Remedies Of The Buyer Where The Seller Is In Breach Of Contract

ABSTRACT

The remedies of the buyer in case of breach by the seller in contracts differ in certain instances under the Vienna Convention and English law.  The primary difference is that the Vienna Convention adheres to the concept of fundamental breach as ground before the buyer can avail of any remedial options.  A comparison of the remedies under the two legal systems will show that there are more similarities than differences, apart from the provisions on fundamental breach under the Vienna Convention.  Adoption of the Vienna Convention however would benefit the United Kingdom in order to better facilitate international sales contract between its foreign trade partners since it allows for more options for the contracting parties as to what law should govern.

CHAPTER 1

INTRODUCTION

            The United Nations Vienna Convention on Contracts for the International Sale of Goods (CISG) was concluded in 1980 and came into force in 1988.  Even though almost sixty states have accepted the CISG, including most member states of the European Union, plus USA, Canada and Australia, the United Kingdom finds itself in the position of odd-man out for having not ratified the Convention.

This has caused some problems especially since many of UK’s important trading partners and several of the world’s leading trading nations follow the rules outlined in the Convention when drawing up contracts.  Trade between companies on mainland Europe are expected to be increasingly governed by the Convention, and it is also likely to apply, unless excluded, to sales between companies within the EFTA and EU states and the NAFTA.[1]

            There are arises a problem mainly because companies in UK which negotiate sales contracts with foreign companies will be forced to chose as the applicable law the law of a state which has ratified the Convention.

A dispute involving a UK company could be governed by the laws of a state which has incorporated the Convention, pursuant to the rules of private international law of the forum state.

            The reason why the UK has hesitated in adapting the CISG is because of remedial provisions in the Convention which are in some respects different to English law.  The purpose of this thesis is to examine, in relation to c.i.f contracts, the rights of a buyer to terminate the contract for breach by the seller.  The remedies available under the Vienna Convention and English law will be examined in relation to five commonly recurring disputes in order to ascertain whether such differences as existing between the two systems are likely to lead to substantial differences in results.

CHAPTER 2

REMEDIES FOR BREACH UNDER ENGLISH LAW AND THE VIENNA CONVENTION 

REMEDIES UNDER THE ENGLISH LAW

            Legislation on export sales in the UK is governed by the Uniform laws on International Sales Act 1967.  The legislation applied for the general sale of goods is the Sale of Goods Act 1979 (SGA), as amended, and common law.

Generally, English law on termination for breach in the context of c.i.f contracts lead to “clear and easily predictable results.”  Adoption of the Convention would thus lead to considerable uncertainty.

The UK private law of internal trade provides for a duality of remedies for the buyer in case of breach of contract by the seller.  There is the remedy in relation to the documents, and remedies in relation to the goods.

In the remedies in relation to documents, the buyer always has the right to reject the documents and to refuse to pay.  The buyer can reject even if the same problem would not justify rejection of the goods.[2]  In other words, the buyer can in general treat the contract as terminated and claim damages.

Another option under remedies in relation to documents is that the buyer, instead of rejecting the documents, can choose to accept them.  As a result, performance of the contract will continue.  But in either case, the buyer can generally claim damages for the seller’s breach of contract.

In remedies in relation to the goods, the general rule is that the buyer has a right to reject the goods if the seller is in breach of a condition.  There will also be a right to reject if there is a serious breach of an innominate term.[3]

Express terms as to quality will typically be innominate terms.[4]  In export sales, implied terms are deemed as conditions,[5] but in commercial sales, the right to reject is taken away if the breach is slight and the rejection is unreasonable.[6]  If there is a shortfall or incorrect quantity, the buyer can likewise reject the goods.[7]

Thus, in sum, if the buyer rejects the goods, he can generally treat the contract as terminated,[8] and he can recover the price (if paid), or alternatively, he can claim damages.  The buyer may choose to accept the goods instead of rejecting them, but in certain circumstances, the buyer will be deemed to have accepted the goods and to have waived his right to reject, even though he is not aware of the breach.  Once the buyer accepts the goods, he cannot reject them and treat the contract as terminated.[9]

Thus, there are two primary remedies for breach of contract in English law wherein the buyer has a right to treat the contract as terminated and becomes entitled to damages.   The right of a buyer to treat the contract as terminated can be exercised in two situations:

• where there is a term in the contract which serves as a condition thereto, and the seller fails to meet such term
• where the breach of the intermediate term by the seller deprives the buyer of “substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing these undertaking”[10]

In the first instance, the buyer will be entitled to terminate the contract when, for instance, the goods are shipped outside the shipment period, or where the shipping documents are tendered late, even where the shipment or tender is only one date late.[11]

            The right to treat the contract as discharged may be lost by the buyer either through election, waiver, or acceptance.[12]  In the case of any breach of contract, the buyer, when the innocent party, would be entitled to claim damages.  However, in a typical sale of commodities, the buyer will almost never be awarded, or for that matter, want, specific performance since this tends to be available to the buyer only where the goods are unique[13] and in any event are only available at the discretion of the court.

            The rules of English law in relation to breach are described as generally clear and lead to relatively predictable results in most cases.  This is true in some respects since the standard form of commodity contracts in the UK have not changed very much for the last 100 years (Mullis, 2004).

REMEDIES UNDER THE VIENNA CONVENTION

            The approach adopted by the Convention as to remedies available to buyer in case of breach by the seller is rather different to that of English law.  The provisions of the CISG apply to an international sale between parties whose places of businesses are in different but contracting states.

In such contracts, the nationality of the parties become irrelevant, since the place of business for the purpose of the contract is that with the closest relation to the contract and its performance.

