LEGISLATIVE HISTORY
1980 Vienna Diplomatic Conference

The meeting was called to order at 3.05 p.m.

CONSIDERATION OF THE QUESTION OF CONTRACTS FOR THE INTERNATIONAL SALE OFGOODS IN ACCORDANCE WITH GENERALASSEMBLY RESOLUTION 33/93 OF 16 DECEMBER 1978 (agenda item 9) (continued)

REPORT OF THE FIRST COMMITTEE TO THE PLENARY CONFERENCE (A/CONF.97/11 and Add. 1 and 2) (continued)

18	Article 16 [became CISG article 18 ]

1. Article 16 [became CISG article 18 ] was adopted by 40 votes to none.

19	Article 17 [became CISG article 19 ]

2. Mr. ROGNLIEN (Norway) asked for a separate vote on article 17(3) [became CISG article 19(3) ].

3. Mr. STALEV (Bulgaria) opposed that request.

4. Mr. ROGNLIEN (Norway) withdrew the request.

5. Article 17 [became CISG article 19 ] was adopted by 40 votes to none.

20	Article 18 [became CISG article 20 ]

6. Article 18 [became CISG article 20 ] was adopted by 41 votes to none.

21	Article 19 [became CISG article 21 ]

7. Article 19 [became CISG article 21 ] was adopted by 45 votes to none.

22	Article 20 [became CISG article 22 ]

8. Article 20 [became CISG article 22 ] was adopted by 44 votes to none.

23	Article 21 [became CISG article 23 ]

9. Article 21 [became CISG article 23 ] was adopted by 42 votes to none.

24	Article 22 [became CISG article 24 ]

10. Article 22 [became CISG article 24 ] was adopted by 46 votes to none.

Titles of Part III (Sale of Goods) and Part III, Chapter I(General Provisions)

11. The titles were adopted by 44 votes to none.

25	Article 23 [became CISG article 25 ]

12. Mr. ZIEGEL (Canada) said his delegation would abstain from voting on article 23 [became CISG article 25 ] because the new definition of fundamental breach imposed an unduly heavy onus on the party invoking the breach. In a great many cases it would be extremely difficult for the aggrieved party to establish whether the default of the other party really amounted to fundamental breach, particularly in the case of delivery of defective goods, especially where durable goods were concerned. On the basis of the experience of the Canadian courts with the interpretation of the concept of fundamental breach, his delegation firmly believed that the application of the definition in article 23 [became CISG article 25 ] would give rise to a great many difficulties. His delegation greatly preferred the earlier definition because it was more flexible.

13. Mr. HJERNER (Sweden) said that his delegation would vote against article 23 [became CISG article 25 ] because it firmly believed that the new formulation did not offer any advantage when compared to the previous one. On the contrary, it could lend itself to several different interpretations and lead to confusion. The fact was that fundamental breach, like good faith, was one of those concepts which did not lend themselves to definition. In any case, his delegation could well accept a Convention which did not contain any definition of fundamental breach and would prefer that to the inclusion of the definition embodied in article 23 [became CISG article 25 ] as it now stood.

14. Article 23 [became CISG article 25 ] was adopted by 42 votes to 2, with 2 abstentions.

15. Mr. GARRIGUES (Spain), explaining his vote against article 23 [became CISG article 25 ], said that the whole concept of "fundamental breach" was unacceptable to most legal systems of the "continental" type. In his country and in most countries of Latin America, any breach of contract -- regardless of its character -- justified a claim for damages on the part of the aggrieved party against the party in breach, on the understanding that the breach in question was due to the fault of that party, or that the party in breach was on notice. Due regard should be had, of course, for the exception of force majeure, i.e. the case where the party in breach could invoke circumstances entirely beyond its control. From that standpoint, the idea embodied in article 23 [became CISG article 25 ] that a breach would be taken into account only if it were "fundamental" was totally unacceptable.

16. Article 23 [became CISG article 25 ] would create two major difficulties for any judge trying to apply it. The first was that of determining whether the detriment resulting from the breach was of sufficiently substantial character. The second was that of determining whether the detrimental result in question was foreseeable or not.

17. Mr. HERBER (Federal Republic of Germany) saidthat his delegation had voted in favour of article 23 [became CISG article 25 ] because the text represented a considerable improvement by comparison with the original draft. The text adopted might give rise to certain difficulties of interpretation, but those difficulties could be easily overcome.

