ABSTRACT
United Nations Convention on Contracts for the International Sale of Goods (“CISG”) dated April 11, 1980 contains regulations that will be applied to the international sale of goods contracts. Along with the obligations brought to the buyer and the seller within the context of CISG, liability that may occur due to failing to fulfil such obligations is also regulated.
Elective rights of the buyer is also regulated in detail for the situations that the seller acts against the contract and the goods do not comply with the contract and these are right to renege on the contract; right to request to take a similar of the good or repair of the good; right to request for discount on the price of the good and right to request compensation.
Liability to damage which is one of the consequences of such elective rights are also regulated under CISG and article 79 of CISG regulates how to avoid from this liability (strict liability) enclosed in article 79 of CISG.
Even though the related article seems to be clear, there are some problems in the implementation of it. First of these problems revives when some specific situations regarding the implementation of the article reviewed. Another issue that is particularly discussed under article 79 of the CISG is that whether it could be construed as involving the hardship clause.
I. INTRODUCTION
THE CISG HAS BEEN SIGNED ON APRIL 11, 1980 AND INcludes the provisions relating to the establishment, performance and termination of the contracts for the sale of goods (“Contract”) between the parties in different countries, and became a part of Turkish law on 1 August 2011. The CISG constitutes the common law of sale of the countries which are party to the CISG, and it is in the status of domestic law for the signatory countries1.
There are four main requirements that should be omplied with for the application of the provisions regulating the liability of the seller under the CISG: the defect should be existed at the time of the transmission of the damage to the buyer, the buyer should fulfil its burden to inspect or get the goods inspected, the buyer should inform the seller about the defect, and the buyer should not accept the defected good.
When the liability of the seller that constitutes the subject of this article is examined, firstly the application of CISG will be mentioned and later the liability to damage will be examined in general.
II. CISG’S FIELD OF APPLICATION
CISG’s application area has been determined between the items 1 and 6, and the relevant issues are arranged as follows:
(i) CISG shall be applied to the sale of goods contracts between the parties whose work places are in different countries if one of the parties is one of the signatory states or the rules of private international law has been referred.
(ii) The presence of workplaces in different states shall not be considered unless it is understood from the Contract or the negotiations that took place before or during the Contract or from the information provided.
(iii) The Parties’ citizenship, being merchant or the commercial nature of the Contract shall not be considered in the application of the CISG.(iv) CISG shall not be applied in case of purchasing goods for personal or family needs or for household necessities – if the seller does not have to know that the goods are taken for such use during or before the Contract; auctions; sales made under the law of enforcement or other law; securities, exchange notes and currency trading; ships, boats, air cushion vehicles or aircraft, and electricity sales.
(v) CISG shall not be applied to contracts that obligations of the one of the parties mostly consist of manpower or other services.
(vi) CISG arranges only the establishment of the Contract and rights and obligations of the seller and the buyer arising from the Contract. Unless otherwise provided in the CISG, the validity of the Contract or of the provisions or customs of the Contract and the possible effects of the Contract on the ownership of the goods have not been regulated.
III. SELLER’S DEFECT LIABILITY IN THE EXTENT OF CISG
Prior to the examination of the seller’s responsibilities under the CISG, the CISG’s performance obstacle system should be examined. CISG, contrary to Turkish law, has only one concept to cover all performance obstacles: violation of the Contract. CISG rules has not been distinguished as to whether the infringement derives from the provisions of the CISG clauses or the provisions of the Contract. Rather the classification of essential - nonessential infringement of the contract has been chosen of essential and non-essential has been chosen2.
The seller’s liability is set out in Section II, “Conformity of the Goods and Third Party Claims”, and the conditions for the seller’s liability to be held in this context are as follows:
(i) The defect must be present when the defect passes to the buyer.
(ii) The buyer has the burden to inspect or get the goods inspected.
(iii) The buyer is obliged to submit a defect notice at the end of the inspection.
(iv) The buyer must not accept the defective goods.