            Breach of contract under the CISG covers all failures of a party to perform any of his obligations without making any distinction between main and auxiliary obligations.  The origin of the breach, whether it be in the contract, in a usage, or in the Convention itself, is also not important.  Under certain conditions pursuant to the Convention, a breach of contract is deemed as fundamental.

            Article 25 of the CISG provides:

“A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result.”

            However, it should be pointed out that the consequences of a fundamental breach of contract are more severe than the ordinary breach of contract.  The CISG provides for some remedies which are only available to fundamental breaches of contracts.

            Article 45 of the CISG provides:

“(1) If the seller fails to perform any of his obligations under the contract or this Convention, the buyer may:

• exercise the rights provided in articles 46 to 52;
• claim damages as provided in articles 74 to 77.”

Articles 46 to 52 of the CISG pertain to specific rights and their necessary preconditions.  Articles 74 to 77 deal with the definition and calculation of damages, as well as limitation and mitigation of damages.

This concept of fundamental breach under the Convention has lead to some controversy in English courts.  First of all, it does not have the predictability and certainty that the English condition technique has.   It is open to criticism since the definition of fundamental breach in Article 25 of the CISG makes it hard to predict just when a breach can be deemed as fundamental.  It is open to many interpretations which may cause confusion.

Secondly, the fundamental breach provision under the Convention tends to be less favourable to the buyer than the automatic right of rejection under English law in the case of a breach of a breach of express terms in contracts which are classified as conditions pursuant to English law, subject to Section 15A of the SGA (Mullis, 2004).

Section 15A of the SGA is of primary importance to English law since it admits that the automatic right of rejection for breach of condition does not always achieve a just result.

However, English law, notwithstanding Section 15A, continues to allow automatic termination at least where defects in the documents are concerned.   There is doubt as to whether the CISG is as sufficiently flexible to deal with such disputes.

            The buyer has two primary remedies under the CISG.  The first remedy is that of compelling performance.[14]  The Convention is similar to English law in this case in that it provides that an injured party is entitled to require performance.

The second remedy is that mentioned in relation to fundamental breach of contract.  The buyer can treat the contract as avoided or discharged, when the seller’s failure to perform amounts to a fundamental breach of contract, or where the breach is due to non-performance and the seller fails to perform within the additional period of time provided for in Article 47(1) of the CISG.

Article 47(1) is designed to overcome the difficulty that late delivery may not be sufficiently late to allow the buyer to treat it as a fundamental breach.  By fixing an additional time frame, the buyer can make time of the essence so that a failure by the seller to perform within the additional period extended to him will allow the buyer to discharge the contract.

            Under the Convention, there are certain conditions which may exempt the seller from certain consequences of a failure to perform his obligations.  The CISG lays considerable emphasis on the prompt exercise of rights, so when the buyer fails to give notice specifying the nature of the lack of conformity by the seller within a reasonable time after he has discovered it or ought to have discovered it, then the buyer loses his right to rely on the lack of conformity.

            Article 38 of the CISG provides that the buyer “must examine the goods… within as short a period as is predictable in the circumstances.”

Thus, if the examination undertaken, or the examination which ought to be undertaken, should disclose the defects, otherwise, the buyer loses right to rely on lack of conformity of he fails to give notice to the seller within a reasonable time after such examination.  The buyer loses his right to rely on the lack of conformity if he fails to give notice within two years from the date on which the goods were handed over to the buyer.[15]

These provisions are subject to exceptions but their consequences nevertheless remain dramatic.  Acceptance of goods or documents under English law only causes the buyer to lose his right to reject them.  In contrast, failure to give notice of lack of conformity under the Convention causes to buyer to lose his right to any claim.[16]

CHAPTER 3

EVALUATION OF THE REMEDIES UNDER ENGLISH LAW AND THE VIENNA CONVENTION

            Aside from compelling specific performance and avoidance of the contract, the Convention provides for other remedies to the buyer in the event of a breach by the seller: compensatory damages and price reduction.[17]  These four remedies (specific performance, avoidance, compensatory damages, and price reduction) are likewise available to the buyer under English law.

Specific Performance

The buyer in a contract has the right to specific performance from the seller in case of breach by the latter.  Under English law, granting specific performance of the terms of a contract is regarded as an extraordinary remedy which is only available in very specific and limited circumstances.

Section 52(1) of the SGA provides:

“In any action for breach of contract to deliver specific or ascertained goods the court may, if it thinks fit, on the plaintiff’s application, by its judgment or decree direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods on payment of damages.”

The abovementioned section of the SGA limits specific performance to instances which involve specific or ascertained goods.   It applies to goods “identified and agreed on at the time a contract of sale is made”[18] or “identified in accordance with the agreement after the time a contract of sale is made.”[19]

The problem is that just because specific or ascertained goods are involved does not necessarily guarantee that the court will exercise its discretion and order specific performance, including instances where the buyer was put to significant hardship in obtaining any sort of replacement good, such as custom machinery[20] or a ship.[21]

The uncertainty thus as to this remedy of specific performance lies in the discretionary approach of the courts in the interpretation of Section 52(1).

Take the case of Sky Petroleum Ltd. v. VIP Petroleum Ltd.[22] where the seller defaulted in a contract for the supply of petrol to a filling station.  In this case, the court exercised its discretion to grant a decree of specific performance for the buyer, but the court failed to discuss whether in fact it had the power to grant such a remedy under the circumstances involved or how the remedy fit into Section 52 of SGA, and the decision of Re Wait.

English case law has remained unsettled on the scope of the discretionary authority of the court to grant specific performance.   Application of the CISG might thus be helpful in clarify the English law on this particular point.

The corresponding provision to Section 52(1) with the Convention is contained in Article 46 of the CISG.   The said article provides that a “buyer may require performance of the seller of his obligation unless the buyer has resorted to a remedy which is inconsistent with this requirement.”

