“OBLIGATIONS OF SELLERS AND OF BUYERS

UNDER CISG”

A RESEARCH PROJECT SUBMITTED IN THE PARTIAL FULFILMENT FOR

THE COURSE OF INTERNATIONAL TRADE LAW FOR ATTAINING THE
DEGREE OF B.A., L.L.B. (HONS)

SUBMITTED BY:

SATYAM KR OJHA

6th Semester

Roll No-2153

SUBMITTED TO:

DR. P. P RAO

PROFESSOR OF LAW

MARCH 2022

Chanakya National Law University,

Nyaya Nagar, Mithapur Patna, Pin- 800001

 DECLARATION BY THE CANDIDATE.

I, SATYAM KR OJHA, student of CHANAKYA NATIONAL LAW UNIVERSITY hereby

declare that the work reported in the B.B.A., LL.B. (HONS.) as Project report on “OBLIGATION
OF SELLERS AND OF BUYERS UNDER CISG”. Submitted at CHANAKYA NATIONAL
LAW UNIVERSITY, PATNA is an authentic record of my work carried out under the supervision
of DR. P.P Rao. I have not submitted this work elsewhere for any other degree or diploma. I am
responsible for the contents of my Project Report.

NAME:SATYAM OJHA

ROLL NO: 2153

COURSE: B.A. LL.B. (Hons.)

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 ACKNOWLEDGEMENT

I would like to thank my faculty DR. P.P RAO whose guidance helped me a lot with
structuring of my project. I take this opportunity to express my deep sense of gratitude
for his guidance and encouragement which sustained my efforts on all stages of this
project.

I owe the present accomplishment of my project to my friends, who helped me

immensely with materials throughout the project and without whom I couldn’t have
completed it in the present way.

I would also like to extend my gratitude to my parents and all those unseen hands that
helped me out at every stage of my project.

THANK YOU

NAME: SATYAM OJHA

ROLL NO: 2153

COURSE: B.A., LL.B. (Hons.)

SEMESTER: (6th)

SESSION: 2019-24

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 TABLE OF CONTENTS

DECLARATION BY THE CANDIDATE. ...........................................................................II

ACKNOWLEDGEMENT ................................................................................................... III

TABLE OF CONTENTS .................................................................................................... IV

AIMS & OBJECTIVE......................................................................................................... VI

HYPOTHESIS .................................................................................................................... VI

RESEARCH METHODOLOGY......................................................................................... VI

SOURCES OF DATA......................................................................................................... VI

LIMITATIONS OF THE STUDY...................................................................................... VII

INTRODUCTION TO CISG................................................................................................. 1

BACKGROUND OF THE CISG ...................................................................................... 1

PURPOSE OF CISG ......................................................................................................... 2

KEY PROVISIONS OF CISG........................................................................................... 3

OBLIGATION OF BUYERS UNDER CISG ........................................................................ 6

OBLIGATIONS OF BUYERS TO PAY FOR THE GOOD .............................................. 6

BUYER’S COMPLIANCE WITH COMMERCIAL REQUIREMENTS ....................... 7

BUYER’S COMPLIANCE WITH ADMINISTRATIVE REQUIREMENTS ................ 8

CURRENCY OF PAYMENT ....................................................................................... 9

CLOUT CASES ON CISG ARTICLE 54 ...................................................................... 9

OBLIGATION OF BUYERS TO TAKE DELIVERY OF GOODS ................................ 11

BUYER’S OBLIGATION OF TAKING DELIVERY ................................................. 11

OBLIGATION OF SELLER UNDER CISG ....................................................................... 13

SELLERS’S OBLIGATION ........................................................................................... 13

TIME AND PLACE OF DELIVERY .............................................................................. 14

SELLER’S DELIVERY OF GOODS .............................................................................. 14

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 SELLERS DELIVERY OFDOCUMENTATION............................................................ 16

TIME OF DELIVERY .................................................................................................... 16

CONFIRMITY OF GOODS............................................................................................ 17

CONCLUSION ................................................................................................................... 19

BIBLIOGRAPHY ............................................................................................................... 20

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 AIMS & OBJECTIVE

• To critically analyze the purpose of CISG

• To critically analyze the obligation of Buyer under CISG
• To critically analyze the obligation of Seller under CISG

HYPOTHESIS

The researcher proceeds with the hypothesis that the obligation of seller as laid down in CISG
is just to fill the gaps of certain items which are not mentioned in Contract.

RESEARCH METHODOLOGY

The researcher will be relying on doctrinal method of research to complete the project. These
involve various primary and secondary sources of literature and insights. The citations have
been done under The Bluebook: A Uniform System of Citation (20th ed.).

SOURCES OF DATA

• PRIMARY SOURCES
o ARTICLES OF CISG.
o UNICTRAL GUIDELINES
o JUDICIAL PRONOUNCEMENTS
• SECONDARY SOURCES
o BLOGS
o BOOKS
o CASE COMMENTARIES
o JOURNALS

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 LIMITATIONS OF THE STUDY

The researcher has territorial, monetary and time limitations in completing the project.

