Source: http://cisgw3.law.pace.edu/cisg/text/peclcomp85.html
Timestamp: 2019-08-20 08:25:38
Document Index: 344223547

Matched Legal Cases: ['art. 7', 'art. 7', 'art. 7', 'art. 85', 'art. 355', 'art. 814', 'art. 6', 'art. 7', 'art. 86', 'art. 85', 'art. 86', 'art. 358', 'art. 816', 'art. 87', 'art. 6', 'art. 1210', 'art. 1212', 'art. 1176', 'art. 332', 'art. 2', 'art. 1024', 'art. 474', 'art. 428', 'art. 429', 'art. 1789', 'art. 1258', 'art. 57', 'art. 1657', 'art. 8', 'art. 1211', 'art. 88', 'art. 427', 'art. 1206', 'art. 841', 'art. 1176', 'art. 1178', 'art. 430', 'art. 6', 'art. 1210', 'art. 1180', 'art. 427', 'art. 430', 'art. 1258', 'art. 1212', 'art. 1178', 'art. 2127', 'art. 1177', 'art. 1260', 'art. 1215', 'art. 1179', 'art. 1248', 'art. 6', 'art. 1198', 'art. 746', 'art. 6']

Guide to Articles 85, 86, 87 & 88
Match-up of Articles 85, 86, 87 & 88 with the European Principles
Match-up of CISG Articles 85, 86, 87 and 88 with PECL Articles 7:110 through 7:112
CISG Article 85
CISG Article 87
(2) If the goods are subject to rapid deterioration or their preservation would involve unreasonable expense, a party who is bound to preserve the goods in accordance with article 85 or 86 must take reasonable measures to sell them. To the extent possible he must give notice to the other party of his intent to sell. PECL Article 7:110 [Property Not Accepted]
PECL Article 7:111 [Money Not Accepted]
PECL Article 7:112 [Costs of Performance]
Editorial remarks Preservation of the Goods: Comparison of Articles 85-88 CISG and
[See also commentary by the author on this subject in: John Felemegas ed., An International Approach to the Interpretation of the United Nations Convention on Contracts for the International Sale of Goods (1980) as Uniform Sales Law, Cambridge University Press (2006) 518-524.]
Comment and notes on PECL 7:110, 7:111, 7:112
Like the commentary to the UNIDROIT Principles and the U.S. Restatements, the comments to the PECL help explain the text. The PECL notes identify civil law and common law antecedents and related domestic provisions. With the permission of the Commission on European Contract Law, these comments and notes are presented below. The source of this material is Ole Lando & Hugh Beale eds., Principles of European Contract Law: Parts I and II, Kluwer Law International (2000) 352-357.
Comment and notes on PECL art. 7:110
Comment and notes on PECL art. 7:111
Comment and notes on PECL art. 7:112
COMMENT AND NOTES: PECL Article 7:110: Property Not Accepted
(2)	The party left in possession may discharge its duty to deliver or return: (a) by depositing the property on reasonable terms with a third person to be held to the order of the other party, and notifying the other party of this; or (b) by selling the property on reasonable terms after notice to the other party, and paying the net proceeds to that party.
This article deals with a specific form of prevention of performance, namely the creditor's failure to take delivery or to retake tangible property, other than money, tendered by the debtor. The effect of failure to accept a tender of money is covered by Article 7:111.
The scope of the provision is fixed in paragraph (1) and comprises three different situations. In the first a party which is by a contract obliged to deliver tangible property (e.g. under a contract of sale) has made a tender conforming to the contract but the other party refuses to take delivery. In the second situation the party to whom delivery was to be made has received the property but has lawfully rejected it, and the other party fails to retake it.
The third situation occurs where a contract has been lawfully terminated. According to Article 9:308 a party which had received property has then to return it to the other party. If the other party refuses to accept it, Article 7:110 applies.
For the application of Article 7:110 it is irrelevant whether or not the refusal to accept property is a non-performance (cf. Article 1:301(4)).
B. Protection and preservation of the property
Where this provision applies, the party which is unwillingly left in possession of property is not on that account entitled to abandon the goods or wantonly to leave them exposed to loss, damage or theft. It must take reasonable steps for their protection, e.g. by taking them back into its own custody or depositing them in a store or warehouse (paragraph (2)).
