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Article 64

(1) The seller may declare the contract avoided:

(a) if the failure by the buyer to perform any of his obligations under the contract or this Convention amounts to a fundamental breach of contract; or

(b) if the buyer does not, within the additional period of time fixed by the seller in accordance with paragraph (1) of article 63, perform his obligation to pay the price or take delivery of the goods, or if he declares that he will not do so within the period so fixed.

(2) However, in cases where the buyer has paid the price, the seller loses the right to declare the contract avoided unless he does so:

(a) in respect of late performance by the buyer, before the seller has become aware that performance has been rendered; or

(b) in respect of any breach other than late performance by the buyer, within a reasonable time:

(i) after the seller knew or ought to have known of the breach; or

(ii) after the expiration of any additional period of time fixed by the seller in accordance with paragraph (1) of article 63, or after the buyer has declared that he will not perform his obligations within such an additional period.

COMMENT

1. Art. 64 is the counterpart to art. 44. See my Comments thereon as well as on the definition of fundamental breach in art. 25.

2. I have some difficulties in understanding the reason for linking payment of the price to the seller's right to avoid the contract under art. 64(2). The [Secretariat] Commentary (pp.152-55) throws little light on the question. At common law, and under the OSGA, payment of the price does not per se affect the seller's right to rescind the contract for essential breaches by the buyer, e.g., failure to name a vessel. Payment may affect his right if it is linked to the passage of title to the buyer. Under art.64 the seller's rights are wholly severed from questions of title.

3. One of the important consequences of this severances is that, semble, the seller will be entitled to avoid the contract even after the goods have been delivered to the buyer and title has passed to him under the applicable law. See art. 81(2) and cf. [Secretariat] Commentary, p. 115, para. 14.

This would not be possible under our law in the absence of special circumstances such as fraud on the buyer's part or the retention of a security interest in the goods by the seller. However, the practical effect of art. 64 will not be as dramatic as might appear at first sight because CISG does not purport to determine property rights. See art. 4(b). Presumably this means that the seller's right of avoidance and right to reclaim the goods will be subject to the provisions of the applicable national law on the property effects of the contract and rights in the goods acquired by third parties dealing with the buyer or otherwise. However, the proper harmonization of art. 64 and the applicable national law may present difficulties. The subject requires further study.

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