OBLIGATIONS AND RIGHTS

OF SELLERS AND BUYERS

Helen Mary Varghese

22005
 INTRODUCTION

• Trans-border transactions. WHAT LAW WOULD APPLY?

- CISG
1. Uniformity and Predictability
2. Reducing Legal Complexity
3. Promoting Fair and Efficient Trade
4. Facilitating Negotiations
5. Adapting to Evolving Business Practices
6. Reducing Legal Barriers to Trade
7. International Recognition and Enforcement
OBLIGATIONS
OBLIGATIONS OF THE SELLER
[CHAP II, PART III]
 Article 30
1. Deliver the goods
2. Hand over documents relating
• The seller must deliver the goods, to the goods
hand over any documents relating to 3. Transfer the property in the
them, and transfer the property in goods to the buyer
• Part III, Chap II, Section I
the goods, as required by the
contract and this Convention.
 DELIVERY OF GOODS [A. 31-33]

• A. 31:

If the seller is not bound to deliver the goods at any other particular place, his obligation to deliver consists:

(a) If the contract of sale involves carriage of the goods—in handing the goods over to the first carrier for
transmission to the buyer;

(b) If, in cases not within the preceding subparagraph, the contract relates to specific goods, or unidentified goods to
be drawn from a specific stock or to be manufactured or produced, and at the time of the conclusion of the contract
the parties knew that the goods were at, or were to be manufactured or produced at, a particular place—in placing
the goods at the buyer’s disposal at that place;

(c) In other cases—in placing the goods at the buyer’s disposal at the place where the seller had his place of
business at the time of the conclusion of the contract.
• place of performance of the seller’s duty of delivery

• A. 31 applies only when the parties have not agreed

• 3 requirements for A. 31(b):

1. delivery must not involve carriage of the goods;

2. goods sold must be specific goods, goods of a specific stock, or goods to be

manufactured or produced;

3. both parties must have known when the contract was concluded that the goods
were located at (or were to be manufactured or produced at) a particular place.
 ARTICLE. 32

(1) If the seller, in accordance with the contract or this Convention, hands the goods over to a carrier and if the goods are
not clearly identified to the contract by markings on the goods, by shipping documents or otherwise, the seller must give
the buyer notice of the consignment specifying the goods.

(2) If the seller is bound to arrange for carriage of the goods, he must make such contracts as are necessary for carriage
to the place fixed by means of transportation appropriate in the circumstances and according to the usual terms for such
transportation.

(3) If the seller is not bound to effect insurance in respect of the carriage of the goods, he must, at the buyer’s request,
provide him with all available information necessary to enable him to effect such insurance.
• A. 32 sets forth obligations of the seller beyond those specified in A.31.

• 3 rules:

1. If goods are not clearly identified (by markings on the goods, shipping documents, or other
means) when they are handed over to a carrier, the seller must specify the goods in a notice to
the buyer of the consignment.

2. When the seller is bound to arrange for carriage of the goods, it must make reasonable
arrangements;

3. If the seller is not bound to arrange for insurance covering the carriage of goods, he must
provide the buyer “all available information” needed for the buyer to procure such insurance
 ARTICLE 33

• The seller must deliver the goods:

• (a) If a date is fixed by or determinable from the contract, on

• the time at or within which the
that date;
seller must deliver the good
• (b) If a period of time is fixed by or determinable from the
contract, at any time within that period unless circumstances
indicate that the buyer is to choose a date; or

• (c) In any other case, within a reasonable time after the

conclusion of the contract.
 HANDING OVER OF DOCUMENTS [A. 34]

• If the seller is bound to hand over documents • documents must be tendered at the time and place, and in
the form, required by the contract.
relating to the goods, he must hand them over at
• if the seller has delivered non-conforming documents
the time and place and in the form required by
before the agreed time, he has the right to cure the defects
the contract. If the seller has handed over
if this would not cause the buyer unreasonable
documents before that time, he may, up to that inconvenience or expense.
time, cure any lack of conformity in the • the buyer can claim any damages suffered despite the
documents, if the exercise of this right does not seller’s cure

cause the buyer unreasonable inconvenience or • “Documents relating to the goods” - bills of lading, dock
unreasonable expense. However, the buyer retains receipts, warehouse receipts, insurance policies,

any right to claim damages as provided for in this commercial invoices, certificates (e.g., of origin, weight,
contents or quality), and other similar documents
 CONFORMITY [ARTICLE 35]
(1) The seller must deliver goods which are of the quantity, quality and description required by the contract and which are
contained or packaged in the manner required by the contract.

