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UN I T ED N A TI O N S

GEN ERALASS EM BLY

UNITED NATIONS COlmSSION ONINTERNATIONAL TRADE LAW

Working Group on the InternationalSale of (}oIo)ds

Fifth s e s s i onGeneva , 21 January 1974

Distr .LIMITED

A/CN .9/WG.2/WP.1727 November 1973

ORI GINAL: ENGLISH

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ANALYSIS OF COMMENTS AND PROPOSALS BY GOVERNMENTS RELATINGTO ARTICLES 71 TO 101 OF ULIS

Note by the Secret ary-General

CONTENTS

Paragraphs

INTRODUCTION • . . . . . . • . . . . •

ANALYSIS OF THE COMMENTS AND PROPOSALS

Arti cle 71

Arti cle 12

Articl e 73

Article 14

Artic l e 75

Art i cle 76

Article 77

Arti cle 78

Arti cle 79

Article 80

Article 81

Article 82

Art icle 83

73-27725

1 - 5

6 - 94

6 - 7

8 - 910 - 14

15 - 25

26 - 2829 - 35

36 - 37

38 - 39

40 - 47

48 - 50

51 - 55

56 - 59

60 - 61

I . . .

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conTENTS (continued)

Art icle 84

Art icles 85 and 86

Article 81

Ar t icle 88

Art ic le 89

Artic le 90

Art ic les 91-93

Art icle 94

Art i cle 95

Arti cle 96

Artic le 97

Artic le 98

Art icle 99

~rtic les 100- 101

Rearrnn~ement of the provis ions of chapter9 IV-VI o f ULIS

Par ."! Taphs

62 - 65

66 - 67

68 - 69

70 - 71

72 - 73

74 - 76

77 - 78

79 - 80

81 - 82

83 - 84

85 - 87

88 - 9091 - 92

93 - 94

95

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INTRODUCTIOll

1. The UNCITRAL Workin g Group on the International Sale of Goods at its fou rthsess ion decided that "at its next session i t vould cons ider a rticles 60 to 90 ofULIS". Y At its informal meeting held during the s ixth sess ion o f t he Commission ,the Working Group decided that at its fifth sess ion it would also consiuerarticles 91 t o 101 o f ULIS.

2. At its above meetings the Working Group on t he Internat i onal Sale of Goodsrequested the r epres entat i ves of its members listed below t o e xamine articles 11to 101 and t o submi t the results of their examinations t o the Sec retar iat . 2/ Theallocation of art icles was aa fo l lows: -

Art i cl es 71-73: Union of Soviet Social is t Republ i cs , i n collaboration withAust r i a , Br azi l and the U~ited Kingdom;

Ar t i cl e 74 : United Kingdom, in collaboration wit h Brazil, Ghana, Japanand the Union of Soviet Soc ial is t Republics;

Ar t icl es 75-77: United States o f Amer i ca , in ~ollaborat ion vith Fr~nce .

Hun ar-y , Iran and Japan ;

Ar t icl es 78-81 : France, in collaboration with Hungary. Tunis ia and t heUnited St at es o f Ame r ica ;

Ar t i cl es 82-90: Mexico , in collaboration vith Aus t r i a , In dia and Japan;

Ar t icl es 91- 101 : Aus t ria , in collaboration vi t h the United Kingdom , '!exicoand India .

I 3. The felleving r epor t s relating t o the above art icles have been rece i ved :

(a) Comme nts and proposals on ar t icle 74 of ULIS by t he representat ive of theUnited Ki n~dom , incorporating obser vat ions by the representati ve of Ghana (annex I);

Cb) Comments and proposals on art icles 75 to 77 of ULIS by the representativeof the Uni ted States and obs ervat ions of the r epres entatives of France and Huneary(annex I1);

(c) Comments and propos als on arti cles 78 t o 81 of ULIS by the represe ntativeof France prepared in co-operation .... i th the r epres entatives of Et;llr'u.ry , 'run i ni a andthe Unit ed States (annex Ill);

!I A/CN .9/75, para . 181.

2/ Art i c les 60-70 of ULIS had al ready been on the agenda o f the fourth sess i onof th;Working Cro up; howe ver , the Wo rki ng Croup at that session decided t o de fe rcons i derat ion o f those articles until its fi fth sess ion . Reports by representativesof members of t he Wo r ki ng Group on t he above art icles nod an analysis thereof by theGecretari at i s cont ained i n documents A/CN .9/Wc.2/WP .15/Add.l and A/ CN . 9/~G .2/WP . 1 5 ,

respectively.I . . .

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(d) Comment s and proposals on ar t icles 82 t o 90 o f ULIS incorporatingobservations by t he r epresent ative of Aus t r i a (annex IV);

(e) Observat ions and proposals on ar t i cl es 91 t o 101 of ULIS by t her epresent at i ve of Aus t r ia , prepared in co-ope r at ion vit h the representative ofMexico (annex V);

(r) Ame ndments propos ed by the r epr esentat i ve of Norway for t he revisionof articles 61 to 101 o f ULIS (annex VI) .

The text of t he above repor t s appea r in anne xes I to VI t o t he present analysis.

4 . Pur suant to the dec is ion o f t he '.J'o rk in~ Group . the Secretariat ci rculated theabove r -epor-ts an:.o n~ repres entati ves of the membe rs of t he Wo rkin,q; Group for comments .The comment s receive d from the repres entatives o f Aust ria , Hungary and Norvay arereproduced in annexes VII t o IX.

5 . The propos als 8nd comments made i n the above r eports and t he comment s thereont hat deal ..... ith a e Lnzle i ss ue a re cons i de red to -;ether in t hi s analysis . This r eportal so includes comnents on arti cles 11-101 that appear i n previous document s in theCommi ssion .

ANALYSIS OF THE COMMENTS AND PROPOSALS

Art icle 11

6 . Art i cle 11 of ULIS reads :

Except as ot he rwise provi ded in art icle 12 , del i very of t he goods andpayment of t he pr ice shall be concurrent condi t ions . Nevertheless t hebuyer shall not be obl iged t o pay t he price unt i l he has had an opportuni tyt o exami ne the goods .

1 . No comments were made on this art icl e .

Articl e 12

8. Arti cl e 72 of ULIS r eads:

1. Where the contract i nvolves car r iage of t he goods and where deliveryis , by virtue o f paragraph 2 of ar t i cl e 19, effect ed by handing over t he goodsto t he car r ier , t he sel ler may either pos tpone di spatch of the goods untilhe r eceives payment or pro ceed to despat ch t hem on t e rms that r eserve tohimse lf the right of disposal of the goo ds dur i ng t r ansit. In the l a t t ercase , he may requi re that t he goods shal l not be handed over to t he buye r atthe place of destination excep t agains t payment of the pr ice and t he buyershall not be bound to pay t he pr ice unt i l he has had an oppor tuni t y t oexamine the goods .

2. Nevertheless, when t he cont ract r equires paycent against documents ,the buye r shall not be entitled to r efus e payment of t he pr ice on the gro undthat he has not had t he oppor tuni t y t o exami ne the goods .