A. The Defect Must Be Present When the Defect Passes To the Buyer
CISG article 36 states that the seller is liable for damages that are exist in the transfer of the goods to the buyer, but such article also states that the seller may be held liable in such cases via the wording “The seller is also liable for any lack of conformity which occurs after the time indicated in the preceding paragraph and which is due to a breach of any of his obligations”. Example of such cases is that in which an incorrect manual for a machine causes a damage to occur3. Although there is no damage in the machine when the good is transferred to the buyer, it is stated that the seller’s faulty manual is an exception to the eventual damage, and in this case the seller is responsible for the damage. Another exception is regulated under paragraph two. “The seller is also liable for any lack of conformity which occurs after the time indicated in the preceding paragraph and which is due to a breach of any of his obligations, including a breach of any guarantee that for a period of time the goods will remain fit for their ordinary purpose or for some particular purpose or will retain specified qualities or characteristics.”
The liabilities stipulated in the article above are the additional liabilities that the parties set out in the framework of the freedom of contract under the first paragraph of article 7 of the CISG, such as the provision of special transport and insurance4.
B. The Buyer Has the Burden to Inspect Or Get the Goods Inspected
CISG article 38 obliges the buyer to inspect the goods. Provision for the postponement of the inspection period has also been added to this article to avoid from the situations that the buyer may not be available for the inspection. Among the arrangements concerning the inspection in the article, postponement of the inspection is also regulated and the buyer was provided with ease. It is possible that the buyer may not be able to inspet the goods often during delivery, or if it is unexpected that the buyer will be able to carry out such inspection5. In addition to these, there is a view that if the seller is seriously defective, the inspection burden on the buyer should be completely removed6.
C. Defect Notice
Defect notice means means the notice made by the buyer to the seller regarding the defect determined by the buyer the event of the inspection carried out on the goods, and via such notification the buyer notify the seller that this is a breach of the Contract. This notice is important since the buyer declare that he/she does not accept the goods and since it is a notice clearly indicating the breach. Parties may decide how to make the notification, but it is possible to make the declaration verbally if there is no form of declaration determined by the parties7.
D. The Buyer Must Not Accept Any Defective Goods
As per CISG article 35/3 the seller shall not be liable under subparagraphs 35 (2) (a) and (d) if the buyer has received the delivery in case he/she knows that the goods are defective or if he/she has to. The reason to the Seller’s such irresponsibility is the buyer’s rightful expectation to receive goods in conformity with the standards specified in 35/2. Therefore, if the buyer knows that the goods do not already comply with these standards, there is no interest to be protected, hence the seller shall not be liable in this case8."
IV. REMEDIES OF THE BUYER
If the conditions for the seller’s liability are met together, it will be possible to use the buyer’s elective rights under CISG article 45. These rights are remedies provided under articles between 46 and 52 and the right to claim compensation under articles 74 to 77. Remedies regulated under mentioned provisions are; the seller has the right to request a free delivery of a similar good or a free repair, the right to return from the contract and right to request reduction from the selling price, and the buyer also has the right to claim compensation. The right to claim compensation shall be examined under a separate heading.
A. Requesting Free Repair or the Delivery of a Similar of the Sold Goods
In order for the buyer to be able to use one of the two alternatives, he/she should not apply to the use of other remedies. In addition, the state party to the Contract should not be subjected to the same decision in the domestic law system9.
The right to request an indefectible similar of the contractual goods from remedies is only possible if, for example, the goods are relocatable, in other words, not in part. In addition to this requirement, the breach leading to the remedies of buyer must be essential as it is explained below.
It should also be noted that when a similar dispensation is requested, all costs related to CISG article 48/1 will be covered by the seller.
B. Right to Return From the Contract
The use of the right to return from the contract is only possible in the event of an essential breach of the Contract. In order to determine whether there is a essential breach of the Contract or not, the definition in article 25 needs to be examined.
“A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result.”
What should be taken into consideration when determining the essential violation under this definition is that to which extent the other party is affected by the violation. For example, in a judgment of the German Federal Court, goods were not considered to be defamatory since it could not be proved that it is impossible to sell such goods in Germany or abroad. In the court’s opinion, this illustrates that the buyer is not deprived significantly of what he/she expects from his/her contract10.
