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 77 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 77 [draft counterpart of CISG article 88].
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. There were modifications to article 77 of the 1978 Draft which should be considered prior to citing the Secretary Commentary on this article.
Text of Secretariat Commentary on article 77 of the 1978 Draft
[draft counterpart of CISG article 88] [Sale of the preserved goods]
PRIOR UNIFORM LAW
ULIS, article 94 and 95.
1. Article 77 [draft counterpart of CISG article 88] sets forth the right to sell the goods by the party who is bound to preserve them.
Right to Sell, Paragraph (1)
2. Under paragraph (1) the right to sell the goods arises where there has been an unreasonable delay by the other party in taking possession of them back or in paying the cost of preservation.
[Article 88(1) requires "reasonable notice of the intention to sell". Enderlein & Maskow state: "This additional condition in regard to the resale is to point out to the other party the consequences of his conduct and give him a chance to remedy [his breach of contract]. Less important seems to us, the aspect of giving him an opportunity to send a representative to attend the sale (but see [OFFICIAL RECORDS, p. 400]) because this would presuppose a public sale, which under the CISG seldom takes place. Given this situation it will now have to be determined what is to be understood by 'reasonable notice'. We believe that from this wording, requirements can be deduced in regard to the time and content of the notice. It has to be given so early that the other party, in reacting speedily, still can remedy his fault. As the discussion at the diplomatic conference [OFFICIAL RECORDS, p. 400] has proved, it is possible for the notice to be given before the conditions for the resale are fulfilled ... in that event it is to be conceived as a warning for possible conduct. The party entitled to resell the goods should not have to wait twice. In regard of the content it is relevant, above all, to indicate how long the entitled party wants to wait. The notice is not bound to any form requirement and need not be received (article 27)." Fritz Enderlein & Dietrich Maskow, "International Sales Law"[Enderlein & Maskow Commentary], Oceana (1992), p. 361.]
3. The sale may be by "any appropriate means" after "[reasonable] notice of the intention to sell" has been given. The Convention does not specify what are appropriate means because conditions vary in different countries. To determine whether the means used are appropriate, reference should be made to the means required for sales under similar circumstances under the law of the country where the sale takes place.
[Enderlein & Maskow state: "The resale is not bound to particular requirements, it only has to be done by any appropriate means. It is in our view inappropriate to measure the appropriateness against the yardstick of national laws, as does the Secretariat's Commentary ... and also a number of subsequent authors ... We believe that the wording of the provision clearly indicates that there shall be exemption from particular requirements which the national laws indeed provide for in the event of resale, e.g. resale by certain persons, by specific procedure ... As appropriate will have to be regarded here as what a reasonable person of the same kind as the party obligated to preserve the goods would consider as appropriate in the same circumstances. It will thus have to be a method which promises appropriate proceeds. Appropriateness follows more from commercial than legal criteria. The resale can be made by the obligated party and not only by a neutral third party ..." Enderlein & Maskow Commentary, p. 359. They further state that where the sale is "on very unfavourable terms, i.e. dumping, [the party responsible for the sale] has the obligation to pay damages to the other party." Id. at 362.]
4. The law of the State where the sale under this article takes place, including the rules of private international law, will determine whether the sale passes a good title to the purchaser if the party selling the goods has not complied with the requirements of this article [see footnote 1] [Footnote 1 cites article 4.].
[Enderlein & Maskow concur, stating: "The consequences which follow where the party was not entitled to resell the goods, in particular to what extent an acquisition in good faith was possible, will be guided by the national law as determined by the conflict-of-law rules. ..." Enderlein & Maskow Commentary, p. 360.]
Goods Subject to Loss [Subject to Rapid Deterioration], Paragraph 2
5. Under paragraph (2) the party who is bound to preserve the goods must make reasonable efforts to sell them if (1) the goods are subject to loss or rapid deterioration [subject to rapid deterioration (the word "loss" was deleted)] or (2) their preservation would involve unreasonable expense.
6. The most obvious example of goods which must be sold, if possible, because they are subject to loss or rapid deterioration is fresh fruits and vegetables. However, the concept of "loss" is not limited to a physical deterioration or loss of the goods but includes situations in which the goods threaten to decline rapidly in value because of changes in the market. [The preceding sentence is not applicable to the Official Text. The word "loss" was deleted from paragraph (2) so that it would apply to physical deterioration but not economic fluctuations in price.]
7. Paragraph (2) only requires that reasonable efforts be made to sell the goods. This is so because goods which are subject to loss or rapid deterioration [subject to rapid deterioration] may be difficult or impossible to sell. Similarly, the obligation to give notice of the intent to sell exists only to the extent to which such notice is possible. If the goods are rapidly deteriorating, there may not be sufficient time to give notice prior to sale.
8. If the party bound to sell the goods under this article does not do so, he is liable for any loss or deterioration [liable for any deterioration] arising out of his failure to act.
Right to Reimbursement, Paragraph 93)
9. The party selling the goods may reimburse himself from the proceeds of the sale for all reasonable costs of preserving the goods and of selling them. He must account to the other party for the balance. If the party selling the goods has other claims arising out of the contract or its breach, under the applicable national law he may have the right to defer the transmission of the balance until the settlement of those claims (OFFICIAL RECORDS, p. 63).