(2) Except where the parties have agreed otherwise, the goods do not conform with the contract unless they:

(a) Are fit for the purposes for which goods of the same description would ordinarily be used;

(b) Are fit for any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the
contract, except where the circumstances show that the buyer did not rely, or that it was unreasonable for him to rely, on the
seller’s skill and judgement;

(c) Possess the qualities of goods which the seller has held out to the buyer as a sample or model;

(d) Are contained or packaged in the manner usual for such goods or, where there is no such manner, in a manner adequate to
preserve and protect the goods.

(3) The seller is not liable under subparagraphs (a) or (d) of the preceding paragraph for any lack of conformity of the goods if at
the time of the conclusion of the contract the buyer knew or could not have been unaware of such lack of conformity.
• whether goods delivered by the seller conform to the contract in terms of type, quantity, quality, and packaging.

• lack of “conformity” encompasses both a lack of quality in the goods delivered and a lack of quantity;

• Article 35 (2) (a): seller to deliver goods “fit for the purposes for which goods of the same description would
ordinarily be used.” – Goods need not be perfect or flawless unless perfection is required for the goods to fulfil
their ordinary purposes

• The article 35 (2) (b) obligation arises only if one or more particular purposes were revealed to the seller by the
time the contract was concluded - The requirements of article 35 (2) (b) do not apply if “the circumstances show
that the buyer did not rely, or that it was unreasonable for him to rely, on the seller’s skill and judgement.”

• Article 35 (2) (c) states that, in order to conform to the contract, goods must “possess the qualities of goods
which the seller has held out to the buyer as a sample or model.” - goods must conform to a model only if there
is an express agreement in the contract that the goods will do so.

• Article 35 (3) relieves the seller of responsibility for lack of conformity under article 35 (2) to the extent that the
buyer “knew or could not have been unaware” of the non-conformity at the time the contract was concluded
 ARTICLE 36

(1) The seller is liable in accordance with the contract and this Convention for any lack of conformity which
exists at the time when the risk passes to the buyer, even though the lack of conformity becomes apparent
only after that time.

(2) The seller is also liable for any lack of conformity which occurs after the time indicated in the preceding
paragraph and which is due to a breach of any of his obligations, including a breach of any guarantee that
for a period of time the goods will remain fit for their ordinary purpose or for some particular purpose or will
retain specified qualities or characteristics
 ARTICLE 37

• If the seller has delivered goods before the date for delivery, he may, up to that date,
deliver any missing part or make up any deficiency in the quantity of the goods delivered,
or deliver goods in replacement of any non-conforming goods delivered or remedy any
lack of conformity in the goods delivered, provided that the exercise of this right does not
cause the buyer unreasonable inconvenience or unreasonable expense. However, the buyer
retains any right to claim damages as provided for in this Convention
 THIRD PARTY CLAIMS [ARTICLE 41]

• The seller must deliver goods which are free from any right or claim of a third party,
unless the buyer agreed to take the goods subject to that right or claim. However, if such
right or claim is based on industrial property or other intellectual property, the seller’s
obligation is governed by article 42.
THIRD PARTY CLAIM BASED ON INDUSTRIAL PROPERTY/
INTELLECTUAL PROPERTY

• (1) The seller must deliver goods which are free from any right or claim of a third party based on industrial property
or other intellectual property, of which at the time of the conclusion of the contract the seller knew or could not have
been unaware, provided that the right or claim is based on industrial property or other intellectual property:

• (a) Under the law of the State where the goods will be resold or otherwise used, if it was contemplated by the parties
at the time of the conclusion of the contract that the goods would be resold or otherwise used in that State; or

• (b) In any other case, under the law of the State where the buyer has his place of business.

• (2) The obligation of the seller under the preceding paragraph does not extend to cases where:

• (a) At the time of the conclusion of the contract the buyer knew or could not have been unaware of the right or claim;
or

• (b) The right or claim results from the seller’s compliance with technical drawings, designs, formulae or other such
specifications furnished by the buyer.
• 3 limitations:

1. Seller only liable if the third party’s right or claim is one “of which at the time of the conclusion of
the contract the seller knew or could not have been unaware” - buyer bears the burden of proving

2. Seller only liable if the third party’s right or claim is based on the law of the State designated by
articles 42 (1) (a) or (b), whichever alternative is applicable. [buyer’s place and place of reselling]

3. Seller not liable if the third party’s right or claim is one of which the buyer “knew or could not
have been unaware” when the contract was concluded, or if the right or claim arose from the
seller’s compliance with technical specifications (“technical drawings, designs, formulae or other
such specifications”) that the buyer itself supplied to the seller.
REMEDIES/ RIGHTS OF THE
BUYER

Section III of Part III, Chapter II

• Articles 45-52
 ARTICLE 45

(1) If the seller fails to perform any of his obligations under the contract or this Convention, the buyer
may:

• (a) Exercise the rights provided in articles 46 to 52;

• (b) Claim damages as provided in articles 74 to 77.

