Q 67-1
Which situations are governed by Article 67 CISG?
Article 67 CISG governs the passing of risk in situations where the contract involves carriage of the goods. Article 67(1) sentence 1 addresses the common situation where the goods must be forwarded and no particular place has been determined, while Article 67(1) sentence 2 CISG deals with the exception where the seller is bound to hand over the goods at a particular place.
Q 67-2
Who is meant by ‘carrier’—is it a third party, or personnel under the seller’s control?
The word ‘carrier’ refers to a third person or legal entity that is independent from the seller. Risk should pass when the seller loses control over the goods, which is the case only where the seller hands over the goods to an independent third party (or directly to the buyer).
Q 67-3
Article 67(1), sentence 1 CISG is said to state a generally accepted international rule. Why is it reasonable to impose the risk on the buyer as soon as the goods are handed over to carriers?
A splitting of the risk is justified by the fact that, after arrival of the goods, the buyer is usually considered to be in a better position than the seller to establish any damage to the goods which has occurred as a result of the transport and to claim damages against the carrier.
Q 67-4
How can the parties derogate from Article 67 CISG?
The parties can incorporate an INCOTERM® rule or another trade term in their contract dealing with the passing of risk. They can also provide for an individual agreement with regard to the passing of risk.
Q 67-5
What considerations guided the court in C 67-1 in holding that ‘franco domicile’ also governed the question of when the risk passed?
It held that the clause could reasonably be understood as derogation from Article 31(a) because ‘franco domicile’ implied that the buyer need not ‘worry about transportation and insurance’, because the seller had insured the goods and because, in previous dealings, the seller had often used its own transportation means. Thus, delivery was not made by handing over the goods to the first carrier but rather only once the goods were delivered to the buyer’s premises. Accordingly, the risk did not pass with handing over the goods to the first carrier but only once the goods had reached the buyer’s premises.
Q 67-6
With regard to Article 67(2) CISG, must the buyer have become the legal owner of the goods in order to say that the goods damaged or lost were ‘the buyer’s’?
The passing of risk must be dealt with separately from the passing of title. The latter is governed by the applicable domestic law.
Q 67-7
When does the risk pass in the following situations?
(a) Seller transports goods using its own equipment and personnel and delivers the goods at the agreed place of delivery.
(b) Seller initially transports goods and then hands them over to a third party who, after having carried them for a while, hands them over to another carrier.
(c) Seller is bound to hand the goods over to the first carrier at a particular place, but hands them over before the agreed place has been reached.
(d) Goods are handed over to the first carrier but have not yet been identified.
(a) The risk passes at the moment of the delivery at the agreed place.
(b) The risk passes when the seller hands over the goods to the first carrier (Art 67(1) CISG).
(c) The risk only passes to the buyer once the goods are delivered at the agreed place and at the time due (Art 67(1) CISG).
(d) The risk does not pass to the buyer until the goods have been clearly identified (Art 67(2) CISG).
Q 67-8
In which of the above situations is the burden of the risk split during transport?
The risk is split in situations (b), (c) and (d). In the situations (b) and (c), the risk passes to the buyer once the goods are properly handed over to the first carrier. In situation (d), the risk passes to the buyer while the goods are in possession of the carrier once they have been identified.
Q 67-9
Compare Article 67 CISG with domestic sales laws.
(a) Are there any similarities between Article 67(1) CISG and Section 2-509 UCC?
(b) What is the corresponding rule in the BGB?
(c) Why is the BGB clearer than the CISG with respect to the passing of risk in the case of handing the goods over to a freight forwarder?
(a) The provisions are similar in the situation where the seller is bound to hand over the goods to a carrier (Art 67(1), first sentence CISG; § 2-509(1)(a) UCC). However, the UCC does not deal specifically with the situation described in Article 67(1), second sentence CISG. What is dealt with in Section 2-509(1)(b) UCC is the situation where delivery must be made either at the buyer’s premises or at a third place. In those cases, the risk passes once the buyer is able to take delivery.
(b) § 447(1) BGB is similar to Article 67(1) CISG, first sentence.
(c) The BGB gives more precise guidance as to who that third party designated to dispatch the goods is, by mentioning not only the ‘carrier’, but also the ‘forwarder’ or ‘other person or body designated to dispatch the thing’.
Q 67-10
It has been stated that, under the CISG, although from a dogmatic view, the time of delivery and the time of passing of risk have been distinguished, in practice they will often coincide. This differs from French and Swiss law, which have settled the passing of risk in sales contracts differently.
(a) To what extent do Swiss and French law provide for a similar rule on the passing of risk?
(b) Which point in time is decisive as to whether the risk has passed to the buyer?
(c) Which rules are more suited for modern international trade, the French and Swiss ones or those found in Article 67 CISG and the other sales laws? Discuss.
(d) Under Swiss law, title to the goods will not pass until handing over the goods to the buyer. How does the CC settle the passing of title to goods? See Article 1196(3) CC.
(e) In light of your answer to (c) above, do you see a rationale in French law for how it handles the passing of risk?
(f) Which difficulty persists in Swiss law with regard to risk allocation between the buyer and the seller?
(a) Under both Swiss and French law, the risk passes to the buyer at the time of the conclusion of the contract.
(b) The decisive moment is the conclusion of the contract.
(c) Linking the passing of risk to the moment of taking delivery is based on the idea that the party who possesses the goods is in a better position to control and protect the goods. Thus, the solution provided by French or Swiss law seems to excessively favour the position of the seller, especially in international trade, where the conclusion of the contract will not usually lead to a simultaneous taking of possession of the goods.
(d) Under French law, title to the goods passes at the moment of the conclusion of the contract, see Art 1196(1) CC.
(e) French law links the passing of risk to the passing of title to the goods. Since, with the conclusion of the contract, the buyer becomes the owner and beneficiary of the goods, it should, from that moment on, also bear the risk of their loss of or damage.
(f) The moment of contract conclusion does not necessarily coincide with the taking of possession and the passing of title. Thus, although the buyer may not yet be in a position to control and protect the goods, according to Article 185(1) OR, it already bears the risk of loss of or damage to the goods.
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