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

Digest of Article 57 case law [reproduced with permission of UNCITRAL] [*]

[Text of article
Introduction
Determination of the place of payment of the price
Application of art. 57 to sums of money other than the price
Change in the seller's place of business]

Article 57

(1) If the buyer is not bound to pay the price at any other particular place, he must pay it to the seller:
(a) at the seller's place of business; or
(b) if the payment is to be made against the handing over of the goods or of documents, at the place where the handing over takes place.
2) The seller must bear any increase in the expenses incidental to payment which is caused by a change in his place of business subsequent to the conclusion of the contract.

INTRODUCTION

1. Article 57(1) defines the place where payment is to be made. Absent a different agreement between the parties, the price is to be paid at the seller's place of business (article 57(1)(a)) or, if the parties agreed that the price would be payable against the handing over of the goods or of documents, at the place where such handing over takes place (article 57(1)(b)). Several decisions have determined that the burden of proof of payment of the price rests on the buyer.[1]

2. After the conclusion of the contract, the seller might change its place of business, which under article 57(1)(a) may be the place for payment. In that case, article 57(2) provides that any increase in the expenses incidental to payment that is caused by the change is to be borne by the seller.

Determination of the place of payment of the price

3. Article 57(1) has attracted a large amount of comment in case law. The provision has been referred to, for example, in determining the currency of payment.[2]

4. Article 57(1) plays an important role in the practice of countries whose legal systems provide for jurisdictional competence at the place of performance of obligations.[3] This is the case in Europe, for example. Article 5.1 of the 1968 Brussels Convention, which is binding for the countries of the European Union and relates to jurisdiction and the enforcement of judgements in civil and commercial matters, permits the plaintiff to sue the defendant in matters relating to a contract, in the courts for the place of performance of the obligation in question. This same provision was incorporated in the Convention of Lugano of 16 September 1988, which is binding on the countries of the European Free Trade Association (EFTA). The combined effect of article 5.1 of the Brussels and Lugano Conventions and article 57 of the Sales Convention is that, with respect to an international sale of goods governed by the Convention, a seller can bring an action against a defaulting buyer in the court having jurisdiction at the seller's place of business. This approach is prevalent in countries of the European Union because the European Community Court of Justice eliminated doubts as to its validity by confirming that the place where the obligation to pay the price is to be performed "must be determined on the basis of the substantive law provisions governing the obligation at issue according to the rules of conflict of the jurisdiction in which the action was brought, even if those rules indicate that a unified substantive law, such as the 1964 Hague Convention relating to the Uniform Law on the International Sale of Goods, must apply to the contract."[4] Decisions applying article 57 of the CISG Convention in connection with the implementation of article 5.1 of the Brussels [5] and Lugano [6] Conventions have been numerous.

5. On 1 March 2002, in the countries of the European Union (with the exception of Denmark), Council Regulation No. 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters [7] entered into force, replacing the Brussels Convention. For those European States article 57 of the United Nations Convention on Contracts for the International Sale of Goods will thus cease to play the role it has hitherto played in the determination of jurisdiction. In fact, the question of special competence in contractual matters is substantially revised by the new text. Although the prior basic rule is retained (article 5.1(a)), the regulation specifies, substantively, the place of performance for two types of contracts -- namely contracts for the sale of goods and contracts for the provision of services -- unless otherwise agreed between the parties (article 5.1(b)). For sales of goods, the place in question is "the place in a Member State where, under the contract, the goods were delivered or should have been delivered." The aim of the authors of this rule was to regroup such actions, whatever the obligations at issue might be, and to avoid making it too easy for the seller to sue the buyer before the courts of the seller's domicile or place of business. When the place of delivery is not in a Member State, article 5.1(b) does not apply, in which case the basic rule of article 5.1(a) of the Council Regulation is applicable and article 57 of the CISG regains all its importance. Council Regulation No. 44/2001 of 22 December 2000 applies every time the defendant is domiciled (article 2) or has its statutory seat, its central administration, or its principle place of business (article 60) in a Member State, whatever its nationality. A similar rule exists in the 1968 Convention of Brussels (articles 2 and 53) and in the 1988 Convention of Lugano adopted by the member states of the EFTA (articles 2 and 53).

Application of Article 57(1) to sums of money other than the price

6. Case law is not uniform on the question whether the rule of article 57(1), establishing payment of the price at the seller's place of business as a default principle, should also be applied to other monetary obligations arising out of a contract of sale governed by the CISG, such as the obligation of a party in breach to pay compensation, or a seller's obligation to return the sale price following avoidance of the contract.

7. Certain decisions on this question refer to the national law governing the contract. Thus the Supreme Court of one State held that article 57 of the Convention was not applicable to claims for restitution of the sale price following amicable avoidance of the contract, and stated that the place for bringing such claims should be determined by the law applicable to the avoided contract.[8] According to another decision, article 57 does not establish a general principle with regard to the place for restitution of the price following avoidance of a contract because the provision could be interpreted as embodying the principle of payment at the seller's domicile, or of payment at the creditor's domicile.[9] These decisions seem to be based on the idea that the solution lies in the applicable national law determined by choice-of-law rules.

