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GUIDE TO ARTICLE 33

Comparison with Principles of European Contract Law (PECL)


Match-up of CISG Article 33 with PECL Article 7:102; see also PECL Article 7:103 through 7:106
CISG Article 33


The seller must deliver the goods:

(a) if a date is fixed by or determinable from the contract, on that date;

(b) if a period of time is fixed by or determinable from the contract, at any time within that period unless circumstances indicate that the buyer is to choose a date; or

(c) in any other case, within a reasonable time after the conclusion of the contract.

PECL Article 7:102 [Time of Performance]
(complete and revised version 1998)

A party has to effect its performance:

(1) if a time is fixed by or determinable from the contract, at that time;

(2) if a period of time is fixed by or determinable from the contract, at any time within that period unless the circumstances of the case indicate that the other party is to choose the time;

(3) in any other case, within a reasonable time after the conclusion of the contract.

SEE ALSO:

PECL Article 7:103 [Early Performance]

(1) A party may decline a tender of performance made before it is due except where acceptance of the tender would not unreasonably prejudice its interest.

(2) A party's acceptance of early performance does not affect the time fixed for the performance of its own obligation.

PECL Article 7:104 [Order of Performance]

To the extent that the performances of the parties can be rendered simultaneously, the parties are bound to render them simultaneously unless the circumstances indicate otherwise.

PECL Article 7:105 [Alternative Performance]

(1) Where an obligation may be discharged by one of alternative performances, the choice belongs to the party which is to perform, unless the circumstances indicate otherwise.

(2) If the party which is to make the choice fails to do so by the time required by the contract then: (a) if the delay in choosing is fundamental, the right to choose passes to the other party; (b) if the delay is not fundamental, the other party may give a notice fixing an additional period of reasonable length in which the party to choose must do so. If the latter fails to do so, the right to choose passes to the other party.

PECL Article 7:106 [Performance by a Third Person]

(1) Except where the contract requires personal performance the creditor cannot refuse performance by a third person if: (a) the third person acts with the assent of the debtor; or (b) the third person has a legitimate interest in performance and the debtor has failed to perform or it is clear that it will not perform at the time performance is due.

(2) Performance by the third person in accordance with paragraph (1) discharges the debtor.


Definitions

For the PECL definition of "reasonableness", go to PECL art. 1:302 and the comment and notes that accompany this provision.


Editorial remarks

Comparison between provisions of the CISG (Articles 33 and 52(1))
and the counterpart provisions of the PECL (Articles 7:102 and 7:103)

Colin Ying [*]
December 2004

  1. Introduction
  2. Ascertaining the time for delivery (Article 33 CISG and Article 7:102 PECL)
  3. Consequences of early delivery by the seller (Article 52(1) CISG and Article 7:103 PECL)
    1. Qualification of the buyer's option to refuse to take delivery
    2. Effect of acceptance of early delivery on the time for the buyer's performance of his obligations
         a. Time for payment specified
         b. Time for payment unspecified
  4. Conclusion

I. Introduction

According to Article 30 CISG, the seller has three obligations which should be performed as required by the contract and the Convention: (i) an obligation to deliver the goods, (ii) an obligation to hand over any documents relating to the goods, and (iii) an obligation to transfer the property in the goods. Article 33 CISG deals with one aspect of the seller's first-mentioned obligation to deliver the goods,[1] viz ascertaining the time for delivery, while Article 52(1) CISG sets out the legal consequences of an early delivery of the goods by the seller.

In this context, Article 33 provides for three situations: (i) where the contract fixes a date or permits a date to be fixed; (ii) where the contract fixes a period of time or permits a period of time to be fixed; and (iii) any other situation, e.g., where the contract is silent as to the date or time for delivery. In the first situation, the seller must deliver the goods on the date so fixed. In the second situation, the seller must deliver the goods on any date within the period so fixed, unless circumstances indicate that the buyer is to choose a date within that period. In the third situation, the seller must deliver the goods within a reasonable time after the conclusion of the contract.

Delivery by the seller on the due date obliges the buyer to take delivery of the goods as well as to pay the price for them as required by the contract and the Convention (Article 53 CISG). On the other hand, if the seller delivers the goods before the due date, the buyer is not obliged to take delivery at that time, but has the option of taking or refusing to take delivery (Article 52(1) CISG). If the seller delivers the goods after the due date, he will be in breach of contract, although the buyer may still be obliged to accept delivery then, while being entitled to appropriate remedies (damages being the norm) in accordance with Article 45 CISG. These editorial remarks focus on early, rather than late, delivery.

Article 7:102 PECL is virtually identical to Article 33 CISG in all material respects, if one treats the CISG seller as the PECL party required to perform, and the CISG buyer as the PECL "other party". The same three situations in the CISG are dealt with in the PECL using the same terminology.

Like Article 52(1) CISG, Article 7:103(1) PECL gives a party in the position of the buyer the same option to decline a tender of early performance by the other party, but goes on to qualify the exercise of the option. The party in question loses the option where acceptance of the tender of early performance "would not unreasonably prejudice its interests". In addition, Article 7:103(2) PECL states that "[a] party's acceptance of early performance does not affect the time fixed for the performance of its own obligation", but the Convention has no comparable Article.

There thus appear to be two differences between Article 52(1) CISG and Article 7:103 PECL, and these differences will be analysed after a comparison is made between Article 33 CISG and Article 7:102 PECL.