C. Right to Request Discount of the Price
There is no obligation for the price to be payed in full in order for the buyer to use the right to request discount as per article 50 of CISG. However, in the same article it is regulated that the buyer will not be able to use the right to request a discount at the price if the seller lost his or her deficiencies in the performance or if the buyer refused the act that the seller had done in accordance with Article 37 or 48 of the CISG.
V. LIABILITY TO DAMAGE AND LEGAL AFFECTS OF SELLER’S LIABILITY
The buyer is also entitled to claim compensation regardless from which elective right is used. The alternative ways to calculate such compensation is regulated under CISG 74, 75 and 76.
A. Seller’s Liability to Damage
CISG has adopted a liability based on a warranty obligation that is based on the seller’s indemnity liability, which is different from many jurisdictions.11If the seller proves that the violation originated from a cause that is not available, the seller will be able to evade from the responsibility. It should be noted that indemnification will always be a monetary value and may be claimed along with other optional rights.
B. Conditions for Seller to Evade From Liability to Damage
As it is mentioned above, the seller must prove that there is damage caused by unavoidable causes in order to be able to evade from liability to damage. In this context, the conditions to evade from responsibility are regulated under article 79 of the CISG. These conditions are; existence of an obstacle out of control of the seller, the obstacle is unpredictable at the time the contract is established, and the obstacle and consequences are inevitable.
1. Existence of An Obstacle Out of Control of the Seller
According to the first paragraph of article 79 of CISG, for the seller to avoid liability to damage, reason for his inability to perform the obligations in article 35 of CISG12 should be caused by an obstacle beyond his control.
CISG did not define the meaning of obstacle and avoided from bringing a limited regulation. However classical force majors can be counted as an obstacle:13“supernatural happenings like earthquake, lightning, flood, thunder; social or political happenings like war, insurrection, strike, coup; legal barriers like embargo, import and export’s prohibition or limitation”. Though the limit should not be overextended, “only situations that can obstruct the performance”14should be understood from the term. While assessing the impediment potential of the Contract conditions like “context of the contract”, “foreseen risks” and “debtor’s control area” should be taken into consideration. The mentioned obstacle has to be out of the seller’s control area and the control area’s limits shall be determined by the parties’ risk distribution as it is mentioned before.
In parallel with Turkish Law, CISG puts full liability on the seller for performance assistants’ actions. Additionally seller’s personal inabilities like; death, sickness, arrest, bankruptcy, employee insufficiency, supplier’s insufficiency, price rise in source materials are not considered in the seller’s control area and therefore shall not be assessed in article 79 of CISG.
2. Unpredictability of the Obstacle at the Time of Establishment of the Contract
Predictability condition has to be assessed objectively. In other words, it is essential to consider whether the active, sensible, reasonable person in business life will be able to perceive an obstacle in such a way and to establish contracts accordingly15.
Such obstacle shall be foreseeable during the establishment of the Contract. In case the existence of such obstacle; it will not be possible for the parties to evade from the responsibility since it shall be considered that the parties are considered to have accepted the risks arising from the Contract.
Even though the burden of proof for the unpredictability condition is on the party that claims the exception in general, if the seller predicts the outcome, he/she can secure himself by taking the precautions that was expected from him/her and set a non-liability clause16.
3. Unavoidability of the Obstacles and Their Consequences
Even if the conditions that have been mentioned in the two prior headlines realised, the seller still has to “avoid the obstacle beyond his/her control, the unpredictable obstacles and its consequences at the establishment of the Contract as far as possible,17take all the commercial and economic precautions.” Any contrary behaviour will be assumed as he/she had a chance to avoid.
In this respect, it is possible for the seller to evade from the responsibility without trying alternatives to a subject outside the seller’s scope, only if such alternatives will cause his/her perish18.
C. Specific Situations Regarding Seller’s Liability to Damage
It is seen that the applicability of CISG article 79 is discussed particularly in four cases when the judicial application of CISG is evaluated. These are; impossibility, hardship (especially economic reasons), defective performance and the failure of a third person to fulfill the task of providing.
