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 OF GOODS IN ACCORDANCE WITH GENERAL ASSEMBLY 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, 2 and 3) (continued)

Title of the Convention

1. The PRESIDENT pointed out that the title of the Convention adopted earlier should in fact read "United Nations Convention on Contracts for the International Sale of Goods". He saw no need to put that amended title to the vote.

45, 78

Article 41 (continued) [became CISG article 45 ]

2. The PRESIDENT said that during the discussion of the interpretation to be placed on article 41 [became CISG article 45 ] the previous day he had spoken somewhat prematurely. As he now understood the position, article 41 [became CISG article 45 ] was in fact to be interpreted as including reference to article 73 bis [became CISG article 78 ] because in the present sequence of articles, article 73 bis [became CISG article 78 ] would come before article 73 [became CISG article 77 ]. The same interpretation was to be placed on article 57 [became CISG article 61 ], which dealt with the consequences of the buyer's failure to perform. However, he did not consider that it was of any legal consequence whether or not article 73 bis [became CISG article 78 ] was explicitly referred to in article 41 [became CISG article 45 ]; that article, like article 57 [became CISG article 61 ],was not intended to provide an exhaustive list of remedies.

3. Mr. LOEWE (Austria) agreed with the President that it was of no importance whether or not a reference to article 73 bis [became CISG article 78 ] was included in article 41 [became CISG article 45 ]. He himself believed that article 73 bis [became CISG article 78 ] was out of place in Chapter V, section II (damages and interest) and should be included in a different section; however, he would raise that point when the Conference came to discuss article 73 bis [became CISG article 78 ] itself.

4. Mr. LEBEDEV (Union of Soviet Socialist Republics) said the Conference should not consider itself bound by decisions which had been reached as a result of a misunderstanding. Article 41 [became CISG article 45 ], paragraph 1(b) was concerned only with damages, not with interest, whereas article 73 bis [became CISG article 78 ] dealt solely with interest. His own view was that interest should not be considered as a form of damages, since if it were so considered serious consequences might ensue.

5. Mr. NICHOLAS (United Kingdom) suggested that the question of whether or not to reopen a discussion on article 41 [became CISG article 45 ] should be deferred until the Conference came to consider article 73 bis [became CISG article 78 ]. His own delegation had a proposal for the deletion of article 73 bis [became CISG article 78 ], and if that proposal were adopted it would waste time to have to return to article 41 [became CISG article 45 ] in order to decide whether or not it was to be understood as covering that article.

6. Mr. KRISPIS (Greece), speaking in explanation of vote, said that he had voted in favour of article 41 [became CISG article 45 ] on the understanding that the remedies listed under paragraph 1 were not exhaustive, but merely indicative.

7. Mr. DABIN (Belgium) recalled that the previous day a vote had been taken on the interpretation of article 41 [became CISG article 45 ]. He urged that in future votes of that kind should be avoided because they had no legal validity and might constitute a dangerous precedent.

46	Article 42 [became CISG article 46 ]

8. Article 42 [became CISG article 46 ] was adopted by 38 votes to none, with 1 abstention.

47	Article 43 [became CISG article 47 ]

9. Article 43 [became CISG article 47 ] was adopted by 38 votes to none.

48	Article 44 [became CISG article 48 ]

10. Article 44 [became CISG article 48 ] was adopted by 38 votes to none, with 2 abstentions.

11. Mr. MEHDI (Pakistan), speaking in explanation of vote, said he had abstained from voting on article 44 [became CISG article 48 ] since he believed that paragraph 2 of that article provided disproportionate penalties for the buyer who did not comply with the seller's request to make known whether he would accept performance within a reasonable time after the date of delivery.

49	Article 45 [became CISG article 49 ]

12. Article 45 [became CISG article 49 ] was adopted by 44 votes to none, with 1 abstention.

13. Mr. FOKKEMA (Netherlands), speaking in explanation of vote, said he had abstained from voting on article 45 [became CISG article 49 ]. He recalled that in the Drafting Committee proposals had been put forward to extend the right of avoidance under article 45 [became CISG article 49 ], paragraph 1 to cover important breaches of contract other than non-delivery. He regretted that those proposals had been rejected, since the Convention might now be seen to condone wilful and intentional breaches of contract by the seller.

50	Article 46 [became CISG article 50 ]

14. Article 46 [became CISG article 50 ] was adopted by 43 votes to 1.

15. Mr. SAMI (Iraq), speaking in explanation of vote, said he had voted against the article since he believed it would be more equitable for the buyer to be able to calculate the reduction of price on the basis of the value that the goods would have had at the time of the signing of the contract.