9 . The representative of Norway suggested that the wor ds "e i t her pos tponedespatch of the goods until he receives payment or" in paragraph 1 of this art icleshould be deleted as mis leading since in mos t cases there .....ill be an agreement or

usage to the contrary.agreement or usage . Heparagraph 1 as proposed

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I f deleted , the right to postpone despatch would depend onfurther suggested several drafting changes . The text o fby the representative o f Norway reads:

"1. Where delivery is e f fecte d by handing o ve r the goo ds to thecar rier i n accordance wi t h subparagraph (8) of ar ticle 20, the sellermay despatch the goods on t erms that deser ve to himself the r i ght ofdisposal of t he goods dur i ng the transit. The sel ler may requi re t hat thegoods shal l no t be handed o ve r t o the buye r at the place of des t inationexcept against payment of t he price and the buyer shall not be bound to paythe price until he has had an opportunity t o examine the goods . 11 ]/

Article 13

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10. Article 13 of ULIS r e a ds :

1. Each party may suspend the performance of his obligations , whenever,after t he concl usion of t he contract, t he economic situation of the ot he rparty appears t o have become sO difficult that there is gpod r eas on t o fearthat he vill not per form a mater ial par t of his obligations .

2. I f t he seller has al ready despatched the goods before the economics ituation of the buye r descr i bed i n paragraph 1 of this article becomesevident, he may prevent the handi ng over of the goods t o the buyer even it thelatter holds a document which entitles him t o obt a i n them .

3. Nevertheless, the seller shall not be entitled t o pr event t hehandi ng over of the goods i f they are claimed by a third person vho i s alawful holder of a document whi ch entitles him t o obt ain t he goods , unlessthe document contains a reservat ion concerning the effects of its transferor unless the seller can prove t hat t he holder of the document, when heacqui red it, knowingly ac ted t o the det r iment o f the seller.

11 . The Ara~ Republ ic of Egypt cr i t icized t his provision on the ground that i twould enable a sel ler t o prevent the del ivery of goods al ready despatched if heconsidered that the economic s i tuation of t he buyer justified such stoppagein transitu. Such a uni lateral decision would open the door to arbit rary actionand might have serious consequences for the buyer , in particular where the buyerwas in a developing country havi ng a vital need for certain goods . y

12 . The representat ive of the United Sta~es sugges t ed that this article should bebroadened to allov the ot her party t o r emedy the situat ion by provi di ngassurances . 21

13. In respect of paragraph 2 of t he ar t icle , Aus t r i a expressed the view thatt his paragraph , in impos ing obl igations upon t he car rier, was in conflict with

~ Annex VI, comments on article 72.

~ A/CN .9/11/Add .3, p. 24 , and A/7618 , annex 1, par a . 95.

21 Annex 11 , pa ra. 7.

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prOVISlons of munic ipal and internat i onal law concerning the car r i a ge of goods ,and also placed an unreasonabl e burden on the car r i er . §/

14, The repres ent at i ve of No rway suggested that a new paragraph 4 should be added~o this art icle . The paragr aph would r ead :

" 4 . A par t y may no t exerci se the rights provide d i n pa ragraphs 1 and 2of this art icle i f the ot her par t y provi des a guarant ee fo r or ot he r adequat eassurance o f h is performanc e o f t he contract." If

Article 74

15. Article 74 of ULIS r ea ds :

1 . Where one o f the parties has not pe r fo rmed one o f his obl igat i ons ,he shall not be liable for s uch non- pe rformance if he can prove that it vasdue to ci rcumstances which , acc ording t o the i ntention of the par t ies at t het ime of the conc l us ion o f the contract, he vas not bo und t o t ak e into accountor t o avo i d or to over come ; i n the absence o f any express ion of the intent ionof the pa r t ies . r egard shall be had to what reasonable pe rsons in t he s~e

situation woul d have intended .

2. Where t he circums tances whi ch gave rise t o t he non-performance o fthe obl igation cons t i t ut ed onl y a temporary i mpedi ment to performance , theparty in default shall nevertheles s be permanently r eli eved of hisobligat ion i f, by r eason o f the de lay . pe rfor mance vould be so r adi call ychanged as to nmount t o the perfor mance o f an obl igat i on qui t e differentfrom that contemplat ed by the contract .

3; The r elief pro vi de d by this ar t icle for one of t he par t ies shal lnot ex cl ude the a voidance of the contract under some ot her provis i on of thepresent UlW or dep r i ve the ot he r party o f any r i ght which he has under t hepresent Law t o r educe the pr ice , unl es s the ci rcums tances which entitled t hef i rst party to r eli e f were caused by t he act of the ot he r par t y or of somepe rson fo r whose conduct he was responsi~le. {

(a) Par ae raph 1

16. The repres ent ative o f the United Kingdom made comments wi th r es pect t o t hefo rm (annex I, paragraph 2 ) and subs t anCe ( paragraph 5) o f pa r ag r aph 1. Theseco~~ents included t he obse rvat ion that t he grounds for excuse in paragraph 1 weret oo broad s ince they wer e not l imited t o f rust rat ion but extend to cases wheresome unforeseen turn of events mere l y made per fo rcance unexpec tedly one rous . I nthe opinion of that representat i ve excuses fo r non - performance fal l i ng short off rustrat ion should be ei the r e xpress l y provided for in the contract or i gnored . §I

11. The representative of Ghana supported the above opi nion and noted t hat therewere mMy cons i der-at i ons agains t r ecogrri t i.on of . nd gi vi ng l egal effect t o,circumstances uther than f rust rat ing events, t o whi ch the par t i es di d not adve rttheir attention at the time of Makin their co nt rac t . For example . it would be

6/ A/Cll."/ll. p . 9.IJ Annex VI .

fJ! !\nnt'x I. pnr-e . 5 .

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very di f f i cult t o de f i ne such circuostances ~ith sUf ficient precision to nake force r tai nt y and uniformity o f applicat i on; it would be also di f f i cul t t o br i ng thoseci r cums t ances t ogether into a s ingle clas s by means of a definition, because oftheir pos s i bl e diversity. Difficulties may further be caused by the vording of t hearti cle accor ding t o which a n inquiry as t o lithe intention o f t he part ies at t hetime o f t he conclusi on of the ccnt.rec t." whether one o f the pa r t i es vo ukd be boundt o t ake into cons iderat ion or t o over come a circumstance. vas not necessarilyconfined t o t he t erms or t he contract but could also be bas ed on t he not eas i l yapplicabl e standard "what reasonable pe r sons in the same s i t ua t ion would haveintended". The r epres ent at i ve of Ghana suggested that, in view of thesedifficulties, the best so l ut i on would be t o l eave t o the cont r act ing par t ies t oat.LprLete for s uch cf r cums t ancee , 21

18. The repres entative of the United Kingdoo noted t hat seve ral express ions inparagraph 1 of the arti cle did not alw ays clearly express the l egislativeintention. Thus the word "L'iabLe" was not used in t he same meani ng in t hi sarticle as in ot her art icles of ULIS; the expr ess ion "due t o" i nt roduced t heproblem of acceptabl e limits of cause and effect which cannot be set t led in anyeas ily identi fiable pr i ncipl e ; the phrase " regard shal l be had t o what r ea sonablepersons in the same s i t ua t ion would have intended" also created di f f i culties s i ncea reasonable sel ler and a reasonable buyer might have i ntended di f f erent things . 10/

19 . The representative of the Uni t ed Kingdom sugges t ed t hat i n order t o accocmodat et he proposals me nt ioned i n paragraphs 16 and 18 above , paragraph 1 of ar t icle 14 ber edrafted as fo l lows :