Unlike Section 52(1) of the SGA, the CISG does not require the goods to be specific, ascertained or otherwise identified in the contract in order for the buyer to avail of the remedy of specific performance.  The CISG is thus able to avoid the uncertainty in English law as to the discretionary authority of the court to grant specific performance to the buyer.

The only limitation provided for in Article 46 of the CISG is that the buyer’s may avail of the remedy of specific performance only if the buyer has not availed of a remedy which is inconsistent thereto.  Remedies which are deemed inconsistent with specific performance are avoidance of the contract[23] or reduction of contract price[24] (Walt, 1991).

It would seem that the buyer should thus apply CISG as the governing law in international contracts since the remedy of specific performance is at the option of the buyer, and not based on court discretion.  However, CISG provides for a limitation to Article 46 in Article 28.

Article 28 of the CISG provides:

“If, in accordance with this Convention, one party is entitled to require performance  of any obligation by the other party, a court is not bound to enter a judgment for specific performance unless the court would do so under its own law in respect of similar contracts of sale not governed by this Convention.”

Thus, the tribunal would have to refer to local law, and if the local law to be applied is English law, then the court would necessarily have to resort to Section 52(1) of the SGA in order to exercise its discretion in accordance with Article 28 of the CISG.  Article 28 is especially useful if one of the parties is English and wishes to avail of the strict requirement on court discretion under the SGA.

What results is that a country’s court can determine whether it would grant specific performance based on its own domestic law.  If the court decided to apply UK law, Section 52(1) of SGA, then the objective of the CISG of attaining commercial certainty or uniformity in the granting of the remedy of specific performance would have failed (Kastely, 1988).

Furthermore, these inconsistencies of remedies available under the SGA and CISG would bring about the possibility of forum shopping by both the buyer and the seller to either seek or avoid specific performance.

Avoidance of Contract

The main difference between English law and the Vienna Convention in terms of avoidance of contract is that the former provides for an automatic avoidance of the contract in case of breach by the seller.

Under English law, the buyer has the right to automatically avoid the contract once the seller commits a breach of any of the express terms of the contract which are treated as conditions.

In the CISG, the breach must be fundamental.  The buyer can declare the contract voided under the CISG only on two instances: a) failure of the seller to perform any of his obligations under the contract or this convention amounts to a fundamental breach of the contract, as defined in Article 25 of the CISG; and b) when the seller does not deliver the goods within the additional period of time fixed by the buyer pursuant to Article 47(1) of the CISG, or declares that he will not deliver within the period so fixed.

Under the CISG, both parties are released from their main obligations once the contract is avoided.  The effects of the avoidance of a contract are governed by Articles 81 to 84 of the CISG.   The Convention provides that the buyer may void the contract only under certain conditions.  Article 48 of the CISG also provides that the buyer cannot void the contract when the seller has already delivered the goods.

Article 48(2) of the CISG provides:

“However, in cases where the seller has delivered the goods, the buyer loses the right to declare the contract avoided unless he does so:

• in respect of late delivery, within a reasonable time after he has become aware that delivery has been made;
• in respect of any breach other than late delivery, within a reasonable time;
  • after he knew or ought to have known of the breach;
  • after the expiration of any additional period of time fixed by the buyer in accordance with paragraph 1 of article 47, or after the seller has declared that he will not perform his obligations within such an additional period; or
  • after the expiration of any additional period of time indicated by the seller in accordance with paragraph (2) of article 48, or after the buyer has declared that he will not accept performance.”

This provision not withstanding, there is, in general, no period of time within which the buyer must declare the contract as void.  As long as the buyer does not void the contract, the seller is required to deliver specific performance of the contract.

Reduction of Price

The provisions on reduction of price under English law, as a remedy for the buyer, are contained in Sections 30 and 53 of the SGA.

Section 30 refers to delivery of wrong quantity.  When the seller delivers less than the quantity of goods as stipulated in the contract, and the buyer accepts, then the latter must pay for such goods at the contract rate.[25]

The corresponding provision to this in the CISG is Article 50 which provides for a proportional rate.  Pursuant to Article 50 of the CISG, once the parties have stipulated a specific contract rate for each item delivered, then such specific rate would also determine the proportion of value that the goods delivered had to the conforming quantity as delivered by the seller.

In the instance where there is delivery of a lesser amount as stipulated in the contract, the provisions of the SGA and CISG thus reach the same conclusion and results in terms of computing the price of the goods actually delivered in lesser quantity even if the SGA applies the value test while the CISG uses the proportionality test.

Similarly with the CISG, the SGA also provides that this remedy of reduction of price will only apply at the option of the buyer in lieu of a claim for damages (Mullis, 2004).

One difference between the SGA and CISG regarding reduction of price is that under English law, there is no general right afforded the buyer in reducing the price unless it is for setting up a defence to the seller’s action for the price.

Another difference is that English law provides for a specific provision on valuation where the breach is in respect of quality obligations.  Section 53(3) of the SGA provides that prima facie, the loss is the difference in value of the goods at the time of delivery between the actual delivered value and the contracted value.  The English court has the discretion to make an award based on the value test in SGA or the proportionality test in Article 50 of the CISG, since proportionality is implicitly recognized in Section 30 of the SGA on defects of quantity.

When the buyer and seller cannot agree on a reduction of price, then the buyer can file for a claim for damages.  If the seller is the one who opts to claim for damages, the buyer can set off the amount owing pursuant to Section 53(1)(a) of the SGA, which has Article 50 of the CISG as corresponding provision.