8. Decisions that resolve the issue by discovering and applying a general principle of the Convention (see article 7(2)) are more numerous. Thus in determining the place for payment of compensation for non-conforming goods a court has stated that "if the purchase price is payable at the place of business of the seller", as provided in article 57(1) of the Convention, then "this indicates a general principle valid for other monetary claims as well".[10] Another court, in an action for restitution of excess payments received by the seller, stated that there was a general principle under which "payment is to be made at the creditor's domicile, a principle that is be extended to other international trade contracts under article 6.1.6 of the UNIDROIT Principles".[11] The Supreme Court of another State, which had previously adopted a different approach, decided that the gap in the Convention with respect to the performance of restitution obligations should be filled by reference to a general principle of the Convention according to which "the place for performance of restitution obligations should be determined by transposing the primary obligations -- through a mirror effect -- into restitution obligations".[12]

Change in the seller's place of business

9. By providing that the seller must bear any increase in the expenses incidental to payment that is caused by a change in its place of business subsequent to the conclusion of the contract, article 57(2) makes clear that the buyer must pay the price at the seller's new address. For this reason, the seller must inform the buyer of the change in a timely manner. Under article 80 of the Convention the seller has no right to rely on any delay in payment of the price that is caused by late notification of the change of address.

10. Does article 57(2) remain applicable when the seller assigns the right to receive payment of the purchase price to another party? According to one decision, assignment of the right to receive the purchase price results in transferring the place of payment from the business premises of the assignor to those of the assignee.[13]


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. [GERMANY Oberlandesgericht München 9 July 1997 (Leather goods case)]; see also [MEXICO Court of Tijuana 14 July 2000 (Wood case)] (decided on the basis of Mexican procedural law).

2. See the Digest for art. 54, para. 6.

3. It is rare for article 57(1) to be applied except in connection with the question of jurisdiction. See, however, [AUSTRIA Oberster Gerichtshof 22 October 2001 (Gasoline and gas oil case)].

4. [EUROPEAN COURT OF JUSTICE, C-288/92, 29 June 1994 (Windows and doors case)].

5. See in particular [GERMANY Bundesgerichtshof 30 April 2003 (Cucumbers case)]; [BELGIUM Rechtbank van Koophandel Veurne 19 March 2003 (Leeks case)]; [GERMANY Bundesgerichtshof 2 October 2002 (Vegetables case)]; [BELGIUM Hof van Beroep Gent 15 May 2002 (Design of radio phone case)]; [BELGIUM Hof van Beroep Gent 31 January 2002 (Candy case)]; [GERMANY Bundesgerichtshof 7 November 2001 (Apple juice concentrate case)]; [FRANCE Cour de cassation 26 June 2001 (Auto parts)]; [GERMANY Landgericht Flensburg 19 January 2001 (Live sheep case)]; [ITALY Corte di Cassazione 14 December 1999 (Manufactured goods case)]; [GERMANY Landgericht, Darmstadt 9 May 2000 (Video recorders case)] (see full text of the decision); [GERMANY Landgericht Trier 7 December 2000 (Equipment for telecommunications case)]; [SPAIN Audencia Provincial de Barcelona 7 June 1999 (Clothes case)] (see full text of the decision); [GERMANY Oberlandesgericht Celle 11 November 1998 (Orange juice case)]; [FRANCE Cour d'appel 15 October 1997 (Mannequins case)] (see full text of the decision); [GERMANY Oberlandesgericht München 9 July 1997 (Fitness equipment case)]; [GERMANY Oberlandesgericht Köln 21 August 1997 (Aluminium hydroxide case)] (see full text of the decision); [DENMARK Østre Landsret 22 January 1996 (Rattan products case)]; [FRANCE Cour d'appel, Grenoble 23 October 1996 (Stock equipment: live stock pens, drinking troughs, etc. case)]; [GERMANY Landgericht Siegen 5 December 1995 (Motors case)]; [NETHERLANDS Gerechtshof 's-Hertogenbosch 9 October 1995 (Cloth case)]; [GERMANY Oberlandesgericht München 28 June 1995]; [FRANCE Cour d'appel, Grenoble 29 March 1995 (Corn case)] (see full text of the decision); [NETHERLANDS Rechtbank Middelburg 25 January 1995 (Beef case)]; [NETHERLANDS Hof 's-Hertogenbosch, 26 October 1994 (Trucks case)]; [FRANCE Cour d'appel, Paris 10 November 1993 (Tin sheets case)] (see full text of the decision) [FRANCE Cour d'appel, Grenoble 16 June 1993 (Construction material case)].

6. [SWITZERLAND Handelsgericht Aargau 5 November 2002 (Inflatable triumphal arch case)]; [GERMANY Landgericht Freiburg 26 April 2002 (Metal racks case)]; [SWITZERLAND Zivilgericht des Kantons Basel-Stadt 3 December 1997 (Furniture case)]; [SWITZERLAND Bundesgericht 18 January 1996 (Waste gas cleansing installation case)].

7. Official Journal of the European Community, Legislation, 16 January 2001.

8. [AUSTRIA Oberster Gerichtshof 10 March 1998].

9. [FRANCE Cour d'appel Paris 14 January 1998 (Two elephants case)].

10. [GERMANY Oberlandesgericht Düsseldorf 2 July 1993 (Veneer cutting machine case)]. To similar effect, see [AUSTRIA Oberster Gerichtshof 18 December 2002 (Goods case)]; [GERMANY Landgericht Giessen 17 December 2002 (Vehicle safety devices case)].

11. [FRANCE Cour d'appel Grenoble 23 October 1996 (Stock equipment: live stock pens, drinking troughs, etc. case)] (see full text of the decision).

12. [AUSTRIA Oberster Gerichtshof 29 June 1999 (Dividing wall panels case)].

13. [GERMANY Oberlandesgericht Celle 11 November 1998 (Orange juice case)].


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