1. Impossibility
Impossibility issue is contradictive in the doctrine, since the CISG does not include a distinction as the initial impossibility and the subsequent Firstly, it should be noted that as per article 2719 of Turkish Code of Obligations (“TCO”), the initial impossibility does not lead to the invalidity of the contract for the contracts subject to CISG unlike the contracts subject to TCO. While some opinions in the doctrine argue that in the case of initial impossibilities, the CISG article 79 may be applied directly, some authors has the idea that the concept of “obstacle” mentioned in the article only points to the impossibility after the establishment of the Contract and argues that CISG article 79 may only be applied comparatively20.
Regarding the impossibility after the Contract’s formation, there is an assessment for article 79 of CISG’s general conditions in doctrine and judicial practice.However the factor of “operation area” has been interpreted quite narrowly. For instance; in Turkish law, parties’ health problems does not constitute a breach to the Contract as an objective impossibility happened in neutral zone, in CISG it is inside the parties’ operation area21.In this regard CISG does not coincide with the assessment in Turkish law and allows article 79 to be applied in such situations.
2. Hardship
Another issue that is controversial under article 79 of the CISG is that the article 79 shall not be applied if it becomes almost impossible to change the existing conditions, which are considered to have taken the source from the “rebus sic stantibus”22meaning primitive and unpredictable and extraordinary. While some authors argue that the language of article 79 of the CISG is not open to such interpretation, some other writers claim the opposite, in particular some of them rejecting the state of economic hardship completely23.
3. Defective Performance
The applicability of the article regarding the defective performance is argued by some authors too24.
It has been determined in the opinion of the CISG Advisory Council that it is already mentioned that the “obstacle” statement in the clause excludes the cases outside the seller’s domain, that the defects in the goods to be accepted in the seller’s domain are not covered under this article25.However, according to the majority opinion of the CISG Advisory Council and as it is pointed out, article 79 of the CISG applies to compensation claims arising out of defective performance26.In the first paragraph of article 79 of the CISG, there is an expression “one of the parties does not fulfill one of its obligations”, and there is no reason for it to be stated under this article since the defective performance seller is not subject to this matter of compensation for loss of liability in the event that the defective seller is covered by the contractual delivery obligation specified in Article 35 of CISG. It should also be noted that the notification obligation in the fourth paragraph of the article does not constitute an obstacle for the applicability of the material in case of defective performance.
4. Liability for Third Person’s Actions
Another subject about the article’s applicability is regarding seller’s liability for third person’s actions. According to the general rule in the first paragraph of article 79 of the CISG and the opinion numbered 7 of CISG Advisory Council:
“In general, the seller is not exempted under Article 79(1) when those within its sphere of risk fail to perform; for example, the seller’s own staff or personnel and those engaged to provide the seller with raw materials or semimanufactured goods. In exceptional circumstances, a contracting party may be exempted under Article 79(1) for the acts or omissions of a third person when the contracting party was not able to choose or control the third person.”
VI. CONCLUSION
As Ercüment Erdem said, “The attempt of solving the international movable objects disputes with a domestic law system is bound to stay as an artificial solution”27. Formed according to this principle, CISG brought a way to avoid liability to damage because of its abstract and objective method, and set conditions for this as an unavoidable and unpredictable obstacle beyond the seller’s control. In addition to being an unforeseeable and unavoidable obstacle, the fourth paragraph of article 79 of the CISG obliges parties exposed to the obligation to notify the other party within a reasonable period of time from the date on which they have learned or have has to learn to avoid such disabilities and effects, so as to benefit exclusively.The CISG, which prefers not to define the elements contained in the article, should be construed in such a way that it will inevitably lead to difficulties in interpretation, but in the sense that it will lead to the uniformity of the subjects in question and the international legal system in the international arena.
The interpretation is particularly important in cases of extreme hardship and in this case, as stated in the CISG Advisory Council’s opinion No. 7,28 the definition of “disability” as a serious difficulty scenario when considering the principle of “pacta sunt servanda” in a fair legal system needs to be interpreted flexibly.
BIBLIOGRAPHY
Sinan Okur, Milletlerarası Mal Satım Hukuku (CISG), 1st Edition, Ankara, 2016.
