Q 57-1
Why is the place of payment in practice a crucial element of any trade?
The place of payment under Article 57 CISG is crucial because it can determine, inter alia, jurisdiction, allocation of risk, and practical costs of transferring funds. It affects which courts have competence in disputes, who bears banking charges, and the impact of currency fluctuations.
Q 57-2
What does C 57-2 say about the interaction between Article 57 CISG and Article 5(1)(b) Brussels Regulation (now Art 7(1)(b) Brussels Regulation (2012) (recast))?
Article 57 CISG still determines the place of performance as the applicable substantive law with respect to the legal obligations of the parties. Article 5(1)(b) Brussels Regulation is relevant to the extent that a rule exists granting international jurisdiction to the courts at the place of performance. However, case law has held that Article 5(1)(b) Brussels Regulation is to be interpreted autonomously, with regard to where delivery actually took place and without recourse to the law applicable to the underlying contract.
Q 57-3
How does the CISG determine the place where payment of the purchase price is to be made?
It provides for two alternatives depending on whether the parties are to perform their obligations concurrently or separately.
Q 57-4
(a) To what extent is Article 57 CISG a subsidiary rule? See the corresponding provisions from the other legal systems.
(b) According to the INCOTERM® ‘EXW’ (Ex Works (insert named place)), the seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or another named place (ie works, factory, warehouse, etc). What does that mean in relation to where the buyer has to pay the purchase price?
(a) It is subsidiary to the extent that party agreement in divergence from Article 57 will prevail. This includes agreement on internationally recognised trade terms such as INCOTERMS®.
(b) An agreement on INCOTERMS® constitutes a contrary agreement and prevails over Article 57 CISG. Consequently, the buyer will have to pay the purchase price in accordance with the EXW provision.
Q 57-5
(a) How can we distinguish Article 57(1)(a) from Article 57(1)(b) CISG?
(b) Why is Article 57(1)(b) CISG of higher practical importance than Article 57(1)(a)?
(a) Article 57(1)(b) is the general rule when the parties are to perform their obligations concurrently. Article 57(1)(a) only applies when one of the parties has to perform in advance.
(b) Because Article 57(1)(b) CISG constitutes the general scenario to be decided in practice; Article 57(1)(a) is the exception.
Q 57-6
What kind of documents are referred to in Article 57(1)(b) CISG?
Documents required to identify the goods and take possession of them, such as airways bills, documents of origin, customs documents etc. The phrase includes all documents required by the sales contract and by the law and rules applicable to the relevant delivery and payment arrangement.
Q 57-7
(a) Does the CISG address the issue of where monetary obligations other than the purchase price are to be paid?
(b) What possible solutions are there to this question?
(c) Compare Article 57(1) CISG with the corresponding provisions of the PICC 2016, OR, and ABGB. To what extent do they differ from Article 57(1) CISG?
(a) and (b) No, but an implied rule arguably exists that applies Article 57(1) CISG to other monetary claims by analogy.
(c) PICC 2016 provides a similar rule as does OR, but does not differentiate between different scenarios, and is therefore broader. ABGB differs because it clarifies that the buyer bears the risk and expense of paying at the creditor’s domicile.
Q 57-8
Compare Article 57(1) CISG with the other legal provisions.
(a) Is it commonly acknowledged that the purchase price is paid at the seller’s place of business?
(b) In particular, are there differences between Article 57(1) CISG and the UCC
— with regard to the structure of the corresponding provisions?
— in substance?
(a) Yes.
(b) Yes, the UCC provides only for the situation contemplated in Article 57(1)(b)—the result will usually be the same in practice.
Q 57-9
If the seller’s place of business changes after the conclusion of the contract, where is payment to be made:
(a) according to Article 57(2) CISG?
(b) according to the corresponding provisions of the BGB, ABGB, Codice Civile, and OR?
(c) In which cases is the place of payment the creditor’s new domicile?
(d) In all other cases, where is the debtor to make payment? Are there any differences between the various provisions?
(a) At the seller’s new place of business; seller bears additional expense.
(b), (c) and (d) BGB: at the seller’s new place of business or domicile; seller bears additional expense and additional risk.
ABGB: at the seller’s new place of business or domicile; seller bears additional expense and additional risk.
Codice Civile: buyer may elect to make payment at its own domicile if it informs the seller first.
OR: buyer may elect to make payment at its own domicile if the change of seller’s domicile imposes a considerable burden on the buyer.
Civil Code of PRC: if no place is agreed, at the seller’s place of business
Q 57-10
What happens if there is not only a change in the seller’s place of business, but a change in the person of the creditor itself?
(a) What did the court in C 57-2 decide?
(b) What other possibilities are there, according to A 57-1?
(a) Place of payment will be the place of the assignee.
(b) It could be decided according to the private international law rules governing assignment of the forum; no change, place of payment remains at the seller’s place of business.
Q 57-11
Based on what you now know about Article 57 CISG, how do you view the practice of business on an “open account” basis, or the sale of goods in transit? What risks are involved with these practices? Do they affect the place of performance of the payment obligation?
Under Article 57 CISG, payment is generally due at the seller’s place of business unless otherwise agreed. Open account sales or goods sold in transit heighten risks of non payment and uncertainty, since the buyer may delay or default without documentary control. These practices do not alter the default place of performance, but they shift commercial risk toward the seller, requiring careful contractual safeguards to mitigate exposure.
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