C. Perishables and goods expensive to preserve
In the case of perishables, the duty to protect encompasses sale of the perishables where they are in danger of deteriorating. The same applies if the expenses of preserving [page 352] the goods are unreasonably high, i.e. disproportionate to the value of the goods; this covers also the case where the goods take much space which is urgently needed by the debtor. In both cases the party must take reasonable steps for disposition, depending on the value of the goods on the one hand and the trouble and expense of finding a favourable opportunity for sale on the other hand (paragraph (3)).
Article 7:110(1) imposes a duty to protect and preserve the goods. However, the party which is left in possession of them is not relieved from its duty to deliver or return them.
If the party left in possession wishes to discharge its duty to deliver (or to return) it must make the property or its substitute available to the other party. The steps it can take to achieve this purpose are prescribed in paragraph (2) for property in general and in paragraph (3) sentence 2 for perishables and equivalent goods.
E. Discharge of party left in possession
In paragraph (2) two ways are set out by which the party which was left in possession of property (the debtor) may discharge its duty to deliver or to return the property.
(a)	The debtor may deposit the property on reasonable terms with a third party to be held to the order of the creditor. The debtor can recover under paragraph (4) all storage charges reasonably incurred. In most cases, the deposit is likely to be a prelude to the debtor's exercise of its power of sale under sub-paragraph (b), for the debtor will itself be responsible to the depositary for the latter's charges and may find it impossible to recover these from the creditor.
(b)	Alternatively, the debtor may sell or otherwise dispose of the object on reasonable terms. The interests of the creditor are protected by requiring that the debtor normally act only after reasonable notice; in the case of perishables this notice may be very short or no notice may be needed at all. The debtor must then account to the obligee for the net proceeds of the disposal. The obligor may be entitled under the applicable law to set off a claim against the creditor's entitlement to the net proceeds (e.g. for damages for breach of contract).
If the debtor had already sold the goods according to paragraph (2) sent. 1, it may discharge its duty by paying the net proceeds (see paragraph (4)) of the sale to the creditor.
F. Other remedies unaffected
If by not taking delivery the obligee fails to perform a contractual duty, the debtor is entitled to exercise any of the remedies available for non-performance, including damages and termination of the contract. If the creditor initially refuses to receive the goods but later is willing to take them, but meanwhile the debtor has incurred expenses in preserving them, the debtor may withhold the goods until the creditor is willing to reimburse the debtor. This right of withholding follows from the idea underlying Article 9:201.[page 353]
In combining in one rule several factual situations where a party has not accepted property, Article 7:110 uses a new and original approach.
1. Duty of preservation
Some European laws expressly provide that if the buyer without justification fails to take delivery of the goods, the seller must take reasonable care of them (U.K. Sale of Goods Act 1979, s. 20(3); DANISH Sale of Goods Act � 33; FINNISH and SWEDISH Sale of Goods Acts, �� 72-78; see also CISG art. 85). In other European laws, there is no special duty of protection which would exceed what is required by good faith and fair dealing (for PORTUGAL Soares & Ramos 243 and 245). By contrast, for the case of mora creditoris it is expressly provided that the obligor is responsible only for deliberate or reckless acts or omissions (GERMAN BGB � 300(1); GREEK CC art. 355; PORTUGUESE CC art. 814(1); this is acknowledged by AUSTRIAN courts also as a result of the general rule laid down in ABGB � 1419); compare BELGIAN Court of Appeals Antwerpen 29 Oct. 1980, R.W. 1981-82, 1563, and see Pothier no. 55. See also NETHERLANDS BW art. 6:90 which includes both non-performance and mora creditoris. In SPANISH law there is a duty of preservation as a result of CC arts. 1167 ff., 1185, 1452(3), 1505, 1589 and 1590.
The other factual situation covered by Article [7:110(3)], i.e. that of the party left in possession of non-conforming goods, is in the NETHERLANDS governed by a general rule in BW art. 7:29, in FINLAND and SWEDEN by Sale of Goods Act � 73; and in CISG by art. 86. In GERMANY and AUSTRIA a corresponding rule applies to commercial transactions and where delivery is made from one place to another (HGB � 379 - Distanzkauf; see Heymann (-Emmerich) � 379 HGB nos. 3 and 4). In non-commercial cases, good faith and fair dealing may require the party not to let the goods perish, but he may send them back (Schlegelberger (-Hefermehl) � 379 HGB no. 1).