"Where one of the part i es has not pe rformed one of his ob.Hgut Lona , heshal l neither be required t o per fo rm nor be li able for his non-performanceif he can prove either that per fo rmance has become i mpossibl e owing toc i rcumstances which, ac co r ding t o the intent i on of the parties at t he time ofthe conclusion of the contract , he vas not bound to take into ac count or toavoid or t o ove rcome , or that, owing to such ci r cums t ances , pe rformance wouldbe so r adi cnlly chan-ted ns to erccunt t o the pe rformance of ·.n obli -et. Icn qui tedi r rc r errt fron t hht ccnt.empkut ed by t he cont ruct , i t' t he i nt enti on of the parti esin t.hcne r eupcct a at t he td ne o f the ccncIus don of the contract vca u, t exprcs ee dr~~ard shall be hnd t o what t he part y who hns not rc rforu£~ could reas onablyhnvc been expected t o t ake into account o r to avoid or to ove rcome . " 11/

20 . The r epres entative of Norway s ugges ted some draft ing changes i n the abovet ext. The text as proposed by him reads:

"1 . . Where one of the par t i es has not per formed one of his obl igat ions ,he shall neither be r equired t o per fo rm nor be l i abl e for hi s non-performanceif he can prove either (a) that pe rformance has become i mpossible ovinb tocircumstances of such nat ure Which it was not contemplated by the contrac tthat he should be bound t o t ake into account or t o avoid or to ove rcome , or(b ) t hat , owing to such ci rcuos t ances, perfcrmance wo uld be so r adicall ychanged as to amount to the per fornance of a qui te other obligat ion than thatcontemplated by t he cont ract; i f the i ntenti on of t he parties in t hese

2! Ib id. , per-a, 7.

10/ Ibid . , para. 2 .

11/ Ib id., pa ra. 5.I

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r espect s at t he time of the conclusion of the contract was not expressed ,r e gard shall be had t o "'hat the par t y who has not pe r formed couldr easonably have bee n expected to t ake into account or t o avoid or t ocve r ccee , f1 12/

21 . Anot he r as pect of the pr ovi s ion in paragraph 1 was r ai sed by t he r epres entativeor Czechos l ovakia who, at t he s econd se s s i on of the Commi ssion, expressed the vi ewthat article 14 did not deal with SUffici ent pr eci s ion with t he ques t i on whe t herthe sel ler could escape li ability because of gover ncent al interference in pr i vat econt ractual relations, as for example where a gove rnment pr evented goods sold t o aforei gn buyer rrc e bei ng sh ippe d t o t he buyer . 1 3/

(b) Paragraph 2

22. The r epres entative of the Uni t ed Ki ngdom s uggested t hat because ofi nconsistenc i es in t he l anguage of this pa r agr aph , set forth in t he corncents ,paragraph 2 of ar t i c l e 74 should be r edra ft ed. The t ext r-ecc raraended by him, 14/vi t h certa i n dr a f t i ng changes proposed by the r epres entati ve of Norvay , 15/ r;;dsas follows:

"Where the circumst ances which gave ris e t o the non-performanceconstitute onl y a t emporary i mped i ment t o pe r formance , t he / exemption!/ iiorvay : r elief7 provided by this art i cle shal l ce ase t o b; available t ot~e non-performing part-y when the i mpediment i s r emoved, L;ave that i fT/Norvay : nrovi ded t hat/ per fo rmance would t hen, by r eas on of t he delay , be;0 r adicaily chanaed as t o amount t o t he pe r formance of L;n obl igat ion qui tedifferent from! / Norvay : a quite di ffe rent obl igat ion t han! t hat contempl ated

- - I -by the contr ac t , the exemption sh all be permanent . '

(c ) Par M raph 3

23 . The Gove rnment of Austri a noted that under the present t ext of ULIS t he par t ywho was the benefi ciary of the obl i gat i on which was not per f ormed and was l i able forr eciproc al per for mance , r etained the possi bi l i t y of declar i ng the cont r ac t voi d. Inmany cas es he could onl y do so if he acted "pr ompt I y'"; if for any r eason he failedt o ac t pr ompt l y he was obl i ged t o pe r form without beins ent i t led t o r ec i procal {per f ormance . In the view of Aus t r ia , this would constitute 0. hardship for thatpa r t y . 161

24. The r epresentati ve of the United Kingdom express ed the op~n~on t hat art icl e 78of ULI5 , wh i ch i s pr i mar i l y concerned with avoidance on breach , might not be wellsuited t o dealing with t he cons equences of frustrat ion s i nce the ef fects ofavoi dance . as l aid down in article 78. might be t oo dr as t i c when non-performance wasnot due t o any faul t . 17/ The s ame r epresent ative noted further that t here was noneed t o s tat e in t hi s paragraph that t he party who had not pe r formed mi ghtnevertheles s avoi d the cont r act on some ot her ground ; ther e was nothi ng i n

12/ Anne x IX. pa r a . 1 .

131 A/ cN.9 /31 , para . 136.14/ Annex I . - iar-a. 3 .

15/ Annex I X, j-n r-u • 1-

161 A/ CN .9/31, para . 135 .

171 An nex I, ' )6.1'8. . 5 (ii) .I ...

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paragr-eph 1 t o suggest that he crlght not do s o and inclusion of this language mightgi ve rise t o doubt as t o what was intended. Fo r this a nd other r easons explained inthe report, this representat ive suggested that pa ragraph 3 be exp ressed as rollows:

liThe exempt ion provi ded by t hi s art icle for one of t he part ies shallnot depr i ve t he ot her part y of any right which he has under the pr esent Lawt o declare the contract avoided or t o r educe t he price , unless thecircuostances which gave r i s e t o t he exempt ion of t he fi rs t party werecaused by the act of the ot her party or or some person for whose conducthe vas respons ible. " 18/

(d) Other proposals

25. Norway su ggested t hnt the par t y who wished t o be reli eved of his liabilityfor non-performance sh ould have a duty t o not i fY t he ot he r par t y of the i mpedi mentso that failure t o not i fY would entai l liability t o pay damages for the l osssustained by the ot her party t hrough l ack of proper notification . 19/

Article 75

26. Article 75 of ULIS reads:

1. Where ~ i n the cas e of cont racts for delivery of goods byinstalments , by r enson of any fail ure by one par t y t o perform any of hisobligations ~ unde r t he contract in r espect of any i ns talment , the otherparty has good reason t o fear fai lure of pe r formance in r espect of fut ureinstal.ments, he may dec lare the cont ract avoided f or t he future , providedthat he does so prompt l y .

2 . The buyer may also, provided that he does so prcmpt.Iy , dec larethe contract avoided in r espect of fu ture de l i ve ries or in r espect ofdeli veries al ready made or bot h , if by r eason of their i nte rdependence suchdel i ver i es would be wort hless t o him.

27. In respect of par agraph 1 of thi s art i cle , t he r epres entative of the Uni tedSt at es suggested that in or der t o br ing t his article into conformi t y with t hepr ovisions on fundamental breach , the exp ress i on "fail ure of pe rformance " shouldbe r eplaced by the expression "a fu ndamental breach". 20/ The comments of t her epr es ent at i ve of France 21/ and those of t he r epres entat i ve of Norway 22/supported this propos al .