The right to seek reduction of price under Article 50 of the CISG, or to require repair in case of disconformity[26] are not likely to be of much importance in relation to international sales on documentary terms and contain provisions which differ from English law, as described earlier in this paper.

With respect to the other remedies, those provided for by the Convention is almost identical to those adopted by English law.

Additional Time to Defaulting Seller

Additional time to perform may be granted to a seller when there is delay in delivery.[27]  The additional times gives the defaulting seller to cure its performance by making the delivery.   Under the CISG, the granting of additional time as a remedy for the buyer is outlined in Article 47.  It is also available as a remedy to the seller, as when the seller may be granted additional time to cure defective performance pursuant to Article 48, such as by repairing defective goods.

Under English law however, there is no express remedy for granting additional time to a defaulting party.  Article 47 of the CISG provides for the instances when additional may be fixed by the buyer:

“(1) The buyer may fix an additional period of time of reasonable length for performance by the seller of his obligations.

(2) Unless the buyer has received notice from the seller that he will not perform within the period so fixed, the buyer may not, during that period, resort to any remedy for breach of contract.  However, the buyer is not deprived thereby of any right he may have to claim damages for delay in performance.”

            Article 47 is to be read in relation to Article 46, and fits into the CISG concept of fundamental breach.   The purpose is to protect the buyer who is waiting for a delayed delivery by the seller.   The buyer during this period may determine whether the delay already constitutes fundamental breach on the part of the seller, and in which case the buyer would be entitled to avoid or repudiate the contract (Honnold, 1991).

Since it is up to the buyer to determine whether the seller has committed a fundamental breach, then the buyer, for his protection, can avail of Article 47 by providing an additional period of time for performance of the contract.

            The limitation on this option by the buyer is that the additional period granted to the seller must be for a reasonable time, although the CISG does not define what would constitute “reasonable” time.  Once this additional period has expired, then the buyer can safely conclude that a fundamental breach was committed by the seller, and then the buyer can avoid the contract.

            The buyer can avoid the contract after delivery of the notice for additional time to the seller as provided for in Article 49(1)(b) of the CISG:

            “The buyer may declare the contract avoided…

(b)in case of non-delivery, if the seller does not deliver the goods within the additional period of time fixed by the buyer in accordance with paragraph 1 of article 47 or declares that he will not deliver within the period so fixed.”

Article 49(1)(b) of the CISG causes some confusion as to the effect of Article 47 since the former provides that avoidance is availed of only in relation to the delivery or non-delivery of the obligation.  The buyer may avoid the contract where the seller has breached a delivery obligation only when there is a fundamental breach.

Thus, when a buyer gives notice of additional time for the seller, then the effect of such notice will be that the buyer is prevented from resorting to any other remedy for breach during that additional period.

Thus, instead of providing for a remedy for the buyer, this additional period notice actually limits the buyer’s remedial options.  The only real remedial measure herein is that upon expiration of the additional period provided for the seller, then the buyer can treat the non-performance as a fundamental breach as ground to void the contract.

Under English law, there is no express provision corresponding to the additional period provision of the CISG.  It is comparable only to breach of timing obligations by a party, and whether such breach would allow the other party to avoid the contract.

The concept of fundamental breach is not recognized under the SGA, but pertains to breach of an express term (treated as a condition) in the contract.  Under English law, the breach of a major term, which is called a “condition”, allows for repudiation or avoidance of the contract, whereas breach of a lesser term, called as a “warranty”, only provides for the remedy of claim for damages for the buyer (Goode, 1995).

Section 10 of the SGA provides for the following rules on timing obligations under English law:

“(1) Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not of the essence of a contract of sale.

(2) Whether any other stipulation as to time is or is not of the essence of the contract depends on the terms of the contract.”

The above provision does not expressly mention conditions or warranties which are deemed the standard methods for determining when the buyer’s right to avoid the contract arises.  What is instrumental then is to determine whether time is or is not of the essence in the contract (Bridge, 1997).

When time is of the essence in contracts of sale, then the time obligations are considered as conditions.  Once the seller fails to meet this condition as to time, then it amounts to breach wherein the buyer can repudiate the contract.  The court had occasion to rule that time stipulations in mercantile contracts will typically be considered to be of the essence and therefore conditions.[28]

The rationale behind this is to allow each party to easily determine whether breach has occurred, and that they can thus avail of the remedy of avoidance of contract.  When a time obligation is breached under English law, the buyer is not entitled to deliver notice to any sort in order to set additional time for performance, which will only provide for fundamental breach as basis for avoidance after expiration of such additional time, as provided for under the Convention.

In this sense, the rules under the English system would be more advantageous to the buyer.   It is easier for the buyer under English law to determine whether breach has been committed by the seller by simply determining whether the seller has failed to abide by a particular term stipulated in the contract.  There is no requirement for fundamental breach for the buyer to void the contract under English law, nor must the buyer wait for an additional period of performance to the seller in order to conclude that fundamental breach was committed by the seller.

Section 11(3) of the SGA provides guidelines on whether a provision in a contract constitutes a warranty or condition depending on the construction of the contract.  This however has been criticized as too simplistic since the case law has developed a third class of terms, called as “innominate” wherein breach may or may not result in the right of repudiation, depending on the seriousness of the breach.[29]

It should be noted however that the buyer under English law may still grant additional time to the seller for performance of the obligation, similar to the CISG.  However, under English law, once the buyer grants additional time to the seller, then this is deemed a waiver by the buyer of its strict rights under the contract pertaining to the condition therein.   This waiver is equivalent to the requirement of notice of additional time to the seller under the CISG.  Whereas in the CISG, wherein only notice of additional time is required, in contrast, English law requires waiver of the time obligation and a new notice making time of the essence.

