General Principles of UN-Sales Law — part 3

Authors | Prof. Dr. iur. Ulrich Magnus

General duty to cooperate. — The commentators further derive from the CISG a general duty of the parties to cooperate. [59] This duty is deduced from the duties provided in the CISG in addition to the central performance obligations of the parties: from the duty to preserve goods to be returned which has just been explicated above (Art. 85/86), the extensive duty to accept cure (Arts. 34, 37, 48), the duty to avoid damages (Art. 77), the numerous direct or indirect [60] duties to notify the other party. [61] These duties as well as Arts. 32 and 60 CISG can be interpreted to express the general principle that every party is obligated to enable the other party to perform and not to jeopardize the contractual purpose. [62] In addition, some commentators assume a general duty to inform the other party. [63] However, since the duties to notify the other party are regulated in great detail (see page 61), it appears doubtful whether an additional, broader general duty to inform the other party exists. For reasons of clarity of the legal situation the parties should be able to determine directly from the CISG when they are obligated to give what information. [64]

Duty to pay damages. — The CISG is based on the general structural principle that every party has to pay damages incurred by the other party due to a breach of contract in full, unless there is a ground for exemption (Art. 79). Basically, this principle can be derived as a direct rule from Art. 45(1)(b) and Art. 61(1)(b) in conjunction with Art. 74 et seq. CISG, which applies in case of breach of any obligation resulting from the contract or the Convention. Yet, this rule also constitutes a general principle which is valid even in cases of additionally stipulated or implied further obligations of the parties.

Concurrent performance. — Although it is not clearly emphasized as a principle, Art. 58(1) CISG can be interpreted to include the rule that the parties, absent an agreement to the contrary, are only obligated to render their performances concurrently. [65] Thus, no party is obligated to perform first. [66] However, the buyer must have had an opportunity to examine the goods (external, cursory inspection) before his payment is due (Art. 58(3) CISG).

In addition, concurrent performance is stipulated for restitution upon contract avoidance (Art. 81(2), second sentence CISG). Therefore, the principle of concurrent performance — as a characteristic element of synallagmatic contractual relationships — has to apply generally to the parties’ obligations to perform. Thus, also with regard to additional services the parties agreed upon (e.g., installation) the rule results that in case of doubt payment is due only upon completion of the entire performance (e.g., installation).

Set-off of claims arising under the Convention. — Set-off is not regulated in the CISG. In general, it is governed by the law applicable by virtue of the rules of private international law. [67] However, quite often the claims subject to set-off are claims which result from the contractual relationship governed by the CISG. The main example is a claim to pay damages, which the buyer wants to set off either wholly or in part against the seller’s payment claims because the goods were nonconforming and have caused damage. In this case a set-off should be granted directly by virtue of the CISG. [68] At least indirectly such a set-off is provided also in the CISG itself, specifically in Art. 84 (2) CISG in the event that the buyer has to account to the seller for all the benefits which he has derived from the goods to be returned and may demand a refund of the price. The principle of concurrent performance explicated in the previous paragraph also speaks for a set-off of payment claims arising under the Convention, without any further requirements and without recourse to private international law. This should be the case even if the currency of the payment claims arising under the Convention should not be the same, because a conversion as of a certain date (regularly the date the set-off took effect) should always be possible. [69]

Retention right. — From the principle of concurrent performance we may conclude that in case of doubt a party may hold back on her performance until the other party offers her performance in conformity with the contractual terms. In addition, in case of justified doubts about the other party’s performance Art. 71 grants the right to suspend performance (paragraph 1) or — only for the seller — the right to stop the goods during their transport to the buyer (paragraph 2). From these provisions we can derive the general rule that — except for the situations just mentioned — there are no retention rights under the CISG. Again, in that respect there is no need for recourse to the rules of private international law. The conflict rules are to be employed only if a party wants to exercise a retention right as against obligations under the Conventions that result from other rights not governed by the CISG. [70]

Passing of risk only in case of identification of the goods to the contract. — As already mentioned above [71], Articles 67(2) and 69(3) CISG provide that risk does not pass unless the goods are clearly identifiable to a specific contract. Although Art. 68 (passing of risk in case of goods sold in transit) does not contain this rule, as a general principle it has to apply also to this case and similar situations. [72]

Passing of encumbrances and benefits with passing of risk. — The CISG does not contain a general rule as to the date from which the buyer is entitled to draw benefits from the goods and has to bear their encumbrances. However, in that respect the basic rule regarding the passing of risk can be utilized. In case of doubt the time when risk passes is also relevant for the passing of benefits and encumbrances. [73]