16. Mr. SEVON (Finland), speaking in explanation of vote, said that he had voted in favour of article 46 [became CISG article 50 ], on the assumption that the reduction of price was to be calculated on the basis of the price agreed upon in the contract. The point raised by the representative of Iraq had been discussed in the Drafting Committee, and it had been considered that the text was clear in that respect.

51	Article 47 [became CISG article 51 ]

17. Article 47 [became CISG article 51 ] was adopted by 42 votes to none.

52	Article 48 [became CISG article 52 ] (A/CONF.97/L.13)

18. Mr. ROGNLIEN (Norway), introducing his delegation's amendment (A/CONF.97/L.13), said the Convention made a distinction between what was fixed by the contract and what was determinable from the contract. In that connection, he referred to articles 12(1), 31(a) and 55 [became CISG article 14(1) , CISG article 33(a) and CISG article 59 ]. The text of article 48 [became CISG article 52 ] should reflect that distinction, since otherwise, it might be thought that the buyer did not have the right to refuse delivery if goods were delivered before the date determinable from the contract.

19. Mr. HONNOLD (United States of America) supported that proposal.

20. Mr. BONELL (Italy) considered that the proposed amendment should be expanded to take in all three cases covered by article 31 [became CISG article 33 ], subparagraphs (a), (b) and (c). If the amendment was not so expanded, he would prefer the existing text.

21. The PRESIDENT invited the Conference to vote on the Norwegian amendment.

22. The result of the voting was 18 in favour, 12 against, with 10 abstentions. Having failed to obtain the required two-thirds majority, the amendment was not adopted.

23. Mr. BONELL (Italy) suggested that paragraph 1 might be amended to read "if the seller delivers the goods before the date provided for in article 31 [became CISG article 33 ] . . .".

24. The PRESIDENT noted that there was little support for that proposal.

25. Mr. BONELL (Italy) said that in that case he would withdraw his proposal.

26. Article 48 [became CISG article 52 ] was adopted by 43 votes to 2.

Title of Part III, Chapter III (Obligations of the buyer)

27. The title was adopted by 33 votes to none.

53	Article 49 [became CISG article 53 ]

28. Article 49 [became CISG article 53 ] was adopted by 43 votes to none.

Title of Part III, Chapter III, Section I (Payment of the price)

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

54	Article 50 [became CISG article 54 ]

30. Article 50 [became CISG article 54 ] was adopted by 47 votes to none.

55	Article 51 [became CISG article 55 ]

31. Article 51 [became CISG article 55 ] was adopted by 40 votes to 3, with 5abstentions.

56	Article 52 [became CISG article 56 ]

32. Article 52 [became CISG article 56 ] was adopted by 49 votes to none, with 1abstention.

57	Article 53 [became CISG article 57 ]

33. Article 53 [became CISG article 57 ] was adopted by 50 votes to none.

58	Article 54 [became CISG article 58 ]

34. Mr. GARRIGUES (Spain) said that, while he had no specific proposal on article 54 [became CISG article 58 ], he wished to place astatement on record. Article 54 [became CISG article 58 ] dealt with the question ofthe time at which the price had to be paid by the buyer.His delegation had no difficulty with the first sentence of paragraph 1, which equated to delivery the operation of placing the goods (or the documents representing them) at the buyer's disposal. His delegation had, however, doubts regarding the statement in the second sentence to the effect that the seller could make payment "a condition" for handing over the goods or documents. The use of the term "condition" was inappropriate. The situation was simply that payment of the price and handing over of the goods (or documents representing them) constituted the main obligations of the two parties to the contract of sale. Since that contract was of a bilateral character, the two sets of reciprocal obligations were complementary.

35. Article 54 [became CISG article 58 ] was adopted by 42 votes to none, with 5 abstentions.

59	Article 55 [became CISG article 59 ]

36. Article 55 [became CISG article 59 ] was adopted by 47 votes to none.

Title of Chapter III, Section II (Taking delivery)

37. The title was adopted by 48 votes to none.

60	Article 56 [became CISG article 60 ]

38. Article 56 [became CISG article 60 ] was adopted by 46 votes to none.

Title of Chapter III, Section III (Remedies for breach of contract by the buyer)

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

61, 78

Article 57 [became CISG article 61 ]

40. Mr. LEBEDEV (Union of Soviet Socialist Republics) suggested that in view of the decision taken by the Conference with regard to article 41 [became CISG article 45 ], consideration of article 57 [became CISG article 61 ] should be deferred until a decision was taken regarding article 73 bis [became CISG article 78 ].