Once the buyer waives a timing breach under English law, then time is no longer deemed as of the essence.  Similarly to the CISG, the obligation then has to be performed within a reasonable time.

TERMINATION FOR BREACH

Most of English law on the international sale of goods was developed in relation to the documentary sales of commodities, particularly on c.i.f. and f.o.b contracts.

A c.i.f contract under English law has been defined as a tender of a bill of lading covering the goods contracted to be sold, coupled with an insurance policy, and accompanied by an invoice which shows the price.[30]  The initials indicate that the price is to include cost, insurance, and freight (therefore, it is termed as a c.i.f. contract).[31]  There is no statutory definition of c.i.f. in English law, rather its definition has been provided for in English case law (Mullis, 2004). The essential feature of the c.i.f. contract is that the seller, once he has shipped goods or bought goods afloat, performs the contract by tendering the conforming documents to the buyer in the contract.   In other words, a c.i.f. contract is a contract for the sale of goods performed by the delivery of documents[32] (Benjamin’s, 2000).

Unlike a domestic sales contract, in a c.i.f. contract, the seller has two obligations[33] imposed on him: 1) delivering the contract goods; and 2) delivering the documents.

F.o.b., or freight on board, contracts have different forms.  The first is when the buyer makes the carriage arrangements.  The buyer makes the contract of carriage and the bill of lading is issued to the buyer.  The seller simply delivers the goods to the ship.

The second form is the classic or strict f.o.b. contract wherein the buyer nominates the ship and the seller delivers the goods to the ship.  The bill of lading in this form of contract is issued to the seller, not the buyer.  The goods will often be deliverable to the buyer’s order, and in that case, the seller will generally contract as agent for the buyer.

The third form of f.o.b. contract is an f.o.b. contract with additional services.  The buyer leaves the carriage arrangements to the seller and the latter selects the ship.  The bill of lading is issued to the seller and the goods will commonly be deliverable to the seller’s order.  The seller may also arrange insurance cover age.

The Vienna Convention does not provide for a definition of either c.i.f. or f.o.b. contracts.  C.i.f. and f.o.b. terms are defined from custom and usage of merchants.[34]

As earlier mentioned, the seller in a c.i.f. contract has two obligations:

• delivery of the contractual goods on board in accordance with the terms of the contract or to buy goods afloat which match the contractual description; and
• delivery of the documents which requires the seller to procure and tender to the buyer the documents stipulated for in the contract. In the absence of an express provision in the contract to the contrary, these documents should include a bill of lading, an insurance policy, and an invoice.[35]

Delivery of the contractual goods is termed as the seller’s physical obligations, while delivery of the documents is his documentary obligations.  Tender of the documents in their proper form constitutes a condition in order for the seller to obtain payment from the buyer (Mullis, 2004).

Right to Reject

Under English law, when the seller fails to perform one or both of these obligations under a c.i.f. contract, then the buyer has the right to reject the goods or documents.  This is the remedy afforded to the buyer in a c.i.f. contract under English law in case of breach by the seller of his obligations to the contract.  For instance, if the seller tenders defective documents, then the buyer has the right to reject such documents.

The buyer may reject such defective documents even if the buyer has accepted the documents.  If the goods on arrival are not in accordance with the terms of the contract, then the buyer likewise has the right to reject such goods delivered (Mullis, 2004).

When the seller however breaches both his physical and documentary obligations in a c.i.f. contract, under English law, then this gives rise to the buyer’s two distinct rights to reject both the goods and the documents.[36]

As provided for in the case of Kwei Tek Chao v. British Traders and Shippers Ltd.[37], by Devlin J.:

“[The physical and documentary obligations] are distinct obligations and the right to reject the documents arises when the documents are tendered, and the right to reject the goods arises when they are landed and when after examination they are found not to be in conformity with the contract.”

Acceptance of defective documents thus will not preclude the buyer’s right to reject non-conforming goods.  The buyer may opt to reject both the documents and goods.  The remedy to reject the documents and the goods are not in the alternative.  They may be exercised at the same time by the buyer, subject to waiver.

Under the Vienna Convention, the remedies available to a buyer in a c.i.f. contract are similar to the remedies under English law.  Article 30 of the CISG provides that the seller is required to “deliver the goods [and] hand over any documents relating to them.”    This indicates that the CISG also recognizes two separate obligations of the seller – the physical obligation and the documentary obligation.

The remedies of the buyer under the Vienna Convention in case of breach by the seller of his physical and/or documentary obligations in a c.i.f. contract are contained in Article 49(1) of the CISG which provides that the buyer may avoid the contract if the failure by the seller to perform “any of his obligations under the contract amounts to a fundamental breach of contract.”

The seller’s breach of his physical or documentary obligations or both would subject the breach as being a fundamental breach of the c.i.f. contract and would thus entitle the buyer to avoid said contract.    The buyer may opt to reject the documents if they are defective or do not comply with the contract, even if the goods delivered are in accordance to the terms of the c.i.f. contract.[38]  The buyer who accepts defective documents can also still avoid the contract when the seller commits a fundamental breach in respect to the goods delivered, subject to waiver by the buyer.

Under the Vienna Convention, however, it should be noted that a buyer who fails to reject documents which are defective on their face amounts to waiver by the buyer to subsequently reject the goods on that ground.  For instance, if the documents stated that the goods were shipped late, then upon acceptance, the buyer cannot later avoid the contract on the basis that the goods were shipped late.

