IV. Claiming the price under the CISG

Property in Goods and the CISG (2024), S. 174—220

Till Maier-Lohmann

Übersicht

392

Turning to the CISG, Article 61(1) reads: “If the buyer fails to perform any of his obligations under the contract or this Convention, the seller may: (a) exercise the rights provided in articles 62 to 65; [...].” The referenced Article 62 states that “[t]he seller may require the buyer to pay the price, take delivery or perform his other obligations, unless the seller has resorted to a remedy which is inconsistent with this requirement.” The aforementioned legal backgrounds explain why the explicit reference of a right to claim payment might appear superfluous from the perspective of a civil law jurist, and why a common law jurist would expect a provision to that effect but might find further prerequisites for an action for the purchase price lacking.

393

Thus, at first sight, the transfer of property seems irrelevant for the seller’s possibility to claim the purchase price under the CISG. However, a closer look at Article 28 of the CISG plainly reveals that the divide between the 174 common law and the civil law tradition regarding the specific performance in contracts for the sale of goods was not bridged in the Convention.828 This provision states:

“If, in accordance with the provisions of this Convention, one party is entitled to require performance of any obligation by the other party, a court is not bound to enter a judgement for specific performance unless the court would do so under its own law in respect of similar contracts of sale not governed by this Convention.”

394

If section 49(1) of the Sale of Goods Act 1979 (and its equivalents in other jurisdictions) applied together with Article 28 of the CISG for a claim of the purchase price under Article 62 of the CISG, the relevance of the transfer of property might suddenly resurface in the uniform sales law and its remedies. Although England is not a Contracting State, the CISG might still be applicable before English courts if the rules of private international law led to the CISG. In that case, Article 28 would nevertheless be applicable, since a non-contracting State cannot be required to apply the CISG in a stricter fashion than a contracting State.829 Furthermore, as has been described above, comparable rules to section 49(1) of the Sale of Goods Act 1979 exist, for example, in Canada, Australia, and Singapore, which are CISG Contracting States.830 Moreover, the majority of scholars consider Article 28 of the CISG to be applicable in arbitrations as well.831 Therefore, even though English law is discussed primarily here, it is of relevance despite England not being a CISG Contracting State.

395

To understand how important Article 28 of the CISG and its potential application to Article 62 of the CISG is, however, it is necessary to first understand the scope of Article 62 and the CISG’s general position toward claiming the price. Thereafter, the CISG’s rules on damages (Articles 74–77) have to be reviewed. This calculation of damages is – as has already been discussed in the section on national laws above – the practical consequence of different scopes of claims for the price.832 Only then can one assess the 175 relevance of Article 28 of the CISG, and possibly the transfer of property for that matter.

1. Article 62 of the CISG

396

No restriction of claims for the price can be found in the wording of Article 62 of the CISG itself. This leads to the impression that the CISG fully adopts the civil law concept of an unlimited claim for performance.833 From a civil law perspective, the claim for the price would already exist due to the sales contract,834 while the wording of Article 61(1) of the CISG prompts the conclusion that the seller has to prove the failure of the buyer to perform.835 Thus, despite the broader wording, Article 62 of the CISG cannot be understood to be a complete civil law transplant. While Articles 79 and 80 of the CISG could also be relevant to assess the scope of Article 62 of the CISG, they are excluded from the following considerations as they do not relate to problems regarding the property in the goods.

a) Notable widening of scope of Article 62 of the CISG compared to Article 61(2) of the ULIS

397

The broad wording of Article 62 of the CISG stands in sharp contrast to the predecessor found in Article 61 of the ULIS. The latter provision read:

“1. If the buyer fails to pay the price in accordance with the contract and with the present Law, the seller may require the buyer to perform his obligation.

2. The seller shall not be entitled to require payment of the price by the buyer if it is in conformity with usage and reasonably possible for the seller to resell the goods. In that case the contract shall be ipso facto avoided as from the time when such resale should be effected.”

398

The wording of Article 61(2) of the ULIS does not hide that it took its cue from the common law.836 The seller’s claim for the price is excluded from the outset if the possibility of a certain kind of resale exists. Even though a 176 difference in the burden of proof 837 and the reference to usages may distinguish the solution under the ULIS from section 63(3) of the Uniform Sales Act and section 2-709(1)(b) of the UCC, the underlying concept is similar.838 Usages to effect a resale were especially considered to exist regarding generic goods.839

399

The limitation of Article 61(2) of the ULIS would be relevant for the purpose of this work if the deletion of the resale-restriction in the drafts that became Article 62 of the CISG are interpreted to have granted the seller an unlimited claim for performance and to have barred similar restrictions from being reintroduced through other provisions or underlying ideas of the CISG. To interpret the deletion to have such far-reaching implications, however, would be stretching the historical record too far. Apart from the vagueness of the threshold of a usage and reasonable possibility,840 the reference to usages in Article 61(2) of the ULIS was ultimately deemed superfluous, since the CISG would contain a provision that incorporated usages in Article 9(2).841 The criticism regarding Article 61(2) of the ULIS was rather aimed at the automatic avoidance of the contract that did not require a declaration of avoidance by the seller (ipso facto avoidance).842 Such an avoidance was deemed to be a sensible solution for trade in commodities where heavy prices fluctuations occur regularly, while the rule might not be appropriate for other goods where prices are more or less stable.843 Moreover, legal uncertainty was feared, since it might be unclear to both parties whether the contract is still ongoing and requires them to perform, or whether it is already considered avoided.844

400

When commenting on the draft Convention on the International Sale of Goods in 1977, the USA suggested limiting the wording of today’s Article 62 of the CISG with the following wording: “The seller may require the buyer to pay the price [...] unless [...] in the circumstances the seller should reasonably mitigate the loss resulting from the breach by reselling 177 the goods.”845 The Committee of the Whole I, established in 1977 to consider the draft convention, decided to discuss this proposed amendment rather under Article 59 of the draft (which became Article 77 of the CISG).846 The majority voted against a limitation of the seller’s claim for the price regarding a resale-opportunity, as this “would destroy the distinction between an action for the price and an action for damages, a distinction which was fundamental in many legal systems.”847 This argument addressed the doctrinal consequences if the limitation were introduced through the duty to mitigate the damages, while it would not have been applicable with regard to the USA’s original proposal to amend Article 43 of the draft (which became Article 62 of the CISG).

401

Therefore, the deletion of the limitation of Article 61(2) of the ULIS and the negotiations of Article 62 of the CISG do not necessarily mean that no limitation of the claim for performance exists under the CISG. Rather, the uncertainty caused by a possible ipso facto avoidance of the contract and the general duty to resell the goods were the cause for the changes. At several stages during the negotiations, usages were held to be a basis for a duty to effect a cover transaction.

b) No limitation of the claim for the price under Article 77 of the CISG

402

If the buyer no longer has any economic interest in the goods, it might stand to reason that the seller could mitigate damages by reselling the goods to a third party. Consequently, an argument could be made that under the CISG Article 77 should also apply to Article 62 directly, limiting the seller’s right to claim the price.848 This has been discussed extensively in scholarly work on the CISG and is rightfully rejected.849 Amendments to apply Article 77 to Article 62 were introduced more than once during the negotiations.850 They were held to blur the lines between an action for the price and an action for 178 damages.851 Furthermore, the aggrieved party would thereby be robbed of the right to demand performance, which would contradict the concept underlying the CISG.852 Against this historical record, an application of Article 77 cannot be convincingly justified. Moreover, the systematic location of the duty to mitigate within the section on damages (Articles 74–77) and the clear limitation to damages claims in the wording of Article 77, sentence 2, lead to the conclusion that no limitation of the claim of performance exists due to Article 77 of the CISG.853 Hence, Article 77 does not bring about a limitation of the claim for the price under Article 62 of the CISG.

c) No limitation of the claim for the price under Articles 85, 87 of the CISG

403

If the buyer does not accept delivery of the goods and fails to pay the price, the seller must take reasonable steps to preserve the goods under Article 85 of the CISG. According to Article 87 of the CISG, the seller in this case is allowed to deposit the goods in a warehouse of a third person as long as the expense incurred is not unreasonable. This does not mean, however, that sellers are required to resell the goods if the costs exceed a reasonable amount, or that they lose their right to claim the price if they fail to resell the goods. Instead, their claim for damages regarding the costs will be reduced to a reasonable amount.854

404

Flechtner argues that a seller’s disregard of Article 85 of the CISG can lead to the loss of the claim for the price under Article 62 of the CISG.855 The constellation that gives rise to this conclusion is that in which the buyer might already bear the risk of the goods, and under these circumstances, a material deterioration due to the seller’s omission should not be to the buyer’s detriment. According to Flechtner, this approach is in line with the mitigation of loss under Article 77 of the CISG, while he concedes that the provision is not directly applicable to Article 62 of the CISG.856 The result can, however, also be achieved without relying on a duty to mitigate the loss: Notwithstanding the deterioration of the goods, the seller can maintain a claim for the price and has delivered conforming goods, since at the time of passing of risk (Article 36 of the CISG) they had not yet deteriorated. 179 Nevertheless, the seller has breached the duty to preserve the goods under Article 85 of the CISG, which enables the buyer to claim damages under Articles 45(1)(b) and 74 et seq. of the CISG.857 Following this interpretation, there is no need for Article 85 of the CISG to limit Article 62 of the CISG.

d) No limitation of the claim for the price under Article 88 of the CISG

405

Under the CISG, Article 88(1) allows the seller to resell the goods if the buyer delays payment unreasonably, and Article 88(2) even requires taking reasonable measures to resell the goods. Some scholars consider the claim for the price under Article 62 of the CISG to be limited by Article 88(2).858 If goods were to be considered “subject to rapid deterioration” when the market price is subject to rapid market fluctuations,859 the solution under the CISG would not be so different from Article 61(2) of the ULIS.

406

Such an interpretation, however, does not stand up to scrutiny. If the seller does not resell the goods, he or she does not lose and is not restricted in the claims for performance under Article 62 of the CISG. This becomes clear in Article 88(3) of the CISG, according to which the seller is only allowed to retain reasonable expenses for preserving the goods and the resale. The seller must further account to the buyer for the balance under Article 88(3), sentence 2 of the CISG. Thus, he or she sells the goods for the buyer and the price received minus the reasonable expenses represents a substitute for the goods. Therefore, the buyer is contractually entitled to this amount. The buyer remains, in turn, bound to pay the price under Article 62 of the CISG.860 However, he or she will be able to claim damages under Article 45(1)(b) of the CISG if the seller fails to take reasonable measures to resell under Article 88(2) of the CISG due to a breach of this obligation.861 The statement that Article 88(2) of the CISG limits the claim for the purchase price is, thus, only correct from a purely economic point of view after the seller’s claim for the price and the damages claim by the buyer have been set off.

407

Moreover, a declining price due to fluctuations of the market price are not a “deterioration” under Article 88(2) of the CISG. The opposite conclusion could be inferred from the Secretariat Commentary, which states regarding today’s Article 88(2) of the CISG that the provision “is not limited to a physical deterioration or loss of the goods but includes situations in which the 180 goods threaten to decline rapidly in value because of changes in the market.”862 Yet, at the stage of the CISG’s development when this remark was made, the provision still contained the wording “subject to loss or rapid deterioration”.863 The reference to loss was deleted after a proposed amendment by Singapore during the conference in Vienna, since the inclusion of economic fluctuations “would place an undue burden on the party preserving the goods by exposing him to the risk of making a wrong commercial judgment.”864 It is doubtful, however, whether Singapore’s concerns applied to both the seller and the buyer. Article 85 of the CISG can also require the buyer to preserve the goods (for example, after the avoidance of the contract). Especially Lebedev expressed his support for the proposal by stating that otherwise the provision “placed an unreasonable burden on the buyer.”865 It could be argued that this unreasonable burden exists because the typical buyer does not necessarily have an overview of other potential buyers in the market, but rather has an overview of the sellers in the marketplace. Conversely, sellers typically have a better overview of the buyers in the market and are in a good position to make a commercial judgment whether to resell the goods. Nevertheless, the word “loss” was deleted from the wording and there is no indication that “deterioration” should be interpreted divergently for the seller and the buyer. Thus, against the historical background, Article 88(2) of the CISG should not be understood to encompass deterioration due to market price fluctuations.866

408

Summarizing, no limitation of the claim for the price under Article 62 of the CISG exists due to Article 88 of the CISG.

e) Possible limitation of the claim for the price under Article 9(2) of the CISG

409

Under Article 9(2) of the CISG the “parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.” A respective resale-usage that could limit Article 62 of the CISG may exist under the CISG.867 As already stated, during the preparations and negotiations 181 leading up to the CISG, the reference to usages in Article 61(2) of the ULIS was considered superfluous, since the CISG would contain a provision that incorporated usages (Article 9).868 Yet, although usages in regard to resales were already relevant in Article 61(2) of the ULIS, and despite Article 9(2) of the CISG, there is no reported case law in which such a usage was in fact proven by the buyer or otherwise accepted.

410

The Unidroit Principles of International Commercial Contracts 2016 (UPICC) also contain a claim for performance of monetary obligations that allows the claim without restrictions in the wording.869 This set of rules also rejects applying the duty to mitigate damage under Article 7.4.8 of the UPICC to claims for performance.870 The official comments, however, provide that “[e]xceptionally, the right to require payment of the price of the goods or services to be delivered or rendered may be excluded. This is in particular the case where a usage requires a seller to resell goods which are neither accepted nor paid for by the buyer.” Nevertheless, similar to the case law on the CISG, there is no reported case law in which such a usage was in fact proven by the buyer or otherwise accepted.871

411

Yet, absence of evidence should not be taken as evidence of absence. In certain sectors, like the trade in commodities, where prices can fluctuate rapidly,872 it is conceivable that a usage to resell unwanted goods as soon as possible exists.873 The same applies to the trade in new electronic hardware, where the prices of goods typically decline rapidly with the steady and unrelenting technological development and release of newer cutting-edge products. A potential advantage of limiting such usages to certain sectors is the resulting ability to tailor the scope and weight attached to the claim for performance to the relevant sector. Whether such usages indeed exist is beyond the scope of this work, but might be a worthwhile object of investigation for a buyer, who faces a seller that has ignored economically sensible cover transactions while claiming performance.874

182 f) Limitation of the claim for the price under Article 58 of the CISG

412

Article 58 of the CISG can also limit the seller’s claim for the price.875 Under Article 58(1), the buyer must generally only pay the price “when the seller places either the goods or documents controlling their disposition at the buyer’s disposal”. Article 58(3) even allows the buyer to postpone payment until he or she had the “opportunity to examine the goods unless the procedures for delivery or payment agreed upon by the parties are inconsistent with his having such an opportunity.” This examination should, however, not be mistaken for a full inspection as required by Article 38 of the CISG, but rather refers to a superficial control of the goods.876 Nevertheless, Article 58(1), sentence 1 of the CISG is widely understood to contain the principle of simultaneous or concurrent performance regarding handing over of the goods and payment.877 Although some argue that the seller typically must perform first under the CISG,878 they acknowledge that the seller can condition full performance on the buyer’s concurrent performance, referring to Article 58(1), sentence 2, in general, and Article 58(2) for cases involving carriage of goods.