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 INTRODUCTION TO CISG

BACKGROUND OF THE CISG

The United Nations Convention on Contracts for the International Sale of Goods (CISG) has
been recognized as the most successful attempt to unify a broad area of commercial law at the
international level. The self-executing treaty aims to reduce obstacles to international trade,
particularly those associated with choice of law issues, by creating even-handed and modern
substantive rules governing the rights and obligations of parties to international sales contracts.
At the time this is written (February 2009), the CISG has attracted more than 70 Contracting
States that account for well over two thirds of international trade in goods, and that represent
extraordinary economic, geographic and cultural diversity.1

The CISG is a project of the United Nations Commission on International Trade Law
(UNCITRAL), which in the early 1970s undertook to create a successor to two substantive
international sales treaties – Convention relating to a Uniform Law on the Formation of
Contracts for the International Sale of Goods (ULF) and the Convention relating to a Uniform
Law for the International Sale of Goods (ULIS) – both of which were sponsored by the
International Institute for the Unification of Private Law (UNIDROIT). The goal of
UNCITRAL was to create a Convention that would attract increased participation in uniform
international sales rules. The text of the CISG was finalized and approved in the six official
languages of the United Nations at the United Nations Conference on Contracts for the
International Sale of Goods, held in 1980, in Vienna. The CISG entered into force in eleven
initial Contracting States on 1 January 1988, and since that time has steadily and continuously
attracted a diverse group of adherents.2

1
Flechtner Harry M., Professor of Law, University of Pittsburgh School of Law,
https://legal.un.org/avl/ha/ccisg/ccisg.html#:~:text=The%20CISG%20Is%20A%20PRoject,of%20Goods%20(UL
F)%20And%20THe, (Accessed on 01.04.2021 at 7:30 Pm))
2
Supra.
 PURPOSE OF CISG
The purpose of the CISG is to provide a modern, uniform and fair regime for contracts for the
international sale of goods. Thus, the CISG contributes significantly to introducing certainty in
commercial exchanges and decreasing transaction costs.3

The contract of sale is the backbone of international trade in all countries, irrespective of their
legal tradition or level of economic development. The CISG is therefore considered one of the
core international trade law conventions whose universal adoption is desirable.

The CISG is the result of a legislative effort that started at the beginning of the twentieth
century. The resulting text provides a careful balance between the interests of the buyer and of
the seller. It has also inspired contract law reform at the national level.

The adoption of the CISG provides modern, uniform legislation for the international sale of
goods that would apply whenever contracts for the sale of goods are concluded between parties
with a place of business in Contracting States. In these cases, the CISG would apply directly,
avoiding recourse to rules of private international law to determine the law applicable to the
contract, adding significantly to the certainty and predictability of international sales contracts.

Moreover, the CISG may apply to a contract for international sale of goods when the rules of
private international law point at the law of a Contracting State as the applicable one, or by
virtue of the choice of the contractual parties, regardless of whether their places of business are
located in a Contracting State. In this latter case, the CISG provides a neutral body of rules that
can be easily accepted in light of its transnational nature and of the wide availability of
interpretative materials.

Finally, small and medium-sized enterprises as well as traders located in developing countries
typically have reduced access to legal advice when negotiating a contract. Thus, they are more
vulnerable to problems caused by inadequate treatment in the contract of issues relating to
applicable law. The same enterprises and traders may also be the weaker contractual parties
and could have difficulties in ensuring that the contractual balance is kept. Those merchants
would therefore derive particular benefit from the default application of the fair and uniform
regime of the CISG to contracts falling under its scope.

3
United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980) (CISG),
https://uncitral.un.org/en/texts/salegoods/conventions/sale_of_goods/cisg, (Accessed on 01.04.2021 at 7:30 Pm).

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 KEY PROVISIONS OF CISG
The CISG governs international sales contracts if (1) both parties are located in Contracting
States, or (2) private international law leads to the application of the law of a Contracting State
(although, as permitted by the CISG (article 95), several Contracting States have declared that
they are not bound by the latter ground). The autonomy of the parties to international sales
contracts is a fundamental theme of the Convention: the parties can, by agreement, derogate
from virtually any CISG rule, or can exclude the applicability of the CISG entirely in favor of
other law. When the Convention applies, it does not govern every issue that can arise from an
international sales contract: for example, issues concerning the validity of the contract or the
effect of the contract on the property in (ownership of) the goods sold are, as expressly provided
in the CISG, beyond the scope of the Convention, and are left to the law applicable by virtue
of the rules of private international law (article 4). Questions concerning matters governed by
the Convention but that are not expressly addressed therein are to be settled in conformity with
the general principles of the CISG or, in the absence of such principles, by reference to the law
applicable under the rules of private international law.

