Source: http://www.jus.uio.no/sisu/remedies_for_non_performance_perspectives_from_cisg_upicc_and_pecl.chengwei_liu/9.3.html
Timestamp: 2013-05-26 00:42:55
Document Index: 49857167

Matched Legal Cases: ['Art. 71', 'Art. 71', 'Art. 71', 'Art. 71', 'Art. 71', 'Art. 71', 'Art. 71', 'Art. 62', 'Art. 62', 'Art. 71']

Art. 71(2) continues the policy of Art. 71(1) in favour of a seller in stipulating that in case the seller has already dispatched the goods before the grounds for suspension become evident, he, nevertheless, "may prevent the handing over of the goods to the buyer even though the buyer holds a document which entitles him to obtain them". In other words, if the deficiency in the buyer's creditworthiness is such as to make it apparent that the buyer will not pay for the goods, the seller has the right as against the buyer to order the carrier not to hand over the goods to the buyer even though the buyer holds a document which entitles him to obtain them, e.g., an ocean bill of lading, and even if the goods were originally sold on terms granting the buyer credit after receipt of the goods. 463 676
As for the application of CISG Art. 71(2), in contrast to Art. 71(1), the issue to be dealt with here only concerns the right of the seller to stop the goods in transit. One could have imagined that the buyer, too, should have been granted such a right, i.e. that he should have had the opportunity to revoke a money transfer order. A relevant proposal was rejected, however, during the drafting of the CISG because there was fear of a serious impairment of the international payment transactions and because in many countries the non-payment of a cheque constitutes a criminal act. No such protection is needed in the case of the opening of a letter of credit because the seller usually cannot have access to the letter of credit before having delivered. 464 At the same time, Art. 71(2) expressly states that it "relates only to the rights in the goods as between the buyer and the seller". The right to stop the goods in transit, therefore, does not relate to the relationship between the buyer and his other partners if he has already resold the goods and a third party has obtained title in the goods. 465 677
In other words, under the CISG the seller loses his right to order the carrier not to hand over the goods if the buyer has transferred the document to a third party who has taken it for value and in good faith. 466 It follows that the relations between the buyer and his obligees remain untouched. If an obligee of the buyer has the goods or if he has pledged title in the goods from a document, the rights of the seller are not governed by the CISG but by the otherwise applicable domestic law. In this point, Vilus submits: "The most common situation referred to in Art. 71 is the case when the goods are in transit. In such circumstances there is a common law institution called stoppage in transitu which the seller can use when the buyer has delivered the documents to a third person. This is clear from the formulation of Art. 71 which emphasizes that 'the present paragraph relates only to the rights in the goods as between the buyer and the seller.' The view is held that in such cases the seller cannot claim the goods from a third party on the basis of the Convention, but he might do so under the applicable national law." 467 678
On the other hand, the right to stop the goods in transit does not touch upon the relationship between carrier and buyer. There are no obligations for the carrier under the CISG to respect the seller's request for stoppage. The question whether the carrier must or is permitted to follow the instructions of the seller where the buyer has a document which entitles him to obtain them is governed by the appropriate law of the form of transport in question. 468 If he voluntarily stops the goods in transit he exposes himself to a claim for damages on the part of the buyer. The seller, on his part, could, because of the right to stop performance, request the buyer not to take measures against the carrier. Because of the contractual relationship with the carrier, the seller could perhaps give orders to the former thus exercising his right to stoppage. Otherwise, he would have to call in a court. In other words, if the seller has already dispatched the goods, he can only prevent the handing over of the goods to the buyer by giving relevant orders to the carrier or forwarding agent in question. To what extent the latter follows those orders in the first place depends on the contract concluded for carriage. If the buyer's country has acceded to the CISG, or if the domestic rules of that country also provide for a right to stop the goods in transit, the seller may try to enforce this right through the courts, e.g. by way of distress or temporary injunction. 469 463. Supra. note 15. 464. See Secretariat Commentary on Art. 62 of the 1978 Draft [draft counterpart of CISG article 71], Comment 10. Available online at ‹http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-71.html› The match-up indicates that paragraphs (2) and (3) of Art. 62 of the 1978 Draft and CISG Art. 71 are substantially the same. However, paragraph (1) was significantly modified. See the match-up, available online at ‹http://www.cisg.law.pace.edu/cisg/text/matchup/matchup-d-71.html› 465. Supra. note 10, p. 288. 466. Supra. note 21, Comment 11. 467. See Jelena Vilus in "Provisions Common to the Obligations of the Seller and the Buyer": Petar Sarcevic and Paul Volken eds., International Sale of Goods: Dubrovnik Lectures, Oceana (1986); pp. 243-244. Available online at ‹http://www.cisg.law.pace.edu/cisg/biblio/vilus.html› 468. Supra. note 21, Comment 12. The rules governing the carrier's obligation to follow the consignor's orders to withhold delivery from the consignee differ between modes of transportation and between various international conventions and national laws. 469. Supra. note 22. [ document manifest ]