41. Mr. ROGNLIEN (Norway) said that it would be preferable for the Conference to vote on article 57 [became CISG article 61 ], while reserving the question of the place of article 73 bis [became CISG article 78 ].

42. The PRESIDENT pointed out that it would be necessary in that case to vote separately on paragraph 1(b) of article 57 [became CISG article 61 ].

43. Mr. ROGNLIEN (Norway) withdrew his suggestion.

44. The motion to adjourn the discussion on article 57 [became CISG article 61 ] was carried by 37 votes to 1, with 8 abstentions.

62	Article 58 [became CISG article 62 ]

45. Article 58 [became CISG article 62 ] was adopted by 48 votes to none.

46. Mr. de la CAMARA (Spain) said that his delegation had voted in favour of article 58 [became CISG article 62 ] but was not satisfied with the wording of the concluding proviso "unless the seller has resorted to a remedy which is inconsistent with this requirement". That passage was not at all clear. As far as he could see, it could only refer to the case inwhich the seller avoided the contract. If the seller had not avoided the contract, the obligations of both parties subsisted unchanged.

63	Article 59 [became CISG article 63 ]

47. Article 59 [became CISG article 63 ] was adopted by 49 votes to none.

64	Article 60 [became CISG article 64 ] (A/CONF.97/L.7)

48. Mr. ROGNLIEN (Norway), introducing his delegation's amendment (A/CONF.97/L.7), said that paragraph 2(a) of article 60 [became CISG article 64 ] stated the consequences of late performance by the buyer, i.e., of late payment by him or of delay in taking delivery of the goods. In the discussions in the First Committee, the words "late performance by the buyer" in paragraph 2(a) had been interpreted as referring to late payment by itself or to delay in taking delivery of the goods by itself. The purpose of his amendment (A/CONF.97/L.7) was to spell out that meaning by adding the words: "by payment or taking delivery, as the case may be". The change would not affect the substance of the text. It would simply make the interpretation clear and more certain.

49. The PRESIDENT noted that there appeared to be only limited support for the amendment.

50. Mr. ROGNLIEN (Norway) said that, in the circumstances, he would not press his amendment.

51. Article 60 [became CISG article 64 ] was adopted by 46 votes to none, with 1 abstention.

65	Article 61 [became CISG article 65 ]

52. Article 61 [became CISG article 65 ] was adopted by 45 votes to 1, with 2 abstentions.

53. Mr. MEHDI (Pakistan), explaining his delegation's vote against article 61 [became CISG article 65 ], said that it had proposed the deletion of the article in the First Committee because it was neither reasonable nor fair to confer upon the seller -- as was done in paragraph 1 -- the right to make the specification of the goods himself simply because the buyer had failed to do so. The seller's interests were fully safeguarded by other provisions of the draft. The drastic remedy embodied in article 61 [became CISG article 65 ] was therefore totally unjustified.

Title of Chapter IV (Passing of risk)

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

66	Article 78 [became CISG article 66 ]

55. Article 78 [became CISG article 66 ] was adopted by 47 votes to none.

67	Article 79 [became CISG article 67 ] (A/CONF.97/L.14)

56. Mr. SEVÓN (Finland), introducing the amendment to article 79 [became CISG article 67 ] submitted by Argentina, Egypt, Finland, Pakistan and Turkey (A/CONF.97/L.14), said that the sponsors felt that it would help to clarify the meaning of article 79 [became CISG article 67 ].

57. Mr. KRISPIS (Greece) opposed the joint proposal, which in his view affected the substance of the article.

58. Mr. BENNETT (Australia) said that he had considerable difficulty with the proposal although he could appreciate the reasons for the proposed change.

59. Mr. STALEV (Bulgaria) urged that the existing text should be kept unchanged.

60. Mr. ZIEGEL (Canada) considered that the proposed addition might suggest that in some cases compliance with the contract was necessary in order to justify a transfer of risk and that, in other cases, where there as no similar reference to the terms of the contract, a contrary inference was to be drawn. Either of those inferences would lead to wrong conclusions. A provision already existed in article 82 [became CISG article 70 ] dealing with the effects of a fundamental breach committed by the seller with respect to the provisions governing the transfer of risk and it might be misleading if other partial provisions were to be inserted in other articles. His delegation preferred the existing text.

61. Mr. HJERNER (Sweden) said that his delegation understood that the sponsors' concern was that the seller should not hand over goods to a carrier unless the contract of sale specifically stated that they had to be transported by him. However, the placing of the proposed additional phrase after "the first carrier" might be taken to restrain the seller's freedom to choose the carrier or the place of dispatch. He therefore proposed that it should be inserted at the end of the sentence after "for transmission to the buyer". If that change was made, his delegation could support the proposal.