If the late shipment by the seller is concealed by misdating the bill of lading, the buyer has the remedy to avoid the contract either on the ground that the documents were not genuine,[39] or on the ground of non-conformity of goods.[40]

Alternatively, the buyer might be held in estoppel from relying on his strict legal rights.  The buyer may thus be precluded by his conduct from asserting his strict legal rights to the extent that the seller has relied on such conduct.[41]  This principle of estoppel, though not expressly provided for in the Vienna Convention, forms a general principle underlying the CISG.[42]

Under English law, a buyer in a c.i.f. contract may refuse to pay the goods until he has seen and inspected the goods.[43]  If he does so, then the seller can treat the buyer’s refusal to pay as a repudiatory breach.[44]

As stated earlier, even when the buyer already paid against conforming documents, he may still reject the goods for non-conformity.  For instance, when the documents as tendered by the seller stated that the goods shipped were in “apparent good order and condition”, but the goods on arrival turned out to be defective for having deteriorated en route because they were unfit to endure a normal transit, then the buyer would still be entitled to reject the goods.[45]

Under the Vienna Convention, the duty of the buyer to pay arises when the seller places either the goods or the documents controlling their disposition at the buyer’s disposal.[46]  The c.i.f. buyer then should pay against the documents, subject to contrary agreement.

The CISG provides though that the buyer does not have to pay the price until he has inspected or examined the goods, unless the procedures for delivery or payment agreed upon by the parties are inconsistent with his having such an opportunity.[47]

It should be pointed out however that the usual procedures for payment in a c.i.f. contract are not consistent with the buyer’s right of examination before payment since the documents are normally tendered before the vessel arrives.

Still, the fact remains that the buyer’s right of avoidance with regard to the documents and goods are separate, subject to waiver, and loss of one right does not preclude loss of the other (Mullis, 2004).

English courts are very strict about the contractual goods matching their contractual description.  Prior to the enactment of Section 15A of the SGA in 1979, English courts interpreted the requirement that the goods must correspond with the contractual description strictly[48] and also construed “description” widely.[49]

Failure of the goods to correspond to the contractual correspond is deemed irrelevant to the buyer since loss has generally been treated as insignificant to the buyer’s right to reject.[50]

Section 15A of the SGA provides:

“(1) Where in the case of a contract of sale —

• the buyer would, apart from this subsection, have the right to reject goods by reason of a breach on the part of the seller of a term impliedly by section 13, 14 or 15 above, but
• the breach is so slight that it would be unreasonable for him to reject them, if the buyer does not deal as a consumer, the breach is not to be treated as a breach of condition, but may be treated as a breach of warranty.
  • This section applies unless a contrary intention appears in, or is to be

            implied from, the contract.

• It is for the seller to show that a breach fell within subsection 1(b) above…”

Section 15A prevents a buyer who does not deal as a consumer from rejecting the goods for breach of terms implied by Section 13, 14, and 15 of the SGA if the breach is so slight that it would be unreasonable for the buyer to reject the goods.[51]  Rejection for trivial discrepancies are thus discouraged.

Section 15A by its terms applies only to breaches of the terms implied by the SGA and leaves the law relating to breach of any express terms untouched (Mullis, 2004).  The section also does not apply where a contrary agreement is express or implied in the contract.

Stipulations as to time and place of shipment are deemed to form part of the description of the goods.  Failure to comply with provisions as to time and place entitles the buyer the right to reject the goods even if the late shipment did not cause any loss to the buyer.[52]

In the case of Bowes v. Shand,[53] the court ruled that stipulations as to the time of shipment form part of the description of the goods and that breach of such stipulations would entitle the buyer to the remedy of rejecting the goods even where the breach caused no loss.  The breach of a stipulation as to the time of shipment may be taken as a breach of Section 13 of the SGA and would put such a breach within the coverage of Section 15A.  The reason why Section 15A would be applicable in that when the buyer has accepted and paid for the documents, even if he did so without knowledge of his right to reject them, the buyer loses his right to reject the goods under English law (Mullis, 2004).

Under the Vienna Convention, late shipment by the seller may be a breach of Article 35(1) or Article 33.  The buyer has the remedy of the right to avoid the contract only if the breach is fundamental as provided for in Article 49(1) of the CISG.  In other words, the buyer only has the right to reject the goods where the late shipment was sufficiently late as to substantially deprive him that which he was entitled to expect under the contract.

Defects in the Physical Characteristics of the Goods

In a c.i.f. contract, it may occur that the goods as shipped by the seller were in apparent good order but arrived in a deteriorated state due to being insufficiently durable to endure a normal transit.[54]  The apparent good condition as shipped are evidenced by the bill of lading issued by the seller and tendered to the buyer.

Section 15A of the SGA would apply even if the breach is only slight once the buyer accepts the bill of lading, assuming the buyer is a non-consumer.  Apart from Section 15A, the buyer’s remedy would also include the right to reject the goods on the ground of breach provided for in Section 14(2) of the SGA.

Section 15A(3) places on the seller the burden of proving that the breach was slight and that it would unreasonable for the buyer to reject the goods.  If the seller proves this, then the breach would be treated as a breach of warranty only, as provided for in Section 15A(3).  If the breach is only in relation the physical characteristics of the goods, with no separate documentary breached involved, then the buyer should not reject the goods for such a trivial defect.  Such a policy applies whether the contract is a domestic commercial sales contract or an international sales contract.

However, when the term which is breached is an express term relating to the quality or condition of the goods rather than implied terms pursuant to Sections 13, 14 or 15 of the SGA, then the buyer will continue to be justified in rejecting the goods even for trivial breaches (Mullis, 2004).

On the other hand, under the Vienna Convention, the seller is under a duty to deliver goods which are of the “quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract.”[55]

If the goods as delivered to the buyer do not conform to the requirements of the contract as stipulated therein, then the buyer’s only remedy is to avoid the contract when the seller’s failure to perform amounts to a fundamental breach of the contract.