II. Ascertaining the time for delivery (Article 33 CISG and Article 7:102 PECL)

Delivery of the goods consists of placing the goods at the buyer's disposal at the appropriate place, doing such act as may constitute delivery under the terms of the contract or, where the contract of sale involves the carriage of goods, handing the goods over to the first carrier for transmission to the buyer.[2]

It should not be problematic to determine the time for delivery in the first two situations covered by paragraphs (a) and (b) of Article 33 CISG or paragraphs (1) and (2) of Article 7:102 PECL. A specific date or period of time can be stated in or determinable from the contract,[3] and where the contract fixes the period of time or allows it to be fixed from objective criteria, any date within that period can be the date of delivery, unless circumstances indicate that the buyer is to choose a date within that period. One such circumstance may be where the buyer is to arrange for the transport of the goods and the contract is FOB, or where the intention is to permit the buyer to schedule the exact arrival time of the goods so as not to overtax his storage and handling capacity.[4]

The date in the third situation (paragraph (c) of Article 33 or paragraph (3) of Article 7:102 PECL) is more flexible and indeterminate. Where no date or period of time for delivery is fixed or capable of being fixed from the contract, the time for delivery is within "a reasonable time after the conclusion of the contract". What is a reasonable time after the conclusion of the contract will vary from case to case, and will depend on all the circumstances, such as the nature of the goods, the distance covered, and the parties' statements during negotiations.[5] According to Honnold, "[w]hat is 'reasonable' can appropriately be determined by ascertaining what is normal and acceptable in the relevant trade."[6] Schlechtriem has suggested that the rule in paragraph (c) should take precedence over a hypothetical inconsistent national law that might provide that where an indeterminate delivery date has been agreed upon, the seller is liable to deliver immediately.[7] On the other hand, one might suppose that if a seller did deliver immediately, even if not obliged to do so, the seller would have delivered "within" a reasonable time after the contract was concluded.

As was previously mentioned, under both the Convention and PECL, in the first situation where the delivery date is fixed by or determinable from the contract, the seller must deliver the goods on the date so fixed or determined. In the second situation where a period of time for delivery is fixed by or determinable from the contract, the seller must deliver the goods on any date within that period, unless circumstances indicate that the buyer is to choose a date within that period. In any other case, the seller must deliver the goods within a reasonable time after the conclusion of the contract.

Delivery after the relevant due date amounts to a breach of contract, which entitles the buyer to the remedies described in Article 45 CISG, and in particular the remedy of damages. Late delivery in itself does not automatically allow the buyer to avoid the contract. Under Article 49 CISG the buyer can avoid the contract for late delivery only if (i) the seller's failure to deliver on time amounts to a "fundamental breach of contract", as defined in Article 25 to mean in essence a breach that results in such detriment to the buyer as substantially to deprive him of what he is entitled to expect under the contract, or (ii) the seller fails to, or declares that he will not, deliver within a reasonable additional time fixed by the buyer under Article 47 CISG.[8] The position is essentially the same under Articles 8:106, 9:103 and 9:301 PECL.[9]

III. Consequences of early delivery by the seller (Article 52(1) CISG and Article 7:103 PECL)

Both Article 52(1) CISG and Article 7:103 PECL deal with performance of its obligations by a contracting party (the seller in the Convention) before the due date, and the consequential position of the other party (the buyer in the Convention). It is thought that neither Article can apply to the situation where the date or period of time for delivery is not fixed by or determinable from the contract, and where the seller's obligation is only to deliver before a reasonable time has elapsed after the contract is concluded (i.e., where Article 33(c) CISG or Article 7:102(3) PECL sets the delivery time). Delivery at any time within that period cannot amount to early delivery under Article 52(1) CISG or early performance under Article 7:103 PECL.

Article 52(1) CISG is placed in Part III (Sale of Goods), Chapter II (Obligations of the Seller), Section III (Remedies for Breach of Contract by the Seller) of the Convention. It therefore appears to treat delivery by the seller before the due date determined in accordance with Article 33 CISG as ordinarily a breach of contract. Early delivery is at least non-performance by the seller of its obligation to deliver, and in those circumstances, the buyer has the option of taking or refusing to take delivery of the goods, since having to accept early unanticipated delivery by the seller may cause the buyer additional expense or inconvenience. Article 52(1) CISG does not purport to qualify the buyer's right to exercise that option.[10]

Article 7:103(1) PECL gives a party in the position of the buyer the same option, but qualifies the exercise of the option. The party in question loses the option where acceptance of the tender of early performance "would not unreasonably prejudice its interests". In addition, Article 7:103(2) goes on to provide that "[a] party's acceptance of early performance does not affect the time fixed for the performance of its own obligation." Consequently, the fact that the buyer accepts early delivery may not mean that the buyer in turn has to pay the purchase price (the buyer's only relevant obligation for our purposes [11]) before the contractual date for payment. The Convention has no express provision that parallels Article 7:103(2).

Whether the apparent silence of the Convention on these two PECL points means that the buyer's position under the CISG is different to that under the PECL will now be examined.

1. Qualification of the buyer's option to refuse to take delivery

The buyer's general obligation to take delivery set out in Article 60 CISG includes an obligation to do "all the acts which could reasonably [writer's emphasis] be expected of him in order to enable the seller to make delivery" and to take over the goods. While Article 52(1) CISG appears to give the buyer an absolute option to refuse to take early delivery, the exercise of such an option may arguably be constrained by Article 60 CISG, and in any event must be governed by the general principle of reasonableness applicable under the CISG.[12] In addition, there is a separate view that when considering whether to refuse to take early delivery, the buyer must act in good faith under Article 7(1) CISG.

On the issue of good faith generally in the Convention, Felemegas has argued forcefully that the CISG imposes no substantive duty of good faith on parties to a contract of sale, and that Article 7(1) only requires the observance of good faith in interpreting the Convention.[13] Magnus adopts a contrary stance,[14] and his approach finds support in the Secretariat Commentary on Article 48 of the 1978 Draft [draft counterpart of CISG Article 52].[15] The Secretariat's opinion on the point was that where the seller delivers early, while the buyer's right to refuse to take delivery does not depend on whether early delivery causes the buyer extra expense or inconvenience, "the buyer must have a reasonable commercial need to refuse to take delivery since article 6 [the draft counterpart of Article 7(1) CISG] requires the observance of good faith in international trade."[16]

Given therefore an obligation under the CISG on the buyer's part to conduct himself reasonably or to observe good faith when exercising the option under Article 52(1), the buyer's right to refuse early delivery cannot be unqualified, and the counterpart provision in Article 7:103 PECL contains an appropriate qualification consistent with the principles of the Convention. Thus, if the ship carrying the goods arrives a week before the contractual delivery date, the buyer who has storage room available will not be entitled to refuse to take early delivery, where the seller is prepared to cover the buyer's expenses and carry the risk during storage of the goods until the contractual delivery date.