28. In respect o f paragraph 2, the r epresentat i ve of the Uni ted States held thatthe word "wor t hles s" vas t oo strong and s uggested t he subst i t ut ion of t he

18/ Ibid., par a . 4.

!21 A/CN .9/ 31, para . 134.

20/ Annex II, para. 3.

21/ Ibid., para. 9 .

22/ Annex IX, para. 3.

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oxp r-eua I on "the value o f such deliveri es t o him voukd be subs t.an t i.uf Iy impai rcd''for the words "s uch dcHver-i es ....cold be wort hless for him" . 23/ This proposalwns supported by the r epres ent ntive of Norvey 24/ ~d oppos~~by the r~prescnt ativeof France on the ground that the suggested t ext ....culd cons iderably heiGhten theunc ertainty th~t ~~rcndy exi s ted qs n r esult of the subjec t ive chRrnctc r o f thewor-d "vor-etneae" . 25/ The proposed change in t he Lan gu age o f this pnr-ngrupb wasalso oppos ed by the reprcsent~tivc o f Austria. ~

Artic l e 76

29. Article 76 o f ULIS r ends:

Where pr i or t o the dnte fixed for p~r for~.ncc of the cont rRct i t i sclear that o nc o f the p~rties will c ocnit n fund~nt~ breach o f th~

ccnt r uc t , the ot her party sh~ll have the r ight t o dccI nr-e t he c ont. r-vctavoided .

30. The represent~tive o f the United St~tes exr~ined t hi s ~ticlc upon ther equest o f the ConnissiQn. Two proposal s vere ~~dc p~ ~ r esult of thisex::u:ri nat i on . The fi rst vas t o delete the wor-d " f i xed" s i nce i t night be n .:'J.J. naliniti ng the appl icat ion of the arti cle t o cont r act s in which n date i s express l ystated. 27/ The r eprcs entntive of Frnnce suppor ted this propo8~1. 28/- -31. The ot her propos aL nndc by the r eprcecnt-it tvc Cl f the United States v ·18 t .or evert t o the or i ginnJ. Lan guag e of thi s ar t i cle ns it uppcurcd in nr-ti cI c 87 ofthe 1956 drnf t of the Uniforn Lav, and t o r estrict t he c ~nnon l aw nut i on j fant ici~'ltory bre~eh introduced by .'\r t i cl e 76 in t he present text of the LAw t ccesee where one of the pnr-tLes "so conduct s b driaeLt' as t o discl. se nn i ntcnt i ont o ccret e ,1\ rundenent.nf br-each of cont.r-ect.", 29/ This prep- an! ves obj cct.cd t oby the r epresentatives of Franc e nnd Hungary .

32. In the vi ew of the r epresentative of Franc e . reversi~n t o the c r i gi nnllangu~e o f this .~t i cle , ther~by ruling out ~vnid~nce in Cf!.Sl.:S where th~

de fend31lt did not stnte his intenti ons, =dght involve t he contr~ct i ng purty i nexcessi ve risk . 30/ This opi nion w~ sup rt cd by the rcprcs ~ntntive .ofAustri n. 31/

33. The r cpr esentntive o f Hungary objected t o the pr opos al rcfcrr~d t o inp~agrnph 31 nbovc on the cround thnt ccnduct shnr t of r epudi nt i on night nl socre~te uncertnintics; there vas , therefore , nQ rc~son t o r estrict t he pos s ib i l i t yof ~VQid~nce t o cas es vhere anticipntion , f n breach was b,~~d 0n t he c nluc te f either Vnrt y . Hc n~tcd further that art icles 76 and 48 v~re ~vcrlnrp i n~ andsUCGcsted th~t bc th these 3rt i cles b~ r eplac ed by n s ingl~ nrti cl~ vhich ~ uldccna t.Lt.ut;c o acpnrrrte s ection ent itled "Anticipatory breach" in chapt.c r- V. Thel~r('lpc sed 1.rticle i s as folloV9:

23/ Annex n. pa ra . 4.

24/ Annex IX, para . 3.25/ Annex n . par a . 9 b .

26/ Annex VII, para . 3.

27/ Anne x II , para . 5.28/ Ibid . , para . 12.

29/ ~. , pa ras . 5-7 .30/ ~. , pnrae . 13-19 .

31/ Annex VII , I=ara . 4. / ...

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"Where pr ior to the date fixed for performance of the contract it is clearthat onc of the pa r t ies viII commi t a breach . the other party shall be entitledf rom thi s time on t o exerc i se the right s provi ded in this Law for thatparticular breach . " 32/

34 . The above ob ject i ons of the repr esentatives of France and Hungary t o thepropos al r eferred t o in paragraph 31 were shared by the r epres ent at i ve of Norway.He also agreed with the pro pos al in par agr aph 33 above that article 16 should beharmoni zed with ar t i cle 48 but opposed the amal gamation of thos e articles into onesincle a rt icle . 33/ Instead, he all ested that article 16 be deleted; t o cover theprov is ions contained therein ar t i cl e 48 should be redrafted and a new article 68shoul d be inserted . The suggest ed texts read :

"Art i cle 4A

The buye r may exercise the ri ghts / ;S7 provi de d in articles 43 to 46L~d t o claim damages as pr ovi de d in article 82 or articles 84 to 8IT. evenbe fo re the time f i!.ed for delivery . if i t i s clear that the seller will fai lt o per fo rm Lany of! his obligat ions . "

"Article 68_ The sel ler may exercise the rights L~i7 provided in articles 2? and 66

l and claim damaBes as provi ded in article 82 or articles 84 to 81/, evenbefore t he time fixed for per fo rmance . i f it i s clear that the buYer will failt o perform L~ny off his obligat ions . " 341

35 . In respect of t he Hungar i an propos al that articles 48 and 76 shoul d be merged,the Working Group will r ecall that it dec ided at the thi rd session that the problemof "anticipatory breach" posed by article 48 should be s t udi ed in connexion with ther elated provis ions on t his problem that appear in later sections of ULIS . 121 Ati ts fou rth sess ion the Wo r king Gr oup provi s i onall y approved the Secret ary-General 'sr ecommendation (A/CN. 9/751 annex 11 , para. 116) t ha t ar ticle 48 be i ncl uded int he consol i dated set of r emedies and dec ided to postpone final action on thatart icle unt i l it considered art i cl es 75-77 on anticipatory breach . 361

Art i cle 17

36. Art icle 11 of ULIS reads:

Where t he cont ract ha s been avoided under article 75 or art i cl e 16. thepart y declar ing t he cont ract avoided may claim damages in ac cor dance withart icles 84 t o 81.

37. The r epres entative of the United St at es noted that since damages could beclaimed unde r ar t icle 78 (1), t his article was unnec es s ary . In addi t ion it wasmisleading to i nclude i t unde r t he headi ng "Supplement ary gro unds fo r avoidance"r ather than "Ef fects of avo i dance" . Conseque nt l y the ar t i cl e sh ould be del eted. TI!The r epres entative of Norway agreed with this proposal . 38/

321 Annex II . paras . 20-22.211 Annex IX, para . 4.341 Annex VI.351 A/cN .9 /62 . annex I . pa ra . 30.361 A/CN .9115. para . 134.371 Annex 11. para . 8 .381 Annex I X, par a . 3 . I . . .