26	Article 24 [became CISG article 26 ]

18. Article 24 [became CISG article 26 ] was adopted by 47 votes to none.

27	Article 25 [became CISG article 27 ]

19. Mr. KRISPIS (Greece) said that his delegation would abstain from voting on article 25 [became CISG article 27 ] because it embodied the so-called "dispatch theory", which was not the appropriate one, and it would apply in all cases under that article.

20. Article 25 [became CISG article 27 ] was adopted by 39 votes to 1, with 7 abstentions.

28	Article 26 [became CISG article 28 ]

21. Article 26 [became CISG article 28 ] was adopted by 44 votes to none, with 1 abstention.

29	Article 27 [became CISG article 29 ] (A/CONF.97/L.9)

22. Mr. HJERNER (Sweden), introducing the proposal (A/CONF.97/L.9) submitted by Denmark and Sweden, said that the sponsors asked that paragraphs 1 and 2 should be voted on separately. Article 27 [became CISG article 29 ] incorporated two totally distinct provisions which had been placed together in the same article quite accidentally, and the sponsors considered that paragraph 2 should either be moved to Part II of the Convention or not adopted.

23. The joint proposal was rejected by 18 votes to 12, with 15 abstentions.

24. Mr. BONELL (Italy) said that his delegation voted in favour of the proposal because the article dealt with two entirely different questions.

25. Mr. ZIEGEL (Canada) said that he had been unable to support the joint proposal because it was in effect an expression of the general doctrine of unconscionability. That doctrine was out of place in the Convention, which was based squarely on the doctrine of the autonomy of the will of the parties.

26. Article 27 [became CISG article 29 ] was adopted by 40 votes to 4, with 3 abstentions.

27. Mr. BONELL (Italy) said that his delegation could not accept the view that the doctrine of unconscionability had no place in the Convention. He hoped that if differences in the bargaining power of the parties led to abuse, the courts would use the second sentence of paragraph 2 to correct the abuses as far as possible.

27(a). Mr. ZIEGEL (Canada) said that he wished to make it clear that his delegation was not opposed to a doctrine of unconscionability. They simply felt that the draft Convention conferred no power on the courts to police the fairness of bargains. It was an open questionas to whether the same goals could be achieved by impeaching the validity of a contract under the applicable national law.

28. Mr. GARRIGUES (Spain) considered that article 27 [became CISG article 29 ] was in its appropriate place in the Convention and should not be moved to part II, which dealt with the formation of the contract. His delegation considered, however, that the second sentence of paragraph 2 was very confused and likely to lead to difficulties of interpretation.

Title of Chapter II (Obligations of the seller)

29. The title was adopted by 45 votes to none.

30	Article 28 [became CISG article 30 ]

30. Article 28 [became CISG article 30 ] was adopted by 45 votes to none.

Title of Section I (Delivery of the goods and handing over of documents)

31. The title was adopted by 43 votes to none.

31	Article 29 [became CISG article 31 ]

32. Article 29 [became CISG article 31 ] was adopted by 48 votes to none.

32	Article 30 [became CISG article 32 ]

33. Article 30 [became CISG article 32 ] was adopted by 48 votes to none.

33	Article 31 [became CISG article 33 ]

34. Article 31 [became CISG article 33 ] was adopted by 45 votes to none, with 1 abstention.

34	Article 32 [became CISG article 34 ]

35. Article 32 [became CISG article 34 ] was adopted by 47 votes to none.

Title of Section II (Conformity of the goods and third party claims)

36. The title was adopted by 44 votes to none.

35	Article 33 [became CISG article 35 ] (A/CONF.97/L.5)

37. Mr. ROGNLIEN (Norway), introducing his delegation's amendment, explained that the proposal was intended as a drafting amendment to paragraph 3. It would be better and simpler to refer to the preceding paragraph 2 as a whole rather than to the four subparagraphs excluding the introductory sentence. The introductory words of paragraph 2 "Except where otherwise agreed" contained an exception to the requirements of quality as indicated in the subsequent subparagraphs (a) to (d). Where the exception implied no liability or less liability than indicated in the above-mentioned subparagraphs, paragraph 3 should apply to the extent that a degree of liability under paragraph 2(a) to (d) remained. Where further conditions as to quality and liability were agreed, such liability would be subject to paragraph 1, to which paragraph 3 did not refer. Paragraph 3 thusexcluded liability for inferior quality as indicated in paragraph 2, even if quality requirements were reduced by agreement. That meaning might not be clear from the text under study.

38. Mr. KRISPIS (Greece) supported the proposal.

39. Mr. PLANTARD (France) suggested that it would be clearer to refer to "paragraph 2" rather than to the "preceding paragraph".

