Go to Database Directory || Go to Table of Contents to Annotated Text of CISG

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

(. . .)

Article 69

(1) In cases not within articles 67 and 68, the risk passes to the buyer when he takes over the goods or, if he does not do so in due time, from the time when the goods are placed at his disposal and he commits a breach of contract by failing to take delivery.

(2) However, if the buyer is bound to take over the goods at a place other than a place of business of the seller, the risk passes when delivery is due and the buyer is aware of the fact that the goods are placed at his disposal at that place.

(3) If the contract relates to goods not then identified, the goods are considered not to be placed at the disposal of the buyer until they are clearly identified to the contract.

COMMENT

1. Article 69 deals with the time of transfer of risk where the seller is not required to send the goods to the buyer. Para. (1) is directed to those cases where the buyer is obliged to remove the goods from the seller's place of business. This is not stated expressly but is to be inferred from the language of para. (2). See also [Secretariat] Commentary, pp. 203-204. Apart from this slight ambiguity, the first sentence of art. 69(1) is in accord with the rule in UCC 2-509(3).

2. The second sentence of para. (1) is concerned with the consequences of the buyer's delay in taking over the goods. On this point the rule adopted differs both from OSGA 21(a) and UCC 2-510(3). The former requires a causal connection between the buyer's breach and the loss; the latter only transfers the risk of loss to the buyer for a commercially reasonable time and then only to the extent of any deficiency in the seller's insurance. See OLRC Sales Report, p.275. The object of the Code's restrictive approach is to deny the seller's insurance company the subrogation rights to which it would otherwise be entitled and, where the seller is covered by insurance at the time of loss, to relieve the buyer of liability.

[3] Art. 69(2) addressed itself to those situations where the goods are in the hands of a bailee other than the seller. See [Secretariat] Commentary, pp. 204-205, and cf. UCC 2-509(2). The [Secretariat] Commentary explains (ibid.) that the intent of para. (2) is to transfer the risk of loss to the buyer as soon as the goods have been put at his disposal even though the buyer is not in breach in not yet having collected them from the bailee. The distinction is a persuasive one and is also adopted in UCC 2-509(2). "Placed at his disposal" is not defined in art. 69 but is explained in the [Secretariat] Commentary (p. 205) to mean when the seller has taken the steps necessary to enable the buyer to take possession of the goods. The expression is not used as a term of art and its content will vary with the circumstances. Quaere whether delivery to the buyer of a non-negotiable document of title will suffice or whether the bailee must also have attorned to the buyer?

[4] The rule adopted in paragraph (3) is one that is also familiar in Anglo-Canadian law, but it creates difficulties in the case of fungible goods in the hands of a bailee which are commingled with other like goods. Applied literally, the delivery of a negotiable document of title involving fungible goods in the hands of a carrier or warehouseman may not be sufficient to transfer the risk of loss until the quantity of goods represented by the document is actually segregated by the bailee. Even the English courts have shrunk from such an uncommercial conclusion (see OLRC Sales Report, pp. 267-8, and p. 268, n.54), and presumeably CISG did not intend paragraph (3) to be interpreted this way. The convention contains no definition of "identified goods" but this should not preclude a court from giving it a flexible meaning consistent with the underlying rationale of art. 69.

(. . .)

Go to entire text of Ziegel Commentary


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

Go to Database Directory || Go to Bibliography