74417811

Research Paper Title 2008/9

Termination of the contract as by the seller: a comparison between English law and the CISG.

A Research Paper submitted to the University of Manchester for the Degree of LL.M Masters (International Business Law) in the Faculty of Humanities.

School of Law
ID#744178

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April 2008/9
Declaration i. No portion of the work referred to in the research has been submitted in support of an application for another degree or qualification of this or any other University or other Institution of Learning. And ii. Copyright in the text of this thesis rests with the Author. Copies (by any process) either in full, or of extracts, may be made only in accordance with instructions given by the Author and lodged in the John Rylands University Library of Manchester. Details may be obtained from the Librarian. This page must from part of any such copies made. Further copies (by any process) of copies made in accordance with such instructions may not be made without the permission (in writing) of the Author. The ownership of any Intellectual property rights, which may be described in this thesis, is vested in the University of Manchester, subject to any prior agreement to the contrary, and may not be made available for use by third parties without the written permissions of the University, which will prescribe the terms and conditions of any such agreement.

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Title: Termination of the contract as a remedy for breach of contract by the seller: a comparison between English law and the CISG.

Abstract This essay focuses on the merchants commonplace problem which occurs when the sellers tender of performance deviates in some respect from his contractual obligation. A crucial challenge is therefore to identify the circumstances in which a buyer may be entitled to terminate the contract. The circumstances, in which the buyer will be entitled to terminate the contract for the sellers non-conforming delivery of goods and documents and consequently the mechanism of exercising the right and the circumstances in which the buyer may lose his right to terminate were explored. Furthermore, the circumstances in which the seller may have the right to cure were highlighted. Finally, from the discussions some comparisons between the English law of sale of goods with the Convention was drawn in order to show the extent of similarity and dissimilarity for termination of the contract between the two systems. It is, further, suggested that the English commercial law of sale may be more than adequate for commodity sales. However, there is much to be said for the view that the Convention is better suited for situation, where contractual continuance is more desirable than hair-trigger termination rights.

Keywords: Remedies for breach of contract; Termination; Lose of right; Right to Cure; English Sales law; The Convention.

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TABLE OF CONTENT
INTRODUCTION......................................................................................................................1 REJECTION AND TERMINATION, ONE REMEDY ORTWO?...........................................2 BUYER'S REMEDIES UNDER ENGLISH LAW AND THE CONVENTION..............3 TERMINATION FOR BREACH UNDER ENGLISH LAW AND THE CONVENTION..4 THE RIGHT TO REJECT THE GOODS..5 Failures in Delivery.......................................................................................................5 Delivery at the wrong time............................................................................................6 Early Delivery...............................................................................................................9 Delivery at the wrong place.........................................................................................10 FAILURE IN RELATION TO THE NATURE, QUALITY OR CONDITION OF THE GOODS.....................................................................................................................................11 Correspondence with description................................................................................12 Satisfactory Quality ....................................................................................................14 Fitness for purpose..15 Wrong quantity of the goods supplied ......................................20 RIGHT TO REJECT THE DOCUMENTS ............................................................................21 LOSE THE RIGHT TO TERMINATE THE CONTRACT ....................................................26 Acceptance .................................................................................................................26 By express Intimation....................................................................................27 Act inconsistent with the ownership of the seller..........................................27 By laps of reasonable time ............................................................................28 Waiver........................................................................................................................29 By election .....................................................................................................29 By estoppel ....................................................................................................30 SELLERS RIGHT TO CURE THE BREACH......................................................................32 COMPARATIVE ASSESMENT ............................................................................................34 CONCLUSION .......................................................................................................................36

7441781 REFERENCES.38

ABBREVIATIONS

CIF: FOB: BOL:

Cost Insurance and Freight Free On Board or Freight On Board Bill of Lading

7441781 INTRODUCTION

The contracting parties, in international sales of commodities, expect that their contract be performed as they contemplate when making the contract. However, when the circumstances change by wide swings in commodity prices between the making of the contract and the time for performance, it is frequent that one of the contracting parties seeks to evade performance of his own part in order to flee from a bad bargain1. In this setting, a right of rejection is of crucial importance to both parties. From the beginning of sales law courts and legislative draftsmen has vexed for examination of this right of rejection.2 This recurrent problem faced by the merchant arises whenever the sellers tender of performance deviates in some respect from his contractual obligation. A crucial challenge is therefore to identify the circumstances in which a buyer may be entitled to terminate the contract.3 This question will be addressed under two major legal sources, i.e. English law4 and The Convention on Contracts for the International Sale of Goods 1980 (the Convention). The courts and lawyers have used expressions to describe what is called in this study the right of termination of the contract.5 In English law, the right to terminate the contract depends in large part on the nature of the term which has been broken by the seller. 6 Therefore, the idea of termination for breach of a term, that is condition, is the most fundamental aspect of the sale of
1 2 3

See Treitel, H. G. (1991) Remedies for Breach of Contract: A Comparative Account. Oxford: Clarendon Paperbacks at 321-322 See Honnold. J. Buyers Right of Rejection: A Study in the Impact of Codification upon a Commercial Problem (Mar., 1949), University of Pennsylvania Law Review, Vol. 97, No. 4 pp. 457-481, at 457, footnote 1. See Scrutton, L. J. in Meyer, Ltd. v. Kivisto, 142 L. T. 480, 481 (C. A. 1930) summed up a lifetime of experience; ". . .As far as I remember, in every com- mercial litigation this question of whether you can reject or have a claim for damages has constantly been raised in various kinds of trade, and under various kinds of con- tracts, and, I daresay, will continue to be raised for centuries yet to come." Cited in n. 2 , at p. 457(f.n.1) 4 In the case of English law, the study will focus on the law regulating the buyer's remedies in light of the Sale of Goods Act 1979 (SGA) 5 Such as: termination," (Lord Wilberforce in: Photo Production v. Securicor ltd. [1980] A.C. p. 827 at 844.) "rescission," "repudiation," (Bettini v. Gye [1876] 1 Q.B.D. p. 183 at 187)"discharge," (Lord Wilberfortce in: Photo Production v. Securicor ltd. [1980] A.C. p. 827 at 844) "rejection," "cancellation," (Millar's Karri and Jarrah Co. v. Weddel [1909] 100 L.T. 128 at 129; Lord Salmon in: Decro-Wall S.A. v. Marketing Ltd. [1971] 1 W.L.R. p. 361 at 369; and [1971[ 2 All E R p. 216 at 223.) avoidance," (Lord Roskill in: Cehave N.V. v. Bremer m.b. h. (The Hansa Nord) [1976] 1 Q.B. p. 44 at 71.) "determination," (Gunton v. Richmond-upon-Thames L.B.C. [1981] ch. p. 448 at 468; Photo Production Ltd. v. Securicor Transport Ltd [1980] A.C. 827 at 850; Gator Shipping Corporation v. Trans-Asiatic Oil Ltd. (The "Odenfeld) [1978] 2 Lloyd's Rep. p. 357 at 370.) "treat the contract as at end" (Vitol SA v. Norelf Ltd. [1994] 4 All E R p. 109 at 114) treat the contract as repudiated," and "to put an end to all primary obligation of both parties," (Lord Diplock in: Photo Production Ltd. v. Securicor Transport Ltd [1980] 1 All E R p. 556at 566.) cited in Jafarzadeh, M.(Dec2001). 6 See Takahashi, K. Right to terminate (avoid) international sales of commodities (2003) J.B.L. 102, at p.102

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goods legislation.7 The convention adopts a mixture of Common Law and German principles in providing that the buyer may declare the contract terminated (avoided) either, where any breach by the seller is 'fundamental8or, where the breach is one of non-performance and the seller fails to perform within the additional period of time.9 Under both the systems it is expressly provided that the contract survives termination for the purpose of settling any dispute between the parties. While a full analysis of all of the implications of the Convention and English law would require a weighty treatise, this paper will take a focused view, based on certain spheres available for termination of the contract in the context of international sales of commodities. Firstly, this paper considers circumstances in which the buyer will be entitled to terminate the contract for the sellers non-conforming delivery. Then, it addresses the mechanism of exercising the right and the circumstances in which the buyer may lose his right to terminate. Further, it takes a short look at the circumstances in which the seller may have the right to cure. Finally, this paper compares English law with the Convention in order to emphasize similarity and dissimilarity for termination of the contract, between the two systems.

REJECTION AND TERMINATION, ONE REMEDY OR TWO?10

Where the sellers non-conformity caused by breach of condition, it is commonly said that the buyer is entitled to reject it and terminate the contract. However, the position of these two rights and their relationship is not quite clear in English law.11 There are several judicial dicta,12 academic writings13 which use one instead of another. In contrast, there can be found some
7 8

See, Carter, J. W. Party Autonomy and Statutory Regulation: Sale of Goods (1993) 6 Journal of Contract Law 93-122. Article 25 9 Article 47 (1). 10 See Jafarzadeh, M. Buyer's Right to Withhold Performance and Termination of Contract: A Comparative Study Under English Law, Vienna Convention on Contracts for the International Sale of Goods 1980,Iranian and Shi'ah Law (December 2001), para.2, available at http://www.cisg.law.pace.edu/cisg/biblio/jafarzadeh1.html. 11 Ibid.. In this connection, the language of the Act is also unclear. 12 See e.g., Bentsen v. Taylor, Sons & Co [1893] 2 Q.B. 274 at 281; Arcos, Ltd. v. E.A. Ronaasen & Son [1933] A.C. 470, per Lord Atkin at 480; Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] 1 Q. B. 44, per Ormerod LJ at 83 and 84; Kwei Tek Chao v. British Traders and Shippers Ltd [1954] 2 Q.B. 459 per Devlin J at 480; Lord Roskill in Bunge Corp v. Tradax Export S. A. [1981] 1 W.L.R. 711 at 724, 725. 13 See e.g., Treitel, G. H., (1991) The Law of Contract, (Sweet & Maxwell Stevens, London, 1991, 8th ed.). at 690;Carter, J. W.(1991) Breach of Contract, (The Law Book Company Ltd., Australia, 1991 2nd ed.). Paras. 102, 628, in particular, 940; Carter, J. W.: "Conditions and Conditions Precedent," 4 J.C.L. (No. 2) (1991 A) 90, at 102-103; Carter, J. W.: "Buyer's Remedies of Rejection and Cancellation under the

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cases14 and academic writings15 in which the right of rejection is distinct from the right of termination. Therefore, assuming that a buyer, who is aggrieved by the sellers breach of condition and where the time of performance is of the essence of the contract, would be entitled to terminate the contract.16

BUYER'S REMEDIES UNDER ENGLISH LAW AND THE CONVENTION

The two primary remedies for breach of contract in English law are a right to treat the contract as terminated and damages.17 The existence of the former under English law depends on the presence of an implied, that is, common law, right of termination for: (a) breach of an express or implied term classified as a condition; or (b) the sufficiently serious breach of an intermediate term. Termination for breach of condition arise where the terms broken by the seller is the subject of an express or implied promise.18 Termination for breach of an

intermediate term occurs where the stipulation is not such a condition but the breach is such as to go to the root of the contract, the other party is entitled to treat himself as discharged: but, otherwise, not.19 The English law also lays inconsequential emphasis on the specific performance.20

UCC and the Convention" 6 J.C.L. (1993) 93, at 95 and 110, cited in n.10. 14 See for instance, the old case of Reuter, Hufeland, & Co. v. Sala & Co. [1879] 4 C.P.D. 239. 15 Treitel, G. H., (1999) at 732 fn. 28 then p. 698; Bridge, M., (1997) at 162, 163; Atiyah, P. S. & Adams, J., (1995) at 449 and 456 fn. 30; Goode, R. M., (1995) at 362-363, to see further Jafarzadeh, M (December 2001) fn.50. 16 See Lord Roskill in Bunge Corpn. v. Tradax Export S.A. [1981] 1 W.L.R. 711 at 724, 725; see also Lord Scarman's judgement at 717; Reference can also be made to the f.o.b. case of Compagnie Commerciale Sucres Et Denrees v. C. Czarnikow Ltd. (The Naxos) [1989] 2 Lloyd's Rep. 462 per Butler Sloss L.J at 478.. 17 Mullis, L.C.A. Termination for Breach of Contract in C.I.F. Contracts Under the Vienna Convention and English Law; Is There a Substantial Difference? in Lomnicka / Morse ed., Contemporary Issues in Commercial Law (Essays in honor of Prof. A.G. Guest), (1997) 137160, available at http://www.cisg.law.pace.edu/cisg/biblio/mullis.html. 18 Subject to s15A Sale of Goods Act 1979, See. e.g. Wickman Machine Tool Sales Ltd. v. L. Schuler A.G. [1974] A.C. 235, Lord Simon of Glaisdale at pp. 264-265 pointed out that "condition" was the "appropriate word to describe a contractual term any breach of which... gives rise to a right... to terminate the contract."; The Mihalis Angelos [1971] 1 Q.B. 164 per Megaw L.J. at pp. 205-207; Carter, J. W. (1993) at 93. 19 Hongkong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1962] 2 Q.B. 26 per Upjohn L.J. at p. 64; See also a number of cases of 1970s where the courts extolled the virtues of the intermediate term, L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235; Cehave NV v Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] QB 44; Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989; Tradax Internacional SA v Goldschmidt SA [1977] 2 Lloyd's Rep 604; Bremer Handelsgesellschaft mbH v Vanden Avenne-Izegem PVBA [1978] 2 Lloyd's Rep 109. 20 See Benjamin 17-087 - 17-091; Phillips v. Lamdin [1949] 2 K.B. 33, (Ornamental door designed by Adam).