Some countries have specific provisions placing the cost of preserving goods on a party who has failed to accept them (e.g. a buyer who has failed to accept delivery, UK Sale of Goods Act 1979 s. 37, CISG art. 85 sent. 2; a seller who has failed to take back goods properly rejected by the buyer, CISG art. 86(1) sent. 2; or generally, DANISH Sale of Goods Act � 36, FINNISH and SWEDISH Sale of Goods Act � 75). Other laws deal with the issue in the context of mora creditoris, and therefore impose the costs on the obligee (GERMAN BGB � 304; GREEK CC art. 358 and AP 115/1970, NoB 18 (1970) 811, 812; PORTUGUESE CC art. 816).
2. Depositing goods
A party left with goods after a failure to take them by the other (mora creditoris) is expressly given a right of deposit by CISG art. 87 as well as in FRANCE, BELGIUM and LUXEMBOURG (CC arts. 1264 and 1961(3): judicial permission is required; M.E.Storme, Invloed no. 451); AUSTRIA (ABGB � 1525); NETHERLANDS (BW art. 6:66); FINNISH and AND SWEDISH Sale of Goods Act � 74; and in ITALY (CC art. 1210 - see also arts. 1514-1515, 1686 and 1690), but rigid procedural rules must be complied with (cf. Italian CC art. 1212). The situation is similar SPAIN (CC art. 1176, Commercial Code art. 332 and Civil Procedure Code art. 2.127); and in PORTUGAL, where deposit discharges the obligation (see CC arts. 841 ff.) but a court procedure is necessary (CC Proc. art. 1024 ff., see Varela II 184, Cordeiro II 217). In GERMANY, discharge by deposit is provided for in BGB � 378 only for money and valuables.
In FRANCE, the party left in possession has an effective alternative to the complicated method of depositing: he may ask for a court injunction against the obligee to take away or accept the goods, combined with an astreinte (judicial penalty) in case of disobedience (Malaurie and Aynès, Obligations no. 1019).
By contrast, in GERMANY deposit in a case of mora creditoris between merchants does not discharge the obligor under HGB � 373(1) Heymann (-Emmerich) � 373, 374 HGB no. 9, Schlegelberger (-Hefermehl), � 373 no. 16). Nor is there a direct equivalent to Article 2.113(2)(a) in ENGLAND. If a buyer refuses to take the goods and the property has not yet passed, the seller's only remedy will be to terminate the contract and claim damages from the buyer (see e.g. Stein, Forbes & Co. Ltd. v. County Tailoring Co. Ltd. (1916) 86 L.J.K.B. 448 (K.B.)).
Resale as a means of self-help in Article 2.113(2)(b) is known in AUSTRIA and GERMANY in HGB � 373(2)-(5) in cases of mora creditoris between merchants; similarly PORTUGUESE Comm. C. art. 474; FINNISH and SWEDISH Sale of Goods Acts, � 76. Except in the Scandinavian laws, however, generally only sale by auction is permitted. Only when the goods have a market price is a sale through officially licensed brokers or auctioneers for the current price admitted. Place and time of such sale are not expressly regulated, but are subject to the seller's diligent determination (Heymann (-Emmerich) �� 373, 374 HGB nos. 21 and 22). In DENMARK (Sale of Goods Act � 34), [page 354] FINLAND and SWEDEN (Sale of Goods Act � 76(3)), AUSTRIA and GERMANY (HGB � 373(2)) prior notice of the sale must be given; it must be so timely and sufficiently clear as to give the buyer the opportunity to take proper steps to protect his interests (ROHG 11.1.1876, ROHGE 19, 293 (293 f.); Heymann (-Emmerich) �� 373, 374 HGB no. 12). The notice is dispensed with for emergency sales and when it is not reasonably feasible (� 373 (2) sent. 3 and 4). According to � 373(3) resale which is justified as self-help takes place for the account of the defaulting buyer; the latter remains liable for that part of the purchase price which is not covered by the proceeds of the resale.