413

Notably, thus, the disagreement between scholars and courts does not pertain to the question of transfer of property when discussing Article 58 of the CISG and the buyer’s obligation to pay the price. A rare exception could be seen in a judgment by the Intermediate People’s Court Xiamen.879 An Australian buyer refused to pay for goods that were delivered under a FOB Xiamen Incoterm to Melbourne as there was a dispute about the quality of a foregoing delivery. The buyer stated that it was not willing to pay for the goods until the dispute regarding the prior delivery had been settled. The goods stayed in the port of Melbourne for 202 days and their whereabouts afterwards are unclear. The Taiwanese seller 880 sued for the price. The court denied the claim and inter alia referred to Article 30 of the CISG and the ob 183 ligation to transfer the property in the goods. It stated that while the transfer of risk had occurred, this should not be considered tantamount to fulfilling of the obligation to deliver the goods, especially since it had to be differentiated from the transfer of property, which was also necessary and had not occurred. On the other hand, the court refers to the seller not having “released” the goods to the buyer. This could be interpreted to signify that the seller had not offered the goods to the buyer against concurrent payment (but rather, merely demanded payment first) by not authorizing the carrier to take payment. If the contract involves carriage of goods, the seller and buyer do not meet face-to-face and consequently concurrent performance can only be executed between the buyer and the carrier. Therefore, the buyer is only required to pay concurrently with receiving the goods if he or she can pay the carrier directly.881 Since the carrier may have lacked authority to receive payment (unclear from the text of the judgment), the buyer’s obligation to pay the price might have not become due under Article 58 of the CISG. Thus, the exact legal reasoning of the decision and the relevance of the transfer of property therein remain unclear.

414

If the decision were understood to interpret Article 58 of the CISG as generally requiring the seller to fulfil all obligations under Article 30 of the CISG, i.e., also the transfer of property, before being able to successfully claim the price, it should not be followed. Placing the goods or documents controlling their disposition at the buyer’s disposal under Article 58(1) of the CISG does not encompass the transfer of property judging from the wording. Moreover, Rabel called the decoupling of the transfer of property from the question of whether the seller has fulfilled the principal duty under the contract as “considerable progress in legal technique, resulting in the removal of a source of many difficulties.”882 Otherwise, under an applicable law that requires the buyer’s consent for property to pass, the buyer could unilaterally evade the obligation to pay the price. This would in turn mirror the legal situation in countries that follow the Sale of Goods Act 1979 as it would make the seller’s claim for the price dependent on prior passing of property. The general idea behind Article 62 of the CISG as described above and the departure from Article 61(2) of the ULIS would be undermined if one considered the passing of property relevant by means of Article 58 of the CISG. The buyer cannot evade the duty to pay the price by not accepting the goods if the seller delivers conforming goods.883 Consequently, under 184 the CISG, even a seller in possession of the goods can sometimes claim the full purchase price.884 Hence, even if the seller must perform first, because the contract envisions carriage and he or she did not authorize the carrier to receive payment against the goods under Article 58(2) of the CISG, the seller must merely place either the goods or documents controlling their disposition at the buyer’s disposal before he or she can claim the price.885 The transfer of property, in contrast, only has to be effected concurrently with payment.

415

This mechanism within the CISG is the reason why there is no need to take recourse to national (unharmonized) law, and for example, refer to the German concept of “default in acceptance” (Annahmeverzug).886 Article 58 of the CISG only provides a limitation on the seller’s claim for the price, if the latter is unwilling to perform.

g) Limitation of the claim for the price under Article 7(1) of the CISG

416

Article 7(1) of the CISG states that “[i]n the interpretation of this Convention, regard is to be had to [...] the observance of good faith in international trade.” While the extent to which this provision obliges the parties to act in good faith is disputed,887 the fact that provisions of the CISG should be interpreted to safeguard the observance of good faith is not controversial.888 Thus, the right to claim the price under Article 62 of the CISG should only be granted to the extent that the existence of the claim is in good faith. To assess when this threshold is crossed, different contractual situations have to be distinguished.

185

417

Article 7(1) can only limit Article 62 when the insistence on the claim for the price represents an abuse of law.889 With regard to a typical sales contract, there are few circumstances under which it is conceivable that the seller abuses the right to the purchase price. If the buyer refuses to accept the goods, sellers do not abuse their rights by insisting on performance of the contract even if they are still in possession of the goods as long as they are willing to perform.890 Whether property has already been transferred is also not relevant in this regard.

418

Sellers that merely insist on performance to harm the buyer by increasing the loss will see their claim for the price curtailed by Article 7(1) of the CISG.891 This does not mirror the rule in English law, i.e., whether the creditor has “no legitimate interest” in requiring the other party to perform. Rather, the contractual obligation to pay the price generally means that the seller has a legitimate interest in requiring its performance. The buyer, thus, has to prove that the seller pursues illegitimate interests, which is a higher threshold.892

419

If sellers insist on performance of the buyers’ obligation to pay the price for an extended period, their damages claims are not generally reduced even if they could have been expected to decide whether they intended to avoid the contract.893 This is because it is unclear when exactly this point in time is and as long as sellers do not pursue illegitimate aims, they should not be understood to abuse their rights.894 The seller, thus, can claim the price under Article 62 of the CISG and does not have to resell the goods elsewhere in an effort to mitigate the loss.

420

In addition to typical sales contracts, contracts in which the seller has to manufacture or produce the goods can be subject to the CISG due to Article 3(1), “unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production.” Under such contracts, there is uncertainty as to whether the buyer can “cancel” the order and, thereby, foil the seller’s claim for the full price. 186 If production of the goods is completed, the contract should not be treated differently than a typical sales contract as the seller is not using up further resources to produce potentially unnecessary goods. Thus, the seller can sell the goods after production, and claim the full purchase price under Article 88(1) of the CISG if the buyer does not take delivery.895

421

This situation might be different if production of the goods has not started yet or is ongoing. As a cancellation at this point in time is possible under many national laws,896 and the seller’s continued production may appear wasteful. It is debatable whether the position of the CISG is in line with these national laws. It is undisputed that the CISG lacks a provision that explicitly governs this situation and no right to cancel a contract for goods to be produced exists.897 Some authors take the wording of the provision literally, and consequently, argue that the seller can continue with the production and claim the full purchase price.898 Yet, many authors and courts agree that the seller should not be entitled to the full purchase price if stopping the production would have saved costs, albeit with different reasoning. Some interpret Article 77 of the CISG to block the claim for performance under Article 62 of the CISG in these cases.899 Others argue that Article 28 of the CISG would in most cases exclude the claim for performance due to the national laws that allow the buyer to cancel such contracts.900 A different argument posits that the seller is under a duty to cooperate in this situation: Continuing production would amount to a breach of said obligation, which is why the buyer has a claim against the seller in the amount of the costs that could have been avoided by stopping the production.901 Since property in the goods under national law has not passed to the buyer in such cases, this work need not reach a conclusive decision.

187

422

Hence, when interpreting Article 62 of the CISG in light of Article 7(1) of the CISG and its mandate to safeguard the observance of good faith when interpreting the CISG, the seller’s claim for the price is limited to the threshold of illegitimate pursuance by the seller.

h) Summary

423

Article 62 of the CISG equips sellers with a broad claim for the purchase price. Property in the goods is irrelevant in this regard. As long as sellers are willing to perform, only Article 7(1) limits their claim under Article 62 of the CISG in case sellers pursue solely illegitimate interests in claiming the price.

2. Damages claim instead of the claim for the price

424

Before discussing Article 28 of the CISG, it is necessary to provide an overview of the situation when the seller abandons the claim for performance and seeks damages instead. This is because the seller under the CISG will be restricted to claims for damages if Article 28 applies to Article 62 and these consequences will have to be taken into account when interpreting Article 28 below. If the recoverable loss for the seller was less than the purchase price, the application of Article 28 to Article 62 (and thereby, potentially the transfer of property) would have severe consequences for the seller.

425

In case the buyer does not fulfil the contract, the seller can claim damages under Articles 61(1)(b), 74–77 of the CISG. If the seller avoids the contract, he or she can calculate damages based on a cover transaction executed after avoidance (Article 75 of the CISG) or based on a hypothetical cover transaction (Article 76 of the CISG). In some situations, the courts have dispensed with the requirement to avoid the contract, for example, when the other party definitively refuses to fulfil the contract.902 All these exceptions from the requirement of prior avoidance of contract are generally to the benefit of the aggrieved party.

426

On the other hand, the possibility of a resale might work against the aggrieved party if it was a required reasonable measure to mitigate damage under Article 77 of the CISG. In this regard, courts and scholars have ex 188 pressed diverging interpretations that mirror the (unharmonized) law of common law and civil law countries.

a) Article 77 of the CISG after extinction of performance claim

427

Undisputedly, the seller is under a duty 903 to mitigate damage under Article 77 of the CISG when he or she has no longer has a claim for the price or for taking delivery. The extinction of these claims could be due to an avoidance of contract by the seller (Article 81(1) of the CISG discharges such obligations of the buyer) or due to a limitation of Article 62 of the CISG in line with Article 7(1) of the CISG.904 A resale will then likely represent a reasonable measure to mitigate the damage and a seller who does not make use of such possibility will face a reduction of the damages claims under Article 77, sentence 2 of the CISG if the price drops afterwards.905 The uniformity in result is not surprising considering that all the national laws analyzed above also require the seller to attempt a reasonable resale under such circumstances.

b) Article 77 of the CISG while claim for performance still exists and is due

428

If the buyer is still under an obligation to take delivery and pay the price, the situation is much less clear. It is important to first of all differentiate the problem at hand from a different discussion: It is disputed whether sellers can calculate damages under the CISG based on Article 75 or Article 74 if they resell the goods when facing a buyer who definitively refuses to perform.906 However, this dispute concerns whether sellers are allowed to resell the goods, while the question at hand is what consequences sellers face if 189 they are not willing to effect a cover transaction due to Article 77 of the CISG.907

aa) Article 77 of the CISG and damages due to delay

429

One aspect is uncontroversial: If one party does not perform properly, the other party has a claim for damages resulting from the delay in performance. In regard to these sums, Article 77 of the CISG requires the aggrieved party to take reasonable measures to mitigate the damage. For buyers, mitigating damages due to delay could mean that they have to purchase (or rent) the goods elsewhere. Indirectly, the aggrieved party may thereby be required to abandon his or her claim for performance, effect a cover transaction and claim damages.908 In practice, the impact on sellers is unclear because with regard to damages for delay, an aggrieved buyer has more conceivable reasons for damages compared to the seller.

(1) Storage costs

430

The obvious costs that could arise if the buyer does not pay and take delivery are costs for storage. In a case addressing storage costs, the Commercial Court Zurich found that in order to avoid storage costs, a seller was generally required to resell the goods under Article 77 of the CISG when a buyer refused to take delivery and pay the price: Since the seller should have immediately resold the goods, the costs for storage of the goods were avoidable, and consequently could not be recovered.909

431

To date, too little attention has been paid to Article 87 of the CISG in this regard. According to the provision, if the buyer fails to take delivery or pay the price, the seller “may deposit them in a warehouse of a third person at the expense of the other party provided that the expense incurred is not unreasonable.” Courts do not consider an immediate resale necessary to avoid these costs.910 The costs for storage are considered unreasonable if they exceed the price of the goods.911 Even if costs exceed this threshold, they do 190 not invalidate a deposit at a warehouse, but rather reduce the recoverable amount to the reasonable costs.912 To maintain coherence within the CISG, this should extend to the interpretation of Article 77.913 In contrast to the opinion of the Commercial Court Zurich, as long as the costs for depositing the goods in a warehouse are not unreasonable and the buyer is still obliged to take delivery and pay the price, Article 77 does not require the seller to resell the goods merely to mitigate the respective costs. On the other hand, goods that can only be stored with unreasonable costs require a seller to resell them under Article 88(1) and (2) of the CISG or avoid the contract and calculate damages under Articles 75 or 76 of the CISG. If he or she fails to do so, the damages claim will be reduced in accordance with Article 77 of the CISG regarding the costs that were unreasonable to incur.

(2) Financing costs

432

Conceivable loss due to delay could also occur in form of financing costs, for example, interest on a loan to bridge the delay in payment.914 As long as the claim for the price exists, the seller can rely directly on Article 78 of the CISG to demand interest on the price as a sum in arrears. If the seller claims damages instead, Article 78 can nevertheless be applied,915 or the loss in the form of interest can be claimed under Article 74 of the CISG. Article 78 and Articles 61(1)(b), 74 of the CISG are two different legal bases to claim interest. These legal bases are not mutually exclusive, but interest as loss under Article 74 of the CISG cannot be claimed in a fashion that would allow for double reimbursement for the identical interest.916 This means that a seller eligible to receive a loan with interest that is less than or equal to the applicable interest rate under Article 78 917 may rely on this provision without further proof. If more was charged, he or she will have to prove the loss under Article 74.

191

433

Yet, if Article 77 of the CISG were interpreted to mean that the seller has to mitigate such losses,918 he or she might in practice either have to resell the goods to a different buyer to avoid a reduction of the recoverable damages or forfeit interest on the amount due in damages. As with Article 87 of the CISG and storage costs, in interpreting Article 77 of the CISG one should look to nearby Article 78 for guidance: The provision embodies the idea that a sum in arrears might accrue interest, and the breaching party has to pay the interest, even if a more extensive and comprehensive agreement on interest could not be reached in Vienna.919 Although, in contrast to Article 78, the seller will have to prove the loss under Article 74, Article 77 should not be interpreted to reduce the interest that can be claimed under Articles 61(1)(b), 74 of the CISG to a lower level than the seller could claim under Article 78. This is because Article 78 signifies that interest under an applicable statutory interest rate on a sum in arrears is not a loss that the creditor has to avoid. Article 78 of the CISG, hence, provides the minimum amount of interest that can be claimed for a sum in arrears.

(3) Summary

434

Neither storage costs under Article 87 of the CISG nor interest under Article 78 of the CISG could be claimed by the seller under Article 62 of the CISG as they do not form part of the purchase price. The CISG contains an independent basis to claim these sums respectively. This section is meant to illustrate the way in which the claim for the price under Article 62 of the CISG and the calculation of damages in this regard might differ. A deeper analysis of potential divergences between Articles 78, 87 on the one hand and Article 77 on the other hand, is not necessary due to the lack of connection with Article 62.