62. Mr. NICHOLAS (United Kingdom) endorsed that proposal.

63. Mr. HONNOLD (United States of America) said that his delegation was not opposed to the thought behind the proposal but was afraid that the wording could lead to ambiguity and to difficulties in the relationship between articles 79 [became CISG article 67 ] and 82 [became CISG article 70 ].

64. Mr. MEHDI (Pakistan) explained that the amendment had been intended to remove ambiguities in the existing text and in no way to limit the seller's right to choose the carrier or the mode of dispatch. His delegation could accept the Swedish representative's subamendment.

65. Mr. SEVÓN (Finland), speaking also on behalf of the Egyptian delegation, Mr. BOGGIANO (Argentina) and Mr. OZERDEN (Turkey) also accepted the subamendment.

66. The amendment (A/CONF.97/L.14), as orally amended, was adopted by 31 votes to 5, with 14 abstentions.

67. Mr. HONNOLD (United States of America) said that his delegation had abstained for the reasons he had already given.

68. Mr. KHOO (Singapore) explained that his delegation had also abstained because the thought underlyingthe amendment seemed to be adequately expressed in article 79 [became CISG article 67 ], paragraph 1.

69. Article 79, as amended [became CISG article 67 ], was adopted by 46 votes to none, with 3 abstentions.

The meeting was suspended at 4.45 p.m. and resumed at 5.05 p.m.

68	Article 80 [became CISG article 68 ] (A/CONF.97/L.15)

70. Mr. MEHDI (Pakistan), introducing the amendment submitted by Argentina, Egypt, Pakistan, Republic of Korea and Turkey, said that the sponsors considered the existing text of article 80 [became CISG article 68 ] somewhat unreasonable in that risk was assumed by the buyer retroactively. The proposed changes would remove that difficulty and avoid possible conflict with article 81 [became CISG article 69 ], paragraph 2.

71. Mr. SEVON (Finland) said that his delegation had no difficulty with the existing text but could support the amendment because it understood that the existing text might create problems in some jurisdictions.

72. Mr. ZIEGEL (Canada) said that his delegation could also support the amendment, first because there appeared to be no law in common law jurisdiction covering special rules for the transfer of risk, and second, because the existing text of article 80 might not cover cases where insurance was inadequate to protect the buyer.

73. Mr. KRISPIS (Greece) also supported the draft amendment.

74. Mr. HJERNER (Sweden) said that the matter was mainly one of trading and insurance techniques and was reflected in the rules governing them. Arguments had been advanced that many insurance companies refused to insure a risk before the date of conclusion of a contract or that a seller might load the goods on to a means of transport before selling them, and sell them in transit. The solution of such problems was a complex drafting matter and could not be done by the wording proposed in the amendment. It was difficult to pinpoint the exact time at which damage occurred, whereas it was simple to note if the goods were or were not damaged at the time of handing them over to the carrier. For those reasons, if the amendment was adopted, his delegation would be obliged to vote against the article as a whole.

75. Mr. KHOO (Singapore) said that the Convention as adopted so far showed a proper balance between the interests of the seller and the buyer and it would be regrettable for it to contain a completely unreasonable article. Article 80 [became CISG article 68 ] had not been given due attention at previous UNCITRAL discussions and his delegation warmly welcomed the draft amendment.

76. Mr. POPESCU (Romania) said that the transfer of risks to the buyer should occur only when the goods were at his disposal. The suggestion that the risk should be assumed by the buyer from the time the contract was concluded seemed to him a step backwards, which his delegation was unable to accept.

77. Mr. DABIN (Belgium) said he could not support the joint proposal (A/CONF.97/L.15). The passing of risk should take place at a clearly defined point in time. It should not be subject to an abstract legal concept.

78. Mr. KHOO (Singapore) considered that the opening phrase of the proposed new first sentence of article 80 [became CISG article 68 ] might make the proposal more acceptable since it would give parties freedom to derogate from the normal rule.

79. Mr. MEHDI (Pakistan) concurred.

80. Mr. LOEWE (Austria) observed that the proviso "unless otherwise indicated" applied to every article in the Convention.

81. Mr. SZÁSZ (Hungary) said that the inclusion of the phrase "unless otherwise indicated" in one article was likely to jeopardize the interpretation of all the other articles.

82. Mr. HJERNER (Sweden) said he did not interpret"unless otherwise indicated" as having the same meaning as "unless otherwise agreed". In his view, the phrase meant that after the conclusion of the contract, either party might indicate his intention of applying another regime for the passing of risk. It would be easier to reconcile the joint proposal with trading techniques if that view was taken.