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The starting point of the buyers remedial provisions under the Convention is Art. 45(1) 21which provides that the buyer can resort to the following remedies: performance, including substitute delivery and repair; avoidance of the contract; reduction of the purchase price; damages.22 These remedies are more clearly structured in the Convention especially the case for the two most significant remedies, damages and avoidance of the contract.23 The convention adopts a mixture of Common Law and German principles in providing the right to declare the contract avoided.24

TERMINATION FOR BREACH UNDER ENGLISH LAW AND THE CONVENTION

Amongst various remedies available for breach of contract, termination is the most drastic measure.25 Termination by the buyer of a sale contract on shipment terms arise on the grounds of the sellers repudiatory breach.26 The seller has two types of obligation in international sales to perform; the physical obligations and the documentary obligations.27 The seller may fail to perform one or both of these duties which will lead the seller in repudiatory breach; and the buyer may have a right to reject in respect of any such failure. 28 This duality performance is of crucial significance in certain aspects of the law on CIF and FOB contracts particularly in the area of the remedies of rejection of goods and documents.29 Therefore the termination, the most radical contractual remedies should need to be analysed in binary terms as well.30

21

See Article 45(1) "If the seller fails to perform any of his obligations under the contract or this Convention, the buyer may: (a) exercise the rights provided in Arts. 46 to 52; (b) claim damages as provided in Arts. 74 to 77." 22 See Huber, P. CISG -- The Structure of Remedies, 71 Rabels Zeitschrist fr auslndisches und internationales Privatrecht (January 2007) 13-34, at p- 13, available at http://www.cisg.law.pace.edu/cisg/biblio/huber1.html 23 See Schlechtriem, P. Uniform Sales Law in the Decisions of the Bundesgerichtshof Translation by Todd J. Fox, available at http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem3.html#iii 24 Ibid; Katz, W. A. Remedies for Breach of Contract Under the CISG International Review of Law and Economics 25 (2005) 378396, at p378. 25 Takahashi, K (2003), p.102 26 See Shyam Jewellers Limited v M Cheeseman, CA 29 November 2001, A repudiatory breach of contract is a breach when a party intimates by words or conduct that it does not intend to honour its obligations under the contract, and is sufficiently serious to entitle the innocent party to bring the contract to an end. Available at http://www.brewerconsulting.co.uk/cases/CJ0201RR.htm accessed on 6th April 09. 27 See Debattista, C. (1998) The sale of goods carried by sea (2nd edition), London : Butterworths, at p.186; Biddell Bros. v. E. Clemens Horst Co [1911] 1 K.B per Hamilton .J, at p- 220; Hindley v. E. India Produce Co. Ltd [1973] 2 Lloyd's Rep 515. 28 See Benjamin 19-144 29 See Debattista, C. (1998) at 3; Biddell Bros. v. E. Clemens Horst Co [1911] 1 K.B. per Hamilton J. p- 220. 30 Ibid. at p.186

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Under the Convention, termination (avoidance) is the one-sided right of a party to terminate the contract by its mere declaration.31 There have been great differences of opinion among domestic legal systems concerning the question of under which circumstances the buyer may avoid the contract in case of non-conforming goods or documents. It is suggested that the position of the buyer under the Convention is broadly similar to English law.32 Article 30 requires separate obligations in relation to documents and goods on the seller. The buyer, thus, may exercise his right in two different situations; 33 where the sellers breach is a fundamental breach34of contract or where the seller does not perform his delivery obligation before the end of an additional period of time set by the buyer.35 Consequently, courts under the Convention justified avoidance in relation to three broad types of breach: namely, defects in the goods; defects in the documents; and, late performance and non-performance.36

THE RIGHT TO REJECT THE GOODS

Failures in Delivery It is the duty of the seller to deliver the goods in conformity with the contract to the buyer. 37 In modern international sales it was established that it was sellers duty to deliver the goods. 38 So sellers failure to comply his delivery obligation will entitle the buyer to reject the goods,

31

See the Convention, arts. 49, 64, 72 and 73 ("may declare the contract avoided"), cited in Hamburg, M. U The Remedy of Avoidence of Contract Under CISGGeneral Remarks and Special Cases(2005-2006) 25 J.L. & Com. at P-423. 32 See Mullis, A. Termination for Breach of Contract in C.I.F. Contracts Under the Vienna Convention and English Law: Is There a Substantial Difference? in E Lomnicka and G Morse (eds), Contemporary Issues in Commercial Law (Essays in honor of Prof. A.G. Guest) (1997), 137160, available at http://www.cisg.law.pace.edu/cisg/biblio/mullis.html 33 Kazimierska, A. (1999-2000) at p. page 95; Schlechtriem, P (n.23)at para III. 34 See Article 25 ; Kazimierska, A. (1999-2000) at p- 104; in determining whether a breach is fundamental, one must also take into account the possibility to cure the defect by means of reasonable efforts, as well as the possibility of using the goods despite that defect. cited in Ferrari, F. Fundamental Breach of Contract Under the UN Sale Convention- 25 Years of Article 25 CISG (2005-2006) 25 J.L. & Com. 503,at p- 504 35 Article 49(1)(a), 64(1)(a), 72 (1) (anticipatory breach) 73 (1) and (2) (instalment contracts). 'Fundamental breach' is defined in article 25. 36 See Mullis, A. Avoidance for Breach under the Vienna Convention; A Critical Analysis of Some of the Early Cases (1998) 326-355. at p338, available at http://www.cisg.law.pace.edu/cisg/biblio/mullis1.html.; Kazimierska, A. The Remedy of Avoidance under the Vienna Convention on the International Sale of Goods Kluwer (1999-2000) 79-192 , at p-104, available at http://cisgw3.law.pace.edu/cisg/biblio/kazimierska.html 37 See s.27 of SGA; Section 29 of SGA contains rules relating to the place, time, expense and other details of the delivery. 38 See Benjamin's at 1821; Scottish & Newcastle International Ltd v Othon Ghalanos Ltd [2008] UKHL 11, [2008] 1 Lloyd's Rep. 462.; Wiskin v Terdich Bros Pty Ltd ( 1928) Arg LR, at p. 242-3. For pre 1893 Act (where delivery was buyers duty) see Benjamin 8-018; and also Smith v Chance (1819) 2 B. & Ald. 753 at 755; Wood v Tassell (1844) 6 Q.B. 234; Wilkinson v Lloyd (1845) 7 Q.B. 27 at 44.

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specially two general issues of particular importance in international sales will be considered, namely, delivery at the wrong time and delivery at the wrong place.

Delivery at the wrong time Delivery at the wrong time may, of course, justify the buyer in refusing to take the goods at all.39 Where the seller fails to deliver the goods within the time limited for delivery, there is a breach of condition and the buyer is entitled to reject the goods and treat the contract as repudiated.40 In commercial contracts, time is frequently construed of the essence with respect to delivery,41even though this is not expressly stated in the words of the contract.42 In addition, Baron Bramwell
43

says that in the absence of express term it is necessary for those who

construe the instrument to see whether the parties intend to do it. However, in Compagnie Commerciale Sucres et Denres v C Czarnikow Ltd44 it was established that, there is no presumption or rule of law that stipulations as to time of delivery are of the essence of the contract. Upon this point some judicial dictums45 unanimously says that where the agreement was that a ship should sail on a particular day, that was a condition precedent, and breach of this condition give the buyer a right to treat the contract as at an end. In Hong Kong Fir,46 however, Diplock L.J. stated that time stipulation is not a condition; it is merely an innominate or intermediate term, unless the breach of it is seen to have deprived the party not in default of
39
40

See Atiyah, S.P. (2005) Sale of Goods (11th edition ), Publisher: Pearson Longman, at p-542. See Bailhache J. in Dudley, Clarke & Hall v. Cooper, Ewing & Co, (July 9, 10, 11, 14, 1919) Unreported, cited by McCardie J. in Hartley v Hymans [1920] 3 K.B. 488; Kwei Tek Chao and Others (Trading As Zung Fu Co.) v British Traders and Shippers LD. [1954] 2 Q.B. 459 per Devlin J. at p-472. 41 See Hartley v Hymans [1920] 3 K.B. 483 per McCardie, J. 42 See 1979 Act s.10(1); Bowes v. Shand (1877) 2 App. Cas. 455 , per Lord Cairns L.C. at 463, 464. (the sale of rice); Reuter v. Sala (1879) 4 C. P. D. 239 , per Cotton L.J at 249. (sale of pepper); Sharp v. Christmas (1892) 8 Times L. R. 687, per Lord Esher M.R.(the sale of potatoes); Plevins v. Downing 1 C. P. D. 226. Per Brett J. (deliver of iron); Coddington v. Paleologo (1867) L. R. 2 Ex. 193 , per Martin B. at 196, 197; Cerealmangimi SpA v Toepfer [1981] 1 Lloyd's Rep. 337; Hartley v Hymans [1920] 3 K.B. 475, 483. 43 See Tarrabochia v. Hickie , (1856) 1 H. & N. 188; 156 E.R. 1168.; Bunge Corp v Tradax Export SA, [1981] 2 Lloyd's Rep 1, per Lord Wilberforce at 6 the Courts should not be reluctant, if the intentions of the parties as shown by the contract so indicate, to hold that an obligation has the force of a condition, and that indeed they should usually do so in the case of time clauses in mercantile contracts. 44 (1990)1 W.L.R. 1337, 1347; Paton & Sons v. Payne & Co (1897) 35 S. L. R. 112 45 See Bunge Corp v Tradax Export SA, [1981] 2 Lloyd's Rep 1, per Lord Lowry, at 8; Bentsen v. Taylor, Sons & Co. [1893] 2 Q. B. 279. per Lord Esher M.R; Plevins v. Downing. (1875-76) L.R. 1 C. P. D. 226 per Brett J.; see also See Blackburn on Sale, 3rd ed. , pp. 244 et seq, cited in Hartley v Hymans [1920] 3 K.B. 484. 46 Hong Kong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1961] 2 Lloyd's Rep. 494; supported by Mr. Justice Parker in Bunge Corporation v. Tradax Export S.A. (1979) 2 Lloyd's Rep. 477.; see also Cehave N.V. v Bremer Handelgesellschaft m.b.H. (The Hansa Nord), [1975] 2 Lloyd's Rep. 445; [1976] 1 Q.B. 44; Reardon Smith Line Ltd v Hansen-Tangen, [1976] 2 Lloyd's Rep. 621; [1976] 1 W.L.R.

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substantially the whole benefit which he was intended to obtain from the contract. There are many cases,47 however, where terms of the breaches do not deprive the innocent party substantially, were nonetheless held to be conditions any breach of which entitled the innocent party to rescind the contract. Therefore, in Bunge48 Lord Wilberforce rejected Mr. Justice Parker contention and respectfully endorse Lord Justice Megaws49decision. Moreover, where the contract has no proviso as to the time of delivery, the goods must be delivered within a reasonable time.50 What is a reasonable time is a question of fact. But Maule, J.51 stated that the sailing within a reasonable time would also have been held to be a condition precedent. The case of Freeman v Taylor,52 however, is an express authority that the delivering within a reasonable time is not a condition precedent. The obligation to deliver on time as a condition has traditionally been reinforced by treating is as part of the description of the goods.53 As Lord Cairns cogently shown by the judgment in Bowes v Shand54 that this implied term is a condition of the contract and, if the seller shipped late, then, he is in breach of section 13 and buyer has the right to reject goods. However, the introduction of section 15A takes away the right to reject for braches of s.13; if the breach is only slight. Law Commission,55 however, indicated that, the traditional position has not been changed and, even if the goods are shipped one day late, the goods can still be rejected for breach of section 13. Therefore, it says that in the English law time of performance is often treated as of the essence of the contract such that failure to perform on time, even if only slightly late, will entitle the buyer to treat the contract as at an end.

47 48

See Bowes v. Shand , (1877) 2 App. Cas. 455; Reuter v. Sala , (1879) 4 C.P.D. 239 per Cotton L.J. Bunge Corp v Tradax Export SA.[1981] 2 Lloyd's Rep 1 at 6.

49
50

Bunge Corp v Tradax Export SA. [1980] 1 Lloyd's Rep. 294 in the Court of Appeal. See Sale of Goods Act 1979, section 29(3), s.59; Hick v Raymond and Reid (1893) A.C. 22, 51 See Glaholm v Hays, Irvine, and Anderson. 133 E.R. 743; (1841) 2 Man. & G. 257. 52 131 E.R. 348; (1831) 8 Bing. 124.; See also SHV Gas Supply & Trading SAS v Naftomar Shipping and Trading Co. Ltd. Inc. [2005] EWHC 2528 (Comm), [2006] 1 Lloyd's Rep. 163. 53 See Macpherson Train & Co Ltd v. Howard Ross & Co. Ltd. [1955] 1 W.L.R. 640 per McNair, J.; Kwei Tek Chao and Others (Trading As Zung Fu Co.) v British Traders and Shippers LD. [1954] 2 Q.B. 459 per Devlin J. at p-472. 54 (1877) 2 App Cas 455, at p.468, HL. 55 See Report No 160, Sale and Supply of Goods (1987), para 4.24

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As a general rule, under the Convention, late delivery does not constitute a fundamental breach.56 In most sales contracts there will be express provisions as to the time of performance. Thus, where the parties have settled that the delivery should be executed in the quickest possible way
57

and the seller is aware of the urgent need of the goods58 delivery hardly a

week after the stipulated date was held to be a fundamental breach. In the absence of express provision, Convention contains a fall-back provisions.59 The buyers declaration of avoidance requires additionally either a fundamental breach60or a failure by the seller to perform within an additional period of time set by the buyer for performance,61 provided that this period is of a reasonable length.62 Williams,63 thus, says that late delivery can only be fundamental where the buyer sets an additional period of time within which the seller fails to perform. In case of goods, however, with rapidly fluctuating prices64 and seasonal65 a short delay would entitle the buyer to declare the contract avoided immediately without fixing the additional time. Schlechtriem66 says that the late delivery of goods with a quoted market price is normally considered a fundamental breach. Furthermore, Schwenzer67says that where the seller promises the buyer several times that he will deliver at a later date, and by so doing puts him off for an unreasonably long period may amount to a fundamental breach. Thus, even if it was not
56

See Landgericht Miinchen,Germany, 20 Feb. 2002, available at http://cisgw3.law.pace.edu/cases/020220g1.html; Oberlandesgericht Miinchen, Germany, 1 July 2002, available at http://cisgw3.law.pace.edu/cases/020701g1.html) 57 See Hamburg, M. U The Remedy of Avoidance of Contract Under CISGGeneral Remarks and Special Cases(2005-2006) 25 J.L. & Com. at P-435 58 See Oberlandesgericht Diisseldorf, Germany, 21 Apr. 2004, available at, http://cisgw3.law.pace.edu/cases/040421g3.html 59 Articles 33, of the Convention. 60 Articles 25 61 Articles 47(1); Mullis, A. (1998) at p- 350 62 See Honnold, O.J. (1999) Uniform Law for International Sales under the 1980 United Nations Convention (3rd edition) Kluwer Law International, at p-211, available at http://www.cisg.law.pace.edu/cisg/biblio/honnold.html. 63 See Williams, E.A. Forecasting the Potential Impact of the Vienna Sales Convention on International Sales Law in the United Kingdom Review of the Convention on Contracts for the International Sale of Goods (CISG), Kluwer Law International (2000-2001) 9-57, available at http://www.cisg.law.pace.edu/cisg/biblio/williams.html 64 Hamburg, M. U (2005-2006)at p-435 65 See, Oberlandesgericht Disseldort Germany, 24 Apr. 1997, available at http://cisgw3.law.pace.edu/cases/970424g1.html; Corte di Appello Milano, Italy, 20 Mar. 1998, available at http://cisgw3.law.pace.edu/cases/980320i3.html. 66 See Schlechtriem, P. Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods(1986), at n.210, available at http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem.html. 67 See Schwenzer, I.Avoidance of the Contrtract in Case of Non-Conforming Goods (Article 49(l)(A) CISG) (2005-2006) 25 J.L. & Com. 437, at p- 439.