435

Thus, although Article 77 of the CISG applies to damages due to delay for the seller, in practical terms, the restrictions are slim and do not limit the recovery of expenses due to delay that can be claimed under Articles 78 and 87 of the CISG. Even when applicable, only the damages due to delay might be reduced under Article 77, sentence 2 of the CISG.

bb) Approach 1: Article 77 of the CISG generally requires a resale if the buyer refuses to perform

436

There is no consensus on the question whether Article 77 of the CISG can require the seller to resell the goods to avoid further damages due to a decline in the price of the goods. A judgment by the Commercial Court Zurich 192 exemplifies a case in which the different approaches materialize in different results:920 In 2008 an Italian and a Swiss company concluded two contracts for the sale of wire rod. When the wire rod arrived in Italy in August 2008, the Italian buyer refused to take delivery due to multiple alleged breaches of contract by the seller (inter alia late delivery and non-conformity of the goods). In the subsequent months, the parties negotiated, and several tests were performed on the wire rod. In October 2008, the buyer informed the seller that it would not take over the goods and would not pay the price due to non-conformities of the goods. In November 2008, the buyer allowed a deadline to elapse that was set by the seller to clearly and definitively formulate whether the buyer intended to perform the contract or not. The seller resold the wire rod in January, February, August, and November 2009.

437

The main dispute concerned whether the buyer could have avoided the contract, and thus would have been entitled to refuse taking delivery of the goods. The court found that the seller had not committed a fundamental breach. Consequently, the buyer’s refusal to take delivery was unjustified. The seller’s claim for USD 4’337’015.59 in damages was based on the difference between the contract price (USD 7’300’585.68) and the proceeds of the resales (USD 2’963’570.09). The significant markdown on the wire rod was due inter alia to the declining overall market price of steel.

438

According to the court, the seller had the right and also the duty to effect a cover transaction at the latest when the buyer refused to take delivery and pay the price in October 2008.921 Considering the amount of wire rod, the seller could not be required to sell everything at once, but rather a time period between mid-October 2008 to mid-November 2008 was proposed by the court.922 The court held that the duty to effect a cover transaction was not dependent on a prior avoidance of contract.923 It explicitly stated that “Ist der Verkäufer noch im Besitz der Ware und verweigert der Käufer die Annahme definitiv, ist der Verkäufer im Lichte der Schadensminderungspflicht gemäss Art. 77 CISG und des Grundsatzes von Treu und Glauben unter Umständen auch dann, wenn er nicht die Vertragsaufhebung erklärt und ihm mithin ein Erfüllungsanspruch nach Art. 62 CISG zustehen würde, zur Vornahme eines möglichen und zumutbaren Deckungsverkaufs verpflichtet, wodurch der Kaufpreisanspruch entsprechend reduziert wird”.924

193

439

This judgment has been taken to support the idea that Article 77 of the CISG can require sellers to resell the goods even though they still have a claim for performance.925 The Court of Appeal Munich reached a similar result, holding that a seller should have avoided the contract due to Article 77 and denied the seller’s damages claims.926 Whether the Polish Supreme Court accepts this effect of Article 77 was left undecided, since the unwilling seller did not prove the loss that could have been mitigated.927 Likewise, Schlechtriem accepted the seller’s duty to resell the goods.928 However, to support his view he cites only one decision by the Court of Appeal Hamm that does not address this question since the contract in that case was avoided, and the question was rather whether the seller would have been able at that point in time to conclude a cover transaction above the market price.929 Furthermore, he refers to the statements made by a Norwegian delegate during the negotiations of the CISG in Vienna (Rognlien), who stated that if the seller informs the buyer that he or she would not perform the obligations, the buyer is under a duty to mitigate the damage and, thus, cannot freely speculate on the developments of the market price.930

cc) Approach 2: Article 77 of the CISG does not generally require a resale if the buyer refuses to perform

440

In contrast, the Court of Appeal Braunschweig decided that the seller can generally demand performance as long as such a claim exists under Article 62 of the CISG and the seller is at that point in time not under a duty to resell the goods elsewhere due to Article 77 of the CISG.931 This even holds true when the buyer definitively refuses performance and negative developments of the market price are foreseeable.932 This view is widely shared in literature.933 Exceptions are, however, accepted where it could be expected 194 from the aggrieved party to have decided on whether or not to avoid the contract long ago,934 or where the insistence on performance serves only the purpose of increasing the damages.935

dd) Discussion

441

The CISG does not generally require sellers to resell the goods as long as their claim for performance under Article 62 exists. An exception stems indirectly from Article 77 when unreasonable damages for delay accrue and a cover transaction is the only possibility to avoid these losses, although it is not apparent whether this will apply to the seller with any practical significance.936 As a starting point regarding damages other than those for delay, it is important to highlight that Article 77 aims not at reducing any loss that could be avoided, but as is apparent from Article 77, sentence 2, the focus is on losses that should have been mitigated.937 It is, thus, not only a factual question but one that encompasses a normative element, as in what loss should be avoided by mitigation efforts and which can be incurred without mitigation efforts by the aggrieved party.

442

Answering this question requires looking at a panoramic view of the CISG and its underlying principles. Once again, reference is to be made to the attempts of the USA in 1977 and at the conference in Vienna to limit the claim for performance through Article 77 of the CISG.938 In this context, the idea that the aggrieved party should be allowed to insist on the claim for performance and should not be required to elect a different remedy than performance was clearly expressed. The statements in the context of today’s Article 88(2) of the CISG are based on the same understanding: Today’s wording goes back to a Singaporean proposal at the conference in Vienna to delete “subject to loss or rapid deterioration” from the wording. This was because this wording could encompass fluctuations as to the price of the goods and would, thus, “place an undue burden on the party preserving 195 the goods by exposing him to the risk of making a wrong commercial judgment.”939 This reasoning applies to Article 77 of the CISG as much as it does to Article 88(2) of the CISG. Both the travaux préparatoires and the generally unlimited wording of Article 62 of the CISG support the conclusion that damages due to a change in market prices do not form part of the damages that should be avoided under Article 77 of the CISG.

443

Schlechtriem’s argument is not diminished by the fact that he relied on Rognlien’s proposition that Article 77 of the CISG might require a cover transaction and, consequently, the possibility for speculations in the realm of Article 76 of the CISG is limited. Rognlien stated that if sellers do not intend to perform, they will have to inform the buyer accordingly and after being informed, “the buyer would under article 73 [today’s Article 77 of the CISG] have the duty to mitigate the loss by taking appropriate measures, and would consequently have nothing to gain by speculating in price movements thereafter.”940 First, this statement was made in regard to the buyer and could, thus, aim at the (here accepted) proposition that damages for delay can sometimes only be reasonably mitigated by a cover transaction. Second, even if this statement was meant more broadly, it is not clear how many delegates shared this interpretation.941 The understanding of some delegates in this regard should not lead to a contrary interpretation that goes against the common understanding of Articles 77 and 88(2) of the CISG.

444

A different angle to explain why these damages are distinguishable from the that “should” be mitigated, is the seller’s option of a sale under Article 88(1) of the CISG – a provision that until now has been paid too little attention in this regard. If there is an unreasonable delay of the buyer to take the goods or pay the price, the seller can reasonably inform the buyer of his or her intention to sell the goods, and is subsequently allowed to sell them. The seller can then keep a sum equal to his or her expenses for preserving the goods and selling them. The buyer’s obligation to take delivery of the goods ceases to exist, but the contract is otherwise kept intact. Most importantly, the seller can still claim the full purchase price.942 The latter can set-off the price claim against the proceeds of the sale directly under the CISG, or under the otherwise applicable national law.943 If one were to interpret Article 77 of the 196 CISG to apply to the seller in the sense that he or she might have to resell the goods to mitigate possible damages that are due to a market decline, the damages claim would not be equal to the amount of the full purchase price if the seller passes up a reasonable opportunity for resale. If this were true, whether the seller would be able to claim an amount equal to the full purchase price or just the difference between the contract price and the price offered in a hypothetical cover transaction, would depend on whether the seller resold the goods under Article 88(1) instead of Articles 74 or 75 of the CISG. Although the facts underlying these resales would not differ, the outcomes could be quite different. This is not convincing.944 There should be no difference depending on how the seller’s behavior is explained in terms of legal arguments. Otherwise, the question of whether the seller’s claim is reduced depends more on legal advice than on commercial reasonableness. Therefore, as long as the seller could sell the goods under Article 88(1) of the CISG, Article 77 of the CISG should not be interpreted to require a resale by the seller unless it is invoked to reduce unreasonable damages for delay. Accordingly, if the buyer refuses to perform and the price declines, the seller can generally insist on performance. If the buyer cannot avoid the contract, it falls upon him or her to resell the goods. The problem in practice is less often that the buyer is prevented from reselling the goods or that the seller would be in a vastly better position to resell them, but rather that the buyer does not want the goods anymore because he or she could buy them cheaper elsewhere and will often deny any contractual commitment.945

445

Thus, the judgment by the Commercial Court Zurich discussed above 946 should not be followed as far as it requires a resale when the buyer wrongfully refused to take delivery and market prices continued to drop while the seller was still allowed to claim performance under Article 62 of the CISG.947 Also, the court’s conclusion that expenses for storage are not to be reimbursed since they could have been avoided is mistaken, because as long as the claim for performance exists the court undermines Article 87 CISG. The relevant question should have been whether the seller was in fact still 197 entitled to insist on performance. As stated above,948 the latter claim might have been excluded due to a possible trade usage in commodities trade under Article 9(2) of the CISG and/or because of the limitation of good faith under Article 7(1) of the CISG. The court mentions in passing that the seller was not allowed to rely on performance after the buyer’s definitive refusal to perform.949 When the claim for performance ceases to exist, Article 77 of the CISG indeed requires a resale.950

446

Concluding, if the seller does not resell the goods while he or she still has a claim for performance under Article 62 of the CISG, a price decline does not limit a later claim for damages under Article of the 77 CISG.

c) Summary

447

It is important to note that the mere reference to “reasonableness” in regard to a possible resale or end to production is not helpful. Notions of reasonableness differ around the world. Therefore, there is no universal answer to whether reasonableness allows insisting on the claim for the price or requires immediately reselling the goods and claiming damages. As the section on national laws has revealed, a Common lawyer will most probably consider a resale a reasonable and required measure when the other party refuses to perform, while a Civil lawyer will insist that the claim for performance exists and the aggrieved party can generally not be required to shift to a damages claim. For purposes of Article 77 of the CISG, the question of whether a resale is a reasonable measure to mitigate the damage has to be decided with regard to what the CISG determines to be reasonable: Due to the unlimited wording of Article 62 and the general existence of claims for performance, the travaux préparatoires regarding today’s Articles 77 and 88 and otherwise arising contradictions between Article 88(1) and Articles 74 and 77, the seller is not required under Article 77 to resell the goods as long as the claim under Article 62 of the CISG exists. The only indirect exceptions are damages for delay, where sometimes the only mitigation measure is a resale, although it seems questionable what kind of damages of the seller would fall under this category due to Article 87 CISG’s special rule.

198 3. Article 28 of the CISG and the claim for the price under Article 62 of the CISG

448

Against the backdrop of the general position of the CISG regarding the seller’s claim for the price under Article 62 and the correct interpretation of Article 77 in this regard, the question of whether the transfer of property in combination with Article 28 has any impact must be addressed. First, it has to be determined whether Article 28 can be applied to Article 62 at all in light of the above analyses. Second, if Article 28 is applicable to limit the seller’s claim for the price under Article 62, it has to be assessed what “under its own law” means exactly, in order to understand whether the transfer of property is really the relevant factor or whether it is only meant to uphold peculiarities in national law.

a) Applicability of Article 28 of the CISG to the claim for the price under Article 62 of the CISG

449

While the buyer’s obligation to take delivery and perform his or her obligations other than paying the price under Article 62 of the CISG is certainly limited by Article 28 of the CISG,951 the latter provisions’ applicability to the claim for the price is disputed.952 However, the discussion is often abstract when the question posed refers to whether Article 28 is applicable. In order to remove the discussion out of the realm of the abstract and into commercial reality, the first step is analyzing the consequences of Article 28 CISG’s applicability, and comparing it to the general position of the Convention on the claim for the purchase price under Article 62 of the CISG. Next, it is necessary to discuss whether these limitations are supported by 199 the wording, from a systematic point of view, by the travaux préparatoires and the purpose of Article 28.

aa) Potential consequences if Article 28 of the CISG were applicable to the claim for the price under Article 62 of the CISG

(1) (Im)possibility to force the buyer to pay the price in a foreign currency

450

One might consider in case Article 28 of the CISG applied to Article 62 of the CISG that it could be used to enforce national law that limits or forbids claims for money in foreign currencies. Yet, there is widespread agreement that the issue of whether a claim can be made in a foreign currency is not governed by the CISG (Article 4, sentence 2(a))953 or covered by Article 28, as national law to that effect does not limit the specific performance generally.954 Thus, the effect on currency limitations need not be taken into account when discussing whether Article 28 is applicable to the seller’s remedy to claim the price under Article 62.955

**(2) (Im)possibility to force the goods de facto onto the buyer**

451

Although the buyer’s obligation to take delivery of the goods under Article 62 of the CISG is undisputedly subject to the limitation of Article 28 of the CISG, the application of this provision to the claim for the price under Article 62 of the CISG might additionally be necessary to ensure that the buyer indeed does not have to take the goods. This is because if the seller could claim the full purchase price, the buyer could not argue that the price has to be reduced given that the seller still is in possession of the goods and that he or she cannot judicially force the buyer to take them. To avoid a double loss (paying the price without receiving the goods), the buyer will de facto have to take the goods.956 If Article 28 of the CISG applied, however, 200 the calculation of damages would take into account that the seller still has the goods and reduce the damages accordingly by the value of the goods.

452

Considering the existing case law and scholarly work, this consequence of Article 28 of the CISG seems to be more of a theoretical nature.957 The seller will, in most cases, dispose of the goods at some point before the decision of the court. Thus, the more relevant inquiry is whether the seller is free in deciding when to dispose of the goods and who bears the risks of a potential change in price.

(3) (No) indirect duty of the buyer to resell the goods

453

As argued above, under the CISG, a seller who faces a buyer unwilling to fulfil the contract can generally decide freely when to shift from the claim for the price to a damages claim and resell the goods. In a recent decision by the Court of Appeal of Ontario, the interesting question surfaced whether Article 28 of the CISG could change this position when a case is decided by a court in a country that generally does not provide for specific performance in its national law.958 This topic has received no in-depth discussion in literature as far as apparent.