2. Effect of acceptance of early delivery on the time for the buyer's performance of his obligations

Two situations should be distinguished, viz where the contract specifies the time for payment and where it does not.

a. Time for payment specified

One of the buyer's two obligations under Article 53 CISG is to pay the contract price for the goods "as required by the contract and [the] Convention".[17] Article 59 CISG governs the time for payment by the buyer, and this is "the date fixed by or determinable from the contract and [the] Convention". Therefore, if the contract fixes a particular date for payment, the buyer is not obliged to pay the seller before that date arrives, even if the seller chooses to deliver the goods to the buyer early, and the buyer chooses to accept that early delivery. This is likewise the position under Article 7:103(2) PECL.

However, Enderlein and Maskow suggest in relation to Article 52(1) CISG that where the buyer accepts early delivery, in some circumstances that "may" constitute a contractual modification in regard to the period of performance under Article 29 CISG, and if so, the buyer will have to perform his obligations at an earlier date.[18] It is difficult to appreciate why, if a given contract is modified under Article 29 as to the delivery date by the buyer's acceptance of the seller's early delivery (thereby negating any claim for damages by the buyer for the early delivery), the buyer's obligation to pay the price must necessarily be brought forward. A possible justification for that conclusion may lie in the reasoning that the contractual date for payment must be taken to have been displaced in the modified contract, with the result that, since there is no longer a fixed payment date, Article 58(1) CISG requires the buyer to pay on actual delivery. This reasoning is not entirely convincing.

The Secretariat Commentary on Article 48 of the 1978 Draft (identical to Article 52 CISG) also recognises that the buyer's acceptance of early delivery may in some circumstances amount to an agreed modification of the contract pursuant to Article 27 of the 1978 Draft (now Article 29 CISG).[19] It is unclear what Enderlein and Maskow and the Secretariat envisage as the circumstances accompanying early delivery by the seller that will point to the contract being modified. To avoid any inference under the CISG that the contract has been modified simply by the buyer's acceptance of the seller's early delivery, a prudent buyer should declare a relevant reservation when taking delivery. Under the PECL, while a contract, and any obligations under it, can be likewise modified by agreement,[20]any implication along the lines suggested by Enderlein and Maskow advancing the date of the buyer's obligation to pay should less readily arise because of the express provision in Article 7:103(2) PECL, even if theoretically possible.

b. Time for payment unspecified

If the contract specifies no date for payment, the Convention provides in Article 58(1) that the buyer must pay the price when the seller places the goods or the documents controlling their disposition at the buyer's disposal in accordance with the contract and the Convention.[21] In such a case, early delivery by the seller accepted by the buyer requires the latter to pay earlier than he would otherwise have done. This will have a bearing on whether the buyer will or should exercise the option under Article 52(1) CISG to refuse to take delivery. The result is the same if the contract expressly links the day when payment is to be made to the day of delivery, whenever that may be, without a particular date being specified: the earlier the delivery by the seller, the earlier the payment by the buyer who accepts the early delivery.

Whether the contract gives no specific time for payment or whether the contract links the time for payment to the time of delivery, the position under the PECL is similar to that outlined above under the CISG. If the contract "fixed" no specific date for the buyer to pay the seller, on one view Article 7:103(2) is inapplicable, and the time for the buyer's payment is determined solely by Article 7:104 PECL: effectively the time of actual delivery. If one takes the broader view that Article 7:103(2) does not require the contract to specify a particular date for the performance of the buyer's obligation to pay before it can apply, the time "fixed" for the buyer to pay the seller must be first identified. Article 7:104 PECL fixes that time as effectively the time when the seller delivers the goods in the proper performance of his contractual obligations. On that basis, according to Article 7:103(2) PECL, the buyer's acceptance of the seller's early delivery does not affect the time fixed by Article 7:104 PECL for the performance by the buyer of his obligation to pay, since that time remains the time of delivery by the seller, whenever that occurs.

IV. Conclusion

Article 33 CISG and Article 7:102 PECL set out the applicable rules for ascertaining the time for delivery by the seller, and require the seller to deliver on time. As was earlier observed, both Articles are virtually identical in all material respects, with the same three situations in the CISG being dealt with in the PECL using the same terminology. Article 33 CISG is thus substantively on all fours with Article 7:102 PECL, and both should have the same legal effect.

In relation to early delivery by the seller, there are two differences between Article 52(1) CISG and Article 7:103 PECL. First, the former appears not to qualify the buyer's right to accept or reject the seller's early delivery, while the latter does so. Secondly, the former is silent on the effect of early delivery by the seller on the time for payment by the buyer, while the latter provides that a party's acceptance of early performance does not affect the time for the performance of its own obligations. However, in the writer's opinion, these two differences are largely immaterial, as the latter merely makes more explicit what is implicit in the former. Consequently, both Articles would likely have the same effect.

[See also commentary by the author on this subject in: John Felemegas ed., An International Approach to the Interpretation of the United Nations Convention on Contracts for the International Sale of Goods (1980) as Uniform Sales Law, Cambridge University Press (2006) 360-366.]


FOOTNOTES

* Senior Lecturer, Faculty of Law, University of Technology, Sydney.