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fundamental before68or an insignificant breach69 the buyer can automatically terminate the contract.70 As asserted both by commentators and courts, a mere delay in delivery of the goods does not per se amount to a fundamental breach.71 Ferrari,72 however, says that it can only be derived from either the agreement of the parties, the practice, or the usages which bind the parties pursuant to Article 9 that compliance with a particular deadline is essential for the buyer. Therefore, a mere delay can be considered a fundamental breach of the contract. Further, a buyer could hardly avoid the contract for breach of late delivery, where the seller was not informed of the purpose of the purchase.73 Thus, time is of the essence and an integral74 part of the delivery obligation, any delay will amount to a fundamental breach.

Early Delivery Where a time has been fixed for delivery, it would appear that delivery before that agreed date is a breach of contract, entitled the buyer to reject the goods.75 As Lord Cairns76 stated that I should say it meant that the shipment must be madeneither before nor after those months. This has been reaffirmed by the HL in the leading case Bunge.77 Therefore, it makes clear that goods shipped too early can be rejected.

68 69

Ibid. n.6 at p 124 Mullis, A. (1998) at p-350 70 Art 49 (1) (b) 71 Ferrari, F. (2005-2006),at p-504 (fn. 119) 72 Ibid.. (fn 123). 73 See Babiak, A. Defining "Fundamental Breach" Under the United Nations Convention on Contracts for the International Sale of Goods (Spring 1992) 6 Temp. Int'l & Comp. L.J. 113, at 114 cited in Jianming Shen, 74 See DiMatteo, A.L., et al. The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence (Winter 2004) 34 Northwestern Journal of International Law and Business 299-440. available at http://cisgw3.law.pace.edu/cisg/biblio/dimatteo3.html 75 Reference was made to Cheshire and Fifoot, Law of Contract, 4th ed. (1956), pp. 221-222. Cited in Cehave v. Bremer [1976] Q.B. 44 at Page 52 76 See Bowes v Shand (1877) 2 App.Cas. 455, at p 464. 77 See Bunge Corp v Tradax Export SA. [1981] 1 W.L.R. 711 at 724725.

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The option given, under the Convention, the buyer to take or refuse delivery would apply only where the seller delivers goods at an earlier date; which would be inconsistent with the contract.78 It is up to the discretion of the buyer whether he accepts early delivery or not.79 The buyers refusal of an early delivery need not be based on a showing of inconvenience or fundamental breach.80 Article 52(1) does not provide the buyer the right to avoid the contract but the right to refuse the early delivery.81

Delivery at the wrong place As to the place of delivery the seller tenders delivery of the goods at the wrong place depends on whether the stipulation is a condition or is merely an intermediate term. Thus, Donaldson J82 says that to deliver in the right place is ordinarily a condition of the contract. However, Benjamin,83 said that there are some cases where the place of delivery might well be considered to be an intermediate term and entitle the buyer to reject the goods only if it is substantially deprive the buyer of the whole benefit of the contract. The obligation to deliver in the right place is a condition of the contract; as in international sales it is treated as forming part of the description.84 Moreover, section 32(1) provides that, as to the place of delivery, delivery of the goods to a carrier is prima facie deemed to be a delivery of goods to the buyer. But Lord Rodger85 arguing that the presumption under section 32 is displaced and thus under the English law, the goods would not have been delivered to the buyer by being shipped on the carriers vessel. The application of s.15A for minor breach, however, is not clear.
78 79

Article 30 and 52(1) See Enderlein, F. (1996) Rights and Obligations of the Seller under the UN Convention on Contracts for the International Sale of Goods, Ch. 5, 133-201, available at http://www.cisg.law.pace.edu/cisg/biblio/enderlein1.html. 80 See Comments on Article 52 by John O. Honnold [U.S.] in the 3rd ed. (1999) of the most frequently cited text on the CISG: Uniform Law for International Sales, available at http://www.cisg.law.pace.edu/cisg/text/e-text-52.html 81 Ibid.
82 83

See Aruna Mills Ltd v Dhanrajmal Gobindram [1968] 1 Q.B. 655 at 665. See Benjamin 8-024

84

Chuah, J. (2005) The Law of International Trade (3rd ed ), London : Sweet & Maxwell, at p-91; Gill & Duffus SA v. Societe Pour L'Exportation des Sucres SA [1985] 1 Lloyds Rep 621. 85 Scottish & Newcastle International Ltd v Othon Ghalanos Ltd, [2008] UKHL 11, [2008] Bus. L.R. 583, 589, at 20; further supported in The Albazero [1977] AC 774 , per Brandon J and Roskill LJ 800801 and 809812 respectively. Their reasoning was approved by Lord Diplock, at p 840

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As for the place of delivery, the Convention defines that, where a contract specified a particular place of delivery and the seller delivers the goods at the wrong place, the buyer can thereby reject the goods and declare the contract avoided only if dispatch from wrong place is to be regarded as a fundamental breach of contract.86 Moreover, where the seller has agreed to deliver the goods to a particular place and to hand them over to a carrier87 instructed by the buyer or to place them at the buyers disposal and tenders the goods at the wrong place, the seller has defectively perform his delivery obligation, and is therefore liable under articles 45(1) et seq. If the seller delivered the goods at the wrong place, however, he can still deliver at the right place before the delay which can constitute a fundamental breach.88

FAILURE IN RELATION TO THE NATURE, QUALITY OR CONDITION OF THE GOODS

In English law, the relevant duty of the seller in relation to the nature, quality or condition of the good may derive from an express or implied term of the contract.89 In the case of express terms, the right to reject depends on how the term is classified.90 Thus, there will be an automatic right to reject if the term is a condition, that is, of the essence of the contract.91 But if the parties do not make it clear then it will generally be treated as an intermediate term subject to the seriousness of the breach.92 On the other hand, there are number of implied terms into every international sale described in the Act. These are conditions,93 as to description (s.13), satisfactory quality (s.14 (2)) and fitness for purpose (s.14 (3)). The obligations imposed by

86

Article 25, 49(1) (a); Schlechtriem, P., Schwenzer, I. (2005) Commentary on the UN Convention on the International Sale of Goods (2nd English edition), Oxford : Oxford University Press, at p- 368; LG Aachen 43 O 136/92, May 14, 1993 (F.R.G.), available at http://cisgw3.law.pace.edu/cases/930514g1.html. 87 Articles 33. 88 See CA Grenoble #156, 29 March 1995, (Camara v. Magaron), Available at, http://www.cisg.law.pace.edu/cisg/wais/db/cases2/950329f1.html cited in n.82 at p -240. 89 Ibid. n.75. 90 See T. & J. Harrison v. Knowles & Foster (1918) 1. K.B. 608 91 See Chuah, J. (2005) , at p-89, para 3-16. 92 See Cehave N.V. v. Bremer Handelsgesellschaft m.b.H. , [1975] 2 Lloyd's Rep. 445; [1976] 1 Q.B. 44 per Lord Roskill 93 s. 13 (1) (A)

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these conditions must be complied to the seller otherwise the buyer may be entitled to reject the goods.94

Correspondence with description Most international sales controversies grow out of disputes over whether the goods conform to the contract.95 Therefore, the first implied term concerns the conformity of the goods with description.96 English courts strictly interpret this term as that the goods must correspond with the contractual description.97 The words that description98meant precisely the contractual description,99 that is, identification100 of the goods. Channell J101 describes that, The term sale of goods by description must apply to all cases where the purchaser has not seen the goods, but is relying on the description alone. Hence, it would most frequently apply to unascertained goods,102 but it may be applicable to specific goods where there is no identification otherwise than by description.103 To say that there is an implied condition that the goods shall conform to the description is equivalent to saying that the buyer is entitled to get what he bargained for.104 Thus s.13 makes description a condition, but the academics writings105 and judicial dictum,106 however, suggests that not all the descriptions of goods are conditions.
94
95

See Ademuni-Odeke, (1999) Law of International Trade, London : Blackstone, at p- 22 Honnold, O.J. (1999) at page 25.1 96 Section 13(1) 97 Mullis, A (1997); Wyer and Hawke v. Produce Brokers Co, (1921) 9 L1.L.Rep. 240, per Horridge J at 241; Biddell Bros. v. E. Clemens Horst Co [1911] 1 K.B. per Hamilton J p- 220; .Macpherson Train & Co. Ltd. v. Howard Ross & Co. Ltd. [1955] 1 W.L.R. 640; Ashington Piggeries Ltd. v Christopher Hill Ltd. [1972] A.C. 441; Niagara Grain Co. v. Reno, (1916), 8 O.L.R. 159, 32 D. L.R. 576 (contract for "No. 1 timothy" hay; No. 3 supplied); Alibastine Co. v. Canada Producer Co, (1914) 30 O.L. R. 394, 17 D.L.R. 813 (engine of specified type and power). 98 This expression is also used in section 18, rule 5 , but the Act nowhere defines its meaning.
99

See Ashington Piggeries v. Hill [1969] 2 Ll.L.Rep. 425 , 464 See Ashington Piggeries Ltd. v Christopher Hill Ltd. [1972] A.C. 441, per Lord Hodson at 466 101 See Varley v. Whipp [1900] 1 Q.B. 513 , 516 102 Ashington Piggeries Ltd. v Christopher Hill Ltd. [1972] A.C. 441, per Lord Guest at 475; Arcos Ltd. v. E. A. Ronaasen & Son [1933] A.C. 470 103 See Varley v. Whipp, [1900] 1 Q. B. 513, per Channel J, at p. 516; New Hamburg Mfg. Co. v. Webb, 1911, 23 O.L.R. 44, at p. 55; Thornett v. Beers, [1919] 1 K.B. 486, at pp. 488-9; Phillips v. Lamdin [1949] 2 K.B. 33, per Lord Hodson at 467.
100

104

See Chanter v. Hopkins, 1838, 4 M. & W. 399, per Lord Abinger, cited in Bowes v. Shand, (1877) 2 App. Cas. 455, per Lord Blackburn at p. 480 105 See Ademuni-Odeke, (1999) at p-24, 25; Takahashi, K (2003) at 109. 106 See Ashington Piggeries Ltd. v Christopher Hill Ltd. [1972] A.C. 441, per Lord Diplock, at 503; Macpherson Train & Co. v Howard Ross & Co (1955) 1 WLR 640; Tradax Internacional v Goldschmidt, [1977] 2 Lloyd's Rep; Tradax Export v European Grain & Shipping,[1983] 2 Lloyd's Rep. 100.

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When the words in question relate only to the quality of the goods and their description, the condition applied by s. 13 has no application.107 The distinction between these two conditions, however, is made by Lord Dunedin in Manchester Liners Ltd. v. Rea Ltd.108 that defects in quality do not render the goods not in conformity with the description if the goods remain in substance the goods contracted for. Furthermore, where there was a substantial addition to the commodity described, then it might be that the goods plus this addition would not correspond with the description.109Moreover, Chuah 110 stated that in international sales shipping terms are often treated as forming part of the description and hence, contractually binding. Unless goods are delivered which comply with the contract description, buyers, subject to the de-minimis rule,111 are entitled to reject.112 Therefore, even a minor nonconformity between the goods and their description, unless the nonconformity is de-minimis, will entitle the buyer to reject the goods.113 Scrutton L.J, thus, quoting McCardie J.114 stated that, there is a virtual presumption that words used in a commercial agreement are for the purpose and normally be taken seriously. Satisfactory Quality In order to reject the goods under s.14(2) the buyer has to show that, a term implies into a contract of sale, that goods supplied under the contract must be of satisfactory quality, is a condition,115 and he expressly or impliedly makes known to the seller any particular purpose. The expression satisfactory quality replaced the expression merchantable quality which
107 108

See Alfred C Toepfer v. Continental Grain Co. (1974) 1 Lloyds Rep 11

(1922) 2 A.C. 74, at 80; Ibid. n.123 109 See Pinnock Brothers v. Lewis & Peat Ltd. [1923] 1 K.B. 690; Robert A. Munro & Co. Ltd. v. Meyer [1930] 2 K.B. 312; British oil Cake Co. Ltd. v. J. Burstall & Co. Ltd. (1923) 15 Ll.L.Rep. 46; The Bow Cedar [1980] 2 Lloyd's Rep.601; Ashington Piggeries v. Hill [1972] A.C. 441. 110 Chuah, J. (2005) at 91; Meyer v Travaru (1930) 37 Lloyds Law Rep 204, per Rowlatt J at p 205. like, the name of the vessel to be used (Thomas Borthwick Ltd v Bunge Ltd (1969) 1 LI.R. 17); time of shipment (Asmore v Cox (1899) 1 Q.B.436); place of shipment (Gill & Duffus v Societe pour lExportation des Sucres (1985) 1 Lloyds Rep. 621); route to be used (Bergerco USA v Vegoil (1984) 1 Lloyds Rep. 440); Packaging (Manbre Saccharine Co. Ltd v Corn Products Ltd (1919) 1 K.B. 198); Nomination of port of shipment (Boyd v Louca (1973) 1 Lloyds Rep. 209). 111 S. 15A introduced by the Sale and Supply of Goods Act 1994 112 Rapalli v. K. L. Take Ltd. [1958] 2 Lloyd's Rep. 469, 479-480.
113
114

See Re Moore & Co. and Landauer & Co. (1921) 2 KB 519; Arcos Ltd. v. E. A. Ronaasen & Son [1933] A.C. 470 See Manbre Saccharine Co. Ltd v Corn Products Ltd (1919) 1 K.B. 198, cited in Chuah, J. (2005) at 89. See Jones v. Just (1868) L.R. 3 Q.B. 197, per Mellor J. at 202-203

115

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started its statutory life in the 1893 Act.

