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Reproduced with permission from Suomalainen Lakimiesten Yhdistys: - Tidskrift utgiven av Juridiska Föreningen i Finland [Finnish Law Society] 126 (1990) 327-343

excerpt from

Obligations of the Buyer under the Vienna Convention on the International Sale of Goods [*]

Leif Sevón, Director General, jur.lic.

(. . .)

Article 58 deals with the time for payment. The basic rule is that the goods should be exchanged for payment of the price. The seller is not obliged to extend credit to the buyer and the buyer is not required to pay until he receives the goods or documents controlling their disposition.

The expression "documents controlling their disposition" clearly covers the situation where the goods are to be delivered only against surrender of the documents. This would be the case with a bill of lading where the carrier may only deliver the goods to the person presenting the bill of lading.

The expression would also seem to cover a warehouse receipt entitling the holder to claim the goods.

It is uncertain whether the expression covers international way bills issued under the CMR and CIM Conventions governing carriage by road and rail respectively. Under these documents the carrier is required to deliver the goods to the consignee named in the document. The sender may appoint another consignee. However, he may do so only if he can produce the relevant copy of the way bill. Having acquired the way bill, the consignee/buyer is thus protected against dispositions by the sender/seller. As the handing over of the relevant copy of the way bill has the effect that the consignor can no longer alter the consignee to whom the goods are to be handed over, the holder of that copy controls the disposition of the goods in a manner which would seem sufficient for the purposes of Article 58(1).[page 335]

Article 58 (2) deals with the situation where the contract involves carriage of the goods. This expression covers cases where the seller is required or authorized to ship the goods. The contract does not involve carriage if the buyer takes delivery at the seller's place of business and is to make arrangements for the goods to be shipped.

Where the contract involves carriage, the seller must dispatch the goods but he may do so on terms according to which the goods or documents controlling their disposition will not be handed over to the buyer except against payment of the price. The impact of the provision with reference to the time of payment seems to be that the seller may not, unless agreed upon in the contract, make dispatch dependant on previous receipt of payment. On the other hand, the provision states that an arrangement whereby the seller dispatches the goods but does so on terms enabling him to retain control over them until payment is made, does not amount to a breach of contract.

Under Article 58 (1) and (2) the seller may retain control over the goods until payment is made. Article 58 (3) states that the buyer is not bound to pay the price until he has had an opportunity to examine the goods, unless the procedures for delivery or payment agreed upon are inconsistent with his having such an opportunity.

Normally, goods which have arrived at their destination, cannot be sold there to another buyer at a price corresponding to the contract price. Some buyers may use this fact as a means to force the seller to accept a reduction of the price by refraining from taking delivery of the goods on the alleged ground of non-conformity. The seller may protect himself against such claims by a provision in the contract specifying a procedure for delivery according to which the buyer may not inspect the goods until payment has been made.

An agreement according to which payment is to be made against transport documents while the goods are in transit would normally be inconsistent with an opportunity to inspect the goods at the place of destination before payment is made. This means that if payment is to be made in this manner, the buyer runs the risk of having to pay although the goods do not conform to the contract. This risk is to some extent diminished by the rules in transport law on the duty of the carrier to insert a reservation in the transport document if the goods do not conform to the description in the document. In addition, the [page 336] buyer may improve his position by requiring a certificate of quality in order to guarantee that he receives what he pays for.

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Pace Law School Institute of International Commercial Law - Last updated January 27, 2000

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