provision for determining the price, the parties are considered, in the absence of any indication to the contrary, to have impliedly made reference to the price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the trade concerned.

INTRODUCTION

1. As is revealed by the Conventions travaux préparatoires, the interplay of articles 14 and 55 is one of the most difficult questions raised by the Convention.[1]

Priority of the intention of the parties

2. Court and arbitral decisions consistently hold that, in determining the applicability of article 55 (as with other provisions of the Convention), one must refer first and foremost to the intention of the parties. Article 55 does not empower a judge or arbitrator to establish a price when the price has already been determined,[l] or made determinable, by the contracting parties.[2] Article 55 of the Convention is also inapplicable when the parties have made their contract subject to subsequent agreement on the price.[3]

Salvage of a contract specifying no price

3. One court concluded that a proposal to sell aircraft engines did not meet the requirements of article 14 of the Convention because it did not include the price for all the types of aircraft engines among which the buyer could choose under the proposal, and that the contract allegedly resulting from the proposal was therefore invalid.[4] This decision suggests that article 55 does not rescue a contract that is invalid due to the absence of a price term, and that article 14 of the Convention thus prevails over article 55. Under this interpretation of article 55, the provision is applicable only if the contract of sale was validly concluded without a price, and under article 14 of the Convention a price provision may be required to make the contract valid.

4. On the other hand, one court invoked article 55 to determine the price of raw materials where the price had not been agreed upon beforehand by the parties.[5] Arbitrators, confronted with the difficulties presented by articles 14 and 55, have also given precedence to article 55 and indicated a willingness to establish a missing price with a view to rendering the contract effective.[6]

Determining the price under article 55

5. Where article 55 applies, the parties are presumed to have intended "the price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the trade concerned." Implementing this provision should not be particularly difficult when the goods consist of raw materials or semi-finished products. The situation changes when the contract involves manufactured products. Thus the Supreme Court of a State concluded that the price of aircraft engines could not be determined under article 55 because there was no market price for the goods.[7] It has also been held that a current price for purposes of recovering damages under article 76 can be established using the methodology in article 55 for determining the price in a contract that does not expressly or implicitly fix or make provision for determining the price.[8]


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 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.

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. 1980 Vienna Diplomatic Conference, Summary Records of Meeting of the First Committee, 8th meeting, Monday, 17 March 1980. See also the Digest for article 14, paras. 13-16.

2. [GERMANY Landgericht, Darmstadt 9 May 2000 (Video recorders case)]; [FRANCE Cour d'appel, Grenoble 26 April 1995 (Candy case)].

3. [ICC International Court of Arbitration, Award 8324 of 1995 (Magnesium case)]; [AUSTRIA Oberster Gerichtshof 10 November 1994 (Chinchilla furs case)].

4. [RUSSIA Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, Award 309/1993 of 3 March 1995 (Rejection of article 55 case)].

5. [HUNGARY Legfelsobb Birosag 25 September 1992 (Airplane engines case)].

6. [SWITZERLAND Bezirksgericht St. Gallen 3 July 1997 (Fabrics case)]. See on this case, Digest, article 14, No. 16.

7. See [ICC International Court of Arbitration, Award 9187 of June 1999 (Coke case)] ("Sale without prior fixing of a price is common in international trade, as is shown by the Vienna Convention of 11 April 1980 on the International Sale of Goods (art. 55) [...]").

8. [HUNGARY Legfelsobb Birosag 25 September 1992 (Airplane engines case)].

9. [GERMANY Oberlandesgericht München 15 September 2004 (Ink jet printers case)].


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