The term merchantable quality was used for

commercial purpose, that is, if the goods are not fit for one purpose it could be fit for other purpose.116 Under the new Act satisfactory quality requires fitness for all the purposes for which goods of the kind in question are commonly supplied;117 which do not have to be specially made known to the seller.118 Inadequacy is sufficient to annotate the breach of the condition of satisfactory quality in any of the goods supplied under the contract, will be a breach of condition for the whole of the goods and will entitle the buyer to reject the goods.119 Therefore, a very trifling defect120 or where the goods could not be safely121 used was not merchantable which will entitle the buyer to reject the goods.122 Additionally, Diplock .J123 held that the goods to be of such condition that they would remain of merchantable quality from the time of shipment throughout normal transit to the destination and for a reasonable time thereafter for disposal otherwise the buyer can exercise his right of rejection. Chuah,124 however, argue that there is no continuing obligation of satisfactory quality. Above all, with Lord Diplock125 it can be said that in commercial sales a short digression from the stipulated standard of quality will amount only to a warranty, a breach of which would not entitle the buyer to reject the goods. Furthermore, Walton J.126 hold that,

116

See Hardwick Game Farm v. Suffolk Agricultural Poultry Producers Association ("S.A.P.P.A.") [1969] 2 A.C. 31. per Lord Reid and Lord Morris of Borth-y-Gest at p. 75 ; Henry Kendall & Sons v William Lillico & Sons Ltd (1969) 2 AC 31; Aswan Engineering Establishment Co. v Lupdine Ltd (1987) 1 WLR 1; B. S. Brown & Son Ltd. v. Craiks Ltd. [1970] 1 W.L.R. 752. 117 See Goode, R. (2004) Commercial Law (3rd edition), London : LexisNexis UK, at p-299; 118 Bartlett v. Sidney Marcus Ltd[1965] 1 W.L.R. 1013, per Lord Denning M.R at 1017; see also, Shine v General Guarantee Corporation (1988) 1 All ER 911; Lee v York Coach & Marine (1977) RTR 35; Business Appliances Specialist ltd v Nationwide Credit Corpn Ltd (1988) RTR 32. On the current provision, See Thain v Anniesland Trade Centre (1997) SLT (Sh Ct) 102. 119 See Lamarra v Capital Bank plc (2007) SC 120 s.14 (2 B) (c), see also See Henry Kendall & Sons v William Lillico & Sons Ltd (1969) 2 AC 31 per Rougier .J.; Law Commissions Final Report para 3.34. Though this holding was deprecated with the reasoning of the majority in Henry Kendall & Sons v William Lillico & Sons Ltd. 121 s.14 (2B) (d) 122 Bridge, M. (2007) The international sale of goods: law and practice (2nd edition), Oxford : Oxford University Press, at p- 179. 123 See Mash & Murrell Ltd. v. Joseph I. Emanuel Ltd. [1961] 1 WLR 862, [1961] 1 All ER 485 (QB); Crother v Shannon Motor Co (1975) 1 WLR 30; s.14 (2B) (e))). 124 See Chuah, J. (2005) at 95, para 3-26. 125 Christopher Hill Ltd. v. Ashington Piggeries Ltd. [1972] A.C. 441,at p. 511; See also W. N. Lindsay & Co. Ltd. v. European Grain & Shipping Agency Ltd. [1963] 1 Lloyd's Rep. 437; . s.15A of the new 1994 Act. 126 Preist v Last [1903] 2 K.B. 148 p. 150, for opposing view see Mash & Murrell Ltd v Joseph I Emanuel Ltd [1961] 2 Lloyd's Rep. 326per Harman L.J.

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where a specific good is sold over the counter of a shop to a person who has an opportunity of examining the good sold, there was no implied condition of quality.

Bridge,127 Ademuni-Odeke,128 further, says that the ambit of s.14(2 ) covers not only the goods actually bought by the buyer and passing to him, but packages or containers in which the goods are sold,129 as well as information and instructions supplied with the goods.130 Failure to comply this obligation will be breach of s. 14(2) and rendering the buyer to terminate the contract.

Fitness for purpose In order to exercise an automatic right of rejection under s.14 (3), the particular purpose for which the goods are required must be made known by the buyer to the seller, 131 and the circumstances must be such as to show that the buyer relied, need not be total or exclusive, 132 on the sellers skill or judgment.133 In Hardwick Game Farm v. S.A.P.P.A134 thus, defines a communicated purpose, if stated with reasonably sufficient precision, will be a particular or given purpose. If this purpose is shown by the buyer, then no express intimation by the buyer is necessary; it will be implied135 and be an easy step to draw the inference of reliance,136 albeit he had never previously supplied goods of the particular dimensions ordered.137In S.A.P.P.A,138 however, Lord Reid contended that the case Manchester Liners Ltd. v. Rea Ltd.
127 128

139

is not any

Bridge, M. (2007), at p 173 Ademuni-Odeke, (1999) at p-26 129 Geddling v Marsh (1920) 1 KB 668; Niblett v Confectioners Materials Ltd (1921) 3 KB 387 130 Wormell v RHM Agriculture (East) Ltd (1987) 1 WLR 1091 131 See Christopher Hill Ltd. v. Ashington Piggeries Ltd. [1972] A.C. 441 page 477 132 See Cammell Laird & Co. Ltd. v. Manganese Bronze and Brass Co. Ltd. [1934] A.C. 402 , per Lord Wright, at 427; and the earlier case of Medway Oil & Storage Co. Ltd. v. Silica Gel Corporation (1928) 33 Com.Cas. 195 , per Lord Sumner, at 196; It is well settled that the reliance on the seller's skill and judgment need not be total or exclusive, though the Act makes no reference to partial reliance. 133 See Chuah, J. (2005) at p- 94, para 3-25.
134
135

(1969) 2 A.C. 31, per Lord Pearce at p. 114, per Lord Morris of Borth-y-Gest. at p. 93 See Mash & Murrell Ltd. v. Joseph I. Emanuel Ltd. [1961] 1 W.L.R. 862 , 866; Manchester Liners Ltd. v. Rea Ltd. [1922] 2 A.C. 74; Brown v. Edgington (1841) 2 Man. & G. 279; Jones v. Bright (1829) 15 Bing. 533. 136 See Teheran-Europe Co. Ltd. v. S. T. Belton (Tractors) Ltd. [1968] 2 Q.B. 545 , per Lord Denning MR at 554; Jones v. Just (1868) L.R. 3 Q.B. 197 , per Mellor J. At 202- 203; Christopher Hill Ltd. v. Ashington Piggeries Ltd. [1972] A.C. 441 page 477 137 See Cammell Laird & Co. Ltd. v. Manganese Bronze and Brass Co. Ltd. [1934] A.C. 402 138 [1969] 2 A.C. 31. at p. 81.
139

(1922) 2 A.C. 74

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authority for the assumption of reliance on the sellers skill and judgment. But Preist v Last140 says that the whole trend of authority has inclined towards this assumption and if it found that the goods was not fit for that purpose, when sold or after a short time, 141 there was breach of that implied condition. Therefore, relying on a recent case of Clegg142 it can be says that in English law, the buyer has a right to reject goods which are not of satisfactory quality.

Under the convention, according to Schlechtriem,143the judgement of Brett. L.J in 1877 says what article 35(1) today states; it imposes on the seller an obligation to deliver the quantity, quality and description required by the contract and to contain or package the goods in the manner required by the contract. These obligations will be express, or be implied.144 If sellers failure to comply these obligations constitutes a fundamental breach145 then buyer can declare the contract avoided; he must give the notice of defect,146 subject to the provisions of article 40. Thus, only if there is a serious breach of contract for defects in the goods the buyer is entitled to avoid the contract.147 Where the parties had explicitly agreed on certain central features of the goods, in doing so, if the goods do not conform to such express term the courts would hold a breach to be fundamental.148 This is the primary rule on the assessment of the conformity of goods to the

140

[1903] 2 K.B. 148, p- 150 See Lambert v Lewis [1981] 2 Lloyd's Rep. 17 142 Clegg v Olle Andersen t/a Nordic Marine [2003] EWCA Civ 320, per Lady Justice Hale 143 Schlechtriem , P. The Seller's Obligations Under the United Nations Convention on Contracts for the International Sale of Goods (1984), Ch. 6, pages 6-1 to 6-35. at page 6-19. quoting Randall v. Newson, (1877)2 Q.B. 102 (C.A.), per Lord Justice Brett:: "The governing principle ... is that the thing offered or delivered under a contract of purchase and sale must answer the description of it which is contained in words in the contract, or which would be so contained if the contract were accurately drawn out." Available at http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem10.html. 144 Mullis, A. Avoidance for Breach under the Vienna Convention; A Critical Analysis of Some of the Early Cases (1998) 326-355 at page 337, see also (fn 71) http://cisgw3.law.pace.edu/cisg/biblio/mullis1.html 145 Article 25 146 Article 39
141

147

Article 49(1) (a); This avoidance is not subject to the precondition of fixing an additional period of time. (OLG Dsseldorf10 February 1994, available at http://cisgw3.law.pace.edu/cases/940210g2.html ; CISG Advisory Council Opinion No. 5 The buyer's right to avoid the contract in case of non-conforming goods or documents available at http://www.cisg.law.pace.edu/cisg/CISG-AC-op5.html; Schlechtriem , P. Ibid n. 23 148 See CIETAC (China International Economic and Trade Arbitration Commission), 30 October 1991, available at http://cisgw3.law.pace.edu/cases/911030c1.html; GERMANY, BGH, 3 April 1996 available at http://cisgw3.law.pace.edu/cases/960403g1.html

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contract.149 Thus if the time for delivery has been essential in a contract, a reparable lack of conformity will be considered a fundamental breach of contract.150 Mullis151 further, says that late shipment by the seller may be a breach of Article 35(1) because it does not conform to the contractual description. If the parties have not agreed otherwise, the secondary rule in Article 35(2) applies. With the default rule of Article 35(2)(a), the parties do not need to specify the purpose, as long as the goods are to be used for their ordinary purposes. This rule is so widely accepted as the sellers implied obligation to provide goods which conform to the contract. 152 The goods fit for ordinary purposes should be capable of being resold.153 To be fit for ordinary purpose, further, where the goods are below average quality may also be said to conform to the contract and still merchantable.154 Bianca,155 however, leaves the matter open and undecided. Finally, a recent arbitral award on the CISG156 says that the average quality, or of higher or lower quality of the delivered goods will be decided on the basis of price and other circumstances.157 In addition the divergences in the goods from governmental regulations are to be considered a defect in quality.158 Schlechtriem,159 however, argues that the violation of government food regulations must not necessarily represent a defect in quality, unless other
149

Henschel, F. R. Interpreting or supplementing Article 35 of the CISG by using the UNIDROIT Principles of International Commercial Contracts and the Principles of European Contract Law (November 2004) available at http://cisgw3.law.pace.edu/cisg/biblio/henschel.html; Secretariat Commentary to Article 35(1) (Section 33(1) of the Commentary, http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-35.html; GERMANY, OLG Stuttgart, 12 March 2001, http://cisgw3.law.pace.edu/cases/010312g1.html; see also SWITZERLAND, Appellationsgericht Basel-Stadt, 22 August 2003, CISG-online 943. cited in http://www.cisg.law.pace.edu/cisg/CISG-AC-op5.html. 150 Kazimierska, A. (1999-2000), p- 107 151 Mullis, L.C.A. (1997), 152 Honnold, J.O., Documentary History of the 1980 Uniform Law for International Sales (Deventer, 1989) p. 255;Schwenzer, I. in Schlechtriem, P. & Bacher, K.(eds.), Kommentar zum Einheitlichen UN-Kaufrecht 3rd ed. (Mnchen, 2000), Art. 35, p 377 cited in Henschel, F. R (2004). 153 Veneziano, A Veneziano, A., "Non Conformity of Goods in International Sales. A Survey of Current Caselaw on CISG", International Business Law Journal no. 1 (1997), p. 39-65, at 44. 154 Herber, R. & Czerwenka, B., Internationales Kaufrecht (Mnchen, 1991), Art. 35, p. 164, pt. 4; Ziegler, U., Leistungsstringsrecht nach dem UN-Kaufrecht (Baden-Baden, 1995);., p. 70; Su, X., Die vertragsgeme Beschaffenheit der Ware im UNCITRAL-Kaufrecht im vergelich zum deutschen und chinesischen Recht (Mnster, 1996), p. 28. cited in Henschel, F. R (2004) 155 Bianca, C.M. & Bonell, M.J., Commentary on the International Sales Law (Milan, 1987), Art. 35, p. 281; see also, Honnold, J.O., Uniform Law for International Sales under the 1980 United Nations Convention, p. 255 et seq., pt. 225 see also (Mussels case)Germany 8 March 1995 Bundesgerichtshof [Supreme Court], available at http://cisgw3.law.pace.edu/cisg/cases/950308g3.html. 156 Netherlands 15 October 2002 Netherlands Arbitration Institute, Case no. 2319, paragraphs 117 and 118, available at http://www.unilex.info/case.cfm?pid=1&id=836&do=case>. 157 Bianca, C.M. & Bonell, M.J., (Milan, 1987), Art. 35, p. 281,pt. 3.1 158 BGH of 8 March 1995, BGHZ 129, 75 ff. available at <http://cisgw3.law.pace.edu/cases/950308g3.html>].; M. Caiato Roger v. La Socit Francaise de Factoring, Appelate Court Grenoble, France 13 September 1995, available at http://cisgw3.law.pace.edu/cases/950913f1.html, cited in Neumann, T. Features of Article 35 in the Vienna Convention; Equivalence, Burden of Proof and Awareness (2007/1) 81-97 http://www.cisg.law.pace.edu/cisg/biblio/neumann.html 159 Schlechtriem , P. Ibid n. 23

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circumstances indicate otherwise. This has been confirmed in other cases, including decisions from common law jurisdictions.160Furthermore, where the accompany documents do not conform to the contract description, this is to be treated like a defect in quality.161 It is possible that there is no fundamental breach in cases in which the buyer can make some use of the defective goods.162 There are cases, however, appears to have been markedly less strict on this factor. Thus, in an American case,163 the seller's failure to comply with the requirements entitled the buyer to terminate the contract notwithstanding that he may have been able to make use of the goods actually delivered. In this sense, Mullis164 opines to consider all the surrounding circumstances and intention165of the parties so as to decide how important the term broken was to the buyer. In Article 35(2)(b), it is stated that the seller only has to comply with the particular purpose made known to him both expressly and impliedly.166 So where the buyers relied on the sellers skill and judgment and the goods contracted for are not fit for particular purpose, which the seller knew, buyer can reject the goods.167 There is no reliance where the buyer acts contrary to advice from the Seller.168
160

United States 17 May 1999 Federal District Court [Louisiana] (Medical Marketing v. Internazionale Medico Scientifica), available at <http://www.unilex.info/case.cfm?pid=1&id=360&do=case>; Spain 2 March 2000 Audiencia Provincial [Appellate Court] Granada, available at <http://www.unilex.info/case.cfm?pid=1&do=case&id=889&step=Keywords>; Germany 21 August 1995 Landgericht [District Court] Ellwangen , available at <http://www.unilex.info/case.cfm?pid=1&id=164&do=case>; Germany 29 January 2004 Oberlandesgericht [Appellate Court] Frankfurt am Main, available at <http://www.unilex.info/case.cfm?pid=1&id=970&do=case>; Australia 17 January 2003 Supreme Court of Western Australia (Ginza Pte Ltd v Vista Corporation Pty Ltd), available at <http://www.unilex.info/case.cfm?pid=1&id=961&do=case>; Austria 13 April 2000 Oberster Gerichtshof [Supreme Court]; available at <http://cisgw3.law.pace.edu/cases/000413a3.html>; 161 GERMANY, BGH, 3 April 1996 available at http://cisgw3.law.pace.edu/cases/960403g1.html ; CISG Advisory Council Opinion No. 5, at para 4.9 162 Bundesgerichtshof, 3 April 1996, http://cisgw3.law.pace.edu/cases/960403g1.html; OLG Mnchen, 2 March 1994, http://cisgw3.law.pace.edu/cases/940302g1.html; see also, OLG Dsseldorf 6 U 119/93, 10 February 1994, http://cisgw3.law.pace.edu/cases/940210g2.html; OLG Frankfurt, 17 September 1991, http://cisgw3.law.pace.edu/cases/910917g1.html; OLG Frankfurt, 18 January 1994, http://cisgw3.law.pace.edu/cases/940118g1.html.). Cited in Huber, P. (January 2007) 13-34, p-26 Ibid.n.23. 163 Delchi Carrier S.p.A. v. Rotorex Corp 71 F 3d 1024 (1995) cited in Mullis, A (1998) Ibid.n.159; see also 71 RabelsZ (January 2007) 13-34, p-26 available at http://cisgw3.law.pace.edu/cisg/biblio/huber1.html cited in Huber, H. (January 2007) 13-34, p-26 Ibid.n.23. 164 Mullis, A (1998) page 341, Ibid.n.159; see also Koch, P. The Concept of Fundamental Breach of Contract under the United Nations Convention on Contracts for the International Sale of Goods (CISG) at p-234 165 Caiato v. Soc. Franaise de Factoring International Factor France, Cour d'Appel de Grenoble, 13 September 1995, http://cisgw3.law.pace.edu/cases/950913f1.html, cited Mullis, A (1998) page 341, (fn 83)Ibid.n.159 ; Spain 3 October 2002 Audiencia Provincial [Appellate Court] Pontevedra, available at <http://www.unilex.info/case.cfm?pid=1&id=895&do=case> 166 Neumann, T. (2007/1), note 7 see also fn.4; see also Landgericht Ellwangen, 21 August 1995, 1 KfH O 32/95. (Spanish paprika case) available at http://cisgw3.law.pace.edu/cases/950821g2.html
167