1. The Convention does not generally deal with the third obligation, see Article 4: "[...] except as otherwise expressly provided in this Convention, it is not concerned with: [...] (b) the effect which the contract may have on the property in the goods sold".

2. See Article 31 CISG, which deals with the place of delivery. Article 33 CISG deals with the time for delivery; see also the Secretariat Commentary on Article 31 of the 1978 Draft [draft counterpart of CISG article 33], 2, available online at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-33.html>. Article 31 of the 1978 Draft is identical to Article 33 CISG, except for the omission of "or" between paragraphs (a) and (b) of Article 33.

3. A date determinable from a usage that is applicable to the contract under Article 9 CISG or Article 1:105 PECL comes within the first situation.

4. Secretariat Commentary on Article 31 of the 1978 Draft [draft counterpart of CISG article 33], supra note 2, 6 and 7; Peter Schlechtriem, Uniform Sales Law - the UN Convention on Contracts for the International Sale of Goods, Manz (1986), p 66, fn 244; Fritz Enderlein and Dietrich Maskow, International Sales Law: United Nations Convention on Contracts for the International Sale of Goods; Convention on the Limitation Period in the International Sale of Goods, Oceana (1992), p 136; Ole Lando and Hugh Beale (eds), Principles of European Contract Law, Kluwer (2000), pp 332-333.

5. Germany 27 April 1999 Oberlandesgericht [Appellate Court] Naumburg, case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/990427g1.html> (the court took into account the buyer's statement nominating 15 January 1997 as the latest delivery date in ruling that delivery after that date would not be within a reasonable time under Article 33(c) CISG).

6. John Honnold, Uniform Law for International Sales under the 1980 United National Convention, 3rd ed., Kluwer (1999) p 101. Frans van der Velden argues that reasonableness must be regarded as a general principle of the Convention: see "The Law of International Sales: The Hague Conventions 1964 and the UNCITRAL Uniform Sales Code 1980 - Some Main Items Compared" in CCA Voskuil and JA Wade (eds.), Hague-Zagreb Essays 4 on the Law of International Trade, Martinus Nijhoff (1983) p 59. Cf. Article 1:302 PECL, which states how reasonableness is to be judged.

7. Peter Schlechtriem, "The Seller's Obligations under the United National Convention on Contracts for the International Sale of Goods" in NM Galston and H Smit (eds), International Sales: The United Nations Conventions on Contracts for the International Sale of Goods, Matthew Bender (1984), pp 6-1 - 6-4 and 6-15.

8. Article 47 CISG gives the buyer the right to extend the seller's time for performance, while preserving the former's right to claim damages for the delay. The seller's failure to, or declaration that he will not, deliver within the extended period allows the buyer to avoid the contract.

9. See Bruno Zeller, Editorial remarks: Guide to Articles 47 and 49(1)(b) CISG, and Comparison with Principles of European Contract Law , available online at <http://cisgw3.law.pace.edu/cisg/text/peclcomp47.html>.

10. However, Article 86 CISG may compel the buyer in some circumstances to take possession of the goods on the seller's behalf although the buyer has rejected the goods.

11. The buyer has two obligations under the CISG: an obligation to pay the price for the goods, and an obligation to take delivery of the goods. The former obligation is more relevant for present purposes, where the hypothesis is that the buyer has taken early delivery.

12. Peter Schlechtriem writes that "the rule that the parties must conduct themselves according to the standard of the 'reasonable person' ... must be regarded as a general principle of the Convention": supra note 4, p 22 fn 41, and p 39. Frans van der Velden, supra note 6, p 59, also argues that reasonableness must be regarded as a general principle of the Convention. See also Albert Kritzer's Overview Comments on reasonableness as a general principle of the CISG, available online at <http://cisgw3.law.pace.edu/cisg/text/reason.html>.

13. John Felemegas in his editorial remarks on Article 7 CISG, comparing it with Article 1:106 PECL, available online at <http://cisgw3.law.pace.edu/cisg/text/peclcomp7.html>.

14. Ulrich Magnus in his editorial remarks on Article 7 CISG, comparing it with Article 1.6 UNIDROIT Principles, available online at <http://cisgw3.law.pace.edu/cisg/principles/uni7.html>.

15. Article 48 of the 1978 draft corresponds and is identical in wording to Article 52 CISG.

16. Secretariat Commentary on Article 48 of the 1978 Draft [draft counterpart of CISG article 52], 3 and fn 1, available online at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-52.html>. While accepting that the buyer's freedom to refuse early delivery is necessarily restricted by the obligation in Article 7(1) CISG to observe good faith, Michael Will has criticised the restriction of "reasonable commercial need" placed on the buyer by the Secretariat Commentary as placing an unwarranted burden on the buyer: in CM Bianca and MJ Bonell (eds.), Commentary on the International Sales Law, Giuffrè (1987), p 380.

17. The buyer's other obligation under Article 53 CISG is to take delivery of the goods, but that obligation is largely academic for our purposes, since the hypothesis here is that the buyer has accepted the seller's early delivery.

18. Enderlein and Maskow, supra note 4, p 200.

19. Secretariat Commentary on Article 48 of the 1978 Draft, 6, supra note 16.

20. See Articles 2:105, 2:106 and 2:107 PECL.

21. However, even so, the buyer may not be bound to pay until he has had an opportunity to examine the goods: Article 58(3) CISG. See further Leif Sevón, "Obligations of the Buyer under the UN Convention on Contracts for the International Sale of Goods" in Petar Sarcevic and Paul Volken (eds.), International Sale of Goods: Dubrovnik Lectures, Oceana (1986), Chap 6, p 217, 2.4.2; Secretariat Commentary on Article 54 of the 1978 Draft [draft counterpart of CISG article 58], 5-9, available online at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-58.html>.