Among the many significant provisions of the CISG are those addressing the following matters:

❖ Interpretation of the parties’ agreement;

❖ The role of practices established between the parties, and of
international usages;
❖ The features, duration and revocability of offers;
❖ The manner, timing and effectiveness of acceptances of offers;
❖ The effect of attempts to add or change terms in an acceptance;
❖ Modifications to international sales contracts;
❖ The seller’s obligations with respect to the quality of the goods as well
as the time and place for delivery;
❖ The place and date for payment;
❖ The buyer’s obligations to take delivery, to examine delivered goods,
and to give notice of any claimed lack of conformity;
❖ The buyer’s remedies for breach of contract by the seller, including
rights to demand delivery, to require repair or replacement of non-
conforming goods, to avoid the contract, to recover damages, and to
reduce the price for non-conforming goods;
❖ The seller’s remedies for breach of contract by the buyer, including
rights to require the buyer to take delivery and/or pay the price, to
avoid the contract, and to recover damages;
❖ Passing of risk in the goods sold;
❖ Anticipatory breach of contract;
❖ Recovery of interest on sums in arrears;

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 ❖ Exemption from liability for failure to perform, including force
majeure;
❖ Obligations to preserve goods that are to be sent or returned to the
other party.
The CISG also includes a provision eliminating written-form requirements for international
sales contracts within its scope – although the Convention authorizes Contracting States to
reserve out of this provision, and a number have done so. The CISG also includes “Final
Provisions” addressing such matters as ratification, acceptance, approval and accession; the
interplay between the CISG and other overlapping international agreements; declarations and
reservations; entry-into-force dates; and denunciation of the Convention.

Several other UNCITRAL projects are designed to work in tandem with the CISG. For
example, the United Nations Convention on the Limitation Period in the International Sale of
Goods contains rules governing the limitation period for claims arising under international
sales contracts. The Limitations Convention was originally promulgated in 1974, but was
amended in 1980 by a Protocol adopted by the Diplomatic Conference that approved the CISG
in order to harmonize the two Conventions. At the time this is written, the amended Limitations
Convention is in force in 20 Contracting States. In 2005, the General Assembly adopted the
United Nations Convention on the Use of Electronic Communications in International
Contracts to address various issues arising when electronic communications methods are
employed in connection with international contracts, including international sales contracts.
Issues addressed in the Electronic Communications Convention include contract formation by
automated communications, the time and place that electronic communications are deemed
dispatched and received, determination of the location of parties employing electronic
communications, and criteria for establishing functional equivalence between electronic and
hard copy communication and authentication. At the time this is written, 18 States have signed
the Electronic Communications Convention, although it has not yet been ratified or acceded to
by any State and it has not yet entered into force.

No special tribunals were created for the CISG; it is applied and interpreted by the national
courts and arbitration panels that have jurisdiction in disputes over transactions governed by
the Convention. To achieve its fundamental purpose of providing uniform rules for
international sales, the Convention itself requires that it be interpreted with a view to
maintaining its international character and uniformity. To that end, special research resources,
often consisting of databases available free of charge through the Internet, provide access to
materials designed to foster uniform international understanding of the rules of the CISG.
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These resources, including several developed and maintained by UNCITRAL in the six official
languages of the United Nations, allow access to court and arbitral decisions applying the CISG
from around the world, the travaux préparatoires of the CISG, and commentary on the
Convention by a global community of scholars.

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 OBLIGATION OF BUYERS UNDER CISG

Articles 53-60 of the CISG deal with the buyer’s obligations. More specifically, they deal with
the buyer’s principal obligations, namely the duty to pay for the goods and the duty to take
delivery of the goods. While these two requirements form the core of the buyer’s obligations
under a contract, it must be remembered that the buyer is also subject to two separate duties in
the sales transaction, namely to examine the goods and to notify the seller of non-conformities.

Article 53 forms the legal basis for these two principal obligations. The determination of how
they are to be interpreted, in the absence of any specific contractual determination or any
established trade usage or customary use (in accordance with Articles 6 and 9) is laid out in
Articles 54-60.

The majority of the provisions deal with the payment of the price. Article 54 deals with
ancillary obligations to ensure payment is made, and ensures that the buyer must not just make
payment but must take any steps necessary to allow it to be made; i.e., the buyer has an
obligation not just to write a cheque, but to ensure there are funds in the account to allow the
cheque to facilitate payment to the seller.

Articles 55 and 56 assist in determining how to fix the price. Article 56 appoints net weight as
the decisive factor in determining price where this price is agreed by weight, but—of course—
subject to other agreements or trade practices. Article 55 allows for the determination of price
by ordinary value if there is an open-price contract; this is an apparent paradox under the CISG
in view of Article 14, which is dealt with below.

Articles 57 and 58 deal with the determination of time and place of payment, but always subject
to specific language in the agreement determining otherwise, or reasonably discernible intent
determining otherwise, or established trade customs (Articles 6, 8 and 9).

