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GUIDE TO CISG ARTICLE 41

Secretariat Commentary (closest counterpart to an Official Commentary)


Guide to the use of this commentary

The Secretariat Commentary is on the 1978 Draft of the CISG, not the Official Text, which re-numbered most of the articles of the 1978 Draft. The Secretariat Commentary on article 39(1) of the 1978 Draft is quoted below with the article references contained in this commentary conformed to the numerical sequences of the Official Text, e.g., article 39(1) [draft counterpart of CISG article 41].

To the extent it is relevant to the Official Text, the Secretariat Commentary on the 1978 Draft is perhaps the most authoritative source one can cite. It is the closest counterpart to an Official Commentary on the CISG. A match-up of this article of the 1978 Draft with the version adopted for the Official Text is necessary to document the relevancy of the Secretariat Commentary on this article. See the match-up for this article for a validation of citations to this Secretariat Commentary. This match-up indicates that article 39(1) of the 1978 Draft is substantially identical to CISG article 41.


Text of Secretariat Commentary on article 39(1) of the 1978 Draft
[draft counterpart of CISG article 41]   [Third-party claims in general]

PRIOR UNIFORM LAW

ULIS, article 52.

COMMENTARY

Claims of third parties, paragraph (1)

1. Article 39 [draft counterpart of CISG article 41] states the obligation of the seller to deliver goods which are free from the right or claim of any third party other than a right or claim based on industrial or intellectual property [industrial property or other intellectual property].

2. In contrast to article 33(2) [draft counterpart of CISG article 35(3)] in respect of the lack of conformity of the goods and article 40(2)(a) [draft counterpart of CISG article 42(2)(a)] in respect of third-party claims based on industrial intellectual property [industrial property or other intellectual property], article 39 [draft counterpart of CISG article 41] holds the seller liable to the buyer even if the buyer knew or could not have been unaware of the third-party right or claim, unless the buyer agreed to take the goods subject to that right or claim. Such an agreement will often be expressed, but it may also be implied from the facts of the case.

3. The seller has breached his obligation not only if the third party's claim is valid, i.e., if the third party has right in or to the goods; the seller has also breached his obligation if a third party makes a claim in respect to the goods. The reason for this rule is that once a third party has made a claim in respect of the goods, until the claim is resolved the buyer will face the possibility of litigation with and potential liability to the third party. This is true even though the seller can assert that the third-party claim is not valid or a good faith purchaser can assert that, under the apprpriate law applicable to his purchase, he buys free of valid third-party claims, i.e., that possession vaut titre. In either case the third party may commence litigation that will be time-consuming and expensive for the buyer and which may have the consequence of delaying the buyer's use or resale of the goods. It is the seller's responsibility to remove this burden from the buyer.

4. This article does not mean that the seller is liable for breach of his contract with the buyer every time a third person makes a frivolous claim in respect of his goods. However, it is the seller who must carry the burden of demonstrating to the satisfaction of the buyer that the claim is frivolous [see footnote 1]. If the buyer is not satisfied that the third-party claim is frivolous, the seller must take appropriate action to free the goods from the claim [see footnote 2] or the buyer can exercise his rights as set out in article [draft counterpart of CISG article 45].

5. Third-party rights and claims to which article 39 [draft counterpart of CISG article 41] is addressed include only rights and claims which relate to property in the goods themselves by way of ownership, security interests in the goods, or the like. Article 39 [draft counterpart of CISG article 41] does not refer to claims by the public authorities that the goods violate health or safety regulations and may not, therefore, be used or distributed [see footnote 3]. (OFFICIAL RECORDS, pp. 35-36).


FOOTNOTES

1. Cf. article 62 [draft counterpart of CISG article 71] on the right of a party to suspend his performance when he has reasonable grounds to believe that the other party will not perform a substantial part of his obligation.

2. Although the seller may ultimately free the goods from the third person's claim by successful litigation, this could seldom be accomplished within a reasonable time from the buyer's point of view. When it cannot, the seller must either replace the goods, induce the third person to release the claim as to the goods, or provide the buyer with indemnity adequate to secure him against any potential loss arising out of the claim.

3. If the goods delivered are subject to such restrictions, there may be a breach of the seller's obligations under article 33(1)(a) or (b) [draft counterpart of CISG article 35(2)(a) or (b)].


Pace Law School Institute of International Commercial Law - Last updated August 30, 2006
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