83. The PRESIDENT put to the vote the joint proposal in document A/CONF.97/L.15.

84. There were 22 votes in favour, 15 against and 13 abstentions. Having failed to obtain the required two thirds majority, the proposal was not adopted.

85. Mr. INAAMULLAH (Pakistan) asked whether it would not be advisable to set up a working group on the subject in accordance with the agreement reached in the General Committee.

86. The PRESIDENT said it was his understanding that the agreement to which the representative of Pakistan referred applied only in cases where otherwise a gap would be left in the Convention.

87. Mr. LOEWE (Austria) and Mr. DABIN (Belgium) supported the President.

88. The PRESIDENT put to the vote article 80 [became CISG article 68 ].

89. There were 23 votes in favour, 13 against and 14 abstentions. Having failed to obtain the required two-thirds majority, article 80 [became CISG article 68 ] was not adopted.

90. Mr. ROGNLIEN (Norway) said that omission of the article from the Convention would not constitute an important gap. He suggested that the Conference should accept its deletion. That indeed would, in the circumstances, be the best compromise.

91. Mr. KRISPIS (Greece) concurred.

92. Mr. BONELL (Italy) doubted whether a working group would be able to achieve a generally acceptable solution.

93. Mr. HONNOLD (United States of America) said that his delegation had voted against article 80 [became CISG article 68 ] because itdid not consider the provisions satisfactory. In the pertinent case-law, retroactive transfer of risk in transit had been applied only when the seller had handed over to the buyer a negotiable insurance policy. In those circumstances, the courts had concluded that it was for the person in possession of the policy to make the claim against the insurer. The understanding of the parties, effective through article 5 [became CISG article 6 ], appeared to solve the problem. He felt that the Convention would have a better chance of success if no attempt was made to find a formulation to deal with the subject.

94. Mr. WANG Tian Ming (China) regretted that the joint proposal had not been sufficiently supported. In view of the evident divergence of opinions on the subject, he agreed that the best course was to delete the article.

95. Mr. PLANTARD (France) doubted whether it was so easy to dispense with article 80 [became CISG article 68 ]. If it was deleted, the circumstances it envisaged would have to be dealt with either under article 79 [became CISG article 67 ] or article 81 [became CISG article 69 ], neither of which would provide a clear answer.

96. Mr. HERBER (Federal Republic of Germany) said that article 80 [became CISG article 68 ] covered an important subject which required a rule of its own. It did not seem that a working group would be useful since the only two possible formulations were already contained in the present text of article 80 [became CISG article 68 ] and in the joint proposal, both of which had failed to obtain the necessary two-thirds majority. He therefore proposed that the conference should reconsider the matter.

97. Mr. LOEWE (Austria) endorsed the proposal of the representative of the Federal Republic of Germany. An article was required to deal with the matter of res in transitu, which was not adequately covered by articles 79 and 81 [became CISG article 67 and CISG article 69 ]. His delegation would have preferred article 80 [became CISG article 68 ] because the date on which damage had occurred to goods in transit was almost impossible to ascertain. However, the joint proposal was more acceptable than total deletion on the understanding that it constituted the whole of the article and not merely the first sentence. The second sentence of article 80 [became CISG article 68 ] would become pointless if the joint proposal was adopted. Furthermore, the opening phrase "unless otherwise indicated" should be omitted. He was unable to grasp the subtle distinction between that phrase and "unless otherwise agreed": it could not be taken to authorize a unilateral declaration of intention, as the Swedish representative had stated.

98. Mr. STALEV (Bulgaria) urged those delegations which had been strongly in favour of article 40 ter [became CISG article 44 ], which other delegations had agreed to adopt in a spirit of compromise, to show similar understanding in their turn and to vote for the adoption of article 80 [became CISG article 68 ].

99. Mr. HJERNER (Sweden) said he was prepared to support the establishment of a working group or the deletion of the article.

100. Mr. SHAFIK (Egypt) said that deletion would leave a serious gap in the Convention as sales in transit were very frequent. He supported the proposal of the representative of the Federal Republic of Germany.

101 Mr. POPESCU (Romania) requested that the joint proposal should be voted on first, if the matter was considered.

102. Mr. MEHDI (Pakistan) concurred.

103. The PRESIDENT put the proposal to reconsider article 80 [became CISG article 68 ] to the vote.

104. There were 35 votes in favour, 6 against and 10 abstentions. Having obtained the required two-thirds majority, the proposal to reconsider article 80 [became CISG article 68 ] was adopted.