The implication made by the court is that the payment obligation under Article 58 CISG is only triggered once the seller supplies documents conforming to the contract within the meaning of Article 35 CISG.
Q 58-4
Suppose a contract specifies that payment is due before delivery. Would Article 58 CISG still grant the buyer a right to examine the goods before payment? Why or why not?
Article 58 CISG grants the buyer a right to examine goods before payment only when payment and delivery are concurrent. If the contract stipulates payment before delivery, this agreement overrides the default rule. In such cases, the buyer cannot insist on examination prior to payment, since party autonomy under the CISG prevails (see also Article 58(3) CISG). The buyer’s inspection right is postponed until delivery, reflecting the primacy of contractual terms over default provisions.
Q 58-5
How might the outcome of a case be affected if the seller delivers documents controlling the disposition of the goods, but not the goods themselves? Would the buyer’s obligation to pay under Article 58 CISG still be triggered?
Under Article 58(1) CISG, the buyer’s obligation to pay arises when the goods or documents controlling their disposition are placed at the buyer’s disposal if there is no other agreement for the buyer to pay at a specific time. If the seller delivers only the documents, payment is still triggered, since control over the goods passes through those documents. The buyer cannot refuse to make payment merely because physical delivery has not occurred.
Q 58-6
Use what you have learned about the obligations of the buyer and seller under the CISG so far.
(a) Do you agree with the sole arbitrator in C 58-2? Why or why not?
(b) What is the significance of the principle of simultaneous performance under Article 58 CISG, and how did it affect the outcome of this case?
(c) If you were to argue on behalf of (i) the seller and (ii) the buyer, which rights under the CISG would you argue or rely on?
(a) Generally yes. Putting a letter of credit on equal footing with a payment obligation, yet also only with an obligation de moyen, not obligation de résultat generally would contradict the understanding of Article 54. However, here the buyer was partially dependent on the seller’s actions. The seller chose the bank which refused the letter of credit; the seller did not proceed with delivery, which impacted the date for opening the letter of credit through Articles 53 and 54. Insofar, these preparatory steps the buyer took until it required the seller to act, can only be an obligation de moyen, as the buyer cannot alone cause the résultat.
(b) Article 58’s simultaneity anchors payment against tender of goods/documents. In a CPT documentary sale, payment falls due upon tender of compliant documents. The buyer’s LC validity around shipment sufficed; the seller’s failure to tender documents meant payment was not yet due.
(c) (i) Seller: Rely on Arts. 58(1),–(2), 58(3) to demand concurrent payment/document terms; suspend under Art. 71 for lack of security from unconfirmed LC; fix an additional period (Art. 63) and potentially avoid under Art. 64.
(ii) Buyer: Invoke Arts. 45, 62 (specific performance), 74–78 (damages, interest), 49 (avoidance for non-delivery), and CPT documentary tender obligations via Art. 9
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