ABSTRACT
Under the United Nations Convention on Contracts for the International Sale of Goods (“Vienna Sales Convention” or “CISG”1 ) rights granted to the buyer are as follows: (i) in case of delivery of goods that do not conform to the contract, requests of performance including delivery of substitute goods and repair, (ii) avoidance of the contract, (iii) abatement of the purchase price, and lastly (iv) compensation. On the other hand, it imposed obligations to the buyer such as payment of price, taking delivery of the goods and giving notice when necessary. CISG regulation contributes to establish a universal text of law forinternational sales and brings the rules with respect to sale contracts in various law systems into conformity with each other. Under the Vienna Sales Convention, buyer’s rights are regulated more extensively compared to the seller’s rights and more provisions are set forth in order to protect the buyer.
I. INTRODUCTION
The struggle of bringing the principles which shall be applied to the international sale of goods into conformity with each other has been an issue for international legal experts. Also, the fact that international trade and sales contracts have become prevalent brought the necessity to uniform the countries’ legislations which contradict each other. Such efforts on having principles to be applied to the international sale of goods uniform, which proceeded for a long period of time were concluded on April 11th, 1980 through the approval of the Vienna Sales Convention at the conference in Vienna. CISG was approved by eighty four (84) countries including Turkey. On one hand, commercial actors such as United States of America (USA), People’s Republic of China and Russia, on the other hand, total of twenty three (23) countries that are members of European Union such as France, Germany, Italy, Holland and Spain and also countries from Asia, Africa and South Africa which own different legal customs and economic systems have become a party of the Vienna Sales Convention and this enables the formation of uniform principles which shall be applied to most part of the international sale of goods2. In this article, the right to claim replacement and repair, avoid a contract, abatement of the purchase price and indemnity that are granted to the buyer by the Vienna Sales Convention and obligations regarding payment of price, receiving the goods and notifying will be examined.
II. SPHERE OF APPLICATION
Prior to examining the rights granted to the buyer by the Vienna Sales Convention, its sphere of applicationshould be examined. Parties can wholly or partially exclude the implementation of the Vienna Sales Convention or they can change the results of the aforementioned agreement provisions3. The Vienna Sales Convention applies to contracts for international sales4. Therefore, the existence of a sale contract is a prerequisite for the application of the Vienna Sales Convention in the first place. Secondly, aforementioned sale contract must be international. The point to be understood in here is that the goods should be sold from one country to another country and there would be different laws which parties shall be subjected to.
The term of goods has been mentioned, starting from the title, in the Vienna Sales Convention but its definition has not been stated. In general, the term of goods covers all kinds of movables and immovables in terms of sale contracts. In fact, the goods subjected to sale are not required to have tangible, physical asset. In this respect, any kind of tangible and intangible assets, which can be exchanged with money and have economic value, can be sold5. The term of goods is not such a broad concept in terms of the Vienna Sales Convention. Aforementioned convention only regulates the sale of movables. Secretariat General of the United Nations has explicitly indicated while annotating Article 1 of CISG that CISG shall be applied to the sale of movables.
CISG has imposed some restrictions to its sphere of application. First of all, some sale contracts, and then some goods which are subjected to sale and some contracts which are similar to sale; and finally some issues regarding sale contract are excluded6. Additionally, contracting countries are permitted to notify their reservations to vary or abolish the results of provisions of the Vienna Sales Convention. Three (3) types of sale contracts are excluded from the sphere of application:
i. Sales of goods for personal, family or household (“domestique”) use
ii. Sales of goods by auction
iii. Sales of confiscated goods or sales which are based on any other decision of judicial authorities
The Vienna Sales Convention also excludes some goods subjected to sale from its scope. These are indicated under three groups in Article 2:
i. The provisions of CISG are not applied to sales of trade bills, investment securities and money
ii. Sales of all kinds of ships, vessels, hovercraft or aircraft
iii. Sales of electricity
III. RIGHTS OF THE BUYER
A. In General
Fundamental purpose of the Vienna Sales Convention is to maintain the validity of the sales contract. Elective rights of the buyer have been regulated on the basis of this purpose. The most essential result of this situation is that, avoidance of the contract is resorted as the last remedy7. Pursuant to the Vienna Sales Convention, the buyer’s rights are as follows: (i) in case of delivery of goods that do not conform to the contract, requests of performance including delivery of substitute goods and repair8, (2) avoidance of the contract9, (3) abatement of the purchase price10, and lastly (4) compensation11.