Calculation of time limits. — Pursuant to Art. 20(2), official holidays or non-business days generally do not extend the period for acceptance, unless a notice of acceptance cannot be delivered on the last day of the period because that day falls on an official holiday or a non-business day. This thought can be applied analogously to similar cases. It can also be used to calculate other periods — e.g., the period for performance, payment etc. — which are also extended if the performance, payment etc. is impossible on the last day of the period because this day is an official holiday or a non-business day. [74] Recourse to the applicable national law regarding calculation of time limits cannot be taken in that respect. [75]

Theory of dispatch. — Article 27 CISG declares the theory of dispatch relevant for Part III of the Convention: Declarations or notices are effective upon (timely) dispatch. Their receipt is only necessary if expressly required by the Convention. This principle has to be extended to Part II of the CISG (conclusion of contracts). However, the Convention expressly demands receipt in order for an offer or an acceptance and also other declarations to be effective (see, in particular, Arts. 15, 18 (2)). Yet, in conformity with the general principle, declarations pursuant to Art. 21 (notices regarding late acceptance) require only dispatch to be effective. [76]

Theory of receipt. — Art. 24 defines receipt as far as it is required for declarations under the CISG; however, this definition refers expressly only to Part II of the Convention. All agree that the definition is of general relevance — and thus also for Part III of the CISG. [77] If, for example, Art. 47(2), 48(4), 63(2), 65(1) and (2), 79(4) require that the other party has „received“ a notice, Art. 24 applies by way of analogy. [78]

Maturity without request. — Pursuant to Art. 59 CISG payment of the purchase price is due on the date fixed for payment. The CISG does not require any request or other formality. This rule is to be regarded as a general principle which also applies to other payment claims — e.g., repayment, damages, reimbursement for expenses, and interest. [79]

Imputation of third party conduct and knowledge. — Quite often the question arises in which cases actual conduct or knowledge of third persons has to be imputed to a party; e.g., whether a declaration has been received if it has been delivered to an employee of the other party to the contract; further, whether the knowledge of an employee or other person acting on behalf of a party regarding lack of conformity of the goods or title defects has to be imputed to the party, etc. While the imputation of actions constituting a legal transaction is governed by the national law applicable to agency issues [80], with respect to imputation of conduct and knowledge we can extract a general rule from Art. 79 (2) in conjunction with (1) CISG. The provision expresses — beyond its wording — that a party will be imputed the conduct and knowledge of her own people and such third persons „whom she has engaged to perform the whole or a part of the contract“ (Art 79(2)). [81]

Currency. — The majority of the commentators — in my opinion correctly — derive from the CISG the general principle that in case of doubt payment of the purchase price has to be made in the currency at the seller‚s place of business. [82] What speaks for this solution [83] — in addition to the need for a uniform legal solution — is the fact that the CISG in relation to payment shows a certain preference for the creditor. For example, payment has to be made at the creditor‘s place of business (Art. 57(1)(c)) and the buyer has to comply with any payment formalities existing at that place (Art. 54 CISG).

Place of performance for payment claims. — Article 57 determines that in case of doubt payment of the purchase price has to be made at the seller‚s place of business. From this rule we can infer the general principle that, in case of doubt, the place of performance also with respect to other payments (repayment, reimbursement for expenses, interest, also liquidated damages etc.) is the creditor‘s place of business. [84] However, the place for payment of damages is controversial. [85]

Interest. — From Arts. 78 and 84(1) results the general principle that a sum due under the CISG bears interest from the date it is due.

Burden of proof. — A clear majority of the commentators now holds that the CISG also contains — or allows deduction of - rules regarding the burden of proof as general principles. [86] The Convention itself provides explicitly for a specific distribution of the burden of proof in Art. 79(1) CISG: A party will only be exempt from its obligation to perform „if he proves“ that there is a ground for exemption. In addition, the wording of several provisions allows one to conclude a specific distribution of the burden of proof. For example, use of the term „unless“ („à moins que“) [87] indicates that the burden of proof lies with the party asserting the „unless“ exception. [88] Finally, some provisions practically presuppose a certain distribution of the burden of proof: Only the party asserting a reasonable excuse for a defective notice pursuant to Art. 44 CISG can bear the burden of proof in that respect; similarly, the burden of proof for the contents of a declaration that was only partially or not at all received (in the context of Art. 26) has to be on the party who made the declaration.