In this case the English law then is more favourable to the buyer since the latter is entitled to avoid the contract without the need for the ground of fundamental breach like under the Vienna Convention where substantial deprivation of that which the buyer was entitled to expect must be proven.

On a positive note however, the Vienna Convention limits the right to avoid the contract to serious breaches[56] whereas English law only excludes the right to reject in cases where the breach is so slight.

Right to Reject the Documents

Under English law, the buyer in a c.i.f. contract is entitled to the remedy of rejecting a tender of the shipping documents on two grounds:

• when the documents are defective; and
• when the documents are tendered late.[57]

Defective documents may include a non-genuine bill of lading,[58] or of a bill of lading which fails to provide the buyer with continuous documentary cover.[59]  This is because the seller’s documentary obligations are deemed strict, as provided for in The Hansa Nord case by Roskill L.J.:

“The seller’s obligation regarding documentation has long been made sacrosanct by the highest authority and… the express or implied provisions in a c.i.f. contract in those respects [are] of the class… any breach of which justified rejection.”[60]

The buyer can reject documents which disclose a defect in the goods even where that defect would not in itself justify rejection of the goods.[61]

There is an exception to the requirement that the documents must in all respects perfect as provided for in the case of Tradax International S.A. v. Goldschmidt S.A.[62] wherein sellers sold to the buyers 8000 tonnes, which was 5^ more or less of White Syrian Barley on f.o.b. terms.  The contract in this case was on f.o.b. terms but the principle is equally applicable to c.i.f. contracts. The contract further provided that the goods should not contain any more than 4% foreign matters and that a certificate of quality had to be tendered with the other shipping documents.  In this case, the sellers tendered the shipping documents to the buyers who in turn rejected the documents since the certificate of quality showed 4.1% of foreign matters.  The court ruled that the provision as to impurities was not part of the description of goods and that there was no condition implied by Section 14 of the SGA relied on.[63]

Slynn L.J. held that the buyer was not entitled to reject the documents on this ground since the certificate did not constitute a defective document:

“But here the certificate is a good certificate in that it does state what is the quality, what is the percentage of impurities. It shows that there was not a full compliance with the contractual term as to quality and it does what it was intended to do.  It is a valid document… capable of being transferred as part of a subsequent sale.”[64]

This case has been open to numerous criticisms.  Documents have been argued as not defective merely because it states that the goods contain a higher percentage of impurities than the contract allows for.  Thus, the buyer cannot reject the documents merely because they disclose any defective condition of the goods (Mullis, 2004).

However, if the document discloses a defect in the goods which would amount to a breach of condition, or serious breach of an intermediate term, the buyer would have the right to reject the documents on the ground of defect of goods.[65]  The buyer has the right to reject the documents not because they are in themselves defective but because the documents reveal a defect in the goods which justifies rejection of the goods.[66]

CHAPTER 4

CONCLUSION

The most glaring difference between English law and the Vienna Convention with regard to the remedies of a buyer in case of breach by the seller in a contract is that the Vienna Convention provides for the concept of fundamental breach.  This leads to certain predictability in results which do not exist in English courts.   However, fundamental breach as provided for in Article 25 of the CISG makes it hard to predict just when a breach can be deemed fundamental.

In contrast, English law provides for the automatic right of rejection which in many instances can be more favourable to the buyer.  The automatic right of rejection goes into effect once the seller commits a breach of an express term in the contract which are classified as conditions, subject to Section 15A of the SGA.

Another main difference between English law and the Vienna Convention is on the remedy of specific performance.   In English law, the buyer’s remedy of specific performance lies on the discretion of the court depending on whether the goods are specific or ascertained.  On the other hand, the CISG does not require that the goods be specified, ascertained or otherwise identified in order for the buyer to avail of the remedy of specific performance.  The only limitation is that the buyer can opt to avail of specific performance, without need for court discretion, if the buyer has not availed of any other remedy inconsistent with specific performance.

The remedy of reduction of price under English law provides that when the seller delivers less than the quantity of goods as stipulated in the contract, and the buyer accepts, then the latter must pay for such goods at the contract rate.[67]  On the other hand, under Article 50 of the CISG, once the parties have stipulated a specific contract rate for each item delivered, then such specific rate would also determine the proportion of value that the goods delivered had to the conforming quantity as delivered by the seller.  Similarly with the CISG, the SGA also provides that this remedy of reduction of price will only apply at the option of the buyer in lieu of a claim for damages (Mullis, 2004).

The first difference between English law and the Vienna Convention regarding reduction of price is that under English law, there is no general right afforded the buyer in reducing the price unless it is for setting up a defence to the seller’s action for the price.   The second difference is that English law provides for a specific provision on valuation where the breach is in respect of quality obligations.  Section 53(3) of the SGA provides that prima facie, the loss is the difference in value of the goods at the time of delivery between the actual delivered value and the contracted value.

Under the Convention, there are certain conditions which may exempt the seller from certain consequences of a failure to perform his obligations.  The CISG lays considerable emphasis on the prompt exercise of rights, so when the buyer fails to give notice specifying the nature of the lack of conformity by the seller within a reasonable time after he has discovered it or ought to have discovered it, then the buyer loses his right to rely on the lack of conformity.

Acceptance of goods or documents under English law only causes the buyer to lose his right to reject them.  In contrast, failure to give notice of lack of conformity under the Convention causes to buyer to lose his right to any claim.[68]

Under the Vienna Convention, the granting of additional time for the seller as a remedy for the buyer is outlined in Article 47.  Once the additional period expires without the seller completing performance, only then may the buyer may consider it as fundamental breach as ground to avoid the contract.  The limitation in this instance is that the additional period granted to the seller must be for a reasonable time.  Under English law, there is no express provision corresponding to the additional period for the seller to complete performance.   As long as it is a timing obligation, and the seller breaches the time of delivery specified in the contract, the buyer may avoid the contract.  Since English law does not require that the breach be fundamental, English law is then more favourable to the buyer in this instance.