OBLIGATIONS OF BUYERS TO PAY FOR THE GOOD

The general obligations of the buyer are summed up in Article 53, which restates in very broad
language that the buyer must pay the price for the goods and take delivery of them as required

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under the contract and the Sales Convention4. Buyer’s duty to pay the price is further elaborated
upon in CISG Article 54, which provides that: “the buyer’s obligation to pay the price includes
taking such steps and complying with such formalities as may be required under the contract
or any laws and regulations to enable payment to be made.” This apparent simplicity, however,
does not mean that the problems that can arise with regard to a buyer’s obligations are simple.
The evolution of financial systems and of international methods of payment, along with
government intervention in the international transfer of funds, has made out of what used to be
a simple conveyance of money a more sophisticated endeavor.5 They occur frequently and can
be very complex6. The problems can also involve a broad range of issues such as letters of
credit7, negotiable instruments8, wire transfers9, currency of payment and legislation
concerning exchange controls10, issues that are beyond the scope of the Sales Convention11.

Pursuant to Article 54 of the CISG, the buyer’s obligation to pay the price includes taking such
steps and complying with such formalities as may be required under the contract or any laws
and regulations to enable payment to be made. Firstly, we must distinguish between the
commercial and the administrative requirements to effect payment.

Buyer’s Compliance with commercial requirements

The commercial measures can include, as mentioned in the UNCITRAL Digest 12, the
Secretariat’s Commentary, and in the wealth of scholarly opinions, the opening of a letter of
credit, establishment of security or obtaining a bank guarantee, or the acceptance of a bill of
exchange. When complying with his commercial requirements, the buyer’s standard of
performance is that he must achieve a specific result. For example, a buyer may be required to
obtain a letter of credit (commercial or stand-by), to obtain a demand guarantee, to sign a bill
of exchange, to make a check to effect payment, or even to make a promissory note to secure
it. These steps to enable payment clearly fall within buyer’s control; thus failure to comply

4
CISG art. 53: “The buyer must pay the price for the goods and take delivery of them as required by the contract
and this Convention.”
5
Alejandro Garro & Luis Alberto Zuppi, Compraventa Internacional de Mercaderìas 222 (Ediciones La Rocca
1990) (Arg.
6
Leif Sevón, Obligations of the Buyer Under the UN Convention on Contracts for the International Sale of Goods,
in International Sale Of Goods: Dubrovnik Lectures 203.
7
ICC Customs and Practice For Documentary Credits, Icc Publication No. 500 (1993).
8
Uwe Jahn, Bills Of Exchange: A Guide To Legislation In European Countries, Asia &Oceania (1999)
9
UNCITRAL Model Law on International Credit Transfers, G.A. Res. 47/34, U.N. Doc.A/47/17 (Feb. 9, 1993).
10
Fernando Vazquez Pando, Introducción al Estudio Jurídico del Control de Cambios Vigente en México a partir
del 20 de Diciembre de 1982,
11
Article 4 of the CISG.
12
UNCITRAL Digest on Article 54, available at http://www.uncitral.org/uncitral/en/ case_law/digests/cisg.html.

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with them would be buyer’s sole responsibility, and would very likely constitute a fundamental
breach. A buyer can most surely control the outcome of taking these steps and thus can very
likely achieve the agreed result13. Furthermore, even in cases where a buyer requires the
services from a bank and is turned.

Buyer’s Compliance with Administrative Requirements

Administrative requirements are those where the buyer must comply with something ordered
in a statute, or with a governmental or administrative ordinance, such as applying for
authorization to purchase foreign currency or transfer funds abroad. The type of obligation will
have an effect on the degree of severity on the assumption of the buyer’s contractual obligation.
Different from what occurs in a commercial setting, obtaining an administrative authorization
is not completely within the buyer’s control. It is well known that government authorities in
some states act with a greater degree of discretion than others, and often times refuse to grant
or issue a license, such as an authorization to purchase foreign currency or to transfer funds
abroad14. Still, the buyer must make his best reasonable effort to pursue compliance with the
legal requirements full heartedly, with a view to actually obtaining the desired result15. This
should not be interpreted to mean that a buyer is required to pay a “gratification” to any person
acting in an official capacity: this would clearly be unreasonable and even illegal. As stated in
the Commentary to the 1978 Draft Convention, the buyer is obligated to take all appropriate
measures to persuade the relevant government authorities to make the funds available and
cannot rely on a refusal by those authorities unless he has taken such measures16. In cases where
a buyer has in fact taken all reasonable measures to secure a license, a government’s
unwillingness to grant a buyer’s request will most likely activate the exemption provision
contemplated in CISG Article 79, provided the buyer can prove that his failure to obtain the
authorization was due to an impediment beyond his control and that it was not reasonably taken
into account at the time the contract was concluded. Unlike the case where the buyer must
comply with his commercial obligations, when it comes to administrative authorizations, the
buyer will not have an alternative.