Comment and notes on PECL 7:102 through 7:106

Like the commentary to the UNIDROIT Principles and the U.S. Restatements, the comments to the PECL help explain the text. The PECL notes identify civil law and common law antecedents and related domestic provisions. With the permission of the Commission on European Contract Law, these comments and notes are presented below. The source of this material is Ole Lando & Hugh Beale eds., Principles of European Contract Law: Parts I and II, Kluwer Law International (2000) 332-340.


COMMENT AND NOTES: PECL Article 7:102: Time of Performance

A party has to effect its performance:

(1) if a time is fixed by or determinable from the contract, at that time;

(2) if a period of time is fixed by or determinable from the contract, at any time within that period unless the circumstances of the case indicate that the other party is to choose the time;

(3) in any other case, within a reasonable time after the conclusion of the contract.

Comment

A. Significance

The time for performance has significance in several connections. An early performance by a party may be and a late performance is almost always a non-performance of the contract, see Article 8:101. If the party which is to receive performance which is duly tendered at the time for performance does not do so at that time it will often bear the risk for performance not being effected.

B. Concurrent performance of the parties' obligations

It is the general rule that the two performances have to be rendered simultaneously, so that each party can withhold its performance until the other performs (Pflicht zur Leistung Zug um Zug, as it is put in German). These issues are treated in Article 9:201 Right to Withhold Performance.

C. Time determinable from the contract

If a time is fixed by or determinable from the contract, performance must be made at that time. This may be a date which at the conclusion of the contract is fixed by the calendar, for instance "delivery on October 15", or it may be otherwise determined.

Illustration 1: A and B have agreed that B shall begin to harvest A's crop one week after A has called upon it. The time is determinable from the contract.

D. Performance within a period of time

It may also occur that the time of performance is to be set within a period of time or by a certain time; and in that case Article 7:102(2) comes into operation.[page 332]

If the contract or the circumstances do not indicate that the receiving party is to choose the time of performance, it is for the party which has to make the performance to choose the time.

An example of where the time for performance is to be determined by the party which is to receive the performance is the f.o.b. sale where delivery is to be made during a period of time. Here it is for the buyer to provide the vessel (see INCOTERMS 1990 f.o.b. under B7) and thus decide the date he will receive the goods on board the ship.

It may follow from the circumstances of the case that the period of the time fixed for the performance begins as soon as the contract is made and as soon as the creditor - or in an appropriate case the debtor - requires performance.

Illustration 2: A makes an agreement with bank B for a cash-credit in favour of A up to E100,000. The agreement does not mention anything about when A can begin to draw money under the credit, but it follows from the circumstances that he can start drawing at once.

E. Performance within reasonable time

If no time is fixed or determinable from the contract, performance is to be made within a reasonable time after the conclusion of the contract. What is reasonable time is a question of fact depending upon the nature of the goods or services to be performed and the circumstances, see Article 1:302.

Notes [Match-ups with Continental and Common Law domestic rules, doctrine and jurisprudence]

1. Time of performance agreed

The rule in Article 7:102(1) appears to be in accordance with the laws of the Member States. It follows from the parties' freedom of contract and is only, as in CISG art. 33(a), provided for the sake of clarity.

2. Performance within a period of time

The rule in Article 7:102(2) seems to be widely accepted, see GERMAN BGB 271(2), ITALIAN CC art. 1184 and PORTUGUESE CC art. 779. The same rule probably applies in FRANCE, compare CC art. 1187 and Malaurie & Aynès no. 1100; in DENMARK, see Sale of Goods Act 13, which applies to other kinds of contract also; and FINLAND and SWEDEN, Sale of Goods Act 9(2). See also CISG art. 33(b) and Unidroit art. 6.1.1(b).

3. No time for performance agreed

The rule in Article 7:102(3) is in accordance with the COMMON LAW rule, see U.K. Sale of Goods Act 1979, s. 29(3); IRISH Sale of Goods Act 1893, s. 29 and Macauley v. Horgan [1925] I.R. 1; FINNISH and SWEDISH Sale of Goods Act 9(1). It has also been adopted by CISG art.33(c) and Unidroit art. 6.1.1.(c).

Most of the other laws provide rules which are different but which will often bring about the same or very similar results as the rule on performance within a reasonable time laid down in Article 7:102(3). They generally provide that the creditor may demand performance at once. See for FRANCE CC art. 1901 and Ponsard & Blondel nos. 136 and 137; AUSTRIA, ABGB 904; DENMARK, Sale of Goods Act 12; GERMANY, BGB 271(1); GREECE, CC art. 323; ITALY, CC art. 1183; NETHERLANDS, BW art. 6:38; PORTUGAL CC art. 777(1). However usage, the nature of the contract or other circumstances will often prevent the creditor from demanding immediate performance: ITALIAN CC art. 1183; PORTUGUESE CC art. 777(2); and SPAIN, CC art. 1128, under which the court may fix the time for performance. In GERMANY the rule on immediate performance is tempered by the principle of good faith, BGB 242 and the same applies in DENMARK (semble), Court of Appeal (East) 31 March 1987 , U.f.R. 1987, 738; GREECE, CC art. 288; and the NETHERLANDS, BW art. 6:2.[page 333]

Go to PECL Abbreviations || Go to PECL Bibliography || Go to full texts of Parts I & II of Principles of European Contract Law


COMMENT AND NOTES: PECL Article 7:103: Early Performance

(1) A party may decline a tender of performance made before it is due except where acceptance of the tender would not unreasonably prejudice its interests.

(2) A party's acceptance of early performance does not affect the time fixed for the performance of its own obligation.

Comment

A. Declining an early tender

Though some codes maintain the presumption that the debtor may perform its obligation early, this rule does not meet the needs of modern contractual relations. Usually the performance is scheduled in accordance with the creditor's activities and availability and an earlier performance may cause it extra expense or inconvenience.