Şemsi Barış Özçelik, Borçlunun Sorumlu Olmadığı Sebeplerle Borcun İfa Edilememesi ve Mücbir Sebep Kayıtları, Ankara Üniversitesi Sosyal Bilimler Enstitüsü unpublished doctorate thesis, http://acikarsiv.ankara.edu.tr/ browse/5497/, (Access Date: 30.06.2017) H. Ercüment Erdem, Milletlerarası Mal Satım Sözleşmeleri Hakkında Birleşmiş Milletler Sözleşmesi (Viyana Satış Sözleşmesi), Milletlerarası Ticaret Hukuku ile İlgili Makaleler, 1st Edition İstanbul 2008.
Yeşim M. Atamer, Satıcının Sözleşmeye Aykırı Davranışı Ekseninde CISG’nin İfa Engelleri Sistemine Genel Bakış, Milletlerarası Satım Hukuku, 1st Edition, İstanbul, 2008.
Yeşim M. Atamer, Uluslararası Satım Sözleşmelerine İlişkin Birleşmiş Milletler Antlaşması (CISG) Uyarınca Satıcının Yükümlülükleri ve Sözleşmeye Aykırılığın Sonuçları, http://cisg.bilgi.edu.tr/wp-content/uploads/2014/08/27.pdf, (Access Date: 30.06.2017).
Yavuz Dayıoğlu, CISG Uygulamasında Sözleşmenin İhlali Halinde Alıcının Hakları ve Özellikle Alıcının Tazminat Talep Etme Hakkı, http://openaccess.bilgi.edu.tr: 8080/xmlui/handle/11411/428, (Access Date: 30.06.2017) CISG Advisory Council Opinion No: 7, Exemption of Liability to Damage under Article 79 of the CISG, 12 Ekim 2007, http://cisgac.com/file/repository/Turkish_No_7_SON. pdf , (Access Date: 30.06.2017).
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, (Access Date: 30.06.2017).
Tolga Ayoğlu, Milletlerarası Menkul Mal Satımları Hakkında Viyana Konvansiyonu’nda Boşlukların Doldurulması, http://dosya.gsu.edu.tr/Docs/ HukukFakultesi/TR/FakulteDergisi/GUHFD-2013_1.pdf, (Access Date: 30.06.2017).
Rudolf Welser, Prof. Dr. Irene Welser (Translator: Ayça Akkayan Yıldırım), Milletlerarası Mal Satımına İlişkin Sözleşmeler Hakkında Birleşmiş Milletler Antlaşması (CISG) Uyarınca Satıcının Sözleşmeye Aykırılığı Halinde Alıcının Başvurabileceği Hukuki İmkanlar, http://www.iku.edu.tr/ userfiles/20120425005438414.pdf, (Access Date: 13.06.2017).
Yrd. Doç. Dr. İpek Yücer Aktürk, Viyana Satım Sözleşmesi Kapsamında Satıcının Ayıptan Doğan Sorumluluğu (Ayıptan Doğan Sorumluluk), Ankara Barosu Dergisi 2015/1.
Mustafa Doğan, CISG Uyarınca Hasarın İntikali, Ankara, 2016.
FOOTNOTE
1 Sinan Okur, Milletlerarası Mal Satım Hukuku (CISG), 1. Edition, Ankara, 2016, p. 535.
2 İpek Yücer Aktürk, Viyana Satım Sözleşmesi Kapsamında Satıcının Ayıptan Doğan Sorumluluğu (Ayıptan Doğan Sorumluluk), 2015/1 Ankara Barosu Dergisi.
3 Aktürk, p. 218.
4 Av. Pelin Baysal, Milletlerarası Mal Satımına İlişkin Sözleşmeler Hakkında Birleşmiş Milletler Antlaşması (CISG) Çerçevesinde Satıcının Ayıptan Sorumluluğu (Satıcının Ayıptan Sorumluluğu), transferred from p. 247, Ferrari, in Ferrari/Kieninger/Mankowski, Art. 36, Rn. 5; Magnus, in Honsell, Art. 36, Rn. 8.