(a) Solea International BVBA v Basset & Walker International Inc

454

Solea International BVBA (hereafter Solea) sold frozen shrimp to Bassett & Walker International Inc. (hereafter BWI) and was to deliver CIF to a Mexican port. BWI was not able to clear customs and one month after arrival of the shrimp refused to pay for the goods, which were delivered back to Solea’s supplier in Ecuador one month later. The court of first instance granted Solea’s claim for the full purchase price.959 One of BWI’s main arguments on appeal was that Solea had a duty to mitigate the loss after BWI refused to pay for the goods.960 Solea should have resold the goods and its damages should therefore be reduced to zero.961

455

The Court of Appeal first, rightly and in accordance with the opinion expressed above, reasoned that the seller’s claim for the price under the CISG 201 is not subject to the duty to mitigate.962 After citing a commentary that provided that Article 28 could mean that the seller was under a duty to mitigate the damage, the court deserves high praise for not simply finding a duty to mitigate, but rather considering whether this would be consistent with the Convention despite little discussion in literature of the topic.963 Ultimately, the court left open whether the seller is under a duty to mitigate when Article 28 of the CISG blocks the claim for the price, because even if a duty to mitigate existed, the seller had no reasonable opportunity to mitigate. Consequently, the court dismissed the appeal.964

456

In this case, however, the court skipped a major consideration regarding Article 28 of the CISG: The applicability of the provision was broadly assumed by the court, since Ontario is a common law jurisdiction and generally does not consider specific performance to be the primary remedy for breach of contract. The court merely stated: “However, any ultimate characterization of Solea’s claim for the purpose of determining whether an Art. 77 duty to mitigate applies would need to take into account the availability of an Art. 62-based specific performance remedy in a common law jurisdiction such as Ontario in view of the limitation placed by Art. 28.” 965 The limitations of national law, however, have to be applicable to the case in question if Article 28 of the CISG shall limit Article 62 of the CISG. Section 47(1) of the Ontario Sale of Goods Act 1990 is similar to the English section 49(1) of the Sale of Goods Act 1979 in that it allows for a claim for the price if property has passed to the buyer.966 However, it seemed undisputed that title in the goods had passed in the Mexican port and the buyer was in possession of the goods.967 Thus, the claim for the price would also have been available under national (unharmonized) law. Under such circumstances, Article 28 of the CISG does not limit Article 62 of the CISG.

202

457

Nevertheless, the Court of Appeals identified the correct question to be answered in cases in which no claim for the price would be available under national law. To find an answer, the question has to be broken down further: First, under which law or against which standards are damages to be calculated – CISG or national law? Second, if the CISG applies, is there a duty to mitigate as far as the claim for performance is not enforceable due to Article 28 of the CISG?

(b) Law applicable to calculation of the damages

458

Article 28 of the CISG merely states as a legal consequence that a court is not bound to enter a judgment for specific performance. Thus, the claimant is indirectly required to claim damages instead. The wording contains no indication that damages should not be calculated in line with Articles 74–77 of the CISG.

459

One could, however, argue that the difference in allowing specific performance or considering damages to be the primary remedy for breach of contract is the economic difference that stems from national damages law. From the perspective of a US jurist, the duty to mitigate damages through resale of the goods naturally flows from the refusal to grant the action for the price under section 2-709 of the UCC. Therefore, it is conceivable that excluding the remedy of specific performance due to the limitations found in common law jurisdictions only truly respects the fundamental idea behind it if damages are calculated accordingly under national law.

460

However, in contrast to claims for specific performance, no unbridgeable gap was thought to exist with regard to damages claims and their calculations: Although the common law and civil law traditions exhibit different preferences in this regard, the CISG provisions on damages contain elements of both traditions.968 Therefore, as long as specific performance is excluded in situations in which the common law jurisdictions do not provide such a remedy, the starting point for the calculation of damages is the Convention itself and not national law.969

(c) Influence of Article 28 of the CISG on Article 77 of the CISG

461

If the claim for the price is not enforceable due to Article 28 of the CISG, it would be questionable whether this has an impact on the question of whether the seller is required to resell the goods to meet the requirements of Arti 203 cle 77 of the CISG. Most of the few opinions expressed so far merely supply a conclusion without providing analysis. The majority of authors seem to be of the opinion that the seller is under a duty to mitigate the damage under Article 77 and resell the goods if the claim for the price is limited by Article 28.970 Others, in contrast, claim that Article 28 does not have such an impact and that the common law viewpoint could not prevail under the CISG, which means that sellers are generally still free to decide when to shift from their claim for the price to a claim for damages and potentially a cover transaction.971

462

If one wanted to substantiate that the seller’s duty to mitigate requires a cover transaction under Article 77 of the CISG in case Article 28 of the CISG applied, one could argue that due to Article 28 the claim for performance ceased to exist and, consequently, the seller could not insist on performance. Therefore, Article 77 could be interpreted to require the seller to effect a cover transaction.

463

However, the claim for performance under Article 62 of the CISG does not cease to exist due to Article 28 of the CISG. Article 28 CISG merely causes a court not to be bound “to enter a judgment for specific performance”. This means the remedy will be unenforceable in the respective court. However, it does not necessarily mean that the claim ceases to exist.972 If the claim would cease to exist due to Article 28 and Article 77 required the seller to cover, legal certainty would be severely undermined. Sellers facing a buyer that refuses to take delivery or pay the price have to be able to assess from the contract and the applicable law whether they bear the risk of a drop in market price if they do not resell the goods at the next reasonable opportunity. At 204 this point in time, it will often not be clear yet before which court the parties will litigate (courts of different countries could be competent to hear the dispute). While an unenforceable claim for performance is not detrimental to sellers who can claim damages instead of performance during the proceedings, a missed opportunity to resell the goods could be detrimental because the sellers’ damages claim might be reduced due to the drop in price.

464

The conclusion that the claim for the purchase price merely becomes unenforceable under Article 28 of the CISG might, nevertheless, come as a surprise: If the remedy cannot be enforced in court, a jurist with a common law background might be inclined to state that in this case the remedy does not exist.973 What the respective party is left with in his or her eyes might be a right or claim, but without enforceability it is not worth much. Yet, it is important to understand “remedy” here as a term of the CISG, thus, to be interpreted autonomously, and not to take a common law understanding as a basis. The interpretation that the claim is merely unenforceable is supported by the fact that the claim would otherwise have to reappear if a claim for performance were to subsequently be raised before a different court where Article 28 of the CISG did not limit the claim for performance. If it is correct that the claim for performance under Article 62 of the CISG is just rendered unenforceable, but the remedy continues to exist, then the arguments raised above (regarding why Article 77 of the CISG should generally not be understood to require a resale by the seller as long as the claim for performance exists)974 apply here, too.

465

The genesis of Article 28 of the CISG also support this understanding. As indicated above, Article 61(2) of the ULIS had a different approach than the CISG and denied the seller a right to claim the price “if it is in conformity with usage and reasonably possible for the seller to resell the goods. In that case the contract shall be ipso facto avoided as from the time when such resale should be effected.” At the same time, Article 16 of the ULIS in combination with Article VII of the ULIS already contained the compromise later found in Article 28 of the CISG. There is no clear indication in the travaux préparatoires of the CISG that the already reached uniform solution under the ULIS (i.e., limiting the claim for the price in combination with ipso facto avoidance and consequently the risk of a drop in price on the seller if he or she misses the opportunity for a reasonable resale at a higher price) was abandoned in favor of two different, hence non-uniform, solutions depending on the court before which the respective case is litigated. Although the documentation of the discussions in Vienna is inconclusive in this regard,975 205 it appears unlikely that the drafters sought to reduce uniformity from the ULIS to the CISG.

466

Concluding, comparative law has revealed that the main practical difference of the national approaches to specific performance concerns whether the aggrieved party has to perform a cover transaction or not and who bears the economic risks of market price fluctuations in the meantime.976 However, as the foregoing analysis shows, this link between an enforceable remedy for the price and the necessity to mitigate the damage by a cover transaction has been severed in the CISG.

(4) Summary

467

Article 28 of the CISG, if applicable to Article 62 of the CISG, would certainly mean that the seller is left without means to “force” the unwilling buyer to take the goods. When one agrees with the arguments raised here, this would be the only effect of Article 28 of the CISG with regard to the obligation to pay the price.

468

Upon contract conclusion, the buyer assumes the risk that the price of the goods is too high or that the price may drop after contract conclusion. As long as the contract is not avoided and the seller’s insistence on contract performance does not violate Article 7 of the CISG, even though the seller has no remedy to claim the price under the CISG due to Article 28, the buyer cannot shift this risk back onto the seller by refusing to take over the goods, and relying on Article 77 of the CISG to argue that the seller bears the risk of movements in price after the first reasonable opportunity to resell the goods. Yet, the buyer does not assume full risk of loss that the seller might have with regard to anything other than the goods and their price if the seller could have reasonably been expected to avoid these risks (this concerns primarily damages for delay). In contrast to the situation in which the seller does not deliver the goods, the analysis showed that a seller will not often have to effect a cover transaction, because reasonable storage costs and reasonable financing costs are not reasonably expected to be avoided by the 206 seller, while other damages due to delay are less frequent for a seller compared to a buyer.977

bb) Arguments for and against the application of Article 28 of the CISG to the claim for the price

469

Against the backdrop of the impossibility for the seller to de facto force goods onto an unwilling buyer as the only consequence of an application of Article 28 of the CISG to the seller’s claim for the price under Article 62 of the CISG, the arguments for and against said application have to be reviewed.

(1) Wording of Article 28 of the CISG

470

The wording of Article 28 of the CISG encompasses “any obligation by the other party” and seems to focus on whether requiring the performance of the respective obligation would be requiring the court to order “specific performance”. Some scholars argue Article 28 should also apply to the obligation to pay the price, because its wording contains no limitations and refers to “any obligation”.978

471

Others, in contrast, argue that an action to recover the purchase price is commonly not understood to be “specific performance” throughout legal systems that are based on English law.979 This is due to the fact that “specific performance” is a term that stems from equity and describes when a debtor of a non-monetary obligation can be ordered to perform this obligation, while the action for the price is an action at law.980 As the action for the price would not be a “specific performance” although its result might rightfully be called “specific”,981 some scholars, therefore, argue that Article 28 of the CISG is not applicable to the right to require payment of the price under 207 Article 62 of the CISG.982 Especially Bridge rightfully maintains that the action for the price is a debt action under which the court enjoys no discretion, which stands in stark contrast to a specific performance in equity.983 According to Bridge, it should be noted that the CISG uses the term “specific performance” only once (in Article 28 of the CISG), while it contains the (potentially broader) term “require performance” elsewhere.984

472

In reply to this argument, Article 7(1) of the CISG and its mandate to interpret the Convention in a manner that promotes uniformity are invoked.985 Against this background, it is argued that national understandings of “specific performance” cannot be relied upon when interpreting the CISG.986

473

It is important to note that the notion of autonomous interpretation of the CISG, i.e., not looking to national law to interpret its wording, is based on the mandate to interpret the CISG having regard to its international character under Article 7(1).987 Yet, when applying these maxims, it has to be kept in mind that Article 28 is an exception and deviates from the system of remedies the CISG routinely provides.988 Thus, if the restrictive understanding in common law jurisdictions of “specific performance” is not considered the basis for a (restrictive) interpretation of the wording of Article 28, the exception from the general system of the CISG in Article 28 is broadened. It is questionable, whether this result would be in accordance with the maxim of an interpretation that has regard to the need to promote uniformity in the 208 Convention’s application under Article 7(1) of the CISG.989 Thus, the aim of Article 7(1) might not be an autonomous interpretation of Article 28 that does not take any cue from national law, but rather one that allows the Convention (!) as a whole to be applied in a uniform manner.

474

On the other hand, it is unclear how this interpretation could be equally valid with regard to all six official languages of the CISG. For example, the French (“l’exécution en nature”) and the Spanish wording (“el cumplimiento específico”) cannot be interpreted to only refer to the concept of “specific performance” when merely relying on the wording. Also, the Russian, Chinese, and Arabic texts do not clearly link the wording to the specific common law concept.990

475

One explanation for Article 28 CISG’s non-applicability to the claim for the price is that payment under Article 62 of the CISG does not consist of a performance such as required by the wording (Naturalleistung, l’exécution en nature), but rather as a monetary obligation.991 This interpretation would split the obligations under the CISG into monetary and non-monetary obligations, as for example, the UPICC do in Articles 7.2.1 and 7.2.2 of the UPICC. This differentiation is, however, not mirrored in the CISG and cannot be based on its wording. A payment in money can be understood to represent a performance in kind.

476

Consequently, the wording of Article 28 of the CISG is inconclusive as to whether the provision encompasses the buyer’s obligation to pay the price.

(2) Systematic interpretation

477

From a systematic point of view, Article 28 can be found in the CISG’s Part III, Chapter I General Provisions. This first chapter of Part III applies to the obligations of both parties (in contrast to Chapter II (Obligations of the Seller) and Chapter III (Obligations of the Buyer)). Since it can be found in a chapter that applies to both parties of a sales contract, one could argue that Article 28 should also be applied to the seller’s remedies.992

478

To assess the persuasiveness of the argument, it has, however, to be kept in mind that it appears undisputed that Article 28 of the CISG limits the seller’s remedy to require the buyer to “take delivery or perform his other obliga 209 tions” under Article 62 of the CISG.993 Thus, the placing of Article 28 in the section of “General Provisions” could also make sense in this regard without necessarily having to extend to also encompass the claim for the price. Nevertheless, the argument cannot be completely negated by the undisputed application to some of the obligations under Article 62 of the CISG, since there is nothing in the systematics that would allow for a differentiation between the claim for the price and the claim for the buyer to take delivery of the goods.

(3) Travaux préparatoires

479

Moreover, the drafting history is sometimes interpreted to favor the application of Article 28 of the CISG to the claim for the price under Article 62 of the CISG.994 This is due to the fact that during the drafting of the CISG the limitation of today’s Article 28 was found to apply only regarding the taking of delivery and performance of other obligations in the provision that became Article 62, but was later extended by broadening the wording moving the provision in Part III, Chapter I General Provisions.995

480

Yet, the travaux préparatoires do not provide persuasive grounds for such an unequivocal interpretation. The first draft of 1935 contained the following Article 70(1): “Si l’acheteur ne paie pas le prix dans les conditions fixées par le contrat, le vendeur est en droit d’exiger le paiement du prix, à moins que ce droit ne lui soit pas reconnu par la loi nationale du tribunal saisi.”996 Thus, the first draft made the seller’s claim for the price subject to the national law of the forum which would be comparable to applying Article 28 of the CISG to the claim for the price under Article 62 of the CISG today. The historical record reveals that this was the clear intention during the first stage of the development of uniform sales law at Unidroit between 1929 and 1950. It is important to note that Rabel’s often cited statement that “[t]he basic ideas are too far away from each other for a thorough unification” was not made in connection with the claim for performance of the non-monetary 210 obligation (delivery of the goods), but rather with regard to the action for the price and specifically in connection with Article 70(1) of the draft of 1935:

“The most impressive phenomenon in this connection remains untouched by the international draft, viz., the rule that the action for the price can not be brought unless the title has passed to the buyer. It is very curious that the seller’s right to obtain the price should depend on any thing other than his own choice, and moreover on an event so difficult to ascertain and so often casual. Where the transfer of the title has been postponed by mutual agreement, one should think that it is left with the seller as a security for the price. Yet, in that system it is declared to be impossible for the seller, at least as a general rule, to have both property in the goods and a right of action for the price. However, the draft had nothing to reform in this matter. It had but one course to follow in face of the abyss between the Anglo-American and the continental concepts of specific performance. The basic ideas are too far away from each other for a thorough unification. In this one point the only sound solution was to leave the existing differences untouched. The draft provides that in the matter of specific performance the courts of each country are allowed to follow their own traditional course. Thus, English and American courts will not be troubled with new principles. All other courts would grant judgments for specific performance as they do now.”997

481

This explains the idea underlying the draft of 1935, which was maintained in the drafts of 1939 and 1956.998 It leaves no doubt that Rabel considered the limitations of the action for the price in common law jurisdictions described above 999 to remain applicable under uniform sales law. Rabel died in 1955 and with him the clarity on why the claim for the price should be limited under uniform sales law if a court in a common law jurisdiction heard the case.

