2008 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods
Digest of Article 69 case law [reproduced with permission of UNCITRAL] [*]
[Text of article
Taking over goods at seller's place of business
Taking over goods at other locations]
(1) In cases not within articles 67 and 68, the risk passes to the buyer when he takes
over the goods or, if he does not do so in due time, from the time when the goods
are placed at his disposal and he commits a breach of contract by failing to take
(2) However, if the buyer is bound to take over the goods at a place other than a place of business of the seller, the risk passes when delivery is due and the buyer is aware of the fact that the goods are placed at his disposal at that place.
(3) If the contract relates to goods not then identified, the goods are considered not to be placed at the disposal of the buyer until they are clearly identified to the contract.
1. Article 69 provides residual rules on the time of passing of risk in cases not covered by the preceding two articles of the Convention. Paragraph (1) covers cases where delivery is to take place at the seller's place of business, while paragraph (2) addresses all other cases. The consequence of the passing of the risk on the buyer's obligation to pay is dealt with in article 66. The effect on the passing of risk in cases where the seller commits a fundamental breach is addressed in article 70.
2. Article 69 applies only if the preceding two articles of the Convention do not apply. Article 67 governs cases where the contract of sale involves carriage of goods, and cases falling within that provision are thus beyond the scope of article 69. If the contract of sale is silent as to the carriage of goods, however, article 69 rather than article 67 will govern the passing of risk. This is true whether or not the buyer arranges for subsequent transportation of the goods by its own vehicles or by a third-party carrier. Which article applies in a particular case often turns on interpretation of the parties' agreement. A court concluded that a contract term "list price ex works" was not inconsistent with article 67(1) where the goods were to be taken by a third-party carrier from Japan. An arbitral tribunal also applied article 67(1) to a contract providing that the buyer has to pick up the fish eggs at the seller's address and take the goods to his facilities in Hungary and that the price was "FOB Kladovo". On the other hand, with respect to a contract where the seller agreed to deliver the goods under the "DAF" ("Delivery at Frontier") Incoterm, an arbitral tribunal found that article 69(2) rather than article 67 governed the issue of when risk passed.
[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.]
Taking over goods at seller's place of business
3. When goods are to be delivered at the seller's place of business, paragraph (1) of article 69 provides that the risk passes to the buyer when it takes over the goods. A court has applied the paragraph to the passing of risk in the sale of a painting at an auction.
4. If the buyer fails to take over the goods, paragraph (1) provides that the risk passes when the goods have been placed at the buyer's disposal and the buyer's failure to take them over breaches the contract. Under paragraph (3), goods are at the buyer's disposal when they are clearly identified to the contract. There are no reported cases applying this provision.
Taking over goods at other locations
5. Paragraph (2) of article 69 addresses the passing of risk in cases where the buyer is bound to take over the goods at a place other than the seller's place of business. In these cases, the risk passes when the buyer is aware that the goods are placed at its disposition and delivery is due. Under paragraph (3), goods are at the buyer's disposal when they are clearly identified to the contract.
6. Paragraph (2) covers a variety of cases, including cases involving delivery of goods stored in a third party's warehouse, delivery at some place other than the seller's or buyer's place of business, and delivery at the buyer's place of business. In one case, a court found that the risk that furniture stored in a warehouse would be lost had not passed to the buyer; the buyer had been issued storage invoices but delivery was not yet due because, by the parties' agreement, delivery was due only on the buyer's demand and it had not yet made a demand. Another case found, however, that risk of loss had passed when the seller delivered raw salmon to a third party processor because the buyer acquiesced in the delivery and delivery was due. In another case, an arbitral tribunal found that the seller, who had stored the goods following the buyer's failure to open an agreed letter of credit, bore the risk of loss because the seller had not delivered the goods "DAF" ("Delivery at Frontier") as agreed, nor had the seller placed the goods at the buyer's disposal.
* 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)] (art. 69(1) applies only if preceding two articles do not apply) (see full text of the decision).
2. [GERMANY Oberlandesgericht Köln 9 July 1997 (Video camera case)].
3. [HUNGARY Arbitration Court attached to the Hungarian Chamber of and Industry 10 December 1996 (Caviar case)].
4. [ICC International Court of Arbitration, Award 7197 of 1992 (Failure to open letter of credit and penalty clause case)].
5. [NETHERLANDS Rechtbank Arnhem 17 July 1997 (Work of art / painting case)] affirmed on other grounds [NETHERLANDS Hof Arnhem, 9 February 1999 (Painting case)] (Convention not applicable).
6. [GERMANY Amtsgericht Duisburg 13 April 2000 (Pizza cartons case)] (paragraph (2) covers cases where buyer takes over goods at place other than seller's place of business).
7. [GERMANY Oberlandesgericht Hamm 23 June 1998 (Furniture case)].
8. [GERMANY Oberlandesgericht Oldenburg 22 September 1998 (Raw salmon case)].
9. [ICC International Court of Arbitration, Award 7197 of 1992 (Failure to open letter of credit and penalty clause case)] (see full text of the decision).