-1 2-

Art i c l e 18

38. Ar t i cle 18 of ULIS reads:

1 . Avoidance of the contract r eleases both par t ies from their obl igat ionsthereunder, subject to any damages which may be due .

2 . If one party has performed the cont r act ei t her wholly or in part , hemay claim the r eturn of what ever he has su pplied or pa i d under t he contract .It both parties are r equired to make restitution, they s hal l do so concurrent ly .

39. The representative of the United Kingdom , in hi s comments on article 74, notedthat article 78 vas pr i mar i l y concerned vith avoidance on bre ach and it might not bewell suited to dealing with the consequences of frustration . In t he opi nion of t hi srepresentative, the combination of avoidance vith t he r emedi es provided in thisarticle might result in too dr as t i c a remedy where t he non-pertormance vas not dueto ""y fault . ~/

Article 79

40. Art i cl e 79 o f ULIS r eads:

(

,1. The buyer shall lose his right to declar~ the cont ract avoided where

it is i mpossible tor hi m to r eturn the goods in t he condi t ion i n vhi ch her eceived them .

2 . nevertheless. the buyer may declare the contract avoided :

(a) it the gpods or part at the goods have pe r ishe d or deter iorated as ar esult at t he defect which Justiti es the avoidance;

(b) it the gpods or part of the goods have per ishe d or deter iorated as ar esult of the examination prescribed in ar t i cle 38 ;

(c) if part of the goods have been cons umed or transtormed by the buyer inthe course of normal us e before the lack of conformity vith the contract vas \discovered;

(d) it the i mpossibility of returning the goods or of r eturning them inthe condition in vhi ch they \lere r eceived i s not due to t he act of t he buyer orat some other person for vhose conduct he is r esponsible;

(e) it the deterioration or transformation of t he goods is unimportant .

41. The r epresentative of No rway suggested t hat the phrase liar t o r equire t hesel l er to deliver substit ute goods It be inserted after the word "evoLded" inparagraph 1 of the article. end that the introductory phrase in paragraph 2 shouldbe r edrafted to r ead: "2. Neve rtheless . the precedin~ par agraph shal l notappl y : " . 40/

42 . I n respect of 9ubparagraph 2 (a) t he represen t ati ve of Hunga ry suggested th~t

t hi s 9ubparagraph should be deleted s i nce it vas s imply one case to whichsUbpa ragraph (d) app l ied. 41/

l2I Annex I, para. 5 (ii).

40/ Annex VI, suggested t ext fo r nev ar t icle 75.41/ Annex Ill, pa ra. 9 .

(

(

(

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43. The representative of Hungary suggested fUrthe r that subparagraph 2 ( c ) shouldbe amended to r ead : "( c) if par t s of t he goods have been sold , ccnaumed . . • " , 42 /The r epres e nt a t i ve of Aust ria disagreed wi t h the addi t ion of the vo rd "sold" vh dch ,i n his opinion , would l ead too far . 43/

44. The representat i ve of Norway suggested that t he following words sho uld beadded t o the end of subparagraph 2 (c ) : "or ought t o have been discovered . " 44/

45 . Concerning Bubparagr aph 2 (d) the r epres entati ve of France suggested that thi sBUbparagraph should be r edr a ft ed : ( a) to make it compatible wi th the provis ion ofarticle 97, paragraph 1 . vhereby ris k passes to the buyer when delivery is effected ,and (b) to r estri ct the r et urn of goods to cases where they have retained thei rsUbstantial qualities . A text proposed by him was 9uppo~ed , with the addition ofa fev words . by the representat ive of Hungary . The proposed text . i nc luding thisaddi tion. reads as follows:

"(d) If t he imposs ibili ty o f r eturning t he goods with thei r substant i alqualities intact or in the condi t i on i n which they wer e r eceived i s due t ot he act of the sel ler LHungaryiT or of some ot her person fo r whose conduct hpi s r esponsible. n~

46. The representat ive of t he Uni ted States stated t hat , i n general he agreed withthe above proposal . provided that r et urn of t he goods vas st ill poss ible where thedeterioration vas due t o the defect i n the ood3 . ~ The r epresentati ves ofTunisia. Austria and Norvay . on the other hand . disagreed vith the proposed text .The r epr es ent at i ve of Tunisia vas of the opinion t hat the original text ofsUbparagraph 2 (d ) should be maintained ; 47/ the representat ive of Austria made thesame proposal but suggested that i n order t o adjust the or igi nal l anguage of thissubpar-egz-aph to that of paragraph I , the vords liar of r eturning them" sho uld bedeleted . ~ No rway noted that i t was important that the except ions in pa ragraph 2of ar t icle 19 should cover , inter al i s . t he pe r iShing , det erioration andt r ansportation r esult ing f rom the very nature of t he goods (e. g. pe r i s hable Goods ) ,r egardless whether such per ishi ng , et c . vas caus ed by non- conformity of the goodsor by some other ci rcumstance . Si nce other subparagraphs of ar t icle 19 .2 did notcove r such cases it vas necessary that sUbparagraph 2 (d) should include them aswell as fortui tous (accident al ) events . ~

42/ Ibid • • para . 11 .

43/ Annex VII . para . 6.44/ Annex VI. text of nev article 15 , para . 2 .

45/ Annex Ill , paras . 6-8 .

46/ Ib id . , para . 12.41/ Ibid .• para . 13.48/ Annex VII , para. 6 .

49/ Annex IX. para. 6.

/ ...

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47 . In respect of subparagraph 2 (c) t he r epresent atives of France and theUnited St at es doubted whether , i n vi ew of the vaguenes s of its wording , t hi s9ubparagr aph should be ma i nt ai ned . 501 On the other hand , the represent ative ofTuni si a t hought that the i dea expr essed in the Bubpar agraph should be maintai nedbut agreed that l es s ambiguous l anguage vas needed . 'i]j The Hungarianr epresent ative suggested t he use of the wording earl ier adopt ed for article 33 ,paragraph 2. 52! The representat ive of Austr ia agreed with this suggest i cn . 211

Article 80

48 . Art i cle 80 of ULIS r eads:

The buyer vhc has l ost t he right t o dec l are the contract avo ided byvirtue of Article 79 shall r etain all the other rights conferred on himby the present Law.

49. The r epr esent atives of France and Tunisi~ considered t hi s ar t icle assuper f l uous and suggested its deletion: on t he other hand , t he representativesof Hungary and the United States prefer red i t s r et ention. ~/ The r epres entativeof Austria supported the latter view i f art icle 77 should be delet ed . 221

50. The r epresentative of Norway suggested that after the vcr-d "avoided" thefollowing phrase should be included : "or to require the sel l er t o del iversu bs t itute gocds ". 22J

Article 81

51 . Art i cle 81 of ULIS r ead s :

(

1. Where t he s el l er is under an obligation t o refund the price, heshall also be l iabl e for the interest t her-ecn at the r ate fixed by Art i cle 83, (as f rom t he dat e of payment .

2. The buyer shall be liable t o account to the seller for all benefitswhich he has derived from t he goods or part of them, as the case may be:

22/ Annex Ill, par as . 15-17.

51/ Ibid., para . 17.

52/ Ibid. , para . 17 .

21/ Annex VII , para. 7.~/ Annex Ill , par as . 18- 20 .

22/ Annex VII , para . 8.

56/ Annex VI, sug ested next fo r new articl e 76 .

/ ...

)

(

c..