Illustration 1: A sells to B 10 tons of perishable goods. The date of delivery provided in the contract is October 1. Since the ship on which the goods were loaded arrives at the place of destination earlier than expected, A asks B to take delivery of the goods on September 20. B is entitled to refuse the earlier performance.

B. Good faith

On the other hand, good faith may be invoked to avoid abusive refusals when the creditor will not suffer any inconvenience through early performance.

Illustration 2: The facts are the same as in Illustration No. 1, except that B has storage room available and A is ready to cover the expenses and to carry the risk for the storage of the goods during the period from September 20 to October 1. B must accept the earlier performance, since a refusal on its part would be contrary to good faith.

C. Money obligations

The principle according to which the creditor has the right to refuse an earlier performance is unjustified in relation to monetary obligations, where the creditor faces no prejudice in receiving the money before the expected time, provided that an earlier payment does not affect the interest due.

Illustration 3: The date for the payment of the price fixed in the contract is July, 1. In order to avoid late payment, the debtor instructs its bank to transfer the funds on the creditor's account well in advance. The price is credited on the creditor's account on June 20. The creditor may not refuse the payment.

D. Creditor's duty not affected

A party's acceptance of an earlier performance does not affect the time fixed for the performance of its own obligation, even if the other party's right to withhold its performance is lost.[page 334]

Illustration 4: The facts are the same as in Illustration 2 with the addition that payment is to be made at the time agreed for delivery on October 1 when the goods are to be handed over to B. B is not obliged to pay the price when he receives the goods on September 20. A cannot withhold the goods because it is not paid on September 20.

Notes [Match-ups with Continental and Common Law domestic rules, doctrine and jurisprudence]

1. Early tender may be refused

As in Article 7:103(1), an early tender may be refused in SPAIN (CC art. 1127: time of performance is presumed to have been fixed for the benefit of both the parties, and PORTUGAL (Jorge 309 f.) unless the time for performance has been fixed exclusively in favour of the debtor. Similarly the creditor cannot be compelled to accept early performance under AUSTRIAN law: ABGB 1413.

In the UNITED KINGDOM a buyer of goods may refuse an early tender, see Benjamin 8-039, and in DENMARK the buyer may do so if an early delivery of the goods will amount to a substantial breach of contract: Nørager-Nielsen & Theilgaard 293. In ITALY the creditor may refuse early performance but not if the time was fixed in the interests only of the debtor (see di Majo 167-168). CISG art. 52(1) provides that the buyer may take delivery or refuse to take delivery but this rule is probably subject to the good-faith principle provided in art. 7(1), see Bianca & Bonell (-Will) 380.

2. Early tender must be accepted

In some laws there is a presumption that the time for performance is fixed in favour of the debtor, and that, therefore, the creditor must accept an early performance, see on BELGIAN, FRENCH and LUXEMBOURG law CC art. 1187; GREEK CC art. 324. The same presumption is found in GERMAN law (BGB 271 (2), DUTCH law (BW art. 6:39) and, for money debts, NORDIC law, see Instrument of Debts Act 5 (note that in FINNISH law it is said that a creditor need not accept early performance of an interest-bearing money obligation if he is not compensated for loss of the interest he would receive according to the contract: Hakulinen, Velkakirjelaki 61). The presumption is rebutted when this follows from the agreement or from the circumstances of the case. Thus in FRANCE, BELGIUM, LUXEMBOURG, GERMANY and DENMARK money debts carrying interest cannot be repaid in advance, and a person who has agreed to provide services at a certain time cannot choose to perform earlier.

3. No duty for the creditor to perform earlier

The rule in Article 7:103(2), under which an earlier performance does not affect the time for performance of the receiving party's obligation, seems to be accepted by those systems which have addressed the issue, see e.g. for DANISH law, Nørager-Nielsen & Theilgaard 293 and for SWEDISH LAW, Ramberg, Köplagen 263.

Unidroit art. 6.1.5(1) and (2) are similar to Article 7.103.[page 335]

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COMMENT AND NOTES: PECL Article 7:104: Order of Performance

To the extent that the performances of the parties can be rendered simultaneously, the parties are bound to render them simultaneously unless the circumstances indicate otherwise.

Comment

In any synallagmatic contract it must be determined whether the parties are to perform simultaneously or whether one is to perform before the other. Article 7:104 provides that in general performances should be rendered simultaneously. This is because, if one party is to perform first, it will necessarily have to extend credit (in one form or another) to the other party, thereby incurring a risk that the other will [page 335] default when the time fot its performance comes. This additional risk is avoided if the performances are made simultaneously. Thus it is the general rule in sales contracts that, unless otherwise agreed, delivery and payment are to be simultaneous.

However, simultaneous performance is often impracticable. An employer cannot realistically be expected to pay a builder brick by brick. Either the employer must pay in advance or, as is more usual, the builder must complete some or all of the work before payment.

The Article does not provide a presumption as to which party should perform first if simultaneous performance is not appropriate. The variety of circumstances is too great for this to be practical. In most cases the matter is settled by usages (cf. Article 1:105), and almost every general rule seems to have many exceptions. Thus it in contracts for services it is common to find the custom, "work first, payment later", which may reflect the fact that the employer is a better credit risk than the sevice provider or may simply be a reflection of market power or social standing; but there are situations in which payment is expected in advance.

Illustration 1: A employs B to spend three afternoons a week tending the garden of A's villa. The time for payment is not discussed when the contract is made. B demands payment in advance. In most countries, A can refuse to pay in advance.

Illustration 2: C books theatre tickets in advance over the phone and comes to collect them from the box office. The theatre may demand payment before A is admitted to the show.

The question will have to be decided by references to such usages or, if there are none, by the factors listed in Article 6:102, Implied terms - (a) the intention of the parties, (b) the nature and purpose of the contract and (c) good faith and fair dealing.