B. Right to Claim Substitute Goods and Repair of the Goods
Pursuant to the Vienna Sales Convention, buyer’s right to claim performance by the seller of his obligations is the general rule12. Nevertheless, if specific performance becomes impossible, for instance, a non-fungible good that is the subject matter of the contract is destroyed prior to the delivery, the buyer’s right of specific performance will be expired13. Additionally, CISG also regulates the cases which the seller delivers goods that are not conformed to the contract14. In this case, buyer has right to claim the delivery of substitute goods15 or repair16. If the goods do not conform to the contract, the buyer may require delivery of substitute goods only if the lack of conformity constitutes a fundamental breach of the contract and a request for substitute goods is made either in conjunction with a notice given in accordance with CISG17 or within a reasonable time thereafter. For instance, the buyer buys raw material for the devices to be produced by him. Although the raw material is defective, it will constitute a fundamental breach of the contract. The buyer aims to complete his orders however the seller does not have the qualified raw material that the buyer wants to. Therefore, the buyer gives notice to the seller and claims the delivery of substitute raw material. In addition to the general obligations with respect to the delivery of substitute goods, three additional obligations envisaged for the delivery of substitute goods: Firstly, a lack of conformity of goods; secondly, a fundamental breach and lastly, time limitation18.
The essential aspect for the buyer is imposing a “reasonable time limitation” to the delivery of substitute goods claim19. Aforementioned time commences when the buyer realizes the defect. The doctrine implies that the aforementioned time must not exceed one month20. Given these circumstances, if the goods do not conform to the contract, the buyer can require the seller to remedy the lack of conformity by repair provided that it would not be an unreasonable claim. A request for repair mustbe made either in conjunction with notice or within a reasonable time thereafter21. There is an additional obligation to general obligations as “being reasonable” for the repair claim22. For instance, in the cases where the goods can easily be repaired by the buyer, a repair claim will not be reasonable. However, the seller is still obliged to reimburse the repair costs. The claim can be made if the lack of conformity to the contract is a noncompliance that can be remedied by repair. If the repair can easily be made by the buyer, a repair claim will not be reasonable. However, the seller will continue to be obliged to reimburse the repair costs in this case23. Taking all conditions into consideration, it shall be evaluated by comparing the buyers benefit and the seller’s respective expenses and difficulties incurred from the repair.
C. Avoidance of the Contract
CISG has imposed some restrictions to the usage of the unilateral termination of contract by taking the detrimental results of this right into consideration. Particularly, it has granted the right of avoidance of the contract, if there is a significantly “fundamental” breach of contract24.
Pursuant to CISG, buyer’s right regarding the avoidance of the contract is subject to below mentioned obligations:
i. Existence of a breach of contract and fulfillment of obligations to the notice25
Pursuant to CISG, the declaration is made with a notification to the other party. CISG does not provide an opportunity to avoid the contract automatically (ipso facto) without making a notification. Notification obligation aims to inform other party about the current status of the contract.
ii. Existence of a Fundamental breach or non delivery of goods by the seller within the additional time given in accordance with Article 49(2)(b)
In practice, one of the most controversial provisions is the obligation of existence of a fundamental breach. German Federal Court has decided on the fact that whether or not the ordered good (in concrete case it was a shoe) is not delivered in due time will be deemed as a fundamental breach of the obligation, the breach of the obligation of delivery in due time will be deemed as a fundamental breach of obligation even the seller has a reasonable ground. Therefore, it has decided that as a result of this situation, the buyer can exercise the rights arising from the Vienna Sales Convention including avoidance of the contract26. The decision on a sale contract between a Russian and Indian company, made by the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry Arbitral Tribunal sets an example of how the term of fundamental breach can be extensively interpreted in favor of the buyer. In the aforementioned case, the seller has not transported all of the goods in the same ship as the buyer has requested but has transported the goods in different ships in accordance with its own facilities. This situation has been interpreted in arbitration as a fundamental breach that has been committed by the seller27. As it can be seen, in the issue of fundamental breach, which is subject to disputes frequently, courts make an extensive fundamental breach interpretation protecting the rights of the buyer.
iii. Non-Existence of Plea
iv. Goods shall be returnable28.
Generally, the buyer is not obliged to make the declaration of the avoidance of the contract within a specific time period. The buyer can declare it any time in which the reason of the avoidance of the contract exists. However, in the cases where the good has been delivered to himself, the buyer is obliged to make a declaration of the avoidance of the contract within a reasonable time period.
It is accepted by Turkish Law doctrine29 and the decisions of Supreme Court30 that only negative damages can be claimed after the avoidance of the contract.
D. Abatement of Price
Pursuant to CISG, if the delivered goods do not conform to the contract, the buyer has a right to claim the abatement of the price. In addition, the seller’s right to claim repair has the priority over the buyer’s right to claim the abatement of the price31. Munich State Court made a decision in 2002 on abatement of the price when the good does not conform to the purpose of use. In the aforementioned case, decorative globes to be used at the buyer’s work place for purpose of decoration are the subject of the sale. It has been indicated in the expert’s report received by the court that the globes, which are expensive and sophisticated, have been bought as a permanent exhibition material however the motors that were mounted to the globes are simple-structured and inappropriate for long-standing work in contrast with the complex and expensive other materials used in the globes. The decision of abatement of price has been made by the court for the mentioned globes which cannot fulfill its expected life32.