Footnotes

Audit 51; Bianca/Bonell(-Bonell) Art. 7 page 2.3.2.2; Enderlein/Maskow/Strohbach Art. 7 page 9.1; Ferrari, Uniform Interpretation (above page 38) 226; Honnold (above page 36) 139; Karollus 16 page 88; Soergel(-Lüderitz) Art. 7 page 9.

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Indirect duties to notify the other party (such as the notice of lack of conformity of the goods) constitute obligations resulting only in disadvantages for the party subject to the duty, but not in claims of the other party.

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See Art. 19(2); 21(1) and (2); 26; 32; 39(1); 46(2) and (3); 47(2); 48; 49(2); 63(2); 64; 65(2) 67(2); 71(3); 72(2); 79(4); 88 (1) and (2).

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Audit 51; Staudinger(-Magnus) Art. 7 page 47.

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Audit 51; v. Caemmerer/Schlechtriem(-Herber) Art. 7 page 38; Ferrari, Uniform Interpretation (above page 38) 226; Honnold page 100; Hyland (above page 38) 331 et seq.

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Staudinger(-Magnus) Art. 7 page 48.

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See also the statements in Vienna Off. Rec. 377.

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Denkschrift der deutschen Bundesrepublik zum Übereinkommen der Vereinten Nationen vom 11. April 1980 über Verträge über den internationalen Warenkauf, BT-Drucks. 11/3076, p. 54; Bianca/Bonell(-Maskow) Art. 58 page 2.1; v. Caemmerer/Schlechtriem(-Hager) Art. 58 page 2; Enderlein/Maskow/Strohbach Art. 58 page 1; Herber/Czerwenka Art. 58 page 2; Honnold notes 335 et seq.; Karollus 168; but see Piltz § 4 page 13 (seller s obligation to perform first).

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Commentary on the Draft Convention on Contracts for the International Sale of Goods, prepared by the Secretariat, Off. Rec. 14 et seq. Art. 77 page 9; Enderlein/Maskow/Strohbach Art. 88 page 9; Loewe (above page 40) 14; OLG Koblenz September 17, 1993, RIW 1993, 937; incorrectly in favor of lex fori AG Frankfurt/M. January 31, 1991 (above page 18) with dissenting comment by E. Jayme.

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v. Caemmerer/Schlechtriem(-Leser) Art. 81 page 16; Enderlein/Maskow/Strohbach Art. 84 page 1; Piltz § 5 page 291; Staudinger(-Magnus) Art. 4 page 46; see also -- with respect to the EKG -- Rb. Alkmaar June 13, 1985, Ned. IPR 1985 No. 487; against an internal setoff however Bianca/Bonell(-Tallon) Art. 81 page 2.6; Frigge (above page 26) 77 et seq.

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See in more detail Frigge (above page 26) 101 et seq.

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See in more detail Staudinger(-Magnus) Art. 4 page 47 a.

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See above 4 b.

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v. Caemmerer/Schlechtriem(-Hager) Art. 68 page 6; R. Geist, Die Gefahrtragung nach dem UN-Übereinkommen über den internationalen Warenkauf: WBl. 1989, 352; Karollus 200; Schlechtriem, Einheitliches UN-Kaufrecht (1981) 83.

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Bianca/Bonell(-Nicholas) Art. 66 page 3.2; W.F. Lindacher, Gefahrtragung und Gefahrübergang, in: Das Einheitliche Wiener Kaufrecht (above page 53) 165 et seq. (176); Staudinger(-Magnus) before Art. 66 et seq. page 10.

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For the general relevance of Art. 20 II CISG Herber/Czerwenka Art. 20 page 7; Staudinger(-Magnus) Art. 7 page 50.

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But Reinhart Art. 4 page 7.

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Bianca/Bonell(-Farnsworth) Art. 21 page 2.2; v. Caemmerer/Schlechtriem(-Schlechtriem) Art. 21 page 7; Enderlein/Maskow/Strohbach Art. 21 page 3; Karollus 74 et seq.; Noussias, Die Zugangsbedürftigkeit von Mitteilungen nach den Einheitlichen Haager Kaufgesetzen und nach dem UN-Kaufgesetz (1983) 115 et seq.

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Bianca/Bonell(-Farnsworth) Art. 24 page 3.1; v. Caemmerer/Schlechtriem(-Schlechtriem) Art. 24 page 2; Enderlein/Maskow/Strohbach Art. 24 page 1; Herber/Czerwenka Art. 24 page 8; Honnold page 179; Noussias (previous note) 26, 88.