Illustration 3: Hamlet engages a troupe of players to perform at his country house. Whether the players may demand payment in advance will depend on usages in the country or previous practices between the parties. If there are none, the question will depend on other factors such as whether the play to be performed had to be specially written and rehearsed.

Even where simultaneous performance is feasible, the contract or the circumstances may lead to a different result. Thus it is possible for food in a restaurant to be handed over in exchange for an immediate cash payment, as happens in some cheaper restaurants and bars; but in others the customer is obliged to pay only after the meal has been finished.

Notes [Match-ups with Continental and Common Law domestic rules, doctrine and jurisprudence]

This provision is in line with the law in most jurisdictions in Europe, such as AUSTRIA, ABGB 904; FRANCE (case-law as set ouit by Terré, Simler & Lequette no. 616) and ENGLAND (see Beale, 28-34 and Treitel, Contract. 677-685) -and with Unidroit art. 6.1.4. In other European jurisdictions, [page 336] the rule is the same although there is no express provision. This is the case in ITALY, where it follows from CC art. 1460 on exceptio non adimpleti contractus, unless something different is provided by the contract or results from the nature of the contract, and PORTUGAL.

In all systems, the rule that performances are due simultaneously is only a presumption which will not apply if the parties have agreed otherwise, for example when credit is given by one party to the other, or if the circumstances make it inappropriate, e.g. when the performance by one party is necessary before the other party can perform (see e.g. in BELGIUM, Cass. 5 May 1971, Arr. 871, Rechtskundig Weekblad 1971-72, 147, Journal des Tribunaux 1972, 85).

Some jurisdictions provide a further rule for the case where performance by one of the parties requires some time. The other party will then only have to perform his side after the performance of the former party has been rendered. Thus in BELGIAN law, when the obligation of one party concerns a continuous performance, and the other one not, the former party normally has to perform first. Similarly Unidroit art. 6.1.4(2) provides that to the extent that the performance of only one party requires a period of time, that party is bound to render its performance first, unless the circumstances indicate otherwise. But in all systems there are customary exceptions: for example, it is customary for theatre-goers to have to pay in advance of seeing the performance. See also notes to Article 9:201.[page 337]

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COMMENT AND NOTES: PECL Article 7:105: Alternative Performance

(1) Where an obligation may be discharged by one of alternative performances, the choice belongs to the party which is to perform, unless the circumstances indicate otherwise.

(2) If the party which is to make the choice fails to do so by the time required by the contract, then: (a) if the delay in choosing is fundamental, the right to choose passes to the other party; (b) if the delay is not fundamental, the other party may give a notice fixing an additional period of reasonable length in which the party to choose must do so. If the latter fails to do so, the right to choose passes to the other party.

Comment

This provision lays down some rules for the not infrequent situation, where an obligation may be performed by any one of two or more alternatives. The basic rule is that the party who is to perform, may then choose which alternative to perform. However, this is subject to a number of conditions. The contract may indicate that it is the other party, who is to make the choice. Or it may be the Principles which make the choice, see e.g. Articles 7:108(3) and 7:109. Finally, usages may also determine who is to make the choice among the alternatives.

Whoever has the right to choose should exercise this power within a reasonable time, especially after having been asked to do so by the other party. The sanction is that otherwise the right to choose may pass to the other party. The point at which the right to choose will pass depends on whether the time for the exercise of the choice was fundamental or, if it was not, whether it has been made fundamental by the other party serving a notice, see Article 8:106(3).[page 337]

Notes [Match-ups with Continental and Common Law domestic rules, doctrine and jurisprudence]

Paragraph (1) of the Article is in line with European Civil Codes - see for instance DUTCH BW art. 6:19, FRENCH CC arts. 1189-1196; GERMAN BGB 263; GREEK CC art. 306, ITALIAN CC art. 1286(1), PORTUGUESE CC arts. 543(2) and 548. As for DENMARK see Gomard, Obligationsret I, 37 and Ussing, Alm del 24. However, the law in ENGLAND is less certain - see Treitel, Contract 671. Rules equivalent to the second paragraph are less common but are found in some countries, e.g. Dutch BW art. 6:19.[page 338]

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COMMENT AND NOTES: PECL Article 7:106: Performance by a Third Person

(1) Except where the contract requires personal performance the creditor cannot refuse performance by a third person if: (a) the third person acts with the assent of the debtor; or (b) the third person has a legitimate interest in performance and the debtor has failed to perform or it is clear that it will not perform at the time performance is due.

(2) Performance by the third person in accordance with paragraph (1) discharges the debtor.

Comment

A. Scope

Article 7:106 treats the questions, under what conditions does performance by a third person constitute due performance in relation to the creditor who cannot then refuse performance, and under what conditions does the performance by a third person discharge the debtor vis-à-vis the creditor. It does not address the question whether a third person who has made a performance acquires the rights of the creditor vis-à-vis the debtor by way of assignment or subrogation.

B. When will a tender constitute performance?

The third person making the performance is often acting with the assent of the debtor or on its directions. An agent or a sub-contractor of the debtor may have been entrusted to perform the contract. In these cases the creditor cannot refuse performance, unless the contract requires personal performance, see Article 7:106(1)(a).

However, performance by a third person may also be made without the volition of the debtor. The third person may have a legitimate interest in doing so. A surety pays a debt in order to avoid costly proceedings against the debtor which eventually the surety will have to pay. A tenant pays the mortgage in order to avoid a forced sale of the property. In the interests of the family, a wife pays the debt of her husband for which she is not liable. A parent company pays the debt of its subsidiary to save the latter's credit rating. In these cases the creditor cannot refuse performance by the third person provided that the debtor has failed to perform when performance fell due or it is clear that it will not perform at the time when it falls due, see Article 7:106(1)(b).[page 338]

C. Is the obligor discharged?

Due performance by the third person who is entitled to perform discharges the obligor, see Article 7:106(2).