Also GREEK law allows the obligor, during the creditor's default and after notice to the latter, to dispose of the object at public auction and to pay the proceeds to a public entity ("Deposits and Loans Fund") for the creditor's account; notice may be dispensed with if the object is liable to perish or if notice is particularly difficult (CC art. 428). An auction can be dispensed with by leave of the judge, if the object has a market price or small value (art. 429). On sale by auction or "in a similar reasonable way", see also DANISH Sale of Goods Act � 34. In ITALY, resale on merely "reasonable terms" is allowed only in the special case of deposit of goods in a public warehouse (CC art. 1789). Under SPANISH law, resale is permitted after termination of the contract (CC art. 1258, Commercial Code art. 57; see Vicent Chuliá II 108).
BELGIAN law has different provisions for different contracts: sales, see CC art. 1657; carriage, see Transport Contract Act art. 8; on contracts for custody, cleaning, repair, etc of goods, see Act of 21 Feb. 1983.
In ENGLAND, by contrast, resale according to Sale of Goods Act 1979, s. 48 has the effect of terminating the original contract. The resale is on the seller's own account and the buyer is liable in damages for the seller's net loss (R.V. Ward Ltd. v. Bignall [1967] 1 Q.B. 534 (C.A.). SCOTTISH law is the same.
4. Rapid deterioration
In sales, the party's duty to effect a resale in case of rapid deterioration or unreasonably expensive preservation (Article 7:110(3)) is recognised in AUSTRIA and GERMANY (HGB � 379(2)), DENMARK (Sale of Goods Act � 35), FINLAND and SWEDEN (Sale of Goods Act � 76(2)) and in the NETHERLANDS (BW arts. 6:66 and 7:30). BELGIAN case law reaches the same result: Court of Appeals Brussels 3 July 1931, Jur. P. Anvers 418; see ME. Storme, Invloed No. 393; Demogue VI, nos. 26 and 45; In ITALY, CC art. 1211 on mora creditoris is similar, but it requires judicial approval and merely authorizes the debtor to resell but does not oblige him to do so (Cattaneo 217). CISG art. 88 also allows resale as a form of self-help; similarly SPANISH law, Vicent Chuliá II 108.[page 355]
COMMENT AND NOTES: PECL Article 7:111: Money Not Accepted
This provision authorises the debtor, after notice, to discharge its obligation to pay by depositing the money in any manner authorised by the law of the contractual place for payment, e.g. by paying it into court. The deposit must be to the order of the creditor so that it obtains the right to dispose of the money deposited (cf. Article 7:110 paragraph (2) sub-paragraph (a)). The notice to the creditor must be reasonable (cf. Article 1:201) both with respect to the method of transmission and with respect to the time given to the first party to reply.[page 355]
This provision applies to two different situations. First, it applies where a debtor attempts to perform a primary duty to pay under a contract, e.g. to pay the price for goods, services or work; in this case the rejected tender must have conformed to the contract. Secondly, it applies to secondary obligations to pay, e.g. after termination of the contract to repay money received (Article 9:307) or to pay damages according to Chapter 9 section 5.
For the application of Article 7:111 it is irrelevant whether or not the refusal to accept money is a non-performance (cf. Article 1:301 sub-paragraph (d)).
C. Payment by a third person
According to Article 7:106 an obligation which does not require personal performance can be performed by a third person. The payment of money will not usually require personal performance. Consequently, the term "tendered by the other party" must be read broadly so as to encompass a third person which makes payment in conformity with Article 7:106.
1. Depositing money
European continental laws generally have detailed rules on deposit of money for cases of mora creditoris (DENMARK: Law on Depositing 1932 � 1; FINLAND: Act on Depositing, 1931; FRANCE BELGIUM and LUXEMBOURG: CC arts. 1257-1264; GERMANY: BGB �� 372 ff.; GREECE: CC art. 427; ITALY: CC art. 1206 ff., PORTUGAL: CC art. 841(1)(b); SPAIN: CC art. 1176). In SWEDEN, depositing is permitted only in certain cases, particularly when the debtor has difficulty in discovering whom he should pay: Rodhe, Obligationsrätt 130. In contrast, ENGLAND and SCOTLAND have no equivalent rule. In IRELAND payment may be made into court, Clark 403.