Landgericht Mnchen, Germany 27 February 2002, Cisg-online.ch number: 654 available at http://cisgw3.law.pace.edu/cases/020227g1.html cited in Neumann, T. (2007/1), Ibid. n174; Reliance occurs when the seller is a professional or an expert but not merely an intermediary (Schlechtriem, p., Schwenzer, I. (2005) Commentary on the UN Convention on the International Sale of Goods, (ed) Published Oxford : Oxford University Press, at p. 422.) 168 Enderlein, F. and Maskow, D. (1992) International Sales Law: United Nations Convention on Contracts for the International Sale of Goods; Convention on the Limitation Period in the International Sale of Goods, Publisher New York : Oceana, at p.109; Henschel, F. R. (2005) The

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As Bianca169 Jafarzadeh170 and LachmiSingh171 said that close consideration of Arts. 46(2), (3), 71(1) and the principle of good faith dictates that the buyer is not entitled to reject the goods for minor nonconformity or he knew or could not have been unaware of the lack of conformity. So from above discussions it can be stated that the common core of all legal systems: that the seller shall assume responsibility that the goods sold conform to the contractual agreement.

Wrong quantity of the goods supplied In the carrying out of a commercial contract some slight elasticity with regard to the quantity of goods is unavoidable.172 The tender of shortfall or excess quantity evidences an unreadiness and unwillingness to perform the contract.173 Therefore, this duty is a strict one, and any failure in this respect normally entitles the buyer to reject the incorrect quantity of goods delivered. 174 By s.30(1) the buyer has a statutory right to reject the contract goods if the seller deliver less then the contracted amount, subject to section 30 (2A). Chitty,175 however, argued that a delivery which is defective under this section does not entitle the buyer to treat the contract as repudiated. Benjamin,176 however, mentioned that quantity of the contract goods is part of their
Conformity of Goods in International Sales, Copenhagen : Thomson/GadJura, at p. 237. cited in Neumann, T. (2007/1), Ibid.n.174.
169

Bianca, C. M. et al. (1987) Commentary on the International Sales Law. The 1980 Vienna Sales Convention (1987) Milano : Giuffr e, at p.392.; see also Schlechtriem, P. (1986) Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods Published by Manz, Vienna, at p- 67 available at http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem-35.html . 170 Jafarzadeh, M. (December 2001), note - 1.2.5.see aalso fn.263 Ibid. n. 9 171 Singh, L. United Nations Convention on Contracts for the International Sale of Goods (1980) [CISG]: An examination of the buyer's right to avoid the contract and its effect on different sectors of the (product) market (February 2006), art. 49 available at http://www.cisg.law.pace.edu/cisg/biblio/singh.html
172

See Benjamin 12-029; Reuter v. Sala, (1879) 4 C.P.D. 239; Falconbridge, D. J. (1921) Handbook Of The Law Of Sale Of Goods, Canada Law Book Company, chapter v, available at http://chestofbooks.com/business/law/Handbook-Of-The-Law-Of-Sale-Of-Goods/index.html, accessed on 15.03.09. 173 Ibid. n.176. 174 Honck v. Muller, (1881) 7 Q.B.D. 92 per Bramwell L. J. at p. 99; Gill & Duffus v Societe pour lExportation des Sucres (1985) 1 Lloyds Rep. 621.per Lord Diplock at p.396 175 See Beale, H. (2008) Chitty on contracts (30th ed.) London: Sweet & Maxwell, at 43-285 (available at Westlaw); Behrend & Co v Produce Brokers Co [1920] 3 K.B. 530. 176 Benjamin 12.029; Polenghi v. Dried Milk Co. (1904) 10 Com. Cas. 42 ; Crozier, Stephens & Co. v. Auerbach [1908] 2 K. B. 161 , at p. 167; Champion v Short (1807) 1 Camp. 53, as explained in Tarling v O'Riordan (1878) 2 L.R.Ir. 82. cited in Beale, H. (2008), at 8-046.

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description; short delivery ranks as no delivery and it produce much the same effect as that of breach of condition. Furthermore, s.30(2) provides that where the seller delivers a quantity of goods excess than the buyer contracted to sell he can generally reject the whole of the goods delivered subject to s.30 (2A).177 And it produces much the same effect as that of breach of condition.178 This led to the conclusion that where the sellers had delivered to the buyers a quantity of goods less or more than they have contracted for, would be a breach of condition; thus entitling the buyers to reject the goods.

The Convention does not provide rule for less quantity delivered. Under Article 52(2) the buyer may accept or reject any excess goods. The delivery of excess quantity can, in some circumstances, constitute a fundamental breach and enable the buyer to avoid the contract and return the entire delivery.179 Honnold,180 further, says parties who are acting in good faith, a sellers refusal to make a reasonable arrangement would give the buyer an added rationale for supporting rejection of the entire shipment. The missing accompanying documents treat as a defect in quantity.181 The buyer, however, may require accepting the goods when the excess in quantity is trivial or is not inconsistent with the practices established by the parties or usage 182 or when the seller does not claim full payment for delivery183

RIGHT TO REJECT THE DOCUMENTS

177

Arcos Ltd v Ronaasen & Sons [1933] AC 470; Shipton Anderson & Co v Weil Bros & Co [1912] 1 KB 574; Gabriel, Wade & English Ltd v Arcos Ltd (1929) 34 LI L Rep 306 178 Cunliffe v Harrison, (1851) 6 ExCh.903 at p.906 179 demand cash for excess (Schlechtriem, P. (1986) at 79, Ibid. n.185; Honnold, O. J. (1999) at p 347 Ibid. n. 71 Lookofsky, J. The 1980 United Nations Convention on Contracts for the International Sale of Goods, 29 (December 2000) 1-192. p- 127 n- 235 (fn.1)available at http://www.cisg.law.pace.edu/cisg/biblio/loo52.html) 180 Honnold, O. J. (1999) at p 347 181 CISG Advisory Council Opinion No. 5, Ibid. n.161. 182 Art. 9 183 Honnold, O. J. (1999) at p 347

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Much of the English law on the international sale of goods was developed in relation to the documentary sales of commodities.184 Thus, the academics185 and courts186 have emphasized that generally both in FOB contract and CIF contracts the role of the documents becomes much more important delivery obligation. According to The Julia187 sellers are obliged to tender three documents188 to the buyer those are bill of lading (BOL), marine insurance policy and invoice. Devlin J189 thus, says that, among these documents if they are tender as defective or they are tendered late, then the buyer is entitled to reject. According to Takahashi190 documentary breach arises when they are not in conformity with the sale contract. The right to reject for nonconformity follows where the delivered document is not genuine.191 It is an essential part of the contract to tender genuine documents relating to the goods complying with the contract to the buyer.192 A BOL contain false information about an aspect of the performance of the contract, like where it did not, refer the initial shipment of the goods193or portray the actual (contractual) state of affairs at the time of shipment194 or the wrong destination195 or deviate from stipulated route of voyage196 is not a genuine document. The presence of a divergence clause in the BOL may entitle the buyer to reject the goods as it may enable the carrier to depart from the stipulated shipment route.197 In contrast, Burstall v

184 185

Ibid. Merrett, L. Case Comment: Place of delivery in international sales contracts (2008) Cambridge Law Journal, at p.246 186 Bowes v Shand (1877) 2 App.Cas. 455, per Lord Blackburn, at p 482; Alfred C Toepfer v Lenersan Poortman NV [1980] 1 Lloyds Rep. 143. 187 Comptoir d'Achat et de Vente du Boerenbond Belge S/A Appellants; v Luis de Ridder Limitada Respondents. (The Julia) [1949] A.C. 293. 188 Moreover, Lord Wright in Smyth v Bailey (1940) 3 All ER 60, at p-67, mentioned notice of appropriation as another document which the seller has to tender if the contract goods are unascertained; see also Proctor & Gamble v Becher , [1988] 2 Lloyd's Rep. 21, per Kerr L.J. at 22 189 Kwei Tek Chao v. British Traders and Shippers Ltd [1954] 2 Q.B. 459 at 480; Benjamin 19-144.
190
191 192

Takahashi, k. (2003) at p. 116

Griffin, B., and Day, D. M, (2003) The Law of International Trade (3rd ed) London : Butterworths LexisNexis, at p.80 James Finlay & Co. Ld. v. N. V. Kwik Hoo Tong H.M, (1929)1 KB 400, CA, per Scrutton L.J p 408; Kwei Tek Chao v British Traders & Shippers Ltd [1954] 2 Q.B. 459 per Devlin J at p. 476) ; Motis Exports Ltd v Dampskibsselskabet AF 1912 A/S (No.1) [2000] 1 Lloyd's Rep. 211; P T Putrabali v. Socit Est Epices [2003] 2 Lloyds Rep 700; Kreditbank Cassel G.m.b.H. v. Schenkers Ltd. [1927] 1 K.B. 826; 43 T.L.R. 237 . per Bankes L.J at p. 835 193 Foreman & Ellams Ltd v Blackburn (1928) 2 KB 60 194 Landauer v. Craven & Speeding Brothers [1912] 2 K. B. 94 , at pp. 104, 105. 195 McKendrick, E. (2000) Sale of Goods, London : LLP, at p 662, (fn 78); Lecky & Co. Ltd v. Ogilvy Gillanders and Co. (1897) 3 Com. Cas. 29; Soules CAF v. P. T. Transap of Indonesia (1999)1 lloyds Rep. 917, p-921 196 McKendrick, E. (2000) p 662 (fn 80); Bergerco USA v Vegoil Ltd (1984) 1 Lloyds Rep. 440;
197

Shipton, Anderson & Co v. John Western & Co (1922) 10 Ll. L.R.762

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Grimsdale198 says deviation clauses are now a common feature in the BOL which will not entitle the buyer to reject the documents. The shipping documents must be valid and effective not only at the date of shipment or when it was issued but also at the time of tender,199 that is, the whole of the voyage to be undertaken.200 Any derogation from it can result in repudiation of the contract.201 Bailhache. J,202 however, contended that the seller does not warrant the validity or effect of his documents. If they become invalid or inoperative in consequence of the outbreak of war, that is the buyers risk. 203 The buyer cannot impose on the seller a guarantee that the documents shall continue to be effective.204 If the documents were good in their inception the sellers had performed their duty of the contract205 and they are bound to accept the tender.206 The buyer can reject the documents where the BOL is not clean.207 Where the BOL has been altered to correspond with other documents that must be tendered by the seller, there is a presumption that the BOL is unclean and entitled the buyer to reject the documents. 208 Re Salomon,209 in contrary, hold that alteration to the BOL does not entitled the buyer to reject the documents; though Phillmore .J opposed in the same case. It is a trite law210 that where the documentary defects is discovered before taking delivery of the goods, the buyers are entitled to reject the consignment even though the goods had been paid for and property in them had

198 199

(1906) 11 Com. Cas. 280 Karberg v. Blythe, Green, Jourdain & Co [1915] 2 KB 379; (1916) 1 KB 495, CA, per Swinfen Eady L. J. (p-506), per Bankes L.J. (p510), and per Warrington L.J. (p-514); Esposito v. Bowden. 7 E. & B. 763, per Willes J p- 783; in Janson v. Driefontein Consolidated Mines. [1902] A. C. 484, per Lord Lindley p- 509. 200 Colin & Shields v. W Weddel &Co Ltd (1952) 2 All E.R. 337 201 Hansson v Hamel & Horley Ltd (1922) 2AC 36, per Lord Summer at P 46. 202 Sanday & Co. v. British and Foreign Marine Insurance Co. [1915] 2 K. B. 781. p- 786 203 Duncan, Fox & Co. v. Schrempft & Bonke. [1915] 3 K. B. 355., per Atkin J at p. 370; Groom v. Barber [1915] 1 K. B. 316. p 325 204 McKendrick, E. (2000) at.p.372 para 13-038.; Manbre Saccharine Co Ltd v Corn Products Co Ltd (1919) K.B. 198 205 Landauer & Co. v. Craven & Speeding Brothers [1912] 2 K. B. 94.; Crozier, Stephens & Co. v. Auerbach. [1908] 2 K. B. 161 206 Sanders Brothers v. Maclean & Co. (1883) 11 Q. B. D. 327 207 Bridge, M. G. (2007)The international sale of goods: law and practice (2nd ed.) Oxford : Oxford University Press, at p178., para- 4.90; M Golodetz & Co Inc v Czarnikow-Rionda Co Inc (The Galatia) [1980] 1 W.L.R. 495 per Donaldson J. at. p-509; Cehave NV v Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] Q.B. 44.at 71 208 SIAT di del Ferro v. Tradax Overseas SA[1980] 1 Lloyds Rep. 53 209 Re Salomon & Co Naudszus (1899) 81 L.T. 325 210 Gill & Duffus v. Berger [1984] A.C. 382, per Lord Diplock at p. 395

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passed to the buyer.211 Documents may be defective where a c.i.f. seller tendered documents which did not include all those required by the contract; the buyer could no doubt reject the tender.212 However Benjamin213said that question of rejection depends on the significance of the missing document. The position is, however, different, if the document, which reveals a defect in goods, is not, in itself, a defective document.214 Benjamin,215 conversely, says that the documents disclosed a breach in the goods justifying their (i.e., the goods) rejection or not itself justifying rejection216 will entitle the buyer to reject the documents. A case decided in the High Court of Australia,217 that a c.i.f. buyer is entitled to reject conforming shipping documents, if it should subsequently turn out that the actual goods shipped under the conforming documents did not in fact conform to the contract. Lord Diplock,218however, says that there was thus no rationale for this decision and those judgments is not the law of England.