13
The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence, 24 NW.
J. INT’L L. & BUS. 299, 373 (2004).
14
ENDERLEIN & MASKOW, supra note 11.
15
UNIDROIT Principles art. 5.1.4(2)
16
UNIDROIT Principles, Article 6.1.15 (Procedure for permission) provides.

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Currency of Payment
The issue concerning currency of payment was raised during the discussion of the draft CISG.
At the 24th meeting of the Diplomatic Conference, Argentina, Spain and Portugal submitted a
proposal to amend a precursor of Article 54, providing that if payment in the contractual
currency were not possible, the seller could require equivalent payment in the legal currency
at the buyer’s place of business17.36 The reasoning behind the proposal was that some countries
with exchange controls could prevent the buyer from paying in the agreed currency and that
the text of the provision might not be sufficient to compel the buyer, since he could then invoke
the excuse provision to evade his obligations.18 This provision would then empower the seller
to require equivalent payment in the legal currency of the buyer’s place of business. The
provision was ultimately rejected because it was thought that it could be interpreted to mean
that the buyer could only demand payment at buyer’s place of business19.

CLOUT Cases on CISG Article 54

Currently, the CLOUT system has eight cases that deal with CISG Article 54, which cover the
following issues:-

A. Buyer’s obligation to pay includes enabling steps (Case Nos. 142 and 236) Russian
Arbitration Case;
IT involves a German seller and a Russian buyer. The buyer had received the goods
but failed to pay the price, arguing that the bank that was responsible for his foreign
currency transactions had been unable to transfer the amounts to the seller.40 The buyer
did not have currency that was freely convertible currency in his bank account to pay
for the goods. The buyer attempted to have the tribunal declare an exemption, based on
Article 79 of the CISG, since the situation—according to buyer—constituted force
majeure, and thus, he should be discharged from performing his contractual obligations.
During the proceedings, it was established that the buyer had merely sent instructions
to the bank, but had not taken measures to ensure that the payment could in fact be
made. Buyer was found in breach for two reasons. First, the contract had a provision
that included an exhaustive list on what constituted force majeure, and this situation did

17
DOCUMENTARY HISTORY, supra note 12, at 692
18
Id. at 538.
19
Id.

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 not fall within its scope.44 Second, the buyer limited his conduct to sending instructions
to the bank but had not taken measures to ensure that the payment could be made.

B. Buyer’s arrangements for a letter of credit (Case Nos. 176 and 301);
This case involved a German buyer and an Austrian seller. The parties had made an
FOB contract for the delivery of propane gas. During negotiations, the parties
exchanged communications by fax and discussed by telephone the conditions of the
contract, including the agreement that payment would be made by means of a letter of
credit. The buyer did not obtain the letter of credit because there was an essential
element missing, since the Austrian seller failed to name the port of origin. The German
Supreme Court determined that the German buyer was not under an obligation to open
a blank letter of credit, and thus buyer was not found to be in breach of contract. Thus,
even if it is true that a buyer has the obligation to take all steps and comply with such
formalities under the contract or under any applicable laws or regulations, in certain
circumstances the buyer may require seller’s collaboration, a principle that is restated
throughout the CISG.

C. Buyer’s failure to take steps may invoke remedies (Case No. 104);
This case involves an Italian seller and a Finnish buyer. The seller sued the buyer for
damages and interest because the latter had failed to make the third down payment to
the seller, and it had failed to notify the letters of credit required under the contract by
the agreed upon date. In dicta the Tribunal said that notifying the letters of credit falls
within the broad definition of paying the price.57 The arbitral tribunal hearing the case
also stated that the mere fact that there had been a delay on behalf of a buyer would not
in itself amount to a fundamental breach as understood under Article 25, in connection
with Articles 53 and 54. However, the Italian seller waited several months before
declaring the contract avoided, and the arbitral tribunal construed this as an additional
time under Articles 63(1) and 64(1)(b) of the Convention.

D. Currency to effect payment (Case Nos. 52, 80 and 281).

Case law concerning currency of payment has consistently pointed towards the
currency at the seller’s place of business.62 The rationale is that because the issue of
currency of payment is not within the scope of the CISG, nor can it be deduced from
any general principle in the Convention, the rules of private international law come into
play pursuant to CISG Article 7(2). So far, the issue of currency of payment has been

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 discussed in at least three CLOUT Cases: CLOUT Case No. 52 (Hungary 1992);
CLOUT Case No. 80 (Germany 1994); and CLOUT Case No. 281 (Germany 1993).