E. The Right to Indemnity
Pursuant to CISG, if the seller does not perform its obligations arising from the contract, the buyer can claim compensation33. Accordingly, the compensation to be paid in the event that one of the parties does not fulfill one of its obligations contains the damages of lost profits34. Aforementioned compensation shall not exceed the damage that the party in breach anticipated as a possible result of the breach of the contract at the time of conclusion of the contract or the damage that he must anticipate in the light of the information that he knew or should have known. In addition, if the buyer benefits from the other legal remedies, the buyer’s right to indemnity will not be expired. The fact that this kind of specific statement is included CISG is beneficial on the grounds that there are certain legal systems such as English, German and Croatian which do not allow the use of the rights to compensation and avoidance of the contract together35.
IV. OBLIGATIONS OF THE BUYER
A. In General
Obligations imposed to buyer by the Vienna Sales Convention are limited compared to rights granted to the buyer and the obligations imposed to the seller. The buyer’s obligations can be basically categorized as payment of price, taking delivery of the goods and making a notice when it is necessary36.
B. Payment of the Price
Pursuant to CISG, the buyer’s obligation to pay the price includes taking measures that shall procure thepayment of the price and complying the formalities indicated in the contract or legislation37. If a contract has been concluded validly without including any explicit or implicit provision regarding the price or the determination of the price, it is assumed that the parties are considered, in the absence of any indication to the contrary, to have impliedly made reference to the price charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the relevant trade sector. If the price is determined according to the weight of the goods, in case of doubt, it is determined by the net weight.
C. Receiving Delivery
The buyer’s obligation to receive delivery is divided into two categories. First obligation of the buyer is to take over the goods physically. Second obligation of the buyer is to do any act which can reasonably be expected from himself in order to enable the seller to make delivery. If the buyer does not perform these obligations, the seller can grant additional time to the buyer to perform them. If the buyer does not perform his obligation of receiving the delivery at the end of the additional time, the seller can void the contract and claim compensation.
D. Buyer’s Obligation to Give Notice in Specific Conditions
The buyer has an obligation at the time of delivery “to examine the goods, or have them examined, within as short period as possible in the circumstances.”38 How should the statement, which is indicated in Article 38 of CISG, that “within as short period as possible in the circumstances” be understood? In regard to this question, it is indicated that the business practices, characteristics of the goods and the examination possibility (whether the deficiencycan be determined by the examination or not) of the deficiencies are taken into account by the doctrine and court decisions (for instance, ironing and washing tests for controlling the color and shrinkage conditions of textile products, trying on the goods if they are shoes or clothes, controlling a random selected good in mass production is required, and if deficiencies of the goods are not able to be examined easily, especially in technical situations, the buyer is required to assign experts) and aforementioned statement should be understood as the business practice which fulfills the conditions39. Furthermore, the buyer is obliged to give a notice of any lack of conformity to the contract by specifying the nature of nonconformity within a reasonable time after he has discovered or ought to have discovered it40. If the buyer does not perform this obligation, he loses his rights arising from the contract.
These two articles of the Vienna Sales Convention are included in the provisions which are subject to most of the disputes41. Courts also specially pay attention to whether the buyer has performed his obligation to give a notice or not42. German District Court of Tübingen decided on June 18, 2003 that if the buyer does not give a notice to the seller within a reasonable time after he has discovered the lack of conformity or ought to have discovered it, he will lose exercising the rights granted to him43.
V. CONCLUSION
Approved by a conference conducted in Vienna on April 1, 1980 within the scope of the United Nations, entered into force on January 1, 1988 and today having 78 countries as contracting parties, CISG regulation contributes to establish a universal text of law for international sales and brings the rules with respect to sale contracts in common law system and civil law system into conformity with each other. The purpose of the CISG is to minimize the disputes which may arise and maintain the validity of the sale contracts in the last instance. In addition to this, buyer’s rights are regulated more extensively than the seller’s rights in the Vienna Sales Convention and more provisions are set forth in order to protect the buyer. In the event that the seller breaches the contract, the buyer is granted some rights including the right of avoidance of the contract. The buyer’s fundamental obligation is to pay the price and to receive the delivery of the good in a way that is indicated in CISG. In conclusion, the Vienna Sales Convention, which is adopted by many countries, provides the buyer with more extensive legal protection in international sale contracts compared to the obligations he undertakes.