(2) The buyer is not deprived of any right he may have to claim damages by exercising his right to other
remedies.

(3) No period of grace may be granted to the seller by a court or arbitral tribunal when the buyer resorts
to a remedy for breach of contract.
 ARTICLE 46

• (1) The buyer may require performance by the seller of his obligations unless the buyer has resorted to
a remedy which is inconsistent with this requirement.

• (2) If the goods do not conform with the contract, the buyer may require delivery of substitute goods
only if the lack of conformity constitutes a fundamental breach of contract and a request for substitute
goods is made either in conjunction with notice given under article 39 or within a reasonable time
thereafter.

• (3) If the goods do not conform with the contract, the buyer may require the seller to remedy the lack of
conformity by repair, unless this is unreasonable having regard to all the circumstances. A request for
repair must be made either in conjunction with notice given under article 39 or within a reasonable time
• REQUIREMENTS:

1. Obligation exists of the seller - not been fulfilled.

2. buyer must “require” performance

• Article 46 (1) restricts the right to compel performance when the buyer has already resorted to a remedy
inconsistent with requiring performance (eg. Avoidance, reduction of price)

• Article 46 (2) applies if

1. the seller has delivered non-conforming goods;

2. the non-conformity constitutes a fundamental breach of contract; and

3. the buyer has requested replacement of the non-conforming goods “either in conjunction with notice given under
article 39 or within a reasonable time thereafter.”

• The right to require delivery of substitute goods is subject to the buyer’s obligation to return the
delivered goods in substantially the condition in which he received them, pursuant to article 82 (1)
 ARTICLE 47

• (1) The buyer may fix an additional period of time of reasonable length for performance
by the seller of his obligations.

• (2) Unless the buyer has received notice from the seller that he will not perform within the
period so fixed, the buyer may not, during that period, resort to any remedy for breach
of contract. However, the buyer is not deprived thereby of any right he may have to claim
damages for delay in performance
 ARTICLE 49

• (1) The buyer may declare the contract avoided:

• (a) If the failure by the seller to perform any of his obligations under the contract or this Convention
amounts to a fundamental breach of contract; or
• (b) In case of non-delivery, if the seller does not deliver the goods within the additional period of time fixed
by the buyer in accordance with paragraph (1) of article 47 or declares that he will not deliver within the
period so fixed.
• (2) However, in cases where the seller has delivered the goods, the buyer loses the right to declare the contract
avoided unless he does so:
• (a) In respect of late delivery, within a reasonable time after he has become aware that delivery has been
made;
• (b) In respect of any breach other than late delivery, within a reasonable time:
• (i) After he knew or ought to have known of the breach;
• (ii) After the expiration of any additional period of time fixed by the buyer in accordance with
paragraph (1) of article 47, or after the seller has declared that he will not perform his obligations within
such an additional period; or
• available in two situations: • avoidance, available along other rights
• 1) if the seller’s failure to perform its [right to request performance (article 46),
contractual obligations amounts to a to reduce the price (article 50), or to
fundamental breach of contract as defined in
claim damages ]
article 25 (article 49 (1) (a)); or
• article 49 (2): Right to avoid even after
• 2) where the goods have not been delivered, if
the goods been delivered - within a
the seller fails to deliver them within an
additional period of time fixed in accordance reasonable time - reasonable time differs
with article 47 depending on whether the breach
• 49(1)(a) – fundamental breach involves late delivery or a different kind

• 49(1)(b) – non delivery of breach.

When buyer becomes
• The buyer must declare the contract avoided. 1. late delivery aware of it – within a
reasonable time
The declaration must be by means of a notice
2. any other breach
 ARTICLE 50

• If the goods do not conform with the contract and whether or not the price has already been
paid, the buyer may reduce the price in the same proportion as the value that the goods
actually delivered had at the time of the delivery bears to the value that conforming goods
would have had at that time. However, if the seller remedies any failure to perform his
obligations in accordance with article 37 or article 48 or if the buyer refuses to accept
performance by the seller in accordance with those articles, the buyer may not reduce the
price
 ARTICLE 51

• (1) If the seller delivers only a part of the goods or if only a part of the goods delivered is in
conformity with the contract, articles 46 to 50 apply in respect of the part which is missing or
which does not conform.