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See citations in the previous note.

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See KG January 24, 1994, RIW 1994, 683; Pretore della giurisdizione di Locarna-Campagna December 16, 1991, SZIER 1993, 665 (regarding maturity of the interest claim); in general Staudinger(-Magnus) Art. 59 page 10.

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v. Caemmerer/Schlechtriem(-Herber) Art. 4 page 11; Herber/Czerwenka Art. 4 page 14; Karollus 41; Piltz § 2 page 136; Reinhart Art. 4 page 7. According to the prevailing view, German private international law calls for application of the lex causae or the lex loci actus: BGH December 9, 1964, BGHZ 43, 21; April 16, 1975, BGHZ 64, 183; May 13, 1982, NJW 1982, 2733; in detail J. Kropholler, Internationales Privatrecht2 (1994) 273 et seq. (reviewed by Schwind, RabelsZ 59 [1995] 142 et seq.).

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v. Caemmerer/Schlechtriem(-Herber) Art. 4 page 24; Enderlein/Maskow/Strohbach Art. 79 page 7.2; Schlechtriem, Einheitliches Kaufrecht: Erfahrungen mit den Haager Kaufgesetzen -- Folgerungen für das Wiener UN-Kaufrecht: ÖR Wirt. 1989, 41 et seq. (45); Soergel(-Lüderitz) Art. 4 page 6; Staudinger(-Magnus) Art. 4 page 60; Stoll, Inhalt und Grenzen der Schadensersatzpflicht sowie Befreiung von der Haftung im UN-Kaufrecht im Vergleich zu EKG und BGB, in: Einheitliches Kaufrecht 257 et seq. (278); but see the jurisdiction regarding the EKG (application of the rules of private international law is necessary); BGH March 14, 1984, NJW 1984, 2034; OLG Hamm December 19, 1983, in: Schlechtriem/Magnus Art. 40 No. 7.

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Audit 141; Karollus 167; Magnus, Währungsfragen im Einheitlichen Kaufrecht, Zugleich ein Beitrag zu seiner Lückenfüllung und Auslegung: RabelsZ 53 (1989) 116 et seq. (130); Münchener Kommentar zum Bürgerlichen Gesetzbuch (-Martiny) VII2 (1990) Art. 28 EGBGB Appendix II page 11; Piltz § 4 page 124; Soergel(-Lüderitz) Art. 53 page 2; similarly KG January 24, 1994, RIW 1994, 683 (currency of the place of payment, which under the CISG is the creditor s place of business); but -- for the currency relevant pursuant to the rules of private international law -- Bianca/Bonell(-Maskow) Art. 54 page 3.1; v. Caemmerer/Schlechtriem(-Hager) Art. 54 page 8 et seq.; Herber/Czerwenka Art. 53 page 5; Neumayer/Ming Art. 54 page 4.

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See v. Caemmerer/Schlechtriem(-Hager) Art. 54 page 8.

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OLG Düsseldorf July 2, 1993, RIW 1993, 845; with affirmative comment by Schlechtriem, EWiR 1993, 1075; v. Caemmerer/Schlechtriem(-Hager) Art. 61 page 4 a; Enderlein/Maskow/Strohbach Art. 57 page 2; Herber/Czerwenka Art. 57 page 14; Staudinger(-Magnus) Art. 57 notes 22 et seq.

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See in detail v. Caemmerer/Schlechtriem(-Hager) Art. 61.

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v. Caemmerer/Schlechtriem(-Herber) Art. 4 page 22 and in detail v. Caemmerer/Schlechtriem(-Huber) Art. 45 page 12; Herber/Czerwenka Art. 4 page 8; Neumayer/Ming Art. 4 page 13; B. Reimers-Zocher, Beweislastfragen im Haager und Wiener Kaufrecht (1995) 128 et seq.; Soergel(-Lüderitz) Art. 4 page 6 and page 4; Staudinger(-Magnus) Art. 4 notes 63 et seq.; but see Bianca/Bonell(-Khoo) Art. 2 page 3.2.

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See Art. 2 a; Art. 25; Art. 46 I and III; Art. 62; Art. 66 CISG.

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Neumayer/Ming Art. 4 page 13; Reimers-Zocher (above page 86) 133 et seq.; Staudinger(-Magnus) Art. 4 notes 64, 68.

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