2008 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods
Digest of Article 66 case law [reproduced with permission of UNCITRAL] [*]
[Text of article
Consequence of passing of risk to buyer
Exception when loss or damage due to seller's act or omissions]
Loss of or damage to the goods after the risk has passed to the buyer does not discharge him from his obligation to pay the price, unless the loss or damage is due to an act or omission of the seller.
1. Article 66 provides that the buyer is not discharged from the obligation to pay the price if the goods are lost or damaged after the risk has passed to the buyer unless the loss or damage was caused by the seller. Article 66 does not create the obligation to pay the purchase price; that obligation is set out in article 53. Article 66 is also silent as to when the risk of loss or damage passes. The parties' contract and articles 67-70 set out rules for determining when the risk passes.
[See also the overview comments UNCITRAL has prepared to introduce the provisions of the CISG dealing with Passing of Risk (articles 66 through 70). They discuss Nature of Risk, Parties' Agreement on Passing of Risk, Other Binding Rules on Passing of Risk, Burden of Establishing the Passing of Risk, and Risk of Loss or Damage Following Termination or Avoidance.]
Consequence of passing of risk to buyer
2. Once it has been established that the risk passed before loss or damage to the goods occurred, decisions routinely require the buyer to pay the price unless it is established that the seller was responsible for the loss or damage. Most, but not all, of these decisions cite both article 53 and article 66. Several decisions cite article 66 for the proposition that a buyer is not obligated to pay the price for lost or damaged goods if the seller is unable to establish that risk had passed.
3. Other articles explicitly or implicitly state the consequences for the buyer of bearing the risk. If, for example, the buyer takes delivery of goods without notifying the seller of lack of conformity and the goods are later discovered to be non-conforming, the buyer bears the burden of establishing that the goods did not conform at the time the risk of loss passed.
Exception when loss or damage due to seller's acts or omissions
4. Although the buyer normally is not discharged from its obligation to pay the price if the goods are lost or damaged after the risk has passed to the buyer, the last clause of article 66 provides an exception to this non-dischargability rule if it is established that the loss or damage was due to an act or omission of the seller. An arbitral tribunal found that the seller's failure to give the carrier agreed instructions on the temperature at which the goods were to be stored during carriage caused the goods to be damaged through melting and leakage, and the buyer was therefore not responsible for the damage. Several cases place the burden of showing this exception on the buyer; in none of these cases has the buyer carried this burden.
5. This exception to the buyer's obligation to pay is distinct from the seller's continuing liability under article 36(1) for non-conformities that exist at the time the risk of loss passes even if they do not become apparent until a later time; the exception in article 66(2) is also distinct from the seller's liability under article 36(2) for non-conformities that arise subsequent to passage of risk if the seller has guaranteed the goods against these non-conformities.
* 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:
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1. [GERMANY Amtsgericht Duisburg 13 April 2000 (Pizza cartons case)] (obligation to pay not discharged where goods suffered damage after risk passed to buyer); [GERMANY Oberlandesgericht Oldenburg 22 September 1998 (Raw salmon case)] (risk had passed to the buyer upon delivery of raw salmon to processing plant, and buyer's obligation to pay therefore was not discharged even though the plant sent the processed salmon to other customers) (see full text of the decision); [GERMANY Oberlandesgericht Hamm 23 June 1998 (Furniture case)] (buyer not obliged to pay for goods that had disappeared from warehouse because risk had not shifted to buyer under art. 69(2)); [HUNGARY Arbitration Court attached to the Hungarian Chamber of Commerce and Industry 10 December 1996 (Caviar case)] (risk having passed to buyer under FOB term, buyer's obligation to pay was not discharged even if buyer was unable to make proper use of goods because of subsequent UN embargo); [ARGENTINA Cámara Nacional de Apelaciones en lo Comercial 31 October 1995 (Dehydrated mushrooms case)] (obligation to pay was not discharged despite deterioration of goods during transit because risk had passed on shipment and buyer was unable to establish that seller was responsible for the deterioration).
2. The following cases cite both article 53 and article 66: [GERMANY Landgericht Flensburg 24 March 1999 (Vine wax case)]; [GERMANY Oberlandesgericht Oldenburg 22 September 1998 (Raw salmon case)] (see full text of the decision); [GERMANY Oberlandesgericht Hamm 23 June 1998 (Furniture case)]; [HUNGARY Arbitration Court attached to the Hungarian Chamber of Commerce and Industry 10 December 1996 (Caviar case)] (see full text of the decision).
3. [GERMANY Oberlandesgericht Köln 9 July 1997 (Video camera case)] (under articles 66 and 67(1) buyer had no obligation to pay the price for goods buyer did not receive where seller did not establish delivery to first carrier); [GERMANY Oberlandesgericht Karlsruhe 20 November 1992 (Frozen chicken case)] (under articles 66 and 67(1) buyer had no obligation to pay the price for goods it did not receive because risk of loss had not passed under "Frei Haus" trade term).
4. [GERMANY Landgericht Flensburg 24 March 1999 (Vine wax case)].
5. [CHINA CIETAC Arbitration 23 February 1995 (Jasmine aldehyde case)].
6. [HUNGARY Arbitration Court attached to the Hungarian Chamber of Commerce and Industry 10 December 1996 (Caviar case)] (see full text of the decision); [ARGENTINA Cámara Nacional de Apelaciones en lo Comercial 31 October 1995 (Dehydrated mushrooms case)].