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Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods

Professor Jacob S. Ziegel, University of Toronto
July 1981

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Article 41

The seller must deliver goods which are free from any right or claim of a third party, unless the buyer agreed to take the goods subject to that right or claim. However, if such right or claim is based on industrial property or other intellectual property, the seller's obligation is governed by article 42.

COMMENT

1. Art. 41 is both narrower and wider than s. 13, the corresponding provision in the OSGA. It is narrower because art. 41 is apparently restricted to rights against the goods existing at the time of delivery to the buyer. It is now established that the implied warranty of quiet possession extends to justifiable claims arising subsequent to delivery. See Microbeads A.G. v. Vinhurst Road Markings Ltd., (1975) 1 W.L.R. 218 (C.A.). The decision has been criticized [see Law Reform Commission, New South Wales, Working Paper on the Sale of Goods, paras. 12.5, (1975)] and though it can perhaps be justified on its special facts, it does seem harsh that the seller should be held responsible for post-delivery occurrences. I therefore support this feature of art. 41.

2. Art. 41 goes somewhat beyond OSGA 13 in so far as it embraces "claims" as well as "rights" against the goods. By way of contrast, SGA 13(a) implies a condition that the seller has "a right to sell the goods", not that there may not be claims against the goods. Admittedly the existing provincial law creates difficulties for the buyer since he may not be in a position to assess whether or not the third party's claim against the goods is justified. [This is the justification given in the [Secretariat] Commentary, p. 105, for the rule in art. 41.] However, he can always protect himself by joining the seller as a third party in any action that may be brought against him. On balance however the wider language of art. 41 can be justified because the seller's obligations are confined to third party rights and claims existing at the time of delivery. Ordinarily he will be aware of their existence and can then either take steps to settle them or persuade the buyer to buy the goods with such disclosed defects in the seller's title, real or threatened. If he fails to take either step, he may not be acting in good faith and has only himself to blame for the consequences.

3. It would appear that the language of art. 41 is not apt to cover restrictions against the use of the goods, e.g., because of mislabelling or non-compliance with statutory requirements, not involving an infringement of third party rights. Cf. Niblett Ltd. v. Confectioners' Materials Co., (1921) 3 K.B. 387. In this respect art. 41 is narrower than OSGA 13 since a seller under the latter provision is deemed to warrant that he has a "right" to sell the goods and not merely that the goods are free from third party interests. The [Secretariat] Commentary, p. 105, suggests that non-compliance with public law requirements will make the goods unfit for use and therefore involve the seller in a breach of art. 35.

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Pace Law School Institute of International Commercial Law - Last updated April 23, 1999
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