OBLIGATION OF BUYERS TO TAKE DELIVERY OF GOODS

Buyer’s obligation of taking delivery

In parallel with a buyer’s duty to pay, a buyer also has a duty to take delivery20. This obligation
consists in carrying out all the acts that could reasonably be expected of a buyer in order to
enable the seller to make delivery and in taking over the goods. Further, preparatory measures
‘such as the provisions of plans or data, are also part of the cooperation required of the buyer
since ultimately they serve to enable the seller to make delivery”. Should the buyer fail to
possession of the goods when delivered, the seller is required to care for the goods until the
buyer takes delivery. The buyer is thereafter liable to reimburse the seller for all reasonable
expenses relating to the upkeep of the goods (Articles 85 & 87 CISG).

Buyer’s obligation upon delivery

Pursuant to the provisions of the CISG, a buyer must examine or have goods examined within
a period as short as practical under the circumstances and if defects are found it must notify the
seller about them within a reasonable period of time, exactly stating the kind of deficiency
(Article 38(1) & 39(1) CISG). The CISG requires “examination and notice to be distinguished
and kept separate, even when the facts of the case would permit them to be combined into a
single period for giving notice”. Further it must be stressed that “the close link between Articles
38 and 39 CISG does not, however, lead to the conclusion to recover for defective goods, the
buyer must previously inspect them. In fact, lack of inspection by the buyer does not necessarily
involve the loss of the right to rely on the lack of conformity of the goods, as long as the defects
are notified (to the seller) in a timely manner, that is, before ‘a reasonable period’ has elapsed”.
Finally it must be noted, “It is up to buyer, who received the goods without reservation, to
provide evidence of the alleged nonconformity,” as well of the fact that this nonconformity

20
LawTeacher. November 2013. Rights and Obligations of the Seller and Buyer. [online]. Available from:
https://www.lawteacher.net/free-law-essays/commercial-law/rights-and-obligations-law-essays.php?vref=1

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existed before the risk passed to the buyer. Where the buyer has failed to provide evidence and
notice of non-conforming goods, he will lose the right to rely on lack of conformity. 21

21
Id.

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 OBLIGATION OF SELLER UNDER CISG

The provisions in this section of the CISG form a comprehensive set of rules that govern all
aspects of the seller’s performance, including the buyer’s obligation to examine and notify the
seller of any defects regarding the seller’s performance. Together, these articles set out the
seller’s duties and the implied terms, which his obligations are subject to, as well as the buyer’s
remedies for any breach by the seller (treated in Chapter 5).

The seller’s obligations are outlined in Articles 30–37 and 41 43, and supplement the contract
of sale to the extent that they fill any gaps in the contract by determining aspects of the sale,
which the contract has not determined. Aspects like time and place of delivery, and the practical
effect of handing over documents to a carrier, are set out here, but will always be subject to the
contract. Central to this part of the CISG is Article 35, which governs the implied terms for
goods regarding quality and fitness for purpose (general or specific).

It may seem surprising to find a set of rules for the buyer’s conduct placed in this section of
the CISG—especially given the importance of these rules. But, as they pertain to the seller’s
obligation to deliver conforming goods, Articles 38, 39, 40 and 44 regarding examination and
notification are to be found here. These rules are vital to any case involving delivery of alleged
non-conforming goods, as the consequences of a failure to notify of non-conformity may be a
complete loss of remedy. In other words, without compliance with these rules on examining
the goods and notifying about non-conformity in time and in the right way, the buyer may
retain no right to any remedy, even if there clearly is a serious breach.

SELLERS’S OBLIGATION
A seller must correspond to the terms of the contract as agreed upon by the parties to the
contract.22 In the absence of said terms a seller “must deliver the goods, hand over any
documents relating to them and transfer the property in the goods, as required by the contact”.
These obligations would include, but not be limited to, the following: a seller delivering the
goods, providing any documentation, and transferring the property but not the passing of title.23

22
Camilla Baasch Andersen, Francesco G. Mazzotta, Bruno Zeller, Practitioner’s Guide to CISG, 2nd Edition,
ISBN: 978-1-944825-18-8
23
Article 30, CISG.

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It must be noted; the passing of ownership is not regulated by the CISG but is governed by
domestic law. Case law establishes that courts will facilitate the actions of the parties to
establish obligations but will limit recovery for failure to fulfil obligations. The obligations of
performance of a seller under a contract are set forth under Articles 31-34 CISG.

TIME AND PLACE OF DELIVERY

In practice, time and place of delivery are often agreed to by the parties via the contract or by
a subsequent Purchase Order24. [6] These terms are of essence, as they not only serve for
business purpose but place of delivery is relevant under the CISG because it determines the
passage of risk and conformity of goods. In some states it also determines jurisdictional issues.
Therefore, Article 31 CISG governing the seller’s duty to deliver applies only if the parties did
not agree on a specific place for a delivery. Parties’ contractual autonomy prevails over Article
31 CISG. Further, a party asserting a verbal agreement as to place of delivery has the burden
of establishing the terms based on Articles 8 or 9 CISG. However, if various documents are
exchanged between the parties with different terms or there is a verbal agreement coupled with
party practice based on Article 8 CISG that still fails to resolve this issue, courts have resorted
to Article 31 CISG to establish the place of performance of the seller’s duty to deliver the
goods.