Deposit is to be made either with a court (AUSTRIA: ABGB � 1425; GERMANY: Regulation on Deposits, � 1(2); SPAIN: CC art. 1178) or with a special Deposits and Loans Fund (BELGIUM: Royal Decree of 18 March 1935, though there is some flexibility in judical practice; FRANCE: Law of 28 July 1875, D. 15 Dec. 1875; GREECE: CC art. 430 and Presidential Decree of 30 December 1926/ 3 January 1927) or the enforcement authority or a financial institution (DENMARK: Law on Depositing � 6; FINLAND and SWEDEN, Laws on Depositing, � 1) or a person whose business it is to take custody of sums of money (NETHERLANDS: BW art. 6:67, 6:68).
A deposit often has the effect of discharging the monetary obligation (for BELGIUM, FRANCE, the NORDIC countries and PORTUGAL see above, para. 1; the same applies in GERMANY, provided the depositor waives the right of reclaiming the money, see BGB � 378), and in ITALY and SPAIN when the deposit is accepted by the creditor or approved by the court, Italian CC art. 1210(2), Spanish CC art. 1180.
In DENMARK and GERMANY if the depositor does not waive his right to reclaim the money, and generally in SPAIN, deposit does not discharge the obligation. In Germany, the debtor has merely the right to refer the creditor to the deposited asset; the debtor no longer bears the risk and need no longer pay interest or compensation for fruits reaped (German BGB � 379).
2. Notice to creditor
A prior notice to the creditor is, in contrast to Article 7:111, not required in GREECE (Capodistrias in ErmAK II/2 art. 427 no. 11 (1954)) and GERMANY, where a subsequent notice given without undue delay suffices (BGB � 374(2) sent. 1; see also FINNISH Act on Depositing, � 2(2)); a notice may sometimes even be dispensed with (Greek CC art. 430; BGB � 374(2) sent. 2). In Germany, Greece and DENMARK, if notice is omitted, the deposit is nevertheless valid (Palandt (-Heinrichs) � 374 no. 1), but it may give rise to a claim for damages (Germany: BGB � 374(2) sent. 1; Greece: AP 161/1977, NoB 25 (1977) 1156, 1157; Danish Law on Depositing, � 1(3)). Other countries require a judicial or other procedure (FRANCE: CC art. 1258(7); ITALY: CC art. 1212; PORTUGAL: CC Proc. arts. 1024 ff.; SPAIN: CC art. 1178, Royal Decree 34/1988, Code of Civil Procedure art. 2127 (third parties who are interested must be given prior notice, CC art. 1177)).[page 356]
3. Costs of deposit
The costs of deposit are imposed upon the creditor who failed to accept the money (FRANCE: CC art. 1260; GERMAN BGB � 381, ITALIAN CC art. 1215; SPANISH CC art. 1179).[page 357]
COMMENT AND NOTES: PECL Article 7:112: Costs of Performance
The performance of commercial obligations usually entails costs. Transportation, money transfers, government licences, risk insurance, etc. will all have to be paid for. This provision lays down that such costs are to be borne by the performing party.
Illustration: A orders a book from Publishers B, located in another country, after B has stated a price for the book knowing that A resides in another country. The Publishers may not invoice A extra for the costs of mailing the book to him, unless this was agreed. Likewise, A has to bear the costs of paying for the book through an international money order or other means of payment.
This provision is in line with the law in most jurisdictions in Europe. See for instance FRENCH and BELGIAN CCs art. 1248, DUTCH BW art. 6:47, GERMAN BGB � 364 and ITALIAN CC art. 1198. The rule is considered self-evident under AUSTRIAN law. The same applies to English law: there is no explicit statement of a general rule but the principle is illustrated by Sale of Goods Act 1979, s. 29(6), under which the seller must bear the expenses of putting goods into a deliverable state: see Chitty � 41-195. The rule also applies in PORTUGAL (Telles, p. 287), although the present Civil Code has dropped the express provision to this point contained in art. 746 of the old Code of 1867. Unidroit art. 6.1.11 is to the same effect as Article 7:112.[page 357]