211

482

At the second stage of the drafting of uniform sales law under the auspices of the Special Commission, the underlying idea of the limitation was blurred. The comments to the draft of 1956 disclose, for example, that the reason of the limitation was seen in the reluctance of national laws to allow a seller to claim payment in a currency other than the local currency.1000 The understanding that the limitation was due to problems of enforcement of payment claims in foreign currencies seems to have been the prevailing understanding at the conference of 1964 leading to the ULIS (the third stage of development).1001 For example, Tunc writes in the commentary on the ULIS:

“Article 61 first states the rule that if the buyer fails to pay the price in accordance with the contract and the Law, the seller may require him to perform his obligation. It will be seen that in this case the rule is not even impliedly subject to the reservation in Article 16 [today’s Article 28 CISG]. Some jurisdictions do refuse to decree the specific performance of some course of action but not, of course, the payment of a price.”1002

483

This reveals that Rabel’s original thought underlying the limitation of the claim for the price had been forgotten in the meantime. Tunc’s comment that the decree of specific performance was “of course” not refused regarding payment of the price reveals that some delegates at The Hague may not have been aware that common law jurisdictions contained severe limitations of this remedy. On the other hand, it has to be kept in mind that Article 61(2) of the ULIS contained a severe limitation of the claim for the purchase price in case a resale of the goods was in line with usages. Maybe this provision was interpreted to align the uniform sales law with the restrictions of the claim in common law jurisdictions.

484

Unfortunately, the clarity of Rabel’s thought did not resurface during the drafting of the CISG between 1966 and 1980. In 1972 the English delegate (Guest) brought up the subject once again and noted that it was unclear when the limitation of Article 61(2) of the ULIS would apply, and explicitly 212 referred to section 49(1) of the Sale of Goods Act 1893 as a better solution and to section 2-709 of the UCC to at least be considered.1003 The limitation contained in Article 61(2) of the ULIS was subsequently deleted in the drafting of what became Article 62 of the CISG. At the fifth session of the Working Group in 1974, several delegates emphasized that the wording of the provision adopted at the fourth session 1004 did not sufficiently reflect that the buyer’s obligation to pay the price should not be subject to limitations under national law.1005 Therefore, the provision was amended to read:

“Article 71

1. If the buyer fails to pay the price, the seller may require the buyer to perform his obligation.

2. If the buyer fails to take delivery or to perform any other obligation in accordance with the contract and the present law, the seller may require the buyer to perform to the extent that specific performance could be required by the court under its own law in respect of similar contracts of sale not governed by the present law.

3. The seller cannot require performance of the buyer’s obligations where he has acted inconsistently with such right by avoiding the contract under article 72 bis.”1006

485

Thus, the limitation of specific performance (now in subsection 2) at that time was considered not to apply to the claim for the price under subsection 1.1007 Carrying on this thought, at the sixth session of the Working Group, the reference to specific performance in the provisions concerning the buyer’s and seller’s remedies was deleted in favor of the general limitation by Article 16 (which became Article 28 of the CISG).1008 The distinction between the two paragraphs seen above in Article 71 was maintained. After this session, the UNCITRAL secretariat drafted the Draft Commentary on the Draft Convention on the International Sale of Goods. This Draft Com 213 mentary explicitly states that the limitation by Article 12 (which became Article 28 of the CISG) shall not apply to the seller’s claim for the price.1009

486

However, between the sixth and seventh session of the Working Group, there appears to have been a change in understanding. The differentiation between the two paragraphs (payment of price and taking delivery) was abandoned in Article 43 (which became Article 62 of the CISG) and, additionally, Article 12 (which became Article 28 of the CISG) was considered without documented reasoning to apply to the seller’s claim for the price.1010 It is very important to keep in mind, however, that at this stage of the drafting, Article 12 (which became Article 28 of the CISG) had a different wording (“a court is not bound to enter a judgment providing for specific performance unless this could be required by the court under its own law [...]”) and was considered only to limit the seller’s claim for the price if the court could under no circumstances award the seller the price under national law.1011 It is not clear which national law the drafters could have had in mind under which the court has no authority under any circumstances to award the price. The proposal by the US at the eighth session of the Working Group could be interpreted to signify that their delegates did not understand possible limitations under their own law to already be applicable to the seller’s claim for the price.1012 Yet, potentially – as was the case under the ULIS – the idea was that issues of enforcement of payment claims in foreign currencies existed under some national laws.

487

At the conference in Vienna, the wording was changed to read that the court would now not only be allowed to abstain from granting specific performance if it “could not” grant it under national law, but also be allowed to abstain if it “would not” order specific performance.1013 The concerns that lead to the broadening of the wording did not, however, relate to the seller’s claim for the price. Rather, the British delegate (Feltham) referred to specific performance of goods when invoking that courts would generally have the jurisdiction to order it but rarely made use of it.1014 Thus, it is unclear whether the implications this change in wording might have for Article 28 CISG’s application to the seller’s claim for the price under Article 62 of the CISG were even recognized.

488

While it is true that the Secretariat Commentary explicitly states that Article 26 (which became Article 28 of the CISG) applied to Article 58 (which 214 became Article of the 62 CISG),1015 this was drafted before the conference in Vienna, and accordingly before the broadening of Article 26 there. The suggested application can, however, not be transplanted into the CISG where the scope of application of Article 28 was significantly broadened.1016

489

In sum, after Rabel’s death in 1955, the point of reference of whether limitations under national law applied to the claim for the price was lost: It appears that issues of currency were at the forefront of the delegates’ minds when the application of today’s Article 28 of the CISG was discussed. Especially delegates of civil law jurisdictions may not have been aware of the differences in national law regarding the claim for the purchase price. In addition to this uncertainty, the broadening of the wording of Article 28 of the CISG at the conference in Vienna produces further uncertainties. This is because there was no discussion of the potential implications of the broadening on the claim for the price. Therefore, while the question of whether Article 28 of the CISG should apply to the seller’s claim for the price under Article 62 of the CISG surfaced during the drafting of the provisions, the travaux préparatoires do not provide unequivocal guidance on the applicability of Article 28 of the CISG regarding the limitations of the claim for the price discussed in this chapter. The development of the claim for the price under the CISG is a prime example for the necessity to extend the relevant historical material beyond the UNCITRAL Yearbooks and the Official Records of the conference in Vienna.1017 Without considering the statements of Rabel and the first drafts, the inconclusiveness of the travaux préparatoires would not be as obvious.

(4) Purpose of Article 28 of the CISG

490

Attempting to describe the purpose Article 28 seeks to fulfil within the CISG is a difficult endeavor. When the question is posed in this broad manner, some scholars argue Article 28 covers only limits that are due to problems with the enforcement of obligations other than money or procedural barriers, not with the diverging requirements in national (unharmonized) law regarding the right to require performance.1018 However, as many studies have elaborated, it can be random whether limitations on claims for perfor 215 mance are located in procedural or substantive law.1019 Consequently, the majority of scholars convincingly argue that common law jurisdictions’ general position opposing the specific performance of contracts is not limited to procedural barriers but enforces considerations of substantive law, too.1020 The limitation by Article 28 was envisioned to cater to the needs of common law jurisdictions not to bind their courts to order specific performance in cases in which the national law would only allow damages claims.1021 The purpose of Article 28 is to allow jurisdictions that principally do not allow a party to legally enforce the performance by the contractual partner to maintain this stance even under the CISG.1022

491

Assessing the applicability of Article 28 to the claim for the price under Article 62 of the CISG against the backdrop of this purpose, the practical consequences of the application have to be considered. As has been analyzed above, applying Article 28 would in effect mean that the seller could not de facto force the buyer to take over the goods.1023 This consequence is in line with the purpose of Article 28 of the CISG, which favors an application to the claim for the price under Article 62 of the CISG.

492

First, it is undisputed that Article 28 limits the seller’s remedy to require the buyer to “take delivery” under Article 62 of the CISG.1024 If the buyer has not performed his or her obligation to take delivery, it is considered exceptional in common law jurisdictions to order the buyer to specifically perform this obligation.1025 Arguments that militate against ordering the buyer to take delivery overlap with arguments against specific performance of the seller’s obligation to deliver the goods: A perhaps overly harsh interreference with the liberty of the debtor and the strain of the courts to supervise the specific 216 performance.1026 While the de facto obligation to take the goods to avoid not receiving anything for the purchase price may at first sight not require the court to supervise the performance, the strain on the buyer’s liberty is similar to the strain on the seller’s liberty regarding the obligation to deliver. Thus, the similarities between the consequence of de facto requiring the buyer to take over the goods and the obligation to take delivery under Article 62 CISG favor the applicability of Article 28 of the CISG to the obligation to pay the price.1027

493

Second, considering the notion of efficiency that at least partly underlies the limitation of performance claims under the UCC,1028 the applicability of Article 28 of the CISG to the claim for the purchase price is also consistent with the purpose of Article 28 of the CISG: A buyer who is unwilling to perform will in some cases need to resell the goods while it would typically have been more efficient under the suggested consideration of efficiency if the seller resells the goods immediately.1029

494

Third, and apparently not highlighted yet with regard to the applicability of Article 28 of the CISG, the claim for the purchase price in common law jurisdictions is even more restricted than the claim for specific performance. The law generally does not provide the seller with a remedy to receive the price if the buyer refuses to perform the contract.1030 In contrast to the remedy for delivery of the goods, there is no remedy in equity for the seller even if damages are not adequate. Maybe this is because it appears inconceivable that the price (due in money) could not be adequately compensated with damages (due in money). Nevertheless, if the seller does not want to perform and no performance has yet been rendered, the buyer potentially has an equitable remedy (specific performance), while the seller that faces a buyer unwilling to perform is not provided with a remedy for performance. Forcing the unwilling buyer to pay the price, thus, seems to be even more restricted than forcing an unwilling seller to deliver the goods. This reasoning applies to jurisdictions that follow the approach of the English Sale of Goods Act 1893/1979. It also convinces regarding the UCC in the USA: Although 217 the seller’s claim for the price under the UCC is broader, since the seller can also claim the price if the goods are not reasonably resalable,1031 the claim for the price is nevertheless more restricted than the claim for delivery of the goods as Flechtner highlights.1032 Bearing in mind the purpose of Article 28 of the CISG to allow jurisdictions that principally do not order a debtor to perform and the limitation on the payment claim being even stricter than on specific performance of non-monetary obligations, the provision should also apply to the claim for the purchase price.

495

For these reasons, the purpose of Article 28 of the CISG favors the applicability of the provision to the seller’s claim for the purchase price under Article 62 of the CISG.

(5) Result

496

While neither the wording nor the travaux préparatoires clearly indicate whether the provision should be applied to the claim for the purchase price under Article 62 of the CISG, the systematic placing of Article 28 of the CISG taken together with its purpose supports the application and the consequent limitation of the claim for the price. This is also in line with Rabel’s insights and the divergence between the common law and the civil law approaches to the claim for the price. The differences that he had in mind and led him to propose forgoing unification of the claim for the price in uniform sales law exist to this day.

b) Application of its “own” law with regard to the claim for the purchase price

497

Since Article 28 of the CISG applies to the claim for the purchase price under Article 62 of the CISG, the next question that arises is what rules the court will apply as its “own” law when deciding whether to grant specific performance under the CISG.

498

There has been uncertainty from the time Article 28 of the CISG was drafted as to whether the respective “own” law refers to the rules of the national substantive law or rather the rules of the respective private international law. While a Greek delegate in Vienna (Krispis) seems to have been of the opinion that private international law has to be consulted when applying the provision,1033 the majority of scholars and courts read the reference to the respective law as being one to the rules of substantive law without interposing 218 private international law.1034 Already the first draft of 1935 contained a rule similar to today’s Article 28 of the CISG and the comments accompanying this draft stated that its reference was not meant to include the private international law rules of the forum.1035 At the conference in 1951 regarding the draft that became the ULIS and later Article 28 of the CISG, Bagge maintained the position that the reference should be understood as referring to the national substantive law without recourse to private international law: If an English court was to find that French law would apply to a contract, it may still deny specific enforcement as English law as the law of the court would prevail.1036

499

Thus, an English court would apply section 49 of the Sale of Goods Act 1979 and courts in other jurisdictions following the approach of the Sale of Goods Act 1893/1979 would apply the equivalent provision of the respective Sale of Goods Act.1037 The subsequent question is, how a court determines whether property in the goods has passed: Is it relevant whether the property in the goods has passed under the law applicable to the property in the goods, or is merely the English or equivalent law of the forum relevant?

500

One could be consistent with the discussion of whether Article 28 of the CISG refers to private international law or substantive law and argue that under the applicable rule of national law that requires the seller to have transferred property, the court should consider the legal situation for (completely national) facts and, consequently, also apply national property law irrespective of the applicable property law. Yet, if the question posed by Article 28 of the CISG to the judge is whether specific performance would be available in the case under national law, the question has left the realm of the 219 CISG, Article 28 of the CISG is no longer decisive, but rather national law determines whether section 49 of the Sale of Goods Act 1979 or equivalent provisions contain an incidental question which requires the judge to apply conflict of laws rules.