With regard to c.i.f. contracts, the buyer has the remedy of right to reject the goods or documents under both the Vienna Convention and English law.  Under both legal systems, the seller has a physical obligation and a documentary obligation.  Pursuant to English, the buyer may reject the documents if the latter are defective even if the documents have already been accepted.  The buyer also has the right to reject the goods as delivered if they do not correspond to the terms of the contract.

Under the Vienna Convention, the buyer may avoid the c.i.f. contract if the seller fails to perform any obligations under the contract which, again, amounts to fundamental breach.  The buyer who accepts defective documents can avoid the contract only when the seller commits a fundamental breach in respect to the goods delivered, subject to waiver by the buyer.  The main difference between the two remedies is that English law allows for avoidance of contract even if breach is slight as long as the buyer is a non-consumer.

Under the English law, stipulations as to time and place of shipment are deemed to form part of the description of the goods.  Failure to comply with provisions as to time and place entitles the buyer the right to reject the goods even if the late shipment did not cause any loss to the buyer.  Under the Vienna Convention, the buyer has the remedy of right to reject the goods only where the late shipment was sufficiently late as to substantially deprive him that which he was entitled to expect under the contract.  Pursuant to the CISG, the seller is under a duty to deliver goods which are of the “quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract.”[69]  If the goods as delivered to the buyer do not conform to the requirements of the contract as stipulated therein, then the buyer’s only remedy is to avoid the contract when the seller’s failure to perform amounts to a fundamental breach of the contract.

In remedies such as right to reject the goods, English law tends to be more favourable for the buyer.  In specific performance however, the buyer would benefit more from an application of the CISG.  The UK has not yet ratified the CISG, and it is recommended that it do so in order to afford the parties to an international contract the option of selecting the legal system which would be more appropriate as to the nature of the transaction and which would afford more protection to the parties.

BIBLIOGRAPHY

• Arcos Ronaasen & Son [1933] A.C. 470
• Benjamin’s Sale of Goods, (Sweet & Maxwell, 4th edition, 2000)
• Bridge, M.G. “The Bifocal World of International Sales: Vienna and Non-Vienna” in R. Cranston, ed., ‘Making Commercial Law’ (Oxford: Clarendon Press, 1997)
• Bundeskammer der gewerblichen Wirtschaft Wien SCH-4318 [1995] UNILEX, D. 94-11
• Bunge Corporation v. Tradax SA [1981] 2 All ER 513, 540
• Cehave v. Bremer Handelsgesellschaft [1976] Q.B. 44
• CN Marine Inc. v. Stena Line [1982] 2 Lloyd’s Rep. 336
• Goode, Roy M. ‘Commercial Law 926’ (2^nd Ed, 1995)
• Hansson Hamel & Horley
• Hindley E. India Produce Co. Ltd [1973] 2 Lloyd’s Rep 515
• Hong Kong Fir Shipping Co. Ltd. Kawasaki Kisen Kaisha Ltd [1962] 2 Q.B. 26, at 66 (per Diplock L.J.)
• Honnold, J.O. ‘Uniform Law for International Sales Under the 1980 United Nations Convention, 2^nd’ (Deventer: Kluwer, 1991)
• Kastley, A.H. “The Right to Require Performance in International Sales: Towards an International Interpretation of the Vienna Convention.” (1988). 63 Wash. L. Rev. 607
• Kwei Tek Chao British Traders and Shippers Ltd. [1954] 2 Q.B. 459
• Mash & Murrell Ltd. Emmanuel (Joseph I.) Ltd. [1962] 1 W.L.R. 16
• Mullis, Alastair. Termination for Breach of Contract in CIF Contracts Under the Vienna Convention and English law; Is There a Substantial Difference. Pace Law School Institute of International Commercial Law. 29 Mar. 2004. 23 Sept. 2006.  http://www.cisg.law.pace.edu/cisg/biblio/keily.html
• Phillips Lamdin [1949] 2 K.B. 33
• Re Wait [1927] Ch 606
• Sales of Goods Act 1979
• Sassoon, ‘C.I.F. and F.O.B. Contracts’ (Sweet & Maxwell, 4th ed.)
• Sky Petroleum Ltd. v. VIP Petroleum Ltd [1974] 1 WLR 576
• Societe des Industries Metallurgiques SA v. Bronx Engineering Co. Ltd. [1975] 1 Lloyd’s Rep. 465
• The Julia [1949] A.C. 293, per Lord Porter.
• Toepfer Lenersan-Poortman [1981] 1 Lloyd’s Rep. 143
• Tradax Internacional S.A. v. Goldschmidt S.A. [1977] 2 Lloyd’s Rep 604.
• Treitel, Guenter Heinz. ‘Remedies for Breach of Contract’ (Oxford University Press, 1988).
• United Nations Convention on Contracts for the International Sale of Goods
• Walt, S. “For Specific Performance Under the United Nations Sales Convention” (1991) 26 Texas International L.J. 211.

[1] Alastair C.L. Mullis ‘Termination for Breach of Contract in CIF Contracts Under the Vienna Convention and English law; Is There a Substantial Difference’ (Pace Law School Institute of International Commercial Law, 2004), available at http://www.cisg.law.pace.edu/cisg/biblio/keily.html

[2] Cehave v. Bremer Handelsgesellschaft [1976] Q.B. 44

[3] Hong Kong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd [1962] 2 Q.B. 26, at 66 (per Diplock L.J.)

[4] Cehave v. Bremer Handelsgesellschaft [1976] