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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 84

(1) If the seller is bound to refund the price, he must also pay interest on it, from the date on which the price was paid.

(2) The buyer must account to the seller for all benefits which he has derived from the goods or part of them:

(a) if he must make restitution of the goods or part of them; or

(b) if it is impossible for him to make restitution of all or part of the goods or to make restitution of all or part of the goods substantially in the condition in which he received them, but he has nevertheless declared the contract avoided or required the seller to deliver substitute goods.

COMMENT

1. At common law there is no requirement that a seller must pay interest on the refundable price. See Chalmer's Sale of Goods, 17th ed., p. 324, However, the position has now been changed by statute in England and in several of the Provinces. [For the details see Fridman, Sale of Goods in Canada, 2nd ed., p.381.] Interest may also be recoverable at common law under the heading of general damages. Art. 84(1) does not state how the rate of interest is to be determined, but the [Secretariat] Commentary, p. 180, explains that it is to be based on the rate current at the seller's place of business. The reason for this choice is that it is the benefit derived by the seller from the goods and not the loss suffered by the buyer that supplies the resitutionary claims under art. 84--hence the seller's place of business is the right forum.

2. There is no general requirement in provincial sales law that a rescinding buyer is accountable for all benefits, the reason being that he would not normally be entitled to reject the goods once he has made substantial use of them. Cf. OSGA 33-34. Again, under the doctrine of Hunt v. Silk (1804) 5 East 449, the action for money had and received will not lie where the plaintiff has derived any, or quaere any substantial, benefit under the contract. However, use or, arguably, even consumption of the goods will not be deemed a benefit where the buyer complains of a defective title. See Rowland v. Divall (1923) 2 K.B. 500 (C.A.) and the discussion in the OLRC Sales Report, pp. 504-509.

3. The buyer's accountability for benefits derived by him from the goods assumes greater importance under the convention than it does under the provincial Acts because the buyer's right to reject non-conforming goods and to avoid the contract is not as limited in time as it is under the provincial Acts. As a result the buyer is much more likely to have derived some benefits from the goods before his right to avoid has been lost. [The same is true under the doctrine of revocation adopted in UCC 2-608.] But, whatever the measure of the buyer's benefit, it is entirely appropriate that he should be accountable for it and that it should march in step with the seller's accountability to return the price if it has been paid. This also appears to be the American doctrine and similar recommendations were made in the OLRC Sales Report, pp. 505-506.

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