501

As seen above, section 49 of the Sale of Goods Act 1979 and equivalent provisions generally depend on the answer to the question of whether a quid pro quo has been provided.1038 If one takes the relevance of a quid pro quo as the basis, the question of whether property in the goods has passed could be answered by applying the law applicable to the property in the goods, i.e., mostly the lex rei sitae.1039 Hence, section 49 Sale of Goods Act 1979 requires determining whether property in goods has passed under the law applicable to the property in the goods. It does not appear problematic in this context that the applicable property law may provide for an absolute notion of property.1040 For example, under German property law, if the buyer does not receive absolute property because the goods were stolen (section 935 of the German Civil Code), the seller could not sue for the price. In contrast, under English property law, the seller may have transferred (relative) property. Considering these results under the CISG, a court in England concerned with goods situated in Germany might consider the seller’s claim for the price under Article 62 unenforceable due to Article 28, while if the goods were situated in England, the action for the price would lie. Whether this even more restrictive (relative to English law) approach to the claim for the price would convince an English court appears doubtful, especially since it would not enforce such a contract under national law due to a total failure of consideration.1041 English law is not clear on this point, since the characterization of “property” under section 49(1) of the Sale of Goods Act 1979 in an international case under conflict of law rules is not sufficiently settled by case law. It might be possible to characterize the question of whether property has been transferred under section 49(1) of the Sale of Goods Act 1979 as a contractual question to avoid the consequences just presented.1042

502

Lastly, it is important to note that Article 28 of the CISG does not necessarily lead to section 49(1) of the Sale of Goods Act 1979 in a case before an 220 English court. As shown by The Res Cogitans,1043 credit sales in which the goods are envisaged to be consumed before payment is due are not sales contracts under the Sale of Goods Act even though they are sales contracts under the CISG.1044 Yet, the national characterization under Article 28 of the CISG regarding limitations of the claim for the purchase price remains decisive. In such cases, the claim for the price under Article 62 of the CISG will, thus, be more readily available than under a sales contract under the Sale of Goods Act 1979.

c) Summary

503

Article 28 of the CISG is applicable to the seller’s claim for the purchase price under Article 62 of the CISG. If the competent court is seated in England or in a jurisdiction that follows the approach of section 49 of the Sale of Goods Act 1979, the transfer of property is relevant for deciding whether the seller’s claim is granted. If property has not passed and the seller is denied the claim for the price, the first practical consequence is that the seller is not able to de facto “force” the goods onto the buyer. It is true that there is probably little practical relevance to this aspect, since the seller who will receive legal advice in case of a dispute with the buyer will usually not hold on to the goods forever and try to force them onto the buyer by judgment, but rather resell them. This is evidenced by the case law cited thus far. No case contained facts wherein the seller still had the goods at the time of the judgment and tried to claim the difference between the price under the contract and the price of the cover transaction. The relevant question always appears to be whether the seller should have taken an earlier or otherwise more favorable possibility to resell the goods. To answer this question, Article 28 of the CISG is irrelevant, as argued above. Therefore, the second practical consequence is a damages claim under Articles 61(1)(b), 74 et seq. of the CISG for the seller that generally amounts to the full purchase price and any further loss that has occurred, but is reduced by the value of the goods at the last relevant point in time under the applicable procedural law. Thus, sellers have to resell the goods if they do not want to keep them, but bear no economic risk until the relevant point in time for the calculation of damages is reached.

828	Farnsworth, 27 American Journal of Comparative Law (1979), 247, 249 (regarding the Draft Convention, which already included the predecessors of Arts. 28, 46, and 62 CISG).

829	Honsell/Gsell, Art. 28 para. 10; Wethmar-Lemmer, 2012 Journal of South African Law (2012), 700, 708.

830	For a list of these provisions, see above para. 365.

831	Kröll/Mistelis/Perales Viscasillas/Björklund, Art. 28 para. 17; Lookofsky, p. 172; Honsell/Gsell, Art. 28 para. 9; Schlechtriem/Schwenzer/Schroeter/Müller-Chen/Atamer, 8th German edn, Art. 28 para. 9; contra, Gillette/Walt, p. 375; Schroeter, FS Karrer, pp. 295, 299.

832	Hager, Rechtsbehelfe, p. 194.

833	Kröll/Mistelis/Perales Viscasillas/Bell, Art. 62 para. 5.

834	Drawing this conclusion also for the CISG Ferrari/Kieninger/Mankowski/Mankowski, Art. 62 CISG para. 4.

835	Acknowledging this necessity despite the foregoing conclusion Kröll/Mistelis/Perales Viscasillas/Bell, Art. 61 para. 3; P. Huber/Mullis/P. Huber, p. 324.

836	von Caemmerer, AcP 178 (1978), 121, 131; Hager, Rechtsbehelfe, p. 192. Tracing back this provision to the draft of 1935 and to international trade usages, Király, 69(2) Acta Universitatis Carolinae. Iuridica (Charles University Law Review) (AUC Iuridica) (2023), 127, 130.

837	Under the concept in the USA, the seller would generally bear the burden of proof that no reasonable opportunity for resale exists, White/Summers/Barnhizer/Barnes/Snyder, p. 306.

838	For the legal landscape under the Uniform Sales Act and UCC, see above paras. 366 et seq.

839	Court of Appeal Hamm, 5 April 1979, 2 U 266/78 as reported in Schlechtriem/Magnus, p. 368 where such a usage was, however, not sufficiently proven by the buyer.

840	See concerns in this regard by Guest (UK) in UNCITRAL Yearbook V (1974), p. 64.

841	UNCITRAL Yearbook V (1974), p. 43 para. 45; O. R., p. 331 para. 51.

842	See “Ipso facto avoidance” in the Uniform Law on the International Sale of Goods (ULIS): report of the Secretary General, (A/CN.9/WG.2/WP.9), UNCITRAL Yearbook III (1972), pp. 41 et seq.; see also Scheifele, p. 95.

843	UNCITRAL Yearbook III (1972), p. 43 para. 12.

844	UNCITRAL Yearbook III (1972), p. 43 para. 12.

845	UNCITRAL Yearbook VIII (1977), p. 133.

846	UNCITRAL Yearbook VIII (1977), p. 51 para. 371.

847	UNCITRAL Yearbook VIII (1977), p. 61, paras. 501–507, citation from para. 504.

848	Fitzgerald, 16 Journal of Law and Commerce (1997), 291, 297; cf. also the remarks by Honnold/Flechtner, para. 554.

849	Staudinger/Magnus, Art. 77 para. 6 with further references; MüKoBGB/P. Huber, Art. 77 para. 3 with further references.

850

UNCITRAL Yearbook VIII (1977), p. 133 where a proposed wording of the provision that became Art. 77 CISG is reproduced: “The party who relies on a breach of contract must adopt such measures as are reasonable in the circumstances to mitigate the loss, including loss of profit, resulting from the breach. If he fails to adopt such measures, the party in breach may claim a reduction in the damages, including any claim for the price, in the amount which should have been mitigated.” A further attempt was made during the negotiations in Vienna by Honnold (USA), O. R., p. 133: “if he fails to take such measures, the party in breach may claim a reduction in the damages in the amount which should have mitigated, or a corresponding modification or adjustment of any other remedy.”

851	UNCITRAL Yearbook VIII (1977), p. 61, para. 504; Scheifele, p. 96.

852	O. R., pp. 396–398.

853	Kröll/Mistelis/Perales Viscasillas/Djordjević, 2nd edn, 2018, Art. 77 para. 10; Riznik, 14 VJ (2010), 267, 270.

854	Kröll/Mistelis/Perales Viscasillas/Sono, Art. 87 para. 15.

855	Flechtner, 8 Journal of Law and Commerce (1988) 53, 105.

856	Flechtner, 8 Journal of Law and Commerce (1988) 53, 105 fn. 249.

857	MüKoBGB/P. Huber, Art. 85 para. 11.

858	Shen, 13 Arizona Journal of International and Comparative Law (1996), 253, 276 et seq.; Schlechtriem/Schwenzer/Schroeter/Mohs, 8th German edn, Art. 62 para. 18; Honnold/Flechtner, para. 268.

859	For example, Schlechtriem, Einheitliches UN-Kaufrecht, p. 105.

860	MüKoBGB/P. Huber, Art. 62 para. 4.

861	MüKoBGB/P. Huber, Art. 88 para. 13; Staudinger/Magnus, Art. 88 para. 19.

862	Secretariat Commentary, Art. 77 para. 6.

863	See text of Art. 77 of the Draft Convention in Secretariat Commentary, Art. 77.

864	Singapore’s proposal is reproduced in O. R., p. 174; the respective discussion in O. R., pp. 227 et seq.

865	O. R., p. 227 para. 43.

866	Stoll, 52 RabelsZ (1988), 617, 630 fn. 58; Schlechtriem/Schroeter, para. 797; Schroeter, Internationales UN-Kaufrecht, para. 928.

867	MüKoBGB/P. Huber, Art. 62 para. 9.

868	UNCITRAL Yearbook V (1974), p. 43 para. 45; O. R., p. 331 para. 51.

869	Art. 7.2.1 UPICC 2016: “Where a party who is obliged to pay money does not do so, the other party may require payment.”

870	Schwenzer, European Journal of Law Reform 1999, 289, 295.

871	Vogenauer/Schelhaas, Art. 7.2.1 UPICC para. 7, who merely references the official comment to Art. 7.2.1 UPICC in this regard.

872	Schmidt-Ahrendts, p. 108; cf. Mullis, 71 RabelsZ (2007), 35, 37. Mohs, FS Schwenzer, pp. 1285, 1288 and Bridge, Singapore Journal of Legal Studies (2021), 271, 277 highlight that the contractual parties can hedge this price risk through futures.

873	For example, in the trade of corn in the USA: NGFA Grain Trade Rules, Rule 28(A) (3); Note, 19 William and Mary Law Review (1977), 253, 276.

874

The buyer bears the burden of proving the existence of such a usage under Art. 9(2) CISG; see Court of Appeal Dresden, 9 July 1998, CISG-online 559; Graffi, 59 Belgrade Law Review (2011), 102, 111. It should be noted that it is disputed whether the burden of proof is regulated by the CISG, Schroeter, Internationales UN-Kaufrecht, para. 258.

875	Schwenzer/Fountoulakis/Dimsey, p. 794.

876	Schlechtriem/Schwenzer/Schroeter/Mohs, 8th German edn, Art. 58 para. 33; Brunner/Gottlieb/Lerch/Rusch, Art. 58 para. 12.

877

Schlechtriem/Schwenzer/Schroeter/Mohs, 8th German edn, Art. 58 para. 1; Kröll/Mistelis/Perales Viscasillas/P. Butler/Harindanath, Art. 58 para. 12; Court of Appeal Canton Valais, 27 April 2007, CISG-online 1721; Swiss Supreme Court, 20 December 2006, CISG-online 1426, para. 2.1.; MKAC, 10 February 1997, CISG-online 5197 para. 3.2. (explicitly stating that transfer of property is not required).

878	Honsell/Schnyder/Straub Art. 58 para. 58; Piltz, Internationales Kaufrecht, para. 4-152.

879	Intermediate People’s Court Xiamen, Fujian Province, 17 December 2018, CISG-online 4803.

880

The judgment is not completely clear as to whether a Chinese company that was involved in the contract performance (foreign trade agent) was sufficient to apply the CISG under Art. 1(1)(a) CISG or alternatively the status of Taiwan under the CISG, i.e., whether it considers Taiwan to be part of the People’s Republic of China.

881	Kröll/Mistelis/Perales Viscasillas/P. Butler/Harindanath, Art. 58 para. 24.

882	Rabel, 5 University of Chicago Law Review (1938), 543, 551.

883

Cf. MüKoHGB/Wertenbruch, Art. 58 para. 15. An exception to the rule is argued to exist if the delivery of the goods constitutes a fundamental breach of contract, see Brunner/Gottlieb Lerch/Rusch, Art. 58 para. 12; critically regarding the threshold of a fundamental breach in this regard, Hartmann, IHR 2006, 181, 186.

884	Bridge, Debt Instead of Damages, pp. 423, 443.

885	MKAC, 10 February 1997, CISG-online 5197 para. 3.2. (English translation in 7 VJ (2003), 171–180).

886	Contra District Court Oldenburg, 24 April 1990, CISG-online 20 relying on Art. 32(2) Introductory Act to the German Civil Code old version (today Art. 12(2) Rome I Regulation).

887	Cf. Felemegas, Review of the Convention on Contracts for the International Sale of Goods 2000–2001, 115, Chapter 2: 5. Good Faith and the CISG; Walt, 33 Boston University International Law Journal (2015), 33, 37 et seq.

888

Farnsworth, 3 Tulane Journal of International and Comparative Law (1995), 47, 55; Kröll/Mistelis/Perales Viscasillas/Perales Viscasillas, Art. 7 para. 23; specifically with regard to Art. 62 CISG, Kastely, 63 Washington Law Review (1988), 607, 620. See Bridge, Singapore Journal of Legal Studies (2021), 271, 287 for the differentiation between the parties’ duty to act in good faith and the courts’ and tribunals’ duty to safeguard good faith in interpreting the CISG.

889	Schlechtriem/Schwenzer/Schroeter/Mohs, 8th German edn, Art. 62 para. 9; Staudinger/Magnus, Art. 62 para. 19; MüKoHGB/Werthenbruch, Art. 62 para. 5.

890	Cf. Bridge, Debt Instead of Damages, pp. 423, 443.

891	Court of Appeal Munich, 8 February 1995, CISG-online 143; Schmidt-Ahrendts, pp. 116, 155; Soergel/Budzikiewicz, Art. 62 para. 6; probably also Flechtner, 8 Journal of Law and Commerce (1988), 53, 69; potentially contra, Soergel/Lutzi, Art. 77 para. 3.

892

Potentially advocating a slightly lower threshold: Staudinger/Magnus, Art. 62 para. 19: “in krassen Fällen, in denen das Erfüllungsverlangen als Missbrauch erscheint”; MüKoHGB/Werthenbruch, Art. 62 para. 5: “in krassen Fällen [...] der Verkäufer bewusst eine Wertminderung eintreten lässt”; Ferrari/Kieninger/Mankowski/Mankowski, Art. 62 CISG para. 19.

893	Contra Court of Appeal Braunschweig, 28 October 1999, CISG-online 510, sub. 3.a).

894	Similarly, Polish Supreme Court, 9 October 2008, CISG-online 3985 where the buyer waited for half a year before avoiding the contract.

895	Ramberg, p. 152.

896	For example, Art. 377 Swiss Civil Code, sect. 648 in combination with sect. 650 German Civil Code, sect. 1168(1) Austrian Civil Code, Art. 1794 French Civil Code, Art. 1671 Italian Civil Code.

897	Weidt, p. 159.

898

Hellner, FS Riesenfeld, pp. 71, 98; Soergel/Lutzi, Art. 77 para. 3; Schroeter, Internationales UN-Kaufrecht, para. 671, the latter however accepts that potential claims for damages of the seller would be reduced under Art. 77 CISG in the amount of costs for production incurred after cancelation by the buyer.

899

Ormanci, 14 Juridical Tribune – Review of Comparative and International Law (2024), 27, 39; potentially, Schwenzer/Manner, FS Kritzer, 2008, pp. 470, 485 who, however, also see the arguments against this interpretation and alternatively rely on Art. 7 CISG. Potentially also, Gildeggen/Willburger, IHR 2021, 45, 48.

900	Schlechtriem/Schwenzer/Schroeter/Mohs, 8th German edn, Art. 62 para. 16; Schlechtriem/U. Huber, 3rd German edn, Art. 28 para. 38.

901	Schlechtriem/P. Butler, para. 236; Ramberg, p. 152.

902

Court of Appeal Hamburg, 28 February 1997, CISG-online 261 (buyer refused performance); Court of Appeal Brandenburg, 5 February 2013, CISG-online 2400 (seller refused performance). Scholars have sometimes criticized this legal reasoning and instead propose calculating the damages under Art. 74 CISG if the contract was not avoided prior to the cover transaction, Schlechtriem/Schwenzer/Schroeter/Schwenzer, 7th German edn, Art. 75 para. 5; Schlechtriem/Schwenzer/Schroeter/Schwenzer/Köhler, 8th German edn, Art. 75 para. 5a; Schmidt-Ahrendts, pp. 76 et seq.