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(a ) where he is under an obligat ion t o r eturn the goods or par t oft hem.i or

(b) where i t is i mposs i bl e for him t o r et urn the goods or part ofthem , but t he cont ract i s nevertheless avoided .

52. The representat i ves of both France and Tunisia considered t hat underparagraph 2 computation of the benefits which the buyer had derived from the goodsvould be a complicated and subjective oper at ion , espec i all y where the goods werebought fo r t he buyer 's personal use . The Tuni sian r epr esent at i ve vas of t heopi ni on t hat this di f f icult y could be el imi nated by an improved wording of thearticle : on t he other hand . the r epresentative of France suggested t hat since thes el ler vas allowed automat icall y to add i nterest to the price t o be refunded by tbebuyer , the buyer should be allowed t o determine the equivalent ot the benefitsder i ved by him f rom the goods . In t he view of the French r epre s ent ative, such aprovision would eliminate the somewhat inequitable provision of this articl e andwould r esult i n t he set-of f of t wo cash claims agai nst each ot her - exc ept , ofcourse , wher e the goo ds were unus abl e or practically worthless f or the purposes oftbe buyer . 2l/

53. The representat ive o f Austria disagreed. with the above proposal o n t he groundthat, i t accepted , the seller voukd be subject t o a forfeiture that in IOO st casesvould not corre s pond to t he actual benefit r eceived by the buyer . He furt her drewt he attent ion to the fac t that t he sale of co nsumer goo ds had been exc l ude d fromthe scope o f appl i cat ion of t he l aw and thus the difficulty of the computation ofbenefits der i ved from suc h goo ds di d not justifY the acceptance o f the Fren chproposal. ~

54 . The representati ve of Norway sugges ted that aubper-agra ph 2 (b) o f t hi sa r ticle should be r edrafted as follows :

lI(b ) Whe r e it is i mpossible for him to r et urn the goods or pa r t of them ,but he hae nevertheless exer c ised his right to declare the co nt rac t avoided orto r equire t he sel ler t o deliver subst itute goods ." 22/

55 . The Commission r equested t he r epres ent at i ve o f Mexico . in co-operation witht he r epres entatives of Austr i a , India and J a pa n , t o examine cha pter V, s ec tion IV(articl es 82 to 90 ) o f ULIS . I n hi s r epo r t the r epres entat i ve of Mexico suggest edthat i n vi ew of the fac t t hat t he general rule on damages as cont ained i nart icle 82 appl ied both wher-e tbe contract was avo ided and where i t was not , t biss ec t ion should be redrafted accordingly a nd its t i t l e should be changed to "Damages".He further suggested that subtitle A should be changed t o "A. De t e rminat ion o fthei r thei r amount" a nd subtitle "BI! should be deleted. 60/ The suggea t I ona

2l/ Annex Ill , paras . 21- 27 .58/ Annex VII , para . 9.

59/ Annex VI, text of new a r t ic l e 11.

60/ Annex IV, paras . 1- 2./ .. .

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in respect of articles 82 and 90 of the r epres entative of Hexico are r e ferr edto under the headin~s article 82 through article 90 below, fol lowing the textof the corresponding ar ticle of uLIS .

Article 82

56 . The text of article 82 of ULIS reads:

Where t he contract i s not avoi ded , damages fo r a breach of cont r act byone party shall consist of a sum equal to the l oss, i ncludi ng 106s of profit ,suffered by the other party . Such damages shall not exceed t he l oss whichthe party in breach ought t o have foreseen at the time of the conclusion ofthe contract, in the light of the facts and mat ters which then were known or (ought to have been known t o him, as a possi ble consequence of the breach ofthe contract . ~

57. The repr esentat ive of Mexi co suggested that this ar t icle be r edraft ed asfo llows :

"Damages for a breach of contract by one par t y shall cons ist (whet hert he contract is avoided or not) of a sum equal t o the l os s actuall y suffer edby t he other party.

Except as provided tor by ar t i cle 89 t such damages shall not exceed thel os s which the party in breach had rcr -e eeea or ought t o have fo reseen at thetime of the conclusion of the cont r act t in the light of t he fac ts and mat terswhich he knew then or ought t o have been known t o him as a possi bleconsequence of' the breach of t he cont ract . " 61/

58. The r epres ent at ives of Aust r ia and Nor way made simi lar comments on t he abovetext . The former r epresentative suggest ed t with respect to t he French version of Zthe Mexican t ext of t hi s article , that the expr ess ions "pert e sub i e" and"gai n mangue " of' article 82 (1 ) of ULIS should be maintained. I n hi s r eply t othi s comment the r epr es ent ative of Mexi co expr ess ed the view t hat t he expressiondommages- i nterets at t he beginni ng of t he article included bot h conc epts but didnot obJect t o the mai ntenance of t hose expres sions provi ded t hat experts of l awand French language considered it necessary . 62/ The represent ative of NorwayBuggested t hat t he text should cont ain an expr-eB s r e f er ence t o l oss ot prOf it . §1/

59. In the view of the representat ive of Hungary, the insertion of the word"act ually" i n the fi rst paragraph of t he Mexi can text might create the impress i onthat only damnum emergens was due . The r epresentative of Hungary doubted fu r t her

61/ Ibid . , Annex.

62/ Ibid., para . 3 (c ).

§]} Annex IX , para . 11 .

/ ...

)

(

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vhether the insertion of t he words "had foreseen or" in the second paragraph orthe suggested text vas appropr iate i a party who fo resav losses and neverthelessfailed to fulfil the contract might have acted i n bad fa ith . 64 /

Ar t i cle 83

60 . The text of article 83 of ULIS r eads :

Where t he br each of cont ract cons ists of delay i n t he payment of thepr ice , the sel l er shall i n any event be ent itled t o i nt eres t on such sum &si s i n ar r ea r at a rate equal t o the Offic i al discount r ate i n t he countrywhere he has hi s place of bus i ness or . if he has no place of business , hishabitual r es i den ce . plus 1%.

61. The r epr esentative of Mexico suggested t he delet ion of the words "plus 1%"at the end of t he art i cle and noted t hat the words "In any tI in t he secondphrase of this article seemed to be super fluous . §2J The r epres ent at i ve ofNor way , on t he ot her hand , noted t hat t he offic i al discount r ates are often muchl ower than the r ates paid in pr i vat e business . He therefore suggested that theexpression "at a rate equal t o the Official discount r ene'' should be substitutedby the phrase "at a r at e of 6': , but at l eas t at a r at e of 1% more than theofticial discount rate" and, consequently, as also suggested by t he Mexicanr epresentative, t he wor ds "plus 1':" at t he end of the art i cl e should bedeleted . 66/

Article 8lI

62 . Art icle 84 of ULIS r eads :

1 . In es se of avoidance of the contract , where t her e i s a cur rentprice for the goods , damages shall be equal t o t he di f f er ence between thepr i ce fixed by the cont ract snd the current price on the date on vhich thecontract is avo ided .

2. In calculating the amount of damages under paragraph 1 of thisArt i cle, the current pr i ce t o be t aken into account shall be that prevai lingin the market i n which t he t r ansact ion t ook place or , if there is no suchcurrent price or if i ts appl i cat ion i s i nappropriate , the price i n a marketwhich serves as a reasonable subst i t ute , maki ng due allowance for differencesin the cost of transporting the goods .