BIBLIOGRAPHY
Allison E. Butler, Performance and Obligations under CISG (Access: 27.05.2016) http://www.cisg.law.pace.edu/cisg/biblio/butler6-ch4.pdf C. B. Andersen & F. G. Mazzotta & B. Zeller, A Practitioner’s Guide to the CISG Ercüment Erdem, “Uluslararası Mal Satışlarında 11 Nisan 1980 Tarihli Birleşmiş Milletler Sözleşmesinin Uygulama Alanı”, Milletlerarası Ticaret Hukuku ile İlgili Makaleler, Istanbul 2007 Haluk Tandoğan, Borçlar Hukuku, Özel Borç ilişkileri, C. 1/1, 6. Edition, Istanbul 2008 M. Kemal Oğuzman, Turgut Öz, Borçlar Hukuku, Genel Hükümler Volume 1, 9. Edition, Istanbul 2011 Pelin Baysal, Milletlerarası Mal Satımına İlişkin Sözleşmeler Hakkında Birleşmiş Milletler Antlaşması (CISG) Çerçevesinde Satıcının Ayıptan Sorumluluğu (Access: 27.05.2016) http://www.cisg.law.pace.edu/cisg/biblio/baysal.pdf Yeşim M. Atamer, Milletlerarası Satım Hukuku, Istanbul 2012
FOOTNOTE
1 CISG is the abbreviation of United Nations Convention on Contracts for the International Sale of Goods.
2 Ercüment Erdem, “Uluslararası Mal Satışlarında 11 Nisan 1980 Tarihli Birleşmiş Milletler Sözleşmesinin Uygulama Alanı”, Milletlerarası Ticaret Hukuku ile İlgili Makaleler, Istanbul 2007, p. 118.
3 CISG Art. 6.
4 CISG Art. 1/1-1.
5 Haluk Tandoğan, Borçlar Hukuku Özel Borç ilişkileri, C. 1/1, 6. Edition, , Istanbul 2008, p. 78.
6 CISG Art. 2.
7 Yeşim M. Atamer, Milletlerarası Satım Hukuku, Istanbul 2012, p. 268.
8 CISG Art. 46.
9 CISG Art. 49.
10 CISG Art. 50.
11 CISG Art. 74 ff.
12 Atamer, p. 271.
13 2012 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods, http://www.cisg.law.pace.edu/cisg/text/ digest-2012-46.html (Access: 27.05.2016).
14 CISG Art. 46/2-3.
15 CISG Art. 46/2.
16 CISG Art. 46/3.
17 CISG Art. 39.
18 CISG Art. 39.
19 CISG Art.46/2.
20 Atamer, p. 276.
21 CISG Art. 39.
22 CISG Art. 46/3.
23 2012 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods, http://www.cisg.law.pace.edu/cisg/text/ digest-2012-46.html, CLOUT case No. 125 [GERMANY Oberlandesgericht Hamm 9 June 1995]
24 Ulrich Magnus, The Remedy of Avoidance of Contract Under CISG—General Remarks and Special Cases, Hamburg, p. 424, http://www.uncitral.org/pdf/ english/CISG25/Magnus.pdf (Access: 27.05.2016).
25 CISG Art.39 ff. and Art. 43 ff.
26 C. B. Andersen, F. G. Mazzotta, B. Zeller, A Practitioner’s Guide to the CISG, p. 619.
27 Andersen, Mazzotta, Zeller, p. 620.
28 CISG Art. 49.
29 M. Kemal Oğuzman, Turgut Öz, Borçlar Hukuku Genel Hükümler Cilt 1, 9. Edition, Istanbul 2011, p.509.
30 Court of Appeals for the 15th circuit 28.09.1993 E 1992/5474 K 1993/3691, Court of Appeals for the 19th Circuit 26.11.1993 E 1992/9997 K 1993/8033.
31 CISG Art. 50.
32 Pelin Baysal, Milletlerarası Mal Satımına İlişkin Sözleşmeler Hakkında Birleşmiş Milletler Antlaşması (CISG) Çerçevesinde Satıcının Ayıptan Sorumluluğu, http://www.cisg.law.pace.edu/cisg/biblio/baysal.pdf p. 238 (Access: 27.05.2016).
33 CISG Art. 45.
34 CISG Art. 74
35 Michael Will, Bianca-Bonell Commentary on the International Sales Law, Giuffrè Milan, 1987, p. 329-332, http://www.cisg.law.pace.edu/cisg/biblio/ will-bb45.html (Access: 27.05.2016).
36 CISG Art. 53-65.
37 CISG Art. 54.
38 CISG Art. 38/1.
39 Allison E. Butler, Performance and Obligations under CISG: Negotiations through Litigation, http://www.cisg.law.pace.edu/cisg/biblio/butler6- ch4.pdf, p. 28 (Access: 27.05.2016).
40 CISG Art. 39/1.
41 Baysal, p. 260.
42 Butler, p. 30.
43 http://cisgw3.law.pace.edu/cases/030618g1.html (Access: 27.05.2016)