It follows from Article 8:107 that the obligor remains responsible if a third person who has promised to perform and who has got the obligor's assent to performance fails to perform or makes a defective tender. Where performance has been undertaken or carried out by a third person who has a legitimate interest in performance the obligor will also remain responsible, if the third person fails to tender performance when it is due, or if his tender is refused because it is defective. The obligor will not be excused under Article 8:108 for a failure to perform by a third person unless the third person's non-performance was due to an impediment which would also have excused the obligor. Whether the obligor is responsible for a defective performance by the third party which has caused a greater loss to the obligee than the expected non-performance by the obligor is to be decided by the applicable law.

An obligee who refuses to accept a performance by a third person made in pursuance of Article 7:106(1) will normally have failed to perform the contract and cannot exercise any of the remedies for non-performance set out in chapter 4. Article 7:110 or 7:111 may also apply.

D. When may a tender be refused?

There are, however, situations where the obligee is entitled to refuse performance by a third party. Such performance may be excluded by the terms of the contract. The terms which exclude third party performance may be express or they may be inferred from the language of the contract. There are also situations where it follows from the nature or purpose of the contractual obligation that it cannot be performed vicariously.

Where in contracts for the performance of personal services it can be inferred that the obligor has been selected to perform because of his skill, competence or other personal qualifications, the obligee may refuse performance by a third person. However, if it is usual in the type of contract to allow delegation of the performance of some or all of the services, or if this can be done satisfactorily by third persons, the obligee must accept such performance.

Where the third person cannot show any assent by the obligor or any legitimate interest the obligee is entitled to refuse his tender of performance. Thus it can refuse payment from a person who attempts to collect claims against the debtor. If the obligor has not assented to the performance the obligee may also refuse performance by a friend of the obligor whose motive is unselfish. Article 7:106 does not treat which consequences it has for the obligor if in these cases the obligee accepts performance by the third person.

Notes [Match-ups with Continental and Common Law domestic rules, doctrine and jurisprudence]

1. Obligor assents to vicarious performance

The legal systems all seem to agree that performance by a third person which is agreed to by the obligor before or after it is made (vicarious performance) is, in principle, admitted. However, it may not be permitted if it is against the interests of the obligee. This idea is expressed differently in the [page 339] legal systems.

GREEK and PORTUGUESE law will not permit vicarious performance when it is prejudicial to the interests of the obligee, see Greek CC art. 317 in fine and PORTUGUESE CC art. 767(2). Under DUTCH law a third party may perform an obligation "unless this is contrary to its content or necessary implication", see BW art. 6:30.

Most of the laws exclude vicarious performance of obligations which have a personal character: DENMARK, see Ussing, Alm. Del. 58; FRANCE and BELGIUM, CC art. 1236, see Malaurie & Aynès, Obligations no. 962 and for Belgium Cass. 28 Sept. 1973, R.W. 1973-74, 1158, R.C.J.B. 1974, 238 obs. van Damme; ENGLAND, Treitel, Contract 672-673; AUSTRIA, a generally acknowledged principle based on provisions for specific contracts: ABGB 1153 (labour contract), 1171 (work contract), etc.; GERMANY, see BGB 267(1); ITALY, CC art. 1180; GREECE: Zepos in Ermak II/1 art. 317 no. 13 (1949); NETHERLANDS, BW art. 6:30(1); SCOTLAND, McBryde 378-382; SPAIN, CC arts. 1158, 1161 and see Diez-Picazo II, 481; SWEDEN, see Rodhe, Obligationsrätt 158.

2. Performance without the consent of the obligor

(a) The civil law

Provided the performance by the third party is not excluded as being against the interests of the obligee under the rules discussed in note 1 above, the other civil law systems seem to allow it on varying conditions. Under AUSTRIAN law, the obligor's consent is not necessary, if the obligee accepts performance by the third party (see ABGB 1423). In GERMANY, BGB 267(2) and ITALY, CC art. 1180 the obligee must accept performance but may refuse if the obligor objects to it. If he objects the obligee has a choice whether or not to accept. This rule also applies in DENMARK, see Ussing, Alm. Del. 307; the NETHERLANDS, BW art 6:30(2); PORTUGAL, CC arts. 592(1) and 768(2); and SWEDEN, Rodhe, Obligationsrätt 66. In FRANCE the obligor can oppose performance if he can show that he will be prejudiced by it, see Malaurie & Aynès, Obligations, no. 962. In BELGIUM the obligor cannot oppose performance, but the third party will not acquire the rights of the creditor by subrogation unless the third party acted with the obligor's consent or had a legitimate interest in performance, CC art. 1236.

Under BW art. 6:73 the obligee may refuse performance, but if the third party has a legitimate interest in performance the rules on the obligee's mora creditoris will apply.

Under SPANISH law the obligee must accept performance by a third party even if the obligor opposes it, but the third party will then not have a right of subrogation but only a claim for enrichment (CC arts. 1158(3) and 1159; Diez-Picazo II, 484; Albaladejo II, 1 24.3; TS 26 June 1925, 16 June 1969, 30 September 1987 and 12 November 1987).

In GREECE the obligee may not accept performance if the obligor opposes it, see CC art. 318.

(b) England, Ireland and Scotland

In ENGLISH law a performance made without the permission of the obligor is not admitted. This holds true when the effect would be a subrogation in favour of the third party: "a man cannot make himself the creditor of another without his knowledge or consent". The same seems even to hold true when there is no subrogation, see Chitty 29-093. It is probably now settled that payment by a third party will only discharge the obligor if he authorized or subsequently ratified the payment, see Goff and Jones 17. There are, however, specific provisions allowing a subtenant of a lease to intervene to prevent forfeiture of the head lease, see Law of Property Act 1925, s. 146. The IRISH and SCOTTISH laws are probably the same as the English.[page 340]

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Pace Law School Institute of International Commercial Law - Last updated January 8, 2007
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