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GUIDE TO CISG ARTICLE 50

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 46 of the 1978 Draft is quoted below with the article references contained in this commentary conformed to the numerical sequence of the Official Text, e.g., article 46 [draft counterpart of CISG article 50].

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 although the basic concept of price reduction set forth in article 46 of the 1978 Draft and CISG article 50 is the same, the method of computing the price reduction is different, and the Official Text makes this remedy inapplicable in cases in which the seller remedied a failure to perform his obligations before the date of delivery.


Text of Secretariat Commentary on article 46 of the 1978 Draft
[draft counterpart of CISG article 50]   [Reduction of the price]

PRIOR UNIFORM LAW

ULIS, article 46.

COMMENTARY

1. Article 46 [draft counterpart of CISG article 50] states the conditions under which the buyer can declare the price to be reduced if the goods do not conform with the contract.

2. Under article 33(1) [draft counterpart of CISG article 35(1)] goods do not conform with the contract, and are therefore subject to reduction of the price, unless they are of the quantity, quality and description required by contract, are contained or packaged in the manner required by the contract, and meet the four specific requirements set out in article 33(1)(a) to (d) [draft counterpart of CISG article 35(2)(a) to (d)]. Goods may conform with the contract even though they are subject to the right or claim of a third party under article 39 or 40 [draft counterpart of CISG article 41 or 42].

[Schlechtriem states: "According to Article 50, a reduction in price is available only when the goods do not conform to the contract. ... The general similarity of the prejudice caused by these defects with that caused by (defects in title or third-party claims based on industrial or other intellectual property rights) justifies the availability of price reduction in these cases as well. But the formula for calculating the decrease in value due to such defects surely would have required thorough deliberations for which no time remained at the Conference." Peter Schlechtriem, "Uniform Sales Law: The UN Convention on Contracts for the International Sale of Goods, Vienna: Manz (1986), p. 79.]

3. The remedy of reduction of the price is a remedy which is not known in some legal systems. In those legal systems it would be natural to see this remedy as a form of damages for non-performance of the contract. However, although the two remedies lead to the same result in some situations, they are two distinct remedies to be used at the buyer's choice.

[Lookofsky states: "The proportionate price reduction,' a remed[y] largely unknown in common law systems ... has been compared to unjust enrichment pursuant to the common law. ... The promisee is partially relieved of the payment obligation, a kind of partial cancellation, corresponding to the degree of non-performance represented by the defect. ..." Joseph Lookofsky,"Remedies for Breach Under the CISG", Commercial Damages: A Guide to Remedies in Business Litigation, Knapp, ed., Matthew Bender (1989), p. 43-42).]

4. The remedy of reduction of the price also leads to results which are similar to those which would result from a partial avoidance of the contract under article 47 [draft counterpart of CISG article 51].

5. First, article 46 [draft counterpart of CISG article 50] itself makes it clear that the price can be reduced by the buyer even though he has already paid the price [see footnote 1]. Article 46 [draft counterpart of CISG article 50] does not depend on the buyer's ability to withhold future sums due. Second, even if the seller is excused from paying damages for his failure to perform the contract by virtue of article 65 [draft counterpart of CISG article 79], the buyer may still reduce the price if the goods do not conform with the contract. Third, the right to reduce the price is not affected by the limitation to which a claim for damages is subjected under article 70 [draft counterpart of CISG article 74], i.e. that the amount of damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contractas a possible consequence of the breach of the contract.

Fourth . . . the amount of the monetary relief which is granted the buyer ismeasured in [a different manner] . . . (OFFICIAL RECORDS, p. 42).


FOOTNOTE

1. In this respect article 46 [draft counterpart of CISG article 50] follows the same policy as does article 66(2) [draft counterpart of CISG article 81(2)]. It is also true, of course, that a claim for damages does not depend on the buyer's ability to withhold future sums.


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