40. Mr. LEBEDEV (Union of Soviet Socialist Republics) said that the inclusion of a reference to the whole paragraph rather than to the subparagraph might be interpreted as meaning that the provision in paragraph 3 applied even in cases where stipulations about the quality of the goods had been agreed by the parties.

41. Mr. SEVON (Finland) said that the existing text caused no confusion and should be kept.

42. Mr. STALEV (Bulgaria) said that his delegation therefore preferred the existing text.

43. Mr. HJERNER (Sweden) considered that any departure from the existing text would involve questions of substance.

44. Mr. KHOO (Singapore) pointed out that in other articles such as article 40 [became CISG article 42 ], the words "preceding paragraph" were always understood to mean the main paragraph, including subparagraphs. Making an exception for the article under discussion might therefore cause confusion.

45. The amendment was rejected by 23 votes to 9, with 12 abstentions.

46. Mr. ZIEGEL (Canada) said that his delegation would abstain because the article applied to every type of seller whereas his delegation still considered that paragraph 2 should be restricted to commercial sellers dealing in the type of goods concerned, as had been proposed in the Canadian amendment rejected by the First Committee (A/CONF.97/C.1/L.115). That represented a substantial change for common law countries and, he believed, for civil law countries also. During the discussion in the Committee, it had been explained that it was not expected that many international sales transactions would involve merchant sellers. It was, however, common in North America for owners of used goods, for example machinery, to sell them, possibly on the international market, even if the goods were not those dealt within their usual line of business.

47. Mr. GARRIGUES (Spain) pointed out that the assumption in the article that non-conforming goods were the rule rather than the exception was contrary to the corresponding ULIS article of 1964, which was worded in such a way that non-conformity was the exception. He wondered if it was possible to submit an amendment to that effect at so late a stage in the work of the Conference. His delegation also thought that the Australian amendment (A/CONF.97/C.1/L.74) expressly excluding insignificant non-conformity should be taken into account.

48. The PRESIDENT regretted that it was too late to submit any further amendments.

49. Mr. BENNETT (Australia) said that his delegation was able to agree to the revised text of the article, on the understanding that the exclusion of insignificant non-conformity was implicit.

50. Mr. LEBEDEV (Union of Soviet Socialist Republics) pointed out that in article 33(1) [became CISG article 35(1) ] the English and Russian texts referred to the description required by the contract whereas the French text referred to the "type" of the goods.

51. Mr. PLANTARD (France) replied that the word would cause no confusion in French and was the correct translation of the English word in the context.

52. Mr. LEBEDEV (Union of Soviet Socialist Republics) noted that explanation but wished his comment to be included in the summary record.

53. Article 33 [became CISG article 35 ] was adopted by 45 votes to 1, with 1 abstention.

The meeting was suspended at 4.30 p.m. and resumed at 4.50 p.m.

36	Article 34 [became CISG article 36 ]

54. Article 34 [became CISG article 36 ] was adopted by 48 votes to none.

37	Article 35 [became CISG article 37 ]

55. Article 35 [became CISG article 37 ] was adopted by 47 votes to none.

38	Article 36 [became CISG article 38 ]

56. Article 36 [became CISG article 38 ] was adopted by 45 votes to none.

39, 44

Article 37 and 40 ter [became CISG article 39 and CISG article 44 ]

57. Mr. SEVÖN (Finland) proposed that articles 37 and 40 ter [became CISG article 39 and CISG article 44 ] should be discussed and voted upon jointly since together they represented a compromise solution which had been agreed upon after long discussion.

58. Mr. HERBER (Federal Republic of Germany) and Mr. DATE-BAH (Ghana) supported the proposal.

59. Mr. BONELL (Italy) also supporting the proposal, observed that the Convention as a whole constituted a compromise and the remaining articles should also be adopted without modification.

60. It was decided to discuss and vote upon articles 37 and 40 ter [became CISG article 39 and CISG article 44 ] jointly.

61. Mr. ROGNLIEN (Norway), introducing his delegation's amendment (A/CONF.97/L.6), said that he had considered that the term "reasonable excuse" was too vague and would give rise to differing interpretations. However, he understood that his proposal was not acceptable to Nigeria and other developing countries and he therefore withdrew it.

62. Mr. PLUNKETT (Ireland) proposed the replacement of the word "excuse" by "justification". The latter word was more objective.

63. Mr. DABIN (Belgium) supported the Irish representative's oral amendment and suggested that the appropriate word in French would be "motif".