903	Duty in this regard does not mean that the buyer can base damages claims on a breach of it, see for the understanding of duty or obligation to mitigate the damage, Saidov, 14 Pace International Law Review (2002), 307, 352 et seq.

904	See above paras. 416 et seq. for the limitation of Art. 62 CISG in line with Art. 7(1) CISG.

905

CIETAC, June 1999, CISG-online 1671; Treibacher Industrie AG v. Allegheny Technologies, Inc. et al., US Court of Appeals (11th Cir.), 12 September 2006, CISG-online 1278, pp. 10 et seq. where the court found the seller to have reasonably mitigated the loss by reselling, even though the price obtained was less than the contract price; Staudinger/Magnus, Art. 77 para. 11; Demir, pp. 196 et seq.

906

Favoring Art. 75 CISG, Court of Appeal Hamburg, 28 February 1997, CISG-online 261 (buyer refused performance); Court of Appeal Brandenburg, 5 February 2013, CISG-online 2400 (seller refused performance). Favoring Art. 74 CISG, Schmidt-Ahrendts, pp. 76 et seq.; Schlechtriem/Schwenzer/Schroeter/Schwenzer, 7th German edn, Art. 75 para. 5.

907	Correctly pointed out by Schmidt-Ahrendts, p. 114 and Schlechtriem, FS Georgiades, sub. II.2.

908	Schmidt-Ahrendts, p. 164; but see Tebel, IHR 2023, 66, 68 para. 32.

909	Commercial Court Zürich, 17 September 2014, CISG-online 2656, sub. 3.3.2. (the case was appealed to the Supreme Court but affirmed in this regard); accord by Brunner/Gottlieb/Schäfer, Art. 77 para. 9.

910	CIETAC, October 2007, CISG-online 1931; MKAC, 25 April 1995, CISG-online 367.

911	Kröll/Mistelis/Perales Viscasillas/Sono, Art. 87 para. 14; MüKoBGB/P. Huber, Art. 87 para. 6; lowering even this threshold if the goods are subject of special affection Schroeter, Internationales UN-Kaufrecht, para. 920 with an example of a piece of art in para. 921.

912	Schroeter, Internationales UN-Kaufrecht, para. 920; contra, Ferrari/Kieninger/Mankowski/Ferrari, Art. 87 CISG para. 1.

913	Similar thought but with regard to Arts. 85–88 CISG and Art. 74 CISG, MüKoHGB/Mankowski, Art. 74 para. 39.

914	District Court Oldenburg, 24 April 1990, CISG-online 20; Asam/Kindler, RIW 1989, 841, 843; cf. Schlechtriem/Schwenzer/Schroeter/Schwenzer/Köhler, 8th German edn, Art. 74 para. 91; MüKoHGB/Mankowski, Art. 74 para. 38.

915	CISG AC Opinion 14 (Atamer), black letter rule 3.b. and comment 3.16; Bridge, Debt Instead of Damages, p. 426 evaluates this statement by the CISG Advisory Council to be “bold”. Cf. regarding this uncertainty, Schlechtriem/Schwenzer/Schroeter/Bacher, 8th German edn, Art. 78 para. 6.

916	Schlechtriem/Schwenzer/Schroeter/Bacher, 8th German edn, Art. 78 para. 41.

917	The applicable interest rate is not stipulated in the CISG and national law has to be applied in this regard, CISG AC Opinion 14 (Atamer), black letter rule 9.

918	Unclear in this regard, CISG AC Opinion 14 (Atamer), para. 3.52.

919	Kröll/Mistelis/Perales Viscasillas/Atamer, Art. 78 para. 3.

920	Commercial Court Zürich, 17 September 2014, CISG-online 2656.

921	Commercial Court Zürich, 17 September 2014, CISG-online 2656, pp. 91 et seq.

922	Commercial Court Zürich, 17 September 2014, CISG-online 2656, p. 94.

923	Commercial Court Zürich, 17 September 2014, CISG-online 2656, p. 92.

924

Commercial Court Zürich, 17 September 2014, CISG-online 2656, p. 88. My translation: If the seller is still in possession of the goods and the buyer refuses definitively to take delivery, in light of the duty to mitigate the damage under Art. 77 CISG and the principle of good faith, the seller is obliged to effect a possible and reasonable cover transaction, even if the seller has not declared avoidance of the contract and, thus, still has a claim for performance under Art. 62 CISG.

925	Brunner/Gottlieb/Schäfer, Art. 77 paras. 2, 9.

926	Court of Appeal Munich, 8 February 1995, CISG-online 143.

927	Polish Supreme Court, 9 October 2008, CISG-online 3985.

928

See e.g., Schlechtriem, FS Georgiades, sub. II.2; Similar opinions by Enderlein/Maskow/Strohbach, Art. 28 para. 2.2.; American Bar Association Report to the House of Delegates, 18 International Lawyer (1984), 39, 48; MüKoHGB/Mankowski, Art. 77 para. 14; Schlechtriem/Schwenzer/Schroeter/Schwenzer/Köhler, 8th German edn, Art. 77 para. 10.

929	Court of Appeal Hamm, 22 September 1992, CISG-online 57.

930	Schlechtriem, FS Georgiades, sub. II.1. citing O. R., p. 222 para. 40.

931	Court of Appeal Braunschweig, 28 October 1999, CISG-online 510, sub 3.a).

932	Court of Appeal Braunschweig, 28 October 1999, CISG-online 510, sub 3.a).

933

Schmidt-Ahrendts, pp. 116, 155; Staudinger/Magnus, Art. 77 paras. 6, 11, 12; MüKoBGB/Gruber, Art. 28 para. 15; MüKoBGB/P. Huber, Art. 77 para. 9; Kröll/Mistelis/Perales Viscasillas/Djordjević, Art. 77 para. 24; jurisPK/Janal, Art. 77 CISG para. 5; BeckOK/Saenger, Art. 77 CISG para. 4; BeckOGK/Fountoulakis, 01.01.2024, Art. 62 CISG para. 17; probably also Flechtner, 8 Journal of Law and Commerce (1988), 53, 69.

934	Court of Appeal Braunschweig, 28 October 1999, CISG-online 510 sub. 3.a); Demir, p. 198. Potentially also, Court of Appeal Düsseldorf, 14 January 1994, CISG-online 119.

935	Court of Appeal Munich, 8 February 1995, CISG-online 143; Demir, p. 198 (“ohne plausiblen Grund”).

936	See above paras. 429 et seq.

937	Saidov, 14 Pace International Law Review (2002), 307, 350, who refers to losses that “could” be avoided. However, on p. 351 he refers to losses that “should” have been avoided.

938	See above paras. 400, 402.

939	Singapore’s proposal is reproduced in O. R., p. 174; the respective discussion is in O. R., pp. 227 et seq.

940	Rognlien in O. R., p. 222 para. 40.

941	For this reason, Schmidt-Ahrendts, p. 118 denies the relevance of this historical argument.

942	Flechtner, 8 Journal of Law and Commerce (1988), 53, 105. As seen above, para. 447, the claim for the purchase price under Art. 62 CISG is generally not limited by considerations of possible resales and, thus, exists in full.

943

It is disputed whether the set-off is a matter governed by the CISG and whether the CISG contains rules on set-off, cf. for an affirmative opinion German Supreme Court, 24 September 2014, CISG-online 2545; CISG AC Opinion 18 (Fountoulakis), black letter rule 1; contra for example, MüKoBGB/P. Huber, Art. 4 para. 39.

944	Cf. Atamer, FS Hopt, pp. 3, 18, who highlights similar coordination problems of rules under the PECL and DCFR.

945	Similar argument regarding the unharmonized German law, U. Huber, Leistungsstörungen II, p. 170, § 35 VI 3.

946	Commercial Court Zürich, 17 September 2014, CISG-online 2656.

947

Correct in contrast, CIETAC, 25 July 2006, CISG-online 2003, where the seller set an additional period of time for the buyer to issue a letter of credit although the prices for the goods already started to drop, and resold the goods only after avoidance of contract one month after the expiration of the additional period.

948	See above paras. 409 et seq. on Art. 9(2) CISG and above paras. 416 et seq. on Art. 7(1) CISG.

949	Commercial Court Zürich, 17 September 2014, CISG-online 2656, p. 90.

950	See above para. 427.

951	Schlechtriem/Schwenzer/Schroeter/Mohs, 8th German edn, Art. 62 para. 15.

952

In favor of applying Art. 28 to the obligation to pay the price under Art. 62 CISG: W. Witz, FS Schlechtriem, pp. 293, 299; Schlechtriem/Schwenzer/Schroeter/Mohs, 8th German edn, Art. 62 para. 14; Honnold/Flechtner, para. 273; Schlechtriem/Cl. Witz, para. 310; Kastely, 63 Washington Law Review (1988), 607, 635; Kröll/Mistelis/Perales Viscasillas/Bell, Art. 62 para. 11; Brunner/Gottlieb/Brunner/Mosimann, Art. 62 para. 3; Soergel/Budzikiewicz, Art. 28 para. 3; Saidov, Journal of Business Law (2019), 1, 15; MüKoHGB/Wertenbruch, Art. 62 para. 3; MüKoBGB/P. Huber, Art. 62 para. 5; Bortolotti, 25 Journal of Law and Commerce (2005–2006), 335, 337; Ferrari/Kieninger/Makowski/Ferrari, Art. 28 CISG para. 3. Some scholars argue that Art. 28 CISG should be applied to limit the claim for the purchase price under Art. 62 CISG and that the restrictions of this claim under common law jurisdictions were no limitations due to “specific performance” and, thus, Art. 28 CISG would have no effect with regard to the claim for the purchase price, Staudinger/Magnus, Art. 62 para. 12; Ferrari/Kieninger/Mankowski/Mankowski, Art. 62 CISG para. 11. Against the application of Art. 28 to the claim for the price under Art. 62 CISG, Bridge, FS Magnus, pp. 161, 169–170; Herber/Czerwenka, Art. 62 para. 3; Reinhart, Art. 28 para. 4; Posch, pp. 153, 160.

953	Schlechtriem/U. Huber, 3rd German edn, Art. 28 para. 16; Schlechtriem/Schwenzer/Schroeter/Müller-Chen, 7th German edn, Art. 28 para. 7; MüKoBGB/Gruber, Art. 28 para. 12; Honsell/Gsell Art. 28 para. 20; Achilles, Art. 28 para. 2.

954	BeckOGK/Thomale/Lindemann, 01.04.2024, Art. 28 CISG para. 9.

955

The understanding of Arts. 16 and 61 ULIS may have been different in this regard, cf. for example, the statement by Wortley (United Kingdom), Diplomatic Conference on the Unification of Law Governing the International Sale of Goods, The Hague, 2–25 April 1964, Vol. I – Records, pp. 106–107; cf. moreover, the assessment by the Swiss Government, Diplomatic Conference on the Unification of Law Governing the International Sale of Goods, The Hague, 2–25 April 1964, Vol. II – Documents, p. 176.

956

Honnold/Flechtner, para. 460 stating that “recovering the full price is functionally the equivalent of compelling the buyer to consummate the transaction” and para. 268: “for the significant feature of the remedy of price recovery (as contrasted with damages) is to force the buyer to take possession of the goods.”

957	Honnold/Flechtner, para. 461.

958	Solea International BVBA v Bassett & Walker International Inc., Court of Appeal of Ontario, 25 July 2019, CISG-online 4505.

959	In between, the first judgment was appealed and set aside due to the lack of discussion whether the CISG applied to the case. In the second judgment by the court of first instance, the seller, however, was awarded the full price again under the CISG.

960	Solea International BVBA v Bassett & Walker International Inc., Court of Appeal of Ontario, 25 July 2019, CISG-online 4505, paras. 12(i), 14.

961	Solea International BVBA v Bassett & Walker International Inc., Court of Appeal of Ontario, 25 July 2019, CISG-online 4505, para. 29.

962	Solea International BVBA v Bassett & Walker International Inc., Court of Appeal of Ontario, 25 July 2019, CISG-online 4505, paras. 13–21.

963

This goes against the prediction by Kröll/Mistelis/Perales Viscasillas/Bell, Art. 62 para. 10: “Effectively, courts in Common law jurisdictions will continue to refuse to grant specific performance and will usually require the seller to mitigate his loss by reselling the goods when he still has them.”

964	Solea International BVBA v Bassett & Walker International Inc., Court of Appeal of Ontario, 25 July 2019, CISG-online 4505, para. 35.

965	Solea International BVBA v Bassett & Walker International Inc., Court of Appeal of Ontario, 25 July 2019, CISG-online 4505, para. 25.

966

Sect. 47(1) Ontario Sale of Goods Act 1990: “Where, under a contract of sale, the property in the goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against the buyer for the price of the goods.”

967	Solea International BVBA v Bassett & Walker International Inc., Court of Appeal of Ontario, 25 July 2019, CISG-online 4505, paras. 30, 31.

968	Cf. Staudinger/Magnus, Art. 74 para. 5 highlighting that the provisions were nevertheless strongly influenced by US law.

969	Staudinger/Magnus, Art. 28 para. 10; Reinhart, Art. 28 para. 5; Schlechtriem/U. Huber, 3rd German edn, Art. 28 para. 23; Soergel/Budzikiewicz, Art. 28 para. 5.

970

Schlechtriem/Schwenzer/Hager/Maultzsch, 5th German edn, Art. 62 para. 14; W. Witz/Salger/M. Lorenz/W. Witz, Art. 77 para. 8; Hellner, FS Riesenfeld, pp. 71, 88 (although he is uncertain whether Art. 28 CISG is applicable to the claim for the price); Saidov, 14 Pace International Law Review (2002), 307, 362: “If the innocent party is not successful in enforcing this remedy [due to Art. 28 CISG], then he will have no choice but to treat the contract as avoided and certainly will be under a duty to mitigate his loss.”

971

MüKoBGB/Gruber, Art. 28 para. 15; Schlechtriem/U. Huber, 3rd German edn, paras. 7, 8; probably also Neymayer/Ming, Art. 28 para. 2: “les prétentions en règlement du prix sont toujours égales au minimum à l’intérêts positif d’une action en dommages-intérêts”; BeckOK/Saenger, Art. 28 CISG para. 11.

972

Walter, FS Vogel, pp. 317, 324; Honsell/Gsell, Art. 28 para. 25; Schroeter, Internationales UN-Kaufrecht, para. 398 (“Artikel 28 [...] begrenzt [...] die Durchsetzbarkeit von Erfüllungsansprüchen [...] Berufung auf Art. 28 CISG bedeutet nicht, dass der Erfüllungsanspruch erlischt oder erloschen ist.”); BeckOGK/Thomale/Lindemann, 01.04.2024, Art. 28 CISG para. 24; BeckOK/Saenger, Art. 28 CISG para. 11; cf. already Tunc, Diplomatic Conference on the Unification of Law Governing the International Sale of Goods, The Hague, 2–25 April 1964, Vol. I – Records, p. 370 regarding the predecessor provision in the ULIS.