SELLER’S DELIVERY OF GOODS

Article 31 CISG establishes the standard of performance by the seller. Where the parties have
agreed upon a place of delivery in a contract, then the implicit language in Article 31 CISG
provides that the seller is bound to deliver to this place. In essence, this test can be established
via physical evidence, for example, a contract or verbal testimony and other evidence
facilitating Articles 8 and 9 CISG. Hence, Article 31 CISG, which determines the place of
“delivery,” applies only if the parties have not stipulated otherwise to delivery. For example,
a provision in a contract regarding cost of freight fails to establish derogation from Article
31(a) CISG. If however, the seller is not bound by the terms of a contract and the contract of
sale involves carriage of the goods, delivery consists in handing the goods over to the first
carrier for transmission to the buyer. The seller has the obligation to deliver the goods and

24
Kling & Freitag GmbH v. Societa Reference Laboratory S.r.1. (2004).

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delivery consists in handing them to an independent carrier. The obligation of the seller is
fulfilled upon transfer to the first carrier.

Further, it must be noted, failure to present evidence of delivery by lack of signature of buyer
can forfeit rights of seller to payment. In essence, liability for carrier’s failure to perform will
not lie with the seller unless the seller has contractually undertaken the obligation to carry out
the carriage of goods.” The seller has performed his duty to deliver the goods even where they
do not meet their description or are defective in other respects” under subsection (a) of Article
31 CISG and the risk of loss passes at such time.

It must be highlighted, if there are no specific or identified goods, Article 31(c) CISG then
provides that the seller has the obligation to place the goods at the buyer’s disposal at the sellers
place of business. Often referred to as the “residue clause,” Article 31(c) CISG lays down the
principle that the seller must perform where its place of business is at the time of conclusion of
the contract. [16] The seller’s delivery obligation is satisfied by placing the goods at the buyer’s
disposal at the seller’s place of business. Furthermore this duty to offer the goods ready and
fit for carriage includes all necessary packaging.

Furthermore, it must be highlighted that there are no provisions under the CISG, dealing
specifically with the passing of title. The Convention concerns itself with risk rather than title.
Title is therefore left to national law and, when it is necessary to determine which national law
applies one refers to the rules of private international law (Article 7(2) CISG). It is significant,
moreover, that the CISG under Article 67(1) adds: “the fact that the seller is authorized to retain
the documents controlling the disposition of the goods does not affect the passage of risk”.

Article 32 CISG supplements Article 31 CISG when the sale involves carriage of goods. In
accordance with Article 32 CISG, there must be identification of the goods by the fixing of
labels or the address of the receiver if the goods are not clearly identified by markings on the
goods, by shipping documents or otherwise, and the seller is required to provide the buyer
notice of the consignment specifying the goods. As per Article 67(1) CISG, when these
conditions have been met, the risk passes to the buyer at the point of handing over the goods to
the first carrier. If the seller is bound to arrange for carriage of goods, Article 32 (2) CISG
provides that the seller must make such contracts that are necessary for carriage to the place
fixed by means of transportation appropriate in the circumstance and according to the usual
terms for such transportation.

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 SELLERS DELIVERY OFDOCUMENTATION
Based on party autonomy, the terms of the contract control this issue and can range form
documents of title, bills of lading, warehouse receipts, insurance policies, invoices, certificate
of origin, and certificate of control or quality. Therefore, if a seller is bound to hand over these
types of documents that relate to the goods, the seller must hand them over at the time and
place, and in the form as required by the contract.

However, courts have found that documentation may be in essence waived if the buyer fails to
provide notice of nonconformity pursuant to Article 39(1) CISG or if the actions of buyer
mandate that the seller hand over “delivery orders” instead of other documentation. Under
Article 34 CISG, if the seller has handed over documents before that time, he may, up to that
time, cure any lack of conformity in the documents, if 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 under the CISG.

TIME OF DELIVERY
The time for delivery of the goods is of the essence under the CISG, because the obligation of
the buyer to pay for the goods arises upon delivery. Article 33 CISG provides for three
circumstances regarding time of delivery. Under subsection (a) of Article 33 CISG, the seller
is under duty to deliver the goods on the date “fixed or determinable from the contract”; Article
33 (b) CISG provides that the seller must deliver the goods on any date within the period so
fixed, “unless circumstances indicate that the buyer is to choose a date” within that period. If
the date cannot be ascertained due to ambiguity or absence in a contract, courts will determine
whether the seller delivered the goods within a reasonable time after the conclusion of the
contract. In determining ‘reasonable time’, regard must be given to the “nature of goods, the
distance covered, and the parties’ statements during negotiations”.