• (2) The buyer may declare the contract avoided in its entirety only if the failure to make
delivery completely or in conformity with the contract amounts to a fundamental breach of
the contract.
• PREREQUISITES

1. Seller has breached the contract either by delivering fewer goods than contracted for or by
delivering goods that, in part, do not conform with the contract under article 35.

2. The delivered goods consist of separable parts, each of which could be used alone and
independently

3. the buyer has given notice of the lack of conformity as required by article 39
 ARTICLE 52

• (1) If the seller delivers the goods before the date fixed, the buyer may take delivery or
refuse to take delivery.

• (2) If the seller delivers a quantity of goods greater than that provided for in the contract,
the buyer may take delivery or refuse to take delivery of the excess quantity. If the buyer
takes delivery of all or part of the excess quantity, he must pay for it at the contract rate.
OBLIGATIONS OF THE BUYER

• Chapter III, Part III

• Articles 53-65
 ARTICLE 53

• The buyer must pay the price

for the goods and take delivery
1. to pay the price and
of them as required by the
2. take delivery of the goods
contract and this Convention.
 ARTICLE 54

• Preparatory actions: opening of a letter of credit, the

• The buyer’s obligation to establishment of security to guarantee payment, or the
pay the price includes acceptance of a bill of exchange, administrative
authorization needed for the transfer of funds etc.
taking such steps and
complying with such
• Double effect:
formalities as may be 1. article 54 imposes these obligations on the buyer, who
must thus bear the costs thereof;
required under the contract
or any laws and regulations
2. the steps for which the buyer is responsible under
article 54 are obligations whose violation permits the
to enable payment to be seller to resort to the remedies specified in articles 61
made
 ARTICLE 57

• 3 RULES:
• (1) If the buyer is not bound to pay the price at any
other particular place, he must pay it to the seller: 1. If parties have contractually specified the place of

(a) At the seller’s place of business; or payment – payment at that place

(b) If the payment is to be made against the handing 2. In the absence of an express or implicit choice - payment
over of the goods or of documents, at the place where
at the place where the handing over of the goods or
the handing over takes place.
documents takes place against
• (2) The seller must bear any increase in the
expenses incidental to payment which is caused by 3. Where the parties have not agreed on a place for payment
a change in his place of business subsequent to the
and payment does not have to be made against handover
conclusion of the contract.
of the goods or documents - at the seller’s place of
business
 ARTICLE 58

• (1) If the buyer is not bound to pay the price at any other
specific time, he must pay it when the seller places either • 2 COMPLEMENTARY RULES
the goods or documents controlling their disposition at the
1. Article 58 (3) grants the buyer the right to
buyer’s disposal in accordance with the contract and this
Convention. The seller may make such payment a condition examine the goods prior to payment unless the
for handing over the goods or documents. delivery or payment terms agreed on by the
• (2) If the contract involves carriage of the goods, the seller parties do not afford the buyer that right.
may dispatch the goods on terms whereby the goods, or
2. The handover of the goods or documents
documents controlling their disposition, will not be handed
over to the buyer except against payment of the price. controlling their disposition to the buyer may be
• (3) The buyer is not bound to pay the price until he has had refused if the buyer does not pay the price at the
an opportunity to examine the goods, unless the procedures time fixed by the Convention (article 58 (1),
for delivery or payment agreed upon by the parties are
second sentence, and article 58 (2)).
inconsistent with his having such an opportunity
 ARTICLE 59

• The buyer must pay the price on the date

fixed by or determinable from the
contract and this Convention without the
need for any request or compliance with
any formality on the part of the seller.
 ARTICLE 60

• Acts of cooperation: the preliminary examination of the

• The buyer’s obligation to take delivery goods by the buyer prior to delivery, signing of a
consists: qualification certificate; obtaining of the import license,

• (a) In doing all the acts which could and export license; conclusion of the contract of carriage or
reasonably be expected of him in order to notification of the name of the vessel on board which the
enable the seller to make delivery; and goods are to be delivered; the obligation to give notice to

• (b) In taking over the goods. the seller within a reasonable period in connection with
deliveries to be made at the buyer’s request or the
obligation of a contracting party bound by a purchase
obligation to place orders required under the contract
 ARTICLE 38