63 . The r epresent ative of Mexico suggested that , in view of t he consid~rations

mentioned in paragraph 55 above , the i ntroduct ory words II In case of avoidance of

64/ Annex VIII , para• . 1- 2.

§2/ Annex IV, para . 4.

66/ Annex VI , comment s on new article 19 .

/ ...

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the cont r act " s hould be deleted . Thus the art icle would commence 'With the words"Where there is a current price . . • 11 . He further ex pressed his agreement with t heproposal of the Austrian r epresentative that the r ef erence under this article tothe date "o n which the contr act i s avo i ded" should be r eplaced by a reference tothe date "on which delivery took place or should have t aken plac e ". 67 / Thislatter proposal , bcvever-, was not s hared by the representative of Horny vhcexpressed the view that the co nt ractual delive ry date or the date of act ualdelivery were not sat isfactory in cases of non-delivery and delivery t o a carrier .In the l at t er case it would be better to r el y on the date on which the goods arena nded ove r t o the buyer or placed at his di sposal at the place of destinationunl~so the buy er has de clared the contract avo ided on an earl ier date, i n whichcas e t he date of avoi dan ce should be the basis for the calculat ion of damages.On the other hand, in cases of non-delivery or non-payment , either the date ofactual avoidance or the ear l ies t date on which the contract could have been'avoi ded. should serve as such basis . 68/

64 . The r epresentative of Hungary noted that it vas not clear from the text oft hi s article whether in case of delayed. delivery t he i njured party had an opt i onbetween (a) basing hi s claim for damages on the pr ice that prevailed on thecontractual delivery time and (b) basing it on the price that prevai led on theactual delivery date . Such an opt ion mi ght lead t o unwar ranted r esult s. 69/

65 . At an earlier s tage o f the r evi sion of ULIS, in 1968, the Government o f t heUni ted Arab Republ ic commented t hat t he meaning of the term "transaction" in t hephrase "prevailing in t he rearket in whic h the transaction t ook place" was notclear . In the view of that Government that term might be construed to r efer t o theplace where preliminary nego t iat ion took place , or the place where the contract vasconcluded , or the plac e where t he co nt r act vas to be executed . 70/

Ar t i cles 85 a nd 86

66 . Art icles 85 and 86 of ULIS r ead:

Art icle 85:

If the buyer has bought good s in r eplacement or the seller has r esoldgoods in a r easonable manne r , he may r ecover the difference be t ween thecont ract pr ice and the pr i ce pa i d for the goods bought i n replacemen~ or thatobta i ned by the resale .

67/ Annex IV, para . 5.

68/ Annex IX, para . 13 .

§2/ Annex VIII , paras . 3- 4.

701 A/cN.?/31 , para . 139 .

I . . .

(

,

(

(

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Article 86 :

The damage s r eferred t o in a r ticles 84 and 85 may be i nc r ea s ed by theamount of any reasonable expenses incurred as a r esult of t he breach or upto the amount of any 106s, includin~ lo~ s of pr of i t , which shoul d have beenforeseen by the par t y in breach , at the time of t he conclusion of t hecont r ac t , in the light of t he facts and mat t ers whi ch wer e known or ought t ohave been known to him, as a possi bl e consequence of the breach of thecont. r -ec't ,

67 . No change was suggest ed i n the text of these articles. However , t her epresentative of No rway not ed t hat since the Wo rk i ng Gr oup was in favour ofdeleting t he provis ions cont ained i n art icles 25. 42 (l ) (c). and 61 (2) of ULIS .it vas des i rable t o add a provision to the r evised t ext t o ensure that t he delet ionof the said provis ions does not affect t he substance of the provision i narticles 84 anrt 85. Consequentl y , he proposed that a nev art i cle fo l lowingarticles 85 and 86 (in the Nor wegian dr af t articles 80 and 81) should be insertedin the uni form l aw. The propo sed article reads:

li The damages referred t o i n art icles L85 and 8§) shall not , however ,exceed the difference betwe~n the pr ice fixed by the contract and thecurrent pr i ce at t he time when it would be in conformi t y wi th usage andr easonably possibl e fo r the buyer to purchase goods to r epla ce, or for theseller t o resell, the goods t o which the cont r act r elates. 111

Article 81

68 . Articl e 81 of ULIS reads:

I f there is no current pr i ce for the goods , damage s shall be calculat edon the same basi s as t hat provi ded in article 82.

69. In view of the changes suggested i n r e spect of art icle 82, the r epresent at iveof Mexico proposed the deletion of art icle 81. JgJ

Art icle 88

10. Article 88 of ULIS reads:

The party who r elies on a breach of the contract shall adopt allreas onabl e measures t o miti~ate the ~os s res ult ing from t he breach . If he fai l st o adopt such measur es , the party in breach may cl ai m a reduction in the damages .

71. The r epresent ative o f Mexico suggested that the oubt i tle preced ing article 88

711 Annex VI, comments to new art icle 82 .

rgl Annex IV. para . 8.

I . . .

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should be changed to "B. General provisions" and that the text of the articleshould be maintained in its original language. 73/

Article 89

72. Article 89 of ULIS reads:

In cases of fraud, damages shall be determined by the rules applicablein respect of contracts of sale not governed by the present Law.

73. The representative of Mexico suggested that the rule which was implicitlycontained in the present text of ULIS should be more clearly expressed.Consequently, he proposed that the following sentence be added to Article 89:"However, such damages shall never be less than those which may result fromapplying the rules of articles 82 through 88." 74/

Article 90

74. Article 90 of ULIS reads:

The expenses of delivery shall be borne by the seller; all expenses afterdelivery shall be borne by the buyer.

75. The representative of Mexico suggested that the following expres?ion shouldbe added to the text at the beginning of this article: "Except as ,otherwiseagreed •••• " 75/

76. The representative of Hungary noted that under the revised draft of theuniform law the term "delivery" covered not only las in ULIS! delivery of goodswhich conformed to the contract, but also delivery of non-conforming goods, andraised the question whether that change in the concept of the said term did notrequire appropriate change in the provision of this article. 76/

Articles 91-93

77. Articles 91 to 93 of ULIS read:

Article 91

Where the buyer is in delay in taking delivery of the goods or in paying·the price the seller shall take reasonable steps to preserve the goods; he

73/ Ibid., paras. 9 and 10.

74/ Ibid., para. ll.

75/ Ibid., para. 13.

76/ Annex VIII, para. 5.

/ ...

ee

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shall have the right to retain them until he has been reimbursed hisreasonable expenses by the buyer.

Article 92

1. Where the goods have been received by the buyer, he shall takereasonable steps to preserve them if he intends to reject them; he shall havethe right to retain them until he has been reimbursed his reasonable expensesby the seller.

2. Where goods despatched to the buyer have been put at his disposalat their place of destination and he exercises the right to reject them, heshall be bound to take possession of them on behalf of the seller, providedthat this may be done without payment of the price and without unreasonableinconvenience or unreasonable expense. This provision shall not apply wherethe seller or a person authorised to take charge of the goods on his behalfis present at such destination.

Article 93

.The party who is under an obligation to take steps to preserve the goodsmay deposit them in the warehouse of a third person at the expense of theother party provided that the expense incurred is not unreasonable.