64. Mr. HERBER (Federal Republic of Germany) deplored last minute changes in a compromise text. The use of the word "excuse" showed that an exceptional situation was envisaged.

65. Mr. HJERNER (Sweden), Mr. DATE-BAH (Ghana) and Mr. MEHDI (Pakistan) agreed.

66. Mr. PLUNKETT (Ireland) withdrew his oral amendment.

67. Mr. LASTRES (Peru) said that the period of notice of two years specified in article 37 [became CISG article 39 ] , paragraph 2, was excessive and might lead to a conflict of rules between the Convention and the Brussels Convention on the responsibility of the carrier, in which the period was one year from the date of discharge of the goods. It should be borne in mind that most of the goods to which the present Convention related would be carried by sea.

68. Mr. GARRIGUES (Spain) said that the paragraph was particularly relevant to developing countries where buyers naturally wanted to have a long period in which to give notice of defective goods. However, two years seemed an unduly long period from the viewpoint of the seller, who naturally wished to discharge his obligations. In Spanish legislation, which had influenced the legislation in Latin American countries, the period of notice for hidden defects was two months.

69. Mr. LASTRES (Peru) proposed that the period of notification in article 37 [became CISG article 39 ] , paragraph 2, should be reduced to one year.

70. The Peruvian oral amendment was rejected by 27 votes to 2, with 15 abstentions.

71. Articles 37 and 40 ter [became CISG article 39 and CISG article 44 ] were adopted by 43 votes to none, with 4 abstentions.

40	Article 38 [became CISG article 40 ]

72. Article 38 [became CISG article 40 ] was adopted by 48 votes to none.

41, 43

Article 39 [became CISG article 41 and CISG article 43 ]

73. Article 39 [became CISG article 41 ] was adopted by 41 votes to none, with 2 abstentions.

42, 43

Article 40 [became CISG article 42 and CISG article 43 ]

74. Article 40 [became CISG article 42 and CISG article 43 ] was adopted by 42 votes to none, with 3 abstentions.

75. Mr. KRISPIS (Greece) said that his delegation had abstained because it believed that the subject matter dealt with in the article should be excluded from the Convention.

76. Mr. WANG Tian ming (China) said that his delegation had abstained in the voting on articles 39 and 40 [became CISG article 41 , CISG article 42 and CISG article 43 ] because they were mainly concerned with industrial property or other intellectual property which were subjects that should be dealt with in a specialized international conference. The subjects were very complex and specific provisions relating to them in the present Convention were likely to lead to disputes.

43	Article 40 bis [became CISG article 43 ]

77. Article 40 bis [became CISG article 43 ] was adopted by 45 votes to none, with 2 abstentions.

Title of Section III (Remedies for breach of contract by the seller)

78. The title was adopted by 43 votes to none.

45, 78

Article 41 [became CISG article 45 ]

79. Article 41 [became CISG article 45 ] was adopted by 45 votes to none, with 1 abstention.

80. Mr. KHOO (Singapore) pointed out that paragraph 1(b) of the article just adopted (article 41 [became CISG article 45 ] ) referred to damages as provided in articles 70 to 73 [became CISG article 74, CISG article 75 and CISG article 76 ] . Since article 73 bis [became CISG article 78 ] under the same heading "Damages and interest" dealt with interest, he wondered whether the vote just taken had implied that there would need to be a consequential amendment to paragraph 1(b) whereby the words "and interest" would be added after "damages".

81. The PRESIDENT said it was his understanding that article 73 bis [became CISG article 78 ] should not be included among those referred to in article 41(1)(b) [became CISG article 45(1)(b) ] , because it dealt with different conditions.

82. Mr. ROGNLIEN (Norway) believed that, on the contrary, it would be logical to include a reference to article 73 bis [became CISG article 78 ] under article 41 [became CISG article 45 ] , which was a complete informative list of remedies available to the buyer under the Convention. That reference might perhaps take the form of a new subparagraph (c) reading: "claim interest as provided in article 73 bis [became CISG article 78 ]". A complete list should be given, both in article 41 [became CISG article 45 ] , which concerned the buyer, and in article 57 [became CISG article 61 ] , which concerned the seller.