The buyer is entitled to reject the documents where the late shipment disclosed in the documents.219 The general is that the seller under c.i.f. contract must tender the shipping documents to the buyer as soon as possible or the time specified in the contract of sale. 220 The buyer, therefore, is entitled to reject the documents if they are not tendered within the time limit specified in the contract.221
211

Kwei Tek Chao v. British Traders and Shippers Ltd. [1954] 2 Q.B. 459, per Devlin J p- 487; One may argue that in C.I.F. contract it is predicted that property on the goods passes on the tender of documents. But Atkin L.J., in the course of his judgment in Hardy & Co. (London) Ld. v. Hillerns and Fowler,[1923] 2 K.B. 490, dealt with this situation and says that the buyer undoubtedly retain a right, to examine the goods when they arrive, and to reject them if they are not in conformity with the contract. 212 Re Denbigh Cowan & Co. and R Atcherley & Co. (1921) 90 L.J.K.B. 836. 213 Benjamin 19-148; Mantovani v Carapelli SpA [1978] 2 Lloyd's Rep. 63 at p.72 (affirmed without reference to this point [1980] 1 Lloyd's Rep. 375). 214 Benjamin 19-146; Mullis, A. (1998) at pp. 344.345 Ibid. n.159; Tradax Internacional S.A v Goldschmidt S.A. [1977] 2 Lloyd's Rep 604. per Slynn L.J at 612 613; P T Putrabali v. Socit Est Epices [2003] 2 Lloyds Rep 700, See 3 arguments in favour of this (Debattista, C, (1998) The sale of goods carried by sea (2nd ed) London : Butterworths, , at. p192,193). 215 Benjamin, 19-147; Vargas Pena Apeztieguia y Cia v. Peter Cremer G.m.b.H. [1987] 1 Lloyd's Rep 394 216 Cehave NV v Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] Q.B. 44.per Roskill LJ at 71. 217 Henry Dean & Sons (Sydney) Ltd. v. O'Day Pty. Ltd. (1927) 39 C.L.R. 330 per Knox C.J. and Higgins J. , To which reference is made in Berger & Co. Inc. Appellants v Gill & Duffus S.A. Respondents [1984] A.C. 382, by Lord Diplock at 391,392. 218 Berger & Co. Inc. Appellants v Gill & Duffus S.A. Respondents [1984] A.C. 382, by Lord Diplock at 391,392 219 Proctor & Gamble Phillipines Manufacturing Corpn. v. Kurt A. Becher G.m.b.H. & Co. K.G. [1988] 2 Lloyd's Rep 21 220 Sanders Bros v Maclean &co (1883) 11 Q. B. D. 327. 221 Alfred C Toepfer v Lenersan Poortman NV [1980] 1 Lloyds Rep. 143; . Parker v. Schuller (1901) 17 Times L. R. 299.

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Now the question is whether the 1994 Act has taken away the right to reject where the documentary breach is only slight. Section 15A and 30(2A), however, applies to breaches related goods;222 but it is arguable223 that section 15A should also apply in the documentary aspects in shipment sales. Therefore, if the breach is so slight that it would be unreasonable for him to reject them, then buyer can not reject the documents.

So far as the position under the Convention is concerned, it says little about the documents.224 These documents could be BOL, the insurance policy, invoice etc.225 Thus, failure to tender conforming these documents constitutes a breach of contract. The right to avoid the contract in accordance with Art 49(1)(a) ,however, is conditional upon the buyer establishing that the breach was fundamental.226 Schlechtriem227says that the lack of insurance coverage may deprive the buyer of the possibility of reselling the goods in transit; and this ignorance can constitutes a fundamental breach. Moreover Huber228says that failure to present the documents required by the contract; relevant usage; practices; or the presentation of defective documents must be regarded as a fundamental breach. But in Cobalt sulphate case229the court refuse Huber views and reject the buyer to declare the contract avoided, as he could not prove sufficient detriment to constitute a fundamental breach. It was, further, argued by Schlechtriem,230 that it is possible to assert a fundamental breach without proving the detriment.

222

Law Commission Report No 160, Sale and Supply of Goods (1987) (available for download at http://www.scotlawcom.gov.uk/downloads/rep104.pdf) 223 Benjamin, 19-151 224 Article 34, Mullis, L.C.A (1997). 225 Enderlein, F. Rights and Obligations of the Seller under the UN Convention on Contracts for the International Sale of Goods (1996),133201, p.153 available at http://www.cisg.law.pace.edu/cisg/biblio/enderlein1.html. 226 See Mullis, A. (1998) at p- 344, 227 Schlechtriem, P. (1986), 60, at para 210, 228 Schlechtriem (1998.), Commentary on the UN Convention on the International Sale of Goods (CISG) (2nd ed. in English translation by Thomas) comment on art.49 (by Huber) at 16. cited in Takahashi, K (2003). Ibid.. n. 6. 229 GERMANY, BGH, 3 April 1996 available at http://cisgw3.law.pace.edu/cases/960403g1.html cited in Mullis, A. (1998) at p- 344, Ibid. n. 41 230 Schlechtriem, P. (1986)

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According to Mullis231 the decision of Cobalt sulphate case is the only case where the question of fundamental breach under the Convention for tendering defective documents has been considered. As it stated that the fundamental breach could not be determined by looking at the documents exclusively. Mullis,232 nevertheless, argued that since Article 30 states that the contract may impose separate obligations in relation to goods and documents. Therefore, breach in respect of either, if fundamental, should entitle the buyer to avoid the contract. Further, where the buyer could easily remedy the defective documents by obtaining correct documents the seller can not treat the tender of defective documents as defective; and declare the contract avoided.233 Mullis,234 however, contends that this is an unjustifiable burden on the buyer which has no basis in the Convention. In other cases235 the buyers remedied duty has been resisted and courts have allowed buyer to avoid the contract. In case of trivial documentary breaches Mullis236says that, to treat this trifling documentary breaches court has to see what the buyer has expected from that particular contract.237 Moreover Will238 has pointed out that it is to be judged objectively taking account of the type of contract concluded the commercial background, and all the terms of the contract. So pursuant to Takahashi239a presumption can be established that a documentary breach is a fundamental breach.

LOSE THE RIGHT TO TERMINATE THE CONTRACT

231 232

Mullis, A. (1998) at p- 346, Ibid. at p- 346, 347; Mullis, L.C.A (1997). 233 OLG Dusseldorf 6 U 119/93, 10 February 1994, available at http://cisgw3.law.pace.edu/cases/940210g2.html; GERMANY, BGH, 3 April 1996 available at http://cisgw3.law.pace.edu/cases/960403g1.html; LG Heidelberg O 42/92, 3 July 1992 available at http://cisgw3.law.pace.edu/cases/920703g1.html 234 Mullis, A. (1998). at pp. 347, 348. 235 ICC Court of Arbitration, 7531/1994,http://cisgw3.law.pace.edu/cases/947531i1.html ; LG Baden Baden, 19910814, 14 August 1991, http://cisgw3.law.pace.edu/cases/910814g1.html 236 Mullis, A. (1998) at p- 348 349. 237 Article 25. 238 Bianca, C. M., Bonnell, M. J. (1987), comment on art. 25 (by Will. M); see also Text of Secretariat Commentary on article 49, para 7,(reads that the buyer will have right to reject the document albeit that discrepancy was of little practical significance) available at http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-49.html 239 Takahashi, K (2003). P.127. Ibid. n. 6.

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Where a buyer makes unequivocal representations by express words or by implication that he will accept the goods, may lost his right of rejection under the common law doctrines of acceptance, waiver and estoppel; and the provisions of the SGA.

Acceptance The notion of acceptance constitutes an important limitation upon the buyers right of return.240 In deciding acceptance the buyer must have a reasonable opportunity to examine the goods241 and to receive all the information from the seller.242 The statute243 distinguishes three244 ways of acceptance: (i) an intimation of acceptance, (ii) acts inconsistent with the seller's ownership, and (iii) an acceptance because of unreasonable delay.

By express Intimation The first portion of section 35 enacts that the buyer is deemed to have accepted the goods when he intimates to the seller by words or by conduct that he has accepted them245unqualifiedly.246 An acceptance is conditional, if, upon examination the goods being ultimately found to be conform to contract.247 An intimation of acceptance before the buyer has had a reasonable opportunity to examine the goods is not a binding acceptance.248 Atkin L.J,249 however, contended that intimation of acceptance may be made before buyer has had a reasonable opportunity of examination. Furthermore, where there having been acceptance of the goods, the

240 241

Stoljar, S. The Doctrine of Acceptance in sales (1957) 1 Melbourne U.L.R. 483. at P. 483; Goode, R. M. (2004), at p.346. See sections 35(2) and 35(5); Goode, R. M. (2004), at p.221; Bridge, M. G. (2007), at p.441; Biddell Bros. v. E. Clemens Horst Co. [1911] 1 K.B. per Hamilton. J.at P- 221; Polenghi v. Dried Milk Co (10 Com. Cas. 42 .I. 242 Clegg v Olle Andersen t/a Nordic Marine [2003] EWCA Civ 320 per Lady Justice Hale. 243 ss. 34 to 35 244 Scott L.J in Halsbury's Laws of England, Hailsham ed., vol. 29, p. 224, para. 297 (said the right to reject is lost by two ways, that is, (ii) and (iii)) cited in Kwei Tek Chao v. British Traders and Shippers Ltd. [1954] 2 Q.B. 459, per Devlin J p- 485; Atiyah, P. S. (2005) at 508( further said a buyer can also be held to have accepted the goods, where he does not discover the sellers breach of his right) 245 Stoljar, S. (1957) at P. 483; Chuah, J. (2005) p. 161, para 5-02 246 Aird & Coghill v. Pullan & Adams, 7 F. 258. 247 Carter & Co. v. Campbell 12 R. 1075. 248 The Law Commissions cited in Atiyah, P. S. (2005), at p.511 249 Hardy & Co v Hillerns and Fowler, 1923] 2 K.B. 490.at 498

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buyer is entitled to reject them for latent defects.250 Lord M'Laren,251 however, firmly holds that, as the buyers had accepted and used the goods in question, they were barred thereafter from rejection, even if the goods were affected by a latent defect.

Act inconsistent with the ownership of the seller In general delivering or reselling the goods to a sub-buyer is an act inconsistent with the sellers ownership.252 Similarly the resale of the goods before inspection253or delivering the goods to the carrier for transmission to the third party254 would be an act inconsistent with the ownership of the seller. In contrast, it was firmly established that delivering the goods to a sub-buyer;255 a mere inquiry to resale256 or a claim against the insurer for damages257 is not an inconsistent act. It is further, however, says that where the buyer do an act inconsistent with the sellers reversionary right, buyer will lose his right of rejection.258 Moreover it was held that where a buyer, with knowledge of the breach,259 takes delivery of the goods, acts upon it and keeps them, it will be construed that he has accepted the goods.260

By laps of reasonable time

250

Mechan & Sons, Limited v. Bow, M'Lachlan & Co., Limited, (1910) S. C. 758, per Lord Salvesen at p. 763; Mechans v Highland Marine Charters (1964) SC 48, per Lord Mackintosh; see also Fleming & Co. (Limited) v. Airdrie Iron Co. 9 R. 473;Carter & Co. v. Campbell, 12 R. 1075.; M'Caw, Stevenson, & Orr, Limited v. Maclaren & Sons20 R. 437; Munro & Co. v. Bennet & Son,(1911) S. C. 337. 251 Morrison & Mason, Limited v. Clarkson Brothers, (1898) 25 R. 427, at 433; see also, Nelson v. William Chalmers & Co., Limited (1913) S. C. 441per Lord Kinnear p. 450; Pearce Brothers v. Irons, 7 Macph. 571; Mechans v Highland Marine Charters (1964) SC 48. per Lord JusticeClerk; Perkins v. Bell [1893] 1 Q.B. 193 252 Atiyah, P. S. (2005), at p.515; Morrison & Mason v Clarkson Bros (1898) 25 R 427.); Hardy & Co v Hillerns & fowler (1923) 2 KB 490 253 Scott L.J in Halsbury's Laws of England, Hailsham ed., vol. 29, p. 224, para. 297, cited in Kwei Tek Chao v. British Traders and Shippers Ltd. [1954] 2 Q.B. 459, per Devlin J p- 485.; during the time of examination, see Hardy & Co. (London) Ld. v. Hillerns and Fowler [1923] 2 K.B. 490; 39 T.L.R. 547. 254 E& S Ruben Ltd v Fair Bros & Co Ltd (1949) 1 KB 254 per Hilbery J; Hammer & Barrow v Coca-Cola (1962) NZLR 723, (noted in (1963) 26 Mod LR 194). 255 The Law Commissions, Sale and supply of Goods, para. 5.38. cited in Atiyah, P. S. (2005), at p. 513 (fn 70); see also s. 35(6)(b). 256 Fisher Reeves & Co Ltd v Armour & Co Ltd (1920) 3 KB 614, per Srutton LJ at 624 257 J & S Robertsons (Aust) Pty Ltd v Martin (1955-6) 94 CLR 30 258 Kwei Tek Chao v. British Traders and Shippers Ltd. [1954] 2 Q.B. 459, per Devlin J p- 487; Atiyah, disagree with this, see for contrary argument Atiyah, P. S. (2005), p- 515. 259 Also of a bill of lading and the fact that it is a nullity. 260 Goode, R. M. (2004), at p.352. substantial or repeated or prolonged use, see Armaghdown Motors v Gray (1963) NZLR 5; Lamarra v Capital Bank Plc (2004) GWD 40-817

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As Benjamin261 and Stoljar262said that, the notion of reasonable time prevents the existence of any long-term right to reject. It is, therefore, necessary to consider what amounts to a reasonable time. A reasonable time would include an opportunity of examining the goods263 and the time taken to resell the goods together with an additional period in which they could be tested by the sub-buyer.264 A buyer, in English law, lost his right to reject the goods fairly quickly. 265 It has been, however, argued that the buyer has a long-term right to reject. 266 On the other hand, proposals to alter the law to create such a long-term right have been rejected. 267 So it can be said that the reasonable time to reject the goods depends on circumstances. 268 Further, a buyer may lose his right to rescind the contract by failing to make their election within a reasonable time.269 A buyer, however, is not deemed to have accepted goods if he asks for or agrees to their repair by the seller.270 GowFR271 and Benjamin272 suggested that the question of acceptance under section 35 neither arises before section 34 nor where the buyer obtains something other than that for which he contracted. In short, thus, it can be said that the buyer will only lose his right to reject by accepting all of the goods, or by accepting goods included in the same commercial unit.