973	Cf. Michaels, Sachzuordnung durch Kaufvertrag, p. 266.

974	For these arguments, see above paras. 441 et seq.

975

Lebedev (Union of Soviet Socialist Republics), O. R., p. 332 para. 67 in the discussion of a limitation of the remedy to claim performance appears to have interpreted Art. 28 CISG to encompass questions of cover transactions, while Hjerner (Sweden) O. R., p. 332 para. 63 could be interpreted to have been of the opposite opinion: “The difficulties encountered by the Common law countries had already been met to a certain extent by replacing the word ‘could’ by the word ‘would’ in article 26 [became Art. 28 CISG], but that amendment was not designed to release the party from his promise. The United States amendment, on the other hand, not only removed the enforceability of the promise, but also relieved the seller of his obligations under it, a very serious and far-reaching change.”

976	Schlechtriem/U. Huber, 3rd German edn, Art. 28 para. 6.

977	See above paras. 429 et seq.

978	Schlechtriem/Schwenzer/Schroeter/Mohs, 5th edn, Art. 62 para. 14; Honsell/Gsell, Art. 28 para. 14; BeckOGK/Fountoulakis, 1.1.2024, Art. 62 CISG para. 16.

979

Honnold/Flechtner, para. 460; Fawcett/Harris/Bridge/Bridge, para. 16.145; Farnsworth, 27 American Journal of Comparative Law (1979), 247, 249 et seq. (addressing Art. 26 of the Draft Convention, which became Art. 28 CISG); also cf. McKendrick, Contract Law, p. 913; Schwimann/Kodek/Posch, Art. 62 CISG para. 4. Yet, in some common law jurisdictions, such as Australia, the claim for the price is partly considered to be a claim for specific performance, cf. Barnett/Harder, para. 10.119 with further references.

980	Anderson, 1 Georgia State University Law Review (1984), 27, 28 et seq.; Posch, pp. 153, 160.

981	Farnsworth, 27 American Journal of Comparative Law (1979), 247, 250; Kastely, 63 Washington Law Review (1988), 607, 634.

982

Fawcett/Harris/Bridge/Bridge, para. 16.145; Farnsworth, 27 American Journal of Comparative Law (1979), 247, 249 et seq. (addressing Art. 26 of the Draft Convention, which became Art. 28 CISG); Bridge, International Sale of Goods, para. 12.48; Posch, pp. 153, 160; Schwimann/Kodek/Posch/Terlitza, Art. 62 CISG para. 4; Staudinger/Magnus, Art. 62 para. 12 who agrees to apply Art 28 CISG and leave it to the respective court to qualify the limitation to the claim for the purchase price, while he claims that most common law courts would not qualify the action as “specific performance”.

983	Bridge, Debt Instead of Damages, pp. 423, 424–425; Bridge, FS Magnus, pp. 161, 169. Cf. also on the divide between a debt action, i.e., the action for the purchase price, and enforcement of a contract, McKendrick/Maxwell, 1 The Chinese Journal of Comparative Law (2013), 195, 199.

984	Bridge, International Sale of Goods, para. 12.48.

985	Schlechtriem/Schwenzer/Schroeter/Mohs, 5th edn, Art. 62 para. 14; MüKoBGB/Gruber, Art. 28 para. 4; Wethmar-Lemmer, 2012 Journal of South African Law (2012), 700, 704.

986	Schlechtriem/Schwenzer/Schroeter/Mohs, 5th edn, Art. 62 para. 14; Kröll/Mistelis/Perales Viscasillas/Bell, Art. 62 para. 11; MüKoBGB/Gruber, Art. 28 para. 4; Kastely, 63 Washington Law Review (1988), 607, 634; Wethmar-Lemmer, 2012 Journal of South African Law (2012), 700, 704.

987	For example, Schroeter, Internationales UN-Kaufrecht, paras. 126 et seq.

988	Ferrari, IHR 2006, 1, 18.

989	This argument is insinuated by Schlechtriem with regard to the lack of an obligation to take delivery under Austrian law, which should not trigger the application of Art. 28 CISG in his view in Doralt, p. 191.

990	Kastely, 63 Washington Law Review (1988), 607, 634 fn. 131.

991	Herber/Czerwenka, Art. 28 para. 3, Art. 62 para. 7; Reinhart, Art. 28 para. 4.

992	Schlechtriem/Schwenzer/Schroeter/Mohs, 5th edn, Art. 62 para. 14; Schlechtriem/Schroeter, para. 558; Schroeter, Internationales UN-Kaufrecht, para. 669; MüKoBGB/Gruber, Art. 62 para. 5; Honnold/Flechtner, para. 460; Honsell/Gsell, Art. 28 para. 7.

993	For example, Schlechtriem/Schwenzer/Schroeter/Müller-Chen/Atamer, 8th German edn, Art. 28 para. 6 with further references. Notably, the seller’s remedy to force the buyer to take delivery of the goods is considered a “specific performance” under English law, Bridge, Sale of Goods, para. 11.59.

994	Schlechtriem/Schwenzer/Schroeter/Mohs, 5th edn, Art. 62 para. 14; exactly the opposing assessment with regard to the travaux préparatoires, Schlechtriem/Cl. Witz, para. 310; Cl. Witz, para. 343.82.

995	Schlechtriem/Schwenzer/Schroeter/Mohs, 5th edn, Art. 62 para. 14.

996	My translation: Where the buyer fails to pay the price in accordance with the terms of the contract, the seller shall be entitled to sue for the price if his right to do so is recognized by the national law of the court to which he applies.

997	Rabel, 5 Chicago Law Review (1938), 543, 559. Similarly, Rabel, 9 RabelsZ (1935), 339, 348; similarly, not restricting the limitation of performance in kind to the delivery of the goods, Gutteridge, L’unification, pp. 273, 283 et seq.

998

Rome draft (1939): “Article 64. Si l’acheteur ne paie pas le prix dans les conditions fixées par le contrat, le vendeur est en droit d’exiger ce paiement, si ce droit lui est reconnu par le droit national tribunal saisi, à moins que la vente ne porte sur une chose pour laquelle une vente compensatoire est conforme aux usages commerciaux.”; draft of 1956: “Article 72. Si l’acheteur ne paie pas le prix dans les conditions fixées par le contrat et par la présente loi, le vendeur est en droit d’exiger que le paiement lui soit effectué dans ces conditions, si ce droit lui est reconnu par le droit national du tribunal saisi. Le vendeur n’a pas le droit de réclamer le prix lorsque les usages imposent une vente compensatoire; dans ce cas, le contrat est résolu de plein droit dès le moment ou cette vente doit être réalisée. [...]”.

999	See above paras. 344 et seq.

1000	Report of the Special Commission [on the Draft Uniform Law on Sale (1956)], Diplomatic Conference on the Unification of Law Governing the International Sale of Goods, The Hague, 2–25 April 1964, Vol. II – Documents, pp. 26, 37.

1001

See for example, the statement by Wortley (United Kingdom), Diplomatic Conference on the Unification of Law Governing the International Sale of Goods, The Hague, 2–25 April 1964, Vol. I – Records, pp. 106–107; cf. moreover the assessment by the Swiss Government, Diplomatic Conference on the Unification of Law Governing the International Sale of Goods, The Hague, 2–25 April 1964, Vol. II – Documents, p. 176.

1002	Tunc, Diplomatic Conference on the Unification of Law Governing the International Sale of Goods, The Hague, 2–25 April 1964, Vol. I – Records, p. 380.

1003	UNCITRAL Yearbook V (1974), p. 64 para. 4 and Appendix A and B on the same page.

1004

Art. [71]: “The seller has the right to require the buyer to perform the contract to the extent that specific performance could be required by the court under its own law in respect of similar contracts of sale not governed by the Uniform Law, unless the seller has acted inconsistently with that right by avoiding the contract under article [72 bis].” UNCITRAL Yearbook V (1974), p. 33.

1005	UNCITRAL Yearbook V (1974), p. 33 para. 42.

1006	UNCITRAL Yearbook V (1974), p. 56.

1007	Schlechtriem/Schwenzer/Schroeter/Mohs, 8th German edn, Art. 62 para. 14.

1008	UNCITRAL Yearbook VI (1975), p. 101 paras. 122 et seq. (regarding buyer’s remedies), p. 105 para. 163 (seller’s remedies).

1009	Draft Commentary on the Draft Convention on the International Sale of Goods (A/CN.9/WG.2/WP.22), p. 73 para. 6.

1010	UNCITRAL Yearbook VII (1976), pp. 93, 102.

1011	UNCITRAL Yearbook VII (1976), p. 102 Art. 12 para. 3.

1012	UNCITRAL Yearbook VIII (1977), p. 156, Art. 43 paras. 3, 4.

1013	O. R., p. 304.

1014	O. R., p. 305 para. 44.

1015	Secretariat Commentary, Art. 58 para. 6.

1016	Overlooked by Schlechtriem/Schwenzer/Schroeter/Mohs, 8th German edn, Art. 62 para. 14 who relies on the Secretariat Commentary in this regard.

1017	See above paras. 19 et seq.

1018

Herber/Czerwenka, Art. 62 para. 7, who apply Art 28 CISG nevertheless in cases of payment in a foreign currency; Loewe, p. 81; same result but without reasoning Soergel/Lüderitz/Budzikiewicz, 13th edn, Art. 28 para. 3, Ferrari/Kieninger/Mankowski/Mankowski, Art. 62 CISG para. 10; Freund, pp. 367 et seq.

1019	Freund, p. 370; Honsell/Gsell, Art 28 para. 13; Schlechtriem/Schwenzer/Schroeter/Müller-Chen/Atamer, 8th German edn, Art. 28 para. 11.

1020	Schlechtriem/U. Huber, 3rd German edn, Art. 28 para. 17; Honsell/Gsell, Art. 28 para. 13; Brunner/Gottlieb/Brunner/Bodenheimer, Art. 28 para. 2; Ferrari/Kieninger/Mankowski/Ferrari, Art. 28 CISG para. 6; Karollus, p. 178.

1021	See for example, regarding the roots of Art. 16 ULIS which became Art. 28 CISG, Riese, 29 RabelsZ (1965), 1, 28 et seq.

1022

Honsell/Gsell, Art. 28 para. 17; MüKoHGB/Benicke, Art. 28 para. 12. Similarly, but highlighting the requirement of national laws to oppose enforcement as such, which is argued to be fulfilled if respective damages claim exists notwithstanding the lack of a performance claim, Neufang, pp. 414 et seq.; Schlechtriem/Schwenzer/Schroeter/Müller-Chen/Atamer, 8th German edn, Art. 28 para. 11.

1023	See above paras. 451–452, 467. Notably, that statement concurrently signifies that the applicability of Art. 28 CISG to the seller’s claim for the purchase price would not have any implications with regard to cover transactions or the currency of the payment obligations.

1024	For example, Schlechtriem/Schwenzer/Schroeter/Müller-Chen/Atamer, 8th German edn, Art. 28 para. 6 with further references.

1025	For example, under English law, Bridge, Sale of Goods, para. 11.59.

1026

A summary of these aspects and more that militate against the general availability of specific performance in common law jurisdictions by Akenhead J in Transport for Greater Manchester v Thales Transport and Security Ltd [2012] EWHC 3717 (TCC), 146 Con LR 194, para. 17. See also Schwartz, 89 Yale Law Journal (1979) 271, 293 et seq.

1027	MüKoBGB/Gruber, Art. 28 para. 4; BeckOGK/Thomale/Lindemann, 01.04.2024, Art. 28 CISG para. 7.

1028	See above para. 370.

1029	Specifically arguing in favor of applying sect. 2-709 UCC under Art. 28 CISG and highlighting considerations of efficiency, Honnold/Flechtner, paras. 273, 458.

1030	Sect. 49(1) SGA 1979; Sec. 52 SGA 1954 (Australia). An exception to this rule exists if the buyer has agreed to pay the price on a day certain, sect. 49(2) SGA 1979.

1031	See above para. 372.

1032	Honnold/Flechtner, para. 458.

1033	O. R., p. 305; the same idea was brought forward by Austria with regard to the same problem under the ULIS, Doc/V/Prep/11, Diplomatic Conference on the Unification of Law Governing the International Sale of Goods, The Hague, 2–25 April 1964, Vol. II – Documents, p. 334.

1034

Magellan Int’l Corporation v. Salzgitter Handel GmbH, US District Court for the Northern District of Illinois, 7 December 1999, CISG-online 439 p. 6 (applying the UCC directly); Styles v. Movie Star Muscle Cars, Inc. et al., Circuit Court of the 17th Judicial Circuit (Broward County) of the State of Florida, 18 January 2017, CISG-online 4684 para. 8 (applying the UCC and Florida law); Kröll/Mistelis/Perales Viscasillas/Björklund, Art. 28 para. 16; Hayward/Perlen, 15 VJ (2011), 119, 139; Honnold/Flechtner, para. 271; Kastely, 63 Washington Law Review (1988), 607, 637–638; Wethmar-Lemmer, 2012 Journal of South African Law (2012), 700, 704; contra, Grigera Naón, pp. 89, 108.

1035	League of Nations 1935 – International Institute in Rome for the Unification of Private Law – Draft I (L. O.N. 1935 – U. P.L. – Draft I), p. 39.

1036

Unidroit, Actes de la Conférence convoquée par le Gouvernement Royal des PaysBas sur un projet de Convention relatif à une loi uniforme sur la vente d’objets mobiliers corporels, 1952, Rome, Éditions Unidroit, p. 164. Highlighting that this understanding continued to persist in the Special Commission that prepared the ULIS draft, Honnold/Flechtner, para. 271.

1037	A list of such provisions can be found above in para. 365.

1038	The different approach in the USA under the UCC, where considerations of efficiency play a more prominent role, does not pose a similar problem, since there is no requirement of a transfer of property (or title under the UCC) in the goods.

1039	See above paras. 66 et seq. on the law applicable to property.

1040	Similar assessment by BeckOGK/Prütting, 01.10.2023, Art. 43 EGBGB para. 123.

1041	Cf. above paras. 139–140.

1042	Cf. but without explanation W. Witz, FS Schlechtriem, pp. 293, 301 stating: “Eine Kaufpreisklage ist im englischen Recht gemäß Art. 49 SGA (1979) in der Regel nur dann möglich, wenn der Verkäufer seine Lieferpflicht bereits erfüllt hat.”

1043	PST Energy 7 Shipping LLC and another v OW Bunker Malta Ltd and another (“The Res Cogitans”) [2016] AC 1034 (UKSC), [2016] UKSC 22.

1044	See above para. 334 with regard to contract characterization.