83. Mr. ZIEGEL (Canada) said it was difficult to follow the President's reasoning that entitlement to interest under what was now article 73 bis [became CISG article 78 ] did not follow in consequence of breach of an obligation. It seemed to him it might well do so, particularly in a case where a buyer had failed to pay the price, because entitlement to interest was prima facie measure of damages suffered by the seller in being deprived of the use of the monies which he would have had, had the buyer met his obligations. He pointed out that article 41(1) [became CISG article 45(1) ] referred not only to obligations under the contract, but also to obligations under the Convention. Under article 66 [became CISG article 81 ] , the buyer and seller respectively were obliged to make restitution where the contract had been avoided: that was a pecuniary obligation under the Convention. He was sympathetic to the comments made by the representative of Singapore, and felt that rather than leave the matter in doubt article 41(1)(b) [became CISG article 45(1)(b) ] should be amended to include a reference to the article on interest. It was important to make clear that the entitlements of a buyer under article 41 [became CISG article 45 ] included an entitlement to interest in appropriate cases.

84. The PRESIDENT considered that article 41(1)(b) [became CISG article 45(1)(b) ] was correct as it stood. He did not think the inclusion of such a reference would be appropriate in an article dealing with the remedies of the buyer: it would be better placed under article 57 [became CISG article 61 ] , which dealt with the remedies of the seller.

85. Mr. PLANTARD (France) remarked that the Drafting Committee had considered the provisions of article 73 bis [became CISG article 78 ] at length and had endeavoured to make clear that it was not simply the payment of the price that as at issue but the payment of any other sum due, whether on the part of the buyer or seller. The Drafting Committee had also debated whether article 73 bis [became CISG article 78 ] should rightly be included under Chapter V section II ("Damages and interest") and had finally concluded that it should be.

86. Mr. KRISPIS (Greece) said that if it were to be decided not to refer in article 41 [became CISG article 45 ] to article 73 bis [became CISG article 78 ] , it would be necessary to amend the wording of paragraph 1 of the latter article to read "If a buyer fails to pay.". Since article 41 [became CISG article 45 ] referred to "any of the obligations" of the seller, he wondered whether it should not also make reference to article 69(1) [became CISG article 84(1) ] , which concerned interest to be paid by the seller in case he was required to refund the price.

87. Mr. HJERNER (Sweden) suggested that a decision should be deferred until the plenary came to consider article 73 bis [became CISG article 78 ] itself.

88. Mr. VINDING KRUSE (Denmark) shared the view that article 41(1)(b) [became CISG article 45(1)(b) ] should include a reference to article 73 bis [became CISG article 78 ] , since the remedies of the buyer would include the right to interest after the time at which damages became due. He could agree that consideration of the point be deferred until article 73 bis [became CISG article 78 ] was discussed.

89. Mr. MASKOW (German Democratic Republic) did not regard the list of remedies in article 41 [became CISG article 45 ] as exhaustive; it contained only the most important and primary rights of the buyer. Secondary rights of the buyer would be available in two main cases, first if the damages to which he was entitled were delayed, and secondly if the contract was avoided and goods were restituted, and he had to pay interest on the price already received. As he saw it, it was unnecessary to refer to secondary rights in article 41 [became CISG article 45 ] , and the text could remain as it stood.

90. Mr. HONNOLD (United States of America) considered that the buyer might have rights to interest under article 73 bis [became CISG article 78 ] ; his rights would not be limited to the very special case described in article 69(1) [became CISG article 84(1) ] . The Drafting Committee's view of the matter was clearly indicated in the title of Chapter V "Provisions common to the obligations of the seller and of the buyer", and article 73 bis [became CISG article 78 ] fell within that Chapter. However, consideration of how best to express that point in article 41 [became CISG article 45 ] could be deferred until a later stage.

91. The PRESIDENT shared the view expressed by the representative of the German Democratic Republic that the list of remedies in article 41 [became CISG article 45 ] was not intended to be exhaustive. He suggested that the plenary should vote onarticle 41 [became CISG article 45 ] on the understanding that arrears of interest would be covered in a separate article. As he saw it, article 41 [became CISG article 45 ] dealt exclusively with the remedies available to the buyer should the seller fail to perform.

92. Mr. HONNOLD (United States of America) did not think it right to assume that the article referred only to remedies available to the buyer, since paragraph 1(b) referred to articles 70 to 73 [became CISG article 74 , CISG article 75 and CISG article 76 ] , covering rights available to both seller and buyer.

93. The PRESIDENT invited the Conference to vote on whether the scope of article 41(1)(b) [became CISG article 45(1)(b) ] should be interpreted as including also article 73 bis [became CISG article 78 ] .

94. The result of the voting was 20 in favour, 14 against, with 12 abstentions.

95. The PRESIDENT noted that as the required two-thirds majority had not been obtained, the interpretation had not been adopted. It remained to be considered whether the Conference would adopt the contrary interpretation.