5 Baysal, transferred from p. 257, Ferrari, in Ferrari/ Kieninger/Mankowski, Art. 38, Rn. 20; Saenger, in Bamberger/Roth, Art. 38, Rn. 7.
6 Baysal, transferred from p. 266, Ferrari, in Ferrari/ Kieninger/Mankowski, Art. 40, Rn. 2; Magnus, in Honsell, Art. 40, Rn. 4; Schwenzer, in Schlechtriem/Schwenzer, Art. 40, Rn.
7 Baysal, transferred from p. 261, Kröll, in Kröll/ Mistelis/Viscasillas, Art 39, Rn.28. Bildirimin sözlü olarak da yapılabileceği yönünde bkz. OLG Graz, 11.03.1998, CISG Online Nr. 670.
8 Baysal, transferred from p. 243, Kröll, in Kröll/ Mistelis/Viscasillas, Art.35, Rn. 149.
9 Aktürk.
10 Mustafa Doğan, CISG Uyarınca Hasarın İntikali transferred from p. 250, Germany 3 April 1996 Supreme Court (Cobalt sulfate case), http://cisgw3.law.peace.edu/cases/960403gl.html.
11 Rudolf Welser, Irene Welser (Translator: Ayça Akkayan Yıldırım), Milletlerarası Mal Satımına İlişkin Sözleşmeler Hakkında Birleşmiş Milletler Antlaşması (CISG) Uyarınca Satıcının Sözleşmeye Aykırılığı Halinde Alıcının Başvurabileceği Hukuki İmkanlar.
12 CISG a. 35/1: “The seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or ¬packaged in the manner required by the contract”.
13 Yeşim M. Atamer, Uluslararası Satım Sözleşmelerine İlişkin Birleşmiş Milletler Antlaşması (CISG) Uyarınca Satıcının Yükümlülükleri ve Sözleşmeye Aykırılığın Sonuçları, p. 454.
14 Şemsi Barış Özçelik, Borçlunun Sorumlu Olmadığı Sebeplerle Borcun İfa Edilememesi ve Mücbir Sebep Kayıtları, Ankara Üniversitesi Sosyal Bilimler Enstitüsü unpublished doctoral thesis (Doctoral Thesis), Ankara 2009, p. 87.
15 H. Ercüment Erdem, Milletlerarası Mal Satım Sözleşmeleri Hakkında Birleşmiş Milletler Sözleşmesi (Viyana Satış Sözleşmesi), Milletlerarası Ticaret Hukuku ile İlgili Makaleler, İstanbul 2008, p. 93.
16 Atamer, p. 460.
17 Yavuz Dayıoğlu, CISG Uygulamasında Sözleşmenin İhlali Halinde Alıcının Hakları ve Özellikle Alıcının Tazminat Talep Etme Hakkı, İstanbul 2011, p. 144.
18 Atamer, p. 461.
19 Dayıoğlu, p. 7-8.
20 Atamer, transferred form p. 458, Nicole Fischer: Die Unmöglichkeit der Leistung im internationalen Kauf-und Vertragarecht, Berlin 2001 255 vd.
21 Özçelik, p. 100.
22 Cevdet İlhan Günay, Türk Borçlar Kanunu Şerhi p. 499 Clausula rebus sic stantibus, the institution expressed in Latin as “unexpected state”, “collapse of the transaction base” and “adaptation”.
23 Okur, Milletlerarası Mal Satım Hukuku (CISG) p. 543.
24 Okur, Milletlerarası Mal Satım Hukuku (CISG) p. 544.
25 CISG Advisory Council Opinion No:7.
26 CISG Advisory Council Opinion No:7.
27 Doç. Dr. Tolga AYOĞLU, Milletlerarası Menkul Mal Satımları Hakkında Viyana Konvansiyonu’nda Boşlukların Doldurulması transferred from p. 87, H. Ercüment Erdem, Uluslararası Mal Satım Sözleşmeleri Hakkında Birleşmiş Milletler Sözleşmesi, Batider 1992, C. XVI, S. 3, p. 105.
28 CISG Advisory Council Opinion No:7.