Waiver

261 262

Benjamin 12-055 Stoljar, S. (1957). P- 483. 263 s.35(2) 264 Truk (UK) Ltd v Tokmakidis GmbH (2000) 2 All ER (Comm) 594, per Judge Jack QC 265 Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 AER 220 per Rougier J; see also Motor Oil Hellas (Cornish) Refineries SA v Shipping Corp. of India (The Kanchenjunga) [1990] 1 Lloyd's Rep. 391 at 398, HL; Percival v. Blake ((1826) 2 C. & P. 514.per Abbott C.J at 576 266 six months see Clegg v Olle Andersen t/a Nordic Marine [2003] EWCA Civ 320; Rogers v Parish (Scarborough) Ltd (1987) QB 933: Cash v. Giles (1828) 3 C. & P. 407. 267 See Law Com. No.160, Sc. Law Com. No.104 (1987), paras 5.6-5.19; above, cited in Benjamin 12-055. 268 Jones v Gallagher [2004] EWCA Civ. 10; [2005] 1 Lloyd's Rep. 377 269 Clough v. London and North Western Railway Co. (L.R. 7 Exch. 26) per Mellor J.at 35.; failure to give early notice of unfitness of goods may destroy the provability of his complaint, see Fisher v. Samuda (1808) 1 Camp. 190; Okell v. Smithc (1815) 1 Stark. 107 cited in Stoljar, S. (1957). pp.485, 486; Groning v. Mendham,( (1816) 1 Stark. 256.); Hopkins v. Appleby'((1816) 1Stark. 477, per Lord Ellenborough p- 479. 270 s.35 (6) (a). In contrary Lord Marnoch says that through a retendering of repaired goods the buyer could not lost his original right of rejection.( Atiyah, P. S. (2005), p- 520) 271 GowFR, B.C.L. Sale of Goods- Right of Rejection (1949) 12 M.L.R. 368 272 Benjamin (12- 066)

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According to Eno273 the principle of waiver were fostered by the interpretation given by the case of Littlejohn v. Shaw274 to its actual ruling. Therefore, a buyer may lose his right of termination by way of waiver by election and estoppel.275 By election A waiver by election is an expression of an intention to affirm the contract.276 Once the buyer chooses to affirm the contract with actual knowledge; he can not go back upon it and seek to reject the goods.277 Further, where a buyer elects to accept non-contractual goods, he is bound by his election.278 Benjamin279 however, says that this act of election can be retracted with the consent of the other party

By estoppel Waiver by estoppel arises when the buyer agreed by a separate agreement 280 with the defaulting seller or by his conduct led the seller to believe that he will not exercise his right of rejection.281 It does not matter whether the buyer has any knowledge of representation or not. It may be, however, difficult to establish that the representation was unequivocal where the buyer is not aware or at least has no obvious means of knowledge. 282 In regard to document the buyer may lose his right of rejection by an implied waiver by accepting the shipping documents.283 The

273 274

Eno R.L. Price Movement and Unstated Objections to The Defective Performance of Sales Contract(1935). 44 Yale L.J. 782, at 782. Littlejohn v. Shaw, (1899). 159 N. Y. 188, 191, 53 N. E. 810, 811, cited in ENO, R.L. (1935). At 782; Where the New York CA declared that if a particular objection is taken to the performance and the party is silent as to all others, they are deemed to be waived.
275
276

Stoljar, S. (1957). P- 487; Debattista, C. (1998) at. P. 214, 215 Benjamin 12-037 277 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp. of India (The Kanchenjunga) [1990] 1 Lloyd's Rep. 391 at 398 ; Panchaud Frres SA v Etablissements General Grain Co [1970] 1 Lloyd's Rep. 53 per Lord Denning MR quoting Roskill J at 57 cited in McKendrick, E. (2000), at p- 44 para 10.17; See also s.11(2).; See also McKendrick, E. (2000), p-489. para 10.008 278 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp. of India (The Kanchenjunga) [1990] 1 Lloyd's Rep. 391 at 399, per Lord Goff of Chieveley. 279 Benjamin 12-037 280 Kwei Tek Chao v British Traders and Shippers Ltd [1954] 2 Q.B. 459 per Devlin J. at 477. 281 Bridge, M. G. (2007), at p-445. para 10.17; McKendrick, E. (2000), p.489, para 10.009; Benjamin 12-035; Avimex SA v Dewulf & Cie. [1979] 2 Lloyd's Rep. 57 per Robert Goff J.at 67.); Finagrain SA v Kruse [1976] 2 Lloyd's Rep. 508 per Megaw L.J;at 535; Hughes v. Metropolitan Railway Co., (1877) 2 App.Cas. 439. cited in (The Kanchenjunga) [1990] 1 Lloyd's Rep. 391 at 399, by Lord Goff of Chieveley. 282 Bremer Handelsgesellscheft mbH v C. Mackprang Jr., [1979] 1 Lloyd's Rep. 221 283 Panchaud Frres SA v Etablissements General Grain Co [1970] 1 Lloyd's Rep. 53 at 57; see also Bridge, M. G. (2007), at p.447. para 10.17. The buyer, however, is not estopped from rejecting the goods on arrival when he finds a physical breach by the seller other than in the documentary defect. (See Benjamin 19-151)

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buyer cannot extract from this binding position, where it would be inequitable to do so.284 Benjamin,285 however, says that the buyer can extract from his position if he gives notice to enable the seller to resume his former position.

Under the Convention the buyer loses his right to declare the contract avoided, where he fails to give notice for nonconformities specifying the nature of the lack of conformity within a reasonable time286 after he has discovered it or ought to have discovered it.287 If the goods are defective in several aspects, notice must be made to each defect individually.288 The buyer, further, forfeits his right to avoid where he failed to notify the seller about the defect specifying the nature of the third-party right or claim within a reasonable time.289 However, the buyer retains this right, in spite of his failure to examine and give the notice,290 if the lack of conformity relates to facts of which the seller knew or could not have been unaware and which he did not disclose to the buyer.291 The remedy, further, is lost if it is impossible for the buyer to make restitution of the goods substantially in the condition in which he received them.292 These restrictions apply before293 as well as after294 the declaration of avoidance. The buyers avoidance right may be further blocked when concurrent restitution, that is, the price cannot be refunded.295 A buyer may be barred from avoidance if he contributed to the sellers failure by his own act or omission. 296
284 285

Birmingham and District Land Co. v L. & N.W. Ry (1888) 40 Ch.D. 268.cited in Benjamin 12-035 Benjamin 12-035. 286 two years. 287 Article 39; Pretore dela Giurisdizione di Locarno-Campagna, 27 April 1992, <http://cisgw3.law.pace.edu/cases/920427s1.html> (PACE), See also Enderlein & Maskow, supra note 13, at 158-159, cited in Kazimierska, A.(1999-2000), at (fn 197). 288 OG Zug 24 March 1998, http://cisgw3.law.pace.edu/cases/980324s1.html; OLG Celle, 10 March 2004, http://cisgw3.law.pace.edu/cases/040310g1.html; cited in Schlechtriem, P., and Schwenzer, I. (2005) p. 464 para 10. 289 Article 43 290 UNILEX D.1997-2, CLOUT 192, cited in Honnold, O. J(1999) p- 273 291 It refers to the seller's deceit and gross negligence as well.see Schlechtriem, P.(1986) at p. 77. This exception laid down in article 40 292 Article 82(1); Magnus, U.(2005-06) at 428; Schlechtriem, P. (1986) at 105; Kazimierska, A.(1999-2000), p- 126.; Jafarzadeh, M (Dec 2001) at p411; for exceprtional case (Bundesgerichtshof, Germany, 25 June 1997, http://cisgw3.law.pace.edu/cases/970625g2.html cited in Magnus, U.(2005-06) at 428-429.) 293 See OLG Koblenz, 27 September 1991,<http://cisgw3.law.pace.edu/cases/910927g1.html>; OLG Dsselldorf, 10 February 1994,<http://cisgw3.law.pace.edu/cases/940210g2.html> 294 Enderlein, F. and Maskow, D. (1992) at 346. 295 Enderlein, F. and Maskow, D. (1992) at 347. 296 Aeticle 80; see also Schlechtriem, P.(1986) at p.105

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Further, the buyer's right to avoid the contract is also lost297 if he waits too long after delivery to declare his intent to avoid.298 The buyer may also lose his right if he failed to avoid within a reasonable time, after the seller failed to deliver the goods within the promised additional period.299

SELLERS RIGHT TO CURE THE BREACH

At law the buyer has the absolute right to reject defective goods. It seems unfair to the seller if the defect is small and can be easily remedied.300 In this respect, Goode301 relying in a number of cases,302 confidently opines that where the buyer lawfully rejects the non-conforming goods, the seller has a general right to make a fresh tender, provided that the time for delivery has not yet expired.303 Jafarzadeh,304 further, says it appears from Goode that this right to cure can also exercise where the sellers breach constitutes a breach of the statutory implied conditions. The buyer, however, can reject a re-tender in this case, if the sellers time for performance is made of the essence of the contract, or if it is too late for him to do so. 305 Atiyah, Bridge and others,306 on this view, disagreed and says that the buyer is always entitle to reject the non-conforming goods and terminate the contract, where sellers delivery of goods does not comply to a
297 298

Ibid. p- 77 Ibid. 299 Shen, J. (Winter 1997), at p- 25. 300 Priest, L. G. Breach and Remedy for the Tender of Nonconforming Goods Under the Uniform Commercial Code: An Economic Approach.(1977-1978), 91 Harv. L. Rev. 960 at p- 961. 301 Goode, R. M (1995) at pp.363-367; Goode, R. M. (2004); Devlin, Lord.Treatment of Breach of Contract, (1966) C.L.J. 192; Apps, A. The Right to Cure Defective Performance [1994] L.M.C.L.Q. 525; Treitel, G. H. (1999) The Law of Contract, (10th ed.),London: Sweet & Maxwell Stevens, at p. 732 (fn. 28) and then p. 698 (fn. 14) 302 Tetley v. Shand (1871) 25 L.T. 658; Borrowman Phillips & Co. v. Free & Hollis (1878) 4 Q.B.D. 500, per Bramwell, L.J, at 502; Ashmore & Sone v. C.S. Cox & Co [1899] 1 Q.B. 436; Longbotton v. Bass Walker [1922] W.N. 245; Motor Oil Hellas (Corinth) Refineries S.A. v. Shipping Corpn of India (The Kanchenjunga) [1990] 1 Lloyd's Rep. 391 at 399. ; Bremer Handelsgesellschaft m. b.H. v. J. H. Rayner & Co. Ltd. [1979] 2 Lloyd's Rep. 216; Empresa Exportadora de Azucar v. Industria Azucareva Nacional S.A. (The Playa Larga) [1983] 2 Lloyd's Rep. 171; E. E. & Brian Smith (1928), LD. v. Wheatsheaf Mills. LD. [1939] 2 K.B. 302; McDougall v Aeromarine of Emsworth [1958] 3 All E.R. 431; Agricultores Federados Argentinos v. Ampro S.A [1965] 2 Lloyd's Rep. 157; Gertreide Import Gesellschaft mb H v Itoh & Co. (America) Inc. [1979] 1 Lloyd's Rep. 592; S.I.A.T. Didal Ferro v. Tradax Overseas S.A [1980] 1 Lloyd's Rep. 53; cited in Jafarzadeh, M. (Dec 2001) see also Ziegel,S.J. (1984) at fn. 59. 303 Eno R.L. (1935) at p- 783; Benjamin 8-052; Bridge, M.(2007), at p.344, Cure, for specific goods, by repairing (p. 344,see also fn. 49) 304 Goode, R. M. (1995) at 274-277, 294,, 362-367, cited in Jafarzadeh,M. (Dec 2001).at 2.1.3. 305 Goode, R. M., (1995) at 365 and then 279. See also Devlin, L. (1966) at 203 306 Bradgate, R. (1995), at 247; Bridge, M. (1997), at 163, 198-201; Atiyah, P. S. & Adams, J. (1995), at 455-456;

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condition of the contract, regardless of whether time for performance is made of the essence of the contract. Furthermore, they said that the cases cited by Goode in favour of the existence of a right to cure by the seller cannot be authorities on this issue.307 As these cases defined where the sellers had not effectively appropriated goods to the contract. In such a case, if the sellers offered goods do not comply with the contract description, he can withdraw his tender and can make a fresh offer.308 This option does not apply where the seller has made a binding appropriation or delivery obligation.309 The seller, however, may be entitled to cure his fault for nonconforming delivery which does not comply with a condition.310 In justifying these possibilities Jafarzadeh311elucidated few cases where the seller was allowed to re-tender the correct documents within the contract time.312 Therefore it would seem that the right at English law to cure defects by re-tender is limited.

The Convention permits the defaulting seller to cure a defect by way of replacing or repairing defective documents and goods.313 For this purpose, the convention has expressly given the seller the right, up to the contract date, to cure for any non-conformity of documents and goods provided Articles 34 and 37. Accordingly Ziegel314 says that these provisions apply whatever the gravity of the seller's breach and whether or not it meets the test of a fundamental breach.

307 308

Bradgate and White (1995) at 71-75; Bridge, M. (1997) at 199-201. Ibid. 309 Bradgate,R., (1995) at 247; Bridge, M. (1997) at 199; Furthermore, where a false tender destroy the confidence of the buyer the seller can not cure (Maple Flock Co. Ltd v Universal Furniture Products (Wembley) Ltd [1934] 1 K.B. 148 at 157; Benjamin 12-031) 310 E.g. where the buyer has lost his right to terminate after rejection or where the sellers offer to cure so as to mitigate his loss under the principle of mitigation.( Payzu Ltd. v. Saunders [1919] 2 K.B. 581, Scrutton LJ said that "in commercial contracts it is generally reasonable to accept an offer from the party in default" (ibid., at 589).) Likewise sellers right of cure up to the stage of appropriation to identify the contract goods. (For supporting view see Jafarzadeh,M. (Dec 2001).at fn. 81. 311 Jafarzadeh,M. (Dec 2001).at 2.1.3 312 Such as Empresa Exportadora de Azucar v. Industria Azucareva Nacional S.A. (The Playa Larga) [1983] 2 Lloyd's Rep. 171 at 185; McDougall v Aeromarine of Emsworth Ltd (1958) 3 All ER 431; S.I.A.T.di dal Ferro v. Tradax Overseas S.A [1980] 1 Lloyd's Rep. 53 at 63; Thus, Kerr J. in Procter & Gamble Philippine Manufacturing Corporation v Kurt A Becher GmbH & Co KG [1988] 2 Lloyd's Rep 21.at p 23) says that If the contents of the documents are untrue in any material respect, then the buyers can reject them and refuse to pay the price. No doubt it may then be open to the sellers to make a second correct tender if they can. 313 Jafarzadeh, M (December 2001), p 411; Honnold, O.J. (1999) p- 266; Ziegel,S.J. (1984) at. page 9-20. 314 Ziegel,S.J. (1984) at page 9-20

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Under Art.48(1) this is a general provision that After the due date for delivery the seller is empowered to cure at his own expense any failure to perform his obligations contrary to the specific one which covers fundamental and non-fundamental breaches.315 Where the buyer has not declared the contract terminated and the seller, after becoming aware of the defect, informs the buyer of his readiness to cure; he is entitled to do so.316 Germany, however, criticized the provision,317 above all, because the buyers right to avoid the contract endangers the sellers right to cure.318 In addition, there are situations to those specified in Articles 34, 37 or 48 in which cure may be useful319 when the buyer notifies the seller of the claim320 of a third party based on an ownership interest321 or intellectual property322 in the goods.