Furthermore, a breach of an obligation under Article 33 CISG qualifies as a fundamental breach

in light of Article 25 CISG if the parties had agreed upon a fixed delivery date and if both
parties are clearly aware of the fact that delivery should take place at that certain date. Hence,
time must be of the essence or equivalent language. A fundamental breach can occur for non-
deliverance, delivery after stated date, or failure to deliver after additional time is given
provided said time is reasonable. However, it must be stressed a buyer’s tolerance of the late

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delivery may be considered equivalent to the granting of an “additional period of time” and
thereby precluding buyer from declaring avoidance under Article 49 CISG.

CONFIRMITY OF GOODS
At the heart of many international sale transaction disputes is the question whether the goods
delivered conform to the contract. Article 35 CISG is at the very core of the CISG and presents
a unified approach on the obligations of the seller in respect of the goods delivered to the buyer.

Accordingly, Article 35(1) CISG provides that “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”. Thus the decisive factor for determining whether the
goods conform to the contract is the contractual description of the goods. The characteristics
are therefore not based on objective standards of quality but rather on the denomination and
description of the required quality in the contract. In one illustrative CISG case on Article 35(1)
CISG, a Turkish company had promised to deliver 1,000 tons of fresh cucumbers to a buyer
doing business in Germany, but the seller allegedly delivered less than that amount. Since the
CISG applied, the seller was obligated to deliver goods of the quantity required by the contract,
and thus delivery of less than 1,000 tons constituted a contractual breach.

However, if the parties have not agreed otherwise, the goods only conform with the contract if
they are fit for the purposes for which goods of the same description would ordinarily be used
(Article 35(2) (a) CISG). In essence, under the CISG, the presumption is that goods “are fit for
the purpose for which goods of the same description would ordinarily be used” and are “fit for
any particular purpose expressly or impliedly made known to the seller at the time of the
conclusion of the contract”. However, this presumption is subject to an express agreement
among the parties to the contrary.

Furthermore, it must be stressed goods do not conform with the contract unless they 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 or judgment. A seller will also
breach its obligation if the goods do not possess the qualities held out to the buyer in a sample
or model (Article 35(2)(c) CISG), or if the goods are not packaged in a manner used for goods
or that is adequate to preserve and protect the goods (Article 35(2)(d) CISG).

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It must be highlighted, if the buyer had knowledge or could have been aware of any lack of
conformity at the conclusion of the contract; the seller is not liable for breach of contract
(Article 35(3) CISG). In addition, if the buyer fails to adhere to the procedural requirements of
the CISG, courts will dismiss a buyer’s claim of nonconformity. Although, it must be stressed
the burden of proof is on the buyer to slow lack of conformity.

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 CONCLUSION

In Conclusion it can be observed that the principal obligations of a Buyer are, namely the duty
to pay for the goods and the duty to take delivery of the goods. While these two requirements
form the core of the buyer’s obligations under a contract, it must be remembered that the buyer
is also subject to two separate duties in the sales transaction, namely to examine the goods and
to notify the seller of non-conformities.

Article 53 forms the legal basis for these two principal obligations. The determination of how
they are to be interpreted, in the absence of any specific contractual determination or any
established trade usage or customary use (in accordance with Articles 6 and 9) is laid out in
Articles 54-60.

Coming to the obligation of seller. The seller’s obligations are outlined in Articles 30–37 and
41 43, and supplement the contract of sale to the extent that they fill any gaps in the contract
by determining aspects of the sale, which the contract has not determined. Aspects like time
and place of delivery, and the practical effect of handing over documents to a carrier, are set
out here, but will always be subject to the contract. Central to this part of the CISG is Article
35, which governs the implied terms for goods regarding quality and fitness for purpose
(general or specific).

It may seem surprising to find a set of rules for the buyer’s conduct placed in this section of
the CISG—especially given the importance of these rules. But, as they pertain to the seller’s
obligation to deliver conforming goods, Articles 38, 39, 40 and 44 regarding examination and
notification are to be found here. These rules are vital to any case involving delivery of alleged
non-conforming goods, as the consequences of a failure to notify of non-conformity may be a
complete loss of remedy. In other words, without compliance with these rules on examining
the goods and notifying about non-conformity in time and in the right way, the buyer may
retain no right to any remedy, even if there clearly is a serious breach.

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 BIBLIOGRAPHY

The researcher has consulted following sources to complete the Final proposal:

1. BOOK
o Camilla Baasch Andersen, Francesco G. Mazzotta, Bruno Zeller,
Practitioner’s Guide to CISG, 2nd Edition, ISBN: 978-1-944825-18-8
2. Journal Article
o Alejandro Osuna-González, Buyer’s Enabling Steps To Pay The Price: Article 54 Of
The United Nation’s Convention On Contracts For The International Sale Of Goods.
o Rights and Obligations of the Seller and Buyer, Law Teacher.
3. Websites:
o https://arbitrationlaw.com
o https://uncitral.un.org/
o https://legal.un.org/
o https://uncitral.un.org/sites/uncitral.un.org/
o

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