78. No comments were made on these articles.

Article 94

79. Article 94 of ULIS reads:

1. The party who, in the cases to which articles 91 and 92 apply, isunder an obligation to take steps to preserve the goods may sell them by anyappropriate means, provided that there has been unreasonable delay by theother party in accepting them or taking them back or in paying the cost ofpreservation and provided that due notice has been given to the other partyof the intention to sell. /

2. The party selling the goods shall have the right to retai~ out of theproceeds of sale an amount equal to the reasonable costs of preserving thegoods and of selling them and shall transmit the balance to the other party.

80. The representative of Austria suggested that, in the French text of the firstparagraph, the words "en temps utile" should be inserted between the wordsIIpourvu gu'elle lui ait donne" and "un avis". 77/

77/ Annex V, para. 1.

I . . .

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Article 95

81. Article 95 of ULIS reads:

Where , i n the cases to which ar t icles 91 and 92 apply , the goods aresubject t o loss or r apid deter iorat ion or t heir preser vat ion would involveunreasonabl e expense , t he par t y unde r the dut y to preserve t hem i s bound t osell them in accordance wit h ~icle 94.

82 . r~ comments were made on this article.

Article 96

83 . Article 96 of UL15 r eads :

Where t he ri sk has passed t o t he buyer . he shall pay the pr icenotwit hstanding the loss or deteriorat ion of the goods , unless this is due tot he ac t of the sel ler or o f some other person for whos e conduct the seller isr esponsibl e.

84 . The r epresentative of Austria, vith t he 8&reement of t he representative ofMexico , exp ressed t he vi ew that this ar t icle served no purpose s ince i t OIuyco ntai ned a quest ionable definition of the t erm "ri sk"; the article ~ therefore ~

could be deleted . 78/ This proposal vas opposed by the r epresent at i ve of Hungarywho held that this-art icle did not endeavour to define the concept of risk butrather to provide for cases wher-e the r i sk had passed; he noted fUrther thatdrafting techniques r equi r ed that legal consequences should follow and not precedet he descr iptions of facts to whi c h they r elat ed. The Hungar ian r epr esent at i vesuggested therefore t hat this article ~ i f retained~ should appear as article 99 oft he r evis ed draft . 12/ The repres entative of Nor way olso expressed the view tl~t

t hi s ar ticle should be r etained . ~

Article 97

85 . Ar ticle 97 of ULIS reads :

1. The ri sk shall pass to t he buyer when del ivery of the goods iseffected in acc ordan ce with t he provis ions of t he cont ract and the present Law.

2. In the case of t he hand ing over of goods which are not in conformitywith the contract . the ri sk shall pass to the buyer from the moment when thehanding over has . ,apart from the l ack of conformity. been effected i n

78( Ibi d . , para. 3.

79 / Annex VIII ~ paras . 6-7.

80/ Annex IX. para. 16 .

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ac cordance with the provr erona of the contract and of the present Lev , wherethe buyer has neither declared the contract avoided nor requi red goods inr eplacement .

86. The representative of Austr ia suggested that t he ....ords "handi ng over ll

wherever they appear in paragraph 2 of thi s articl e , should be r eplac ed by t heword "deliver y" . 81 / Wi t h t he agr eement of the representative of Mexico , hefurther proposed t hat the provi s i ons of article 99. with slight drafting changes ,s hould be brought over in this article as paragraph 3 . The text of the proposedne.... paragraph r eads:

"3 . Where the sale i s o f goo ds in t ransit by sea . t he ri s k shall beborne by the buyer as from t he t iDe of the handing over of the goods to thecarr i er . However . where the seller knew or ought to have known , at thetime of the conclusion of the contract 9 that the goods had been l ost or hadde ter iorat ed , the risk shall remain vith him until the time of theconclusion of the contract . " W

87 . The No rvegi an r epr esentative pr oposed that ar t icle 97 be replaced by thefo l l oving t ext:

"L, The risk shall pass to the buyer when delivery of the goods isaffected .

2 . Same as article 101 of ULIS . " 83/

Art i cl e 9B

88. Ar ticle 98 of ULIS r eads:

1. Wher e the handing over of the goods i s delayed oving to the breachof an obl igat ion of the buyer, the r i sk shall pass to the buyer as from thel ast dat e when , apart f rom such breach 9 the handing over could have been madein accordance with the contract .

2. Where the contract r elates t o a sale of unascertai ned goods , delayon the part of the buyer shall cause the r isk t o pass only vhen the seller hasset aside goods mani fes t ly appropr i at ed to the contract and has notified thebuyer that thi s has been do~e .

3. Where unascertai ned goods ar e of such a kind that the seller cannotset as i de a part of them unt i l the buyer takes del ivery , it shall besuf f i c ient f or t he sel l er to do all acts necessary to enable t he buyer to takedelivery.

81 / Annex V. para . 4.

82/ Ibid. t para. 7 and proposed text of article 97.

83/ Annex VI, text of nev article 94 .

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89 . The r epre s entative of Mex ico proposed that t he expression "ha nding over"s hould be r epl aced by the word "del i ve ry" in paragraph 1 of this article . ~

90. The r epresentative of Aus t r ia suggested t hat s ince art icle 20,paragraphs (b ) and (c) contained clear provis ions as to t he time when deliveryoccurred , paragraphs 2 and 3 of t hi s ar t i cle s hould be deleted . 85/

Articl e 99

91. Art icle 99 of UL15 r eads:

1 . Where the sale i s of goods in t rans i t by sea , the risk shall beborne by the buyer as f r om t he t ime at which the goods were handed over tothe carr ier .

2. Where the sel ler , at the t ime of the concl usion of t he contract ,knew or ought to have known that t he goods had been l os t or had deteriorated ,the r i sk shall r emain wi th him until the t i me of the conclus ion of thecont ract .

92 . The representatives of Austria and Mexico j ointly suggested that theprovisions of t his ar t icle, with sl ight draft ing changes , should be t ransferred toarticle 97 as a new paragraph 3. The r evi s ed text appears above in connexion witharticle 97 (para. 86 , above ) .

Art i cles 100-101

93. Ar ticles 100 and 101 of ULIS r ead :

Article 100

If , in a cas e to which paragraph 3 of Article 19 applies , the seller, att he t ime of se nding t he not i ce or other document r ef erred to i n that paragraph ,knew or ought to have known t hat the goods had been l ost or had deterioratedafter they were handed over to t he car r ier , the risk shall remain with thesel ler unt i l the t ime of sending such not ice or document .

Art iCle 101

The passing of the riSk shall not necessaril y be determined by theprovisions of the contract concerning expenses .

94 . The r epres ent atives of Aust r ia and Mexico suggested that both article 100 andart icle 101 should be deleted . Article 100 r ef ers t o paragraph 3 of article 19 ,

841 Ibdd , , para. 6.

!l2! Ibid . , para. 5 .

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wieh had been del et ed, while art i cle 101 vould only serve to createmiBUDderat andi ng. ~ The representative or Norva,y . on the ot her hand, vu ot theopini on that the provision. ot both article . should be maintained. W

Rearrar.getent or the provisions or chapt ers IV - VI or ULIS

95 . The representative ot Norway suggested, in addition to proPOSalll concerningchanges i n the text ot articl es 71 to 101 , that the provisions ot thosechapters IV to VI should be rearranged. The proposal is contained in annex VI.

§§J Ibi d ., par• • • 9-10.

W Annex IX, par••• 18-19.