COMPARATIVE ASSESMENT

As already shown, generally, both the system here under examination have accepted that the buyer has an option either to terminate the contract or to continue performance, if he wishes, for breach of sellers non-conforming delivery obligation. Similarly, he is not required to apply for a courts judgement to terminate the contract. It is suggested that application of the fundamental breach test is unlikely to produce an answer very different to that produced by English law. The question of communicating the notice of termination is controversial in English law. But the position of the Convention seems clear; the buyer must be communicated to the seller in breach for exercising his right to terminate the contract. As explained before, the Convention while referring to the sellers duty to deliver documents in accordance with the contract terms,323says little about the documents.324 Whereas, by recognising the sellers duty to deliverer the
315

Jafarzadeh, M (December 2001), at para 2.3; see also Ziegel,S.J. (1984) at page 9-22 Honnold, J.(1991) at 376 and fn. 6. (Ibid. at para 2.3); albeit the breach regarding the non-conforming part is fundamental (Schlechtriem, P.(1986) at p. 77) 316 Schlechtriem, P.(1986) at p. 77 317 Art. 48 318 Schlechtriem, P.(1986) at p. 77 319 Honnold, J. (1999) at p- 267 320 Art. 43(a)) 321 Article 41 322 Article 42 323 Arts. 30 and 34 324 One may argue that it has been covered in Incoterms

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conforming goods and documents separately, English courts classified the documentary dutys terms as a condition in the contract and thereby gives the buyer the right to reject them for any lack of conformity.325 English law gives the buyer the right to reject the documents where the goods themselves are perfectly in accordance with the contract.326 Further, the buyer can reject non-conforming goods even though he accepted the documents. However, if the defect giving rise to both rights of rejection is a single breach, the buyers acceptance of the documents has been treated as having waived his right to reject for both the documents and goods.327 Affirmation of the contract must be announced by unequivocal words or conduct. Despite the difference in the language of the provisions both the systems provide that the buyers presumed knowledge of the lack of conformity will be sufficient in loss of the right. Likewise, he loses his right if he fails to exercise it within a reasonable time. However, it is possible to say that the Convention seems more generous than the English Sale of Goods Act. As in the English law the buyer can delivered the goods to another under a sub-sale or other disposition,328 but lose his right for an act inconsistent with the sellers ownership.329 While, under the Convention, he will not result in loss of the right provided these acts are done in the normal course of use.330 Similarly, in comparing Art.39 with the English Sales Act, it is more generous to the buyer in regard to the time allowed to him for latent defect. Both English law and the Convention have responded to the matter of cure in a different way. As explained before, English law has not expressly recognised a general right to cure. But a number of English academic writers and judicial decision have tried to prove the sellers general right of cure. Some others oppose it and suggested where the buyer consents to it. Whereas, the Convention gives the seller a general right to cure for delivering non-conforming

325 326

Kwei Tek Chao v. British Traders & Shippers Ltd ([1954] 2 Q.B. 459; Gill & Duffus S.A. v. Berger & Co. Inc ([1984] 1 A.C. 382. Re General Trading Co. Ltd., and Van Stolk's Commissiehandel [1910] 16 Com. Cas. 95; Tamvaco v. Lucas (no. 1) [1859] 1 E. & E 581. 327 Panchaud Freres S.A. v. Etablissments General Grain Co ([1970] 1 Lloyd's Rep. 53
328 329 330

s. 35(6)(b)
s. 35(1)(b) Art. 82(2)(c)

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documents331 and goods,332 which can be exercised before and after the time for performance has expired.333 In comparison, the view of the first group of English authors334 would be similar to the Convention. Under both systems, as far as the seller is ready and able to cure before the delivery time has expired, the buyer has no right to reject the sellers offer even if the lack of conformity is serious. However, the two systems will differ, where the buyer has lost his confidence in the seller's ability and willingness to make a conforming tender the seller has no right to cure as described by the first group of English authors. In contrast, under the Convention sellers offer to cure would convert the character of an actual fundamental breach into a non-fundamental breach. Further, under English law, sellers right to cure depends on whether or not time was of the essence of the contract, while Art. 48 allow curing beyond the contract time. Likewise, the view of the second approach would be similar to the Convention in respect of non-conforming documents By all illuminating analysis, in any case, rejection may be justified on the mutual intention of the contracting parties. The court may perhaps look at the terms of the contract and the other circumstances surrounding the case to decide whether a perfect tender was, or is assumed to have been, the pre-condition of the buyers right of rejection.

CONCLUSION

For any legal system it is a challenging task to draw the line between cases where the contract continues despite its breach by one party and cases where the aggrieved party has to be permitted to terminate the contract. The English law and the Convention react with a whole set of rules to that problem. The English common law and legislation offer generous rules, to establish a right of termination in respect of technical breaches, by the recognition of implied
331 332

Art. 34 Art. 37 333 Art. 48 334 Like Goode, R. M.

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warranties or conditions. Thus, Lady Justice Hale335 explicitly stated that in English law a buyer can reject the goods for any lack of conformity. He does not have to act reasonably in choosing rejection; he can reject for whatever reason he chooses. The position under the Convention is markedly different since it grants the remedy of avoidance rather reluctantly. It gives paramountcy to the policy that contracts are made to be performed and not to be avoided. Undoubtedly, the technique of fundamental breach is not particularly conducive, of itself, to commercial certainty but with sensitive interpretation against the background of a Convention which makes the parties intentions paramount it may be that similar results to English law could be achieved. It is, however, suggested that, at least the Convention has the merit of promoting justice in the sense that it restricts the right to avoid the contract to serious breaches. English law does not even do that as it only excludes the right to reject in cases where the breach is so slight. Perhaps it is fitting to conclude that the English commercial law of sale may be more than adequate for commodity sales but there is much to be said for the view that the Convention is better suited for situation, where contractual continuance is more desirable than hair-trigger termination rights.

335

Clegg v Olle Andersen t/a Nordic Marine [2003] EWCA Civ 320

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Schlechtriem, P., Schwenzer, I. (2005) Commentary on the UN Convention on the International Sale of Goods (2nd English edition), Oxford : Oxford University Press, Schlechtriem (1998.), Commentary on the UN Convention on the International Sale of Goods (CISG) (2nd ed. in English translation by Thomas) comment on art.49 (by Huber) Schlechtriem, P. (1986) Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods Published by Manz, Vienna, available at http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem-35.html . Schlechtriem, P. Uniform Sales Law in the Decisions of the Bundesgerichtshof Translation by Todd J. Fox, available at http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem3.html#iii Schlechtriem , P. (1984), The Seller's Obligations Under the United Nations Convention on Contracts for the International Sale of Goods Ch. 6, pages 6-1 to 6-35. Available at http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem10.html. Secretariat Commentary to Article 35(1) (Section 33(1) of the Commentary, http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-35.html; Schwenzer, I. Avoidance of the Contrtract in Case of Non-Conforming Goods (Article 49(l)(A) CISG) (2005-2006) 25 J.L. & Com. 437, Singh, L. United Nations Convention on Contracts for the International Sale of Goods (1980) [CISG]: An examination of the buyer's right to avoid the contract and its effect on different sectors of the (product) market (February 2006), art. 49 available at http://www.cisg.law.pace.edu/cisg/biblio/singh.html Saiegh, S. Avoidance Uunder the CISG and its Challenges under International Organizations Commercial Transactions (2005-2006)25 J.L. & Com. 443 Text of Secretariat Commentary on article 49, available at http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-49.html Veneziano, A Veneziano, A., "Non Conformity of Goods in International Sales. A Survey of Current Caselaw on CISG", International Business Law Journal no. 1 (1997), p. 39-65, Williams, E.A. Forecasting the Potential Impact of the Vienna Sales Convention on International Sales Law in the United Kingdom Review of the Convention on Contracts for the International Sale of Goods (CISG), Kluwer Law International (2000-2001) 9-57, available at http://www.cisg.law.pace.edu/cisg/biblio/williams.html Ziegel,S.J. (1984) The Remedial Provisions in the Vienna Sales Convention: Some Common Law Perspectives Published in Galston & Smit ed., International Sales: The United Nations Convention on Contracts for the International Sale of Goods, Matthew Bender Ch. 9, pages 9-1 to 9-43. available at http://www.cisg.law.pace.edu/cisg/biblio/ziegel6.html#903

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(II) Judicial Decisions

Austria 13 April 2000 Oberster Gerichtshof [Supreme Court]; available at <http://cisgw3.law.pace.edu/cases/000413a3.html

Appellationsgericht Basel-Stadt, SWITZERLAND, 22 August 2003, CISG-online 943. cited in http://www.cisg.law.pace.edu/cisg/CISG-AC-op5.html.

Australia 17 January 2003 Supreme Court of Western Australia (Ginza Pte Ltd v Vista Corporation Pty Ltd), available at <http://www.unilex.info/case.cfm?pid=1&id=961&do=case

BGH, 3 April 1996 , GERMANY, available at http://cisgw3.law.pace.edu/cases/960403g1.html BGH of 8 March 1995, BGHZ 129, 75 ff. available at <http://cisgw3.law.pace.edu/cases/950308g3.html> Bundesgerichtshof, 3 April 1996, available at http://cisgw3.law.pace.edu/cases/960403g1.html Bundesgerichtshof,Germany, 25 June 1997, available at http://cisgw3.law.pace.edu/cases/970625g2.html

Corte di Appello Milano, Italy, 20 Mar. 1998, available at http://cisgw3.law.pace.edu/cases/980320i3.html. CIETAC (China International Economic and Trade Arbitration Commission), 30 October 1991, available at http://cisgw3.law.pace.edu/cases/911030c1.html; Caiato v. Soc. Franaise de Factoring International Factor France, Cour d'Appel de Grenoble, 13 September 1995, http://cisgw3.law.pace.edu/cases/950913f1.html CA Grenoble #156, 29 March 1995, (Camara v. Magaron), Available at, http://www.cisg.law.pace.edu/cisg/wais/db/cases2/950329f1.html. Delchi Carrier S.p.A. v. Rotorex Corp 71 F 3d 1024 (1995) Germany 8 March 1995 Bundesgerichtshof [Supreme Court], available at http://cisgw3.law.pace.edu/cisg/cases/950308g3.html.
Germany 21 August 1995 Landgericht [District Court] Ellwangen , available at <http://www.unilex.info/case.cfm?pid=1&id=164&do=case Germany 29 January 2004 Oberlandesgericht [Appellate Court] Frankfurt am Main, available at <http://www.unilex.info/case.cfm?pid=1&id=970&do=case GERMANY, BGH, 3 April 1996, available at http://cisgw3.law.pace.edu/cases/960403g1.html

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ICC Court of Arbitration, 7531/1994, available at http://cisgw3.law.pace.edu/cases/947531i1.html LG Aachen 43 O 136/92, May 14, 1993 (F.R.G.), available at http://cisgw3.law.pace.edu/cases/930514g1.html. LG Baden Baden, 19910814, 14 August 1991, available at http://cisgw3.law.pace.edu/cases/910814g1.html LG Heidelberg O 42/92, 3 July 1992 available at http://cisgw3.law.pace.edu/cases/920703g1.html Landgericht Miinchen,Germany, 20 Feb. 2002, available at http://cisgw3.law.pace.edu/cases/020220g1.html Landgericht Ellwangen, 21 August 1995, 1 KfH O 32/95. (Spanish paprika case) available at http://cisgw3.law.pace.edu/cases/950821g2.html Landgericht Mnchen, Germany 27 February 2002, available at http://cisgw3.law.pace.edu/cases/020227g1.html M. Caiato Roger v. La Socit Francaise de Factoring, Appelate Court Grenoble, France 13 September 1995, available at http://cisgw3.law.pace.edu/cases/950913f1.html Netherlands 15 October 2002 Netherlands Arbitration Institute, Case no. 2319, paragraphs 117 and 118, available at http://www.unilex.info/case.cfm?pid=1&id=836&do=case>. Oberlandesgericht Miinchen, Germany, 1 July 2002, available at http://cisgw3.law.pace.edu/cases/020701g1.html Oberlandesgericht Diisseldorf, Germany, 21 Apr. 2004, available at, http://cisgw3.law.pace.edu/cases/040421g3.html Oberlandesgericht Disseldort Germany, 24 Apr. 1997, available at http://cisgw3.law.pace.edu/cases/970424g1.html; Oberlandesgericht Hamburg, Germany, 28 Feb. 1997, available at http://cisgw3.law.pace.edu/cases/970228g1.html, OLG Dsseldorf10 February 1994, available at http://cisgw3.law.pace.edu/cases/940210g2.html OLGKoblenz, 27 September 1991,available at <http://cisgw3.law.pace.edu/cases/910927g1.html> OLGDsselldorf,10 February, 1994,available at <http://cisgw3.law.pace.edu/cases/940210g2.html>

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OLG Stuttgart, GERMANY, 12 March 2001, http://cisgw3.law.pace.edu/cases/010312g1.html OLG Frankfurt, 17 September 1991, http://cisgw3.law.pace.edu/cases/910917g1.html OG Zug 24 March 1998, available at http://cisgw3.law.pace.edu/cases/980324s1.html
OLG Celle, 10 March 2004, available at

http://cisgw3.law.pace.edu/cases/040310g1.html OLG Frankfurt, 18 January 1994, available at http://cisgw3.law.pace.edu/cases/940118g1.html OLG Dsseldorf 6 U 119/93, 10 February 1994, http://cisgw3.law.pace.edu/cases/940210g2.html OLG Mnchen, 2 March 1994, available at http://cisgw3.law.pace.edu/cases/940302g1.html Pretore dela Giurisdizione di Locarno-Campagna, 27 April 1992, <http://cisgw3.law.pace.edu/cases/920427s1.html 71 RabelsZ (January 2007) 13-34, p-26 available at http://cisgw3.law.pace.edu/cisg/biblio/huber1.html
Spain 2 March 2000 Audiencia Provincial [Appellate Court] Granada, available at <http://www.unilex.info/case.cfm?pid=1&do=case&id=889&step=Keywords

Spain 3 October 2002 Audiencia Provincial [Appellate Court] Pontevedra, available at <http://www.unilex.info/case.cfm?pid=1&id=895&do=case
United States 17 May 1999 Federal District Court [Louisiana] (Medical Marketing v. Internazionale Medico Scientifica), available at <http://www.unilex.info/case.cfm?pid=1&id=360&do=case

UNILEX D.1997-2, CLOUT 192.

(III) Statute United Nations Conference on Contracts for the International Sale of Goods, 11 Apr. 1980 (The Convention)

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