• (1) The buyer must examine the goods, or cause them to be

examined, within as short a period as is practicable in the
circumstances.
• article 38 focuses on the
• (2) If the contract involves carriage of the goods, time when this examination
should take place
examination may be deferred until after the goods have
• Buyerto lose his remedies if
arrived at their destination.
failed to detect any lack of
conformity
• (3) If the goods are redirected in transit or re-dispatched by
• Art 38 silent on the method
the buyer without a reasonable opportunity for examination
the buyer should employ
by him and at the time of the conclusion of the contract the
seller knew or ought to have known of the possibility of such
redirection or redispatch, examination may be deferred
until after the goods have arrived at the new destination
 ARTICLE 39

1. article 39 (1) : notice of lack of

conformity be given within a reasonable
• (1) The buyer loses the right to rely on a lack of time after the buyer has discovered or
conformity of the goods if he does not give notice to ought to have discovered the lack of
conformity;
the seller specifying the nature of the lack of
2. article 39 (2) : in any event, the buyer
conformity within a reasonable time after he has must give the seller notice of the claimed
lack of conformity within two years of the
discovered it or ought to have discovered it.
date on which the goods were actually
handed over to the buyer
• (2) In any event, the buyer loses the right to rely on
• Article 39 does not specify the form of
a lack of conformity of the goods if he does not give notice require
the seller notice thereof at the latest within a period • The notice required by article 39 (1) must
of two years from the date on which the goods were “specify the nature of the lack of
conformity. .
actually handed over to the buyer, unless this time
limit is inconsistent with a contractual period of
REMEDIES/ RIGHTS AVAILABLE
TO THE SELLER

• Articles 61-65
 ARTICLE 61

(1) 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;

• (b) Claim damages as provided in articles 74 to 77.

(2) The seller is not deprived of any right he may have to claim damages by exercising his right to
other remedies.

(3) No period of grace may be granted to the buyer by a court or arbitral tribunal when the seller
resorts to a remedy for breach of contract.
 ARTICLE 62

• The seller may require the buyer to • LIMITATIONS TO RIGHT TO REQUIRE PERFORMANCE:
pay the price, take delivery or
1. A. 62 - seller deprived of the right to require the buyer to
perform his other obligations,
perform its obligations if it has “resorted to a remedy which
unless the seller has resorted to a
is inconsistent” with requiring performance.
remedy which is inconsistent with
this requirement 2. A. 28 - Court is not bound to order specific performance in
seller’s favour, if the court would not do so under its
domestic law in respect of similar contracts not governed by
the Convention.
 ARTICLE 63

• (1) The seller may fix an additional period of time • Seller entitled to fix additional period of
of reasonable length for performance by the buyer
time – NOT OBLIGED TO DO SO
of his obligations.

• (2) Unless the seller has received notice from the

• The additional period of time set by the

buyer that he will not perform within the period so seller must be of reasonable length to
fixed, the seller may not, during that period, resort satisfy the requirements of article 63.
to any remedy for breach of contract. However, the
seller is not deprived thereby of any right he may
have to claim damages for delay in performance
 ARTICLE 64

• (1) The seller may declare the contract avoided:

• (a) If the failure by the buyer to perform any of his obligations under the contract or this Convention amounts to a
fundamental breach of contract; or

• (b) If the buyer does not, within the additional period of time fixed by the seller in accordance with paragraph (1) of article 63,
perform his obligation to pay the price or take delivery of the goods, or if he declares that he will not do so within the period
so fixed.

• (2) However, in cases where the buyer has paid the price, the seller loses the right to declare the contract avoided unless he
does so:

• (a) In respect of late performance by the buyer, before the seller has become aware that performance has been rendered; or

• (b) In respect of any breach other than late performance by the buyer, within a reasonable time:

• (i) After the seller knew or ought to have known of the breach; or

• (ii) After the expiration of any additional period of time fixed by the seller in accordance with paragraph (1) of article 63, or
• seller must declare the contract avoided by means of a
1. Fundamental breach
notice
2. Non-payment of price OR not taking delivery
• AVAILABLE IN 2 SITUATIONS:
• Article 64(2) applies to cases where payment
1. buyer’s failure to perform its contractual obligations
already made by buyer; but seller wants to
amounts to a fundamental breach
avoid the contract – due to late performance or
2. if the buyer fails to pay the price or to take delivery of
any other breach
the goods within an additional period of time fixed
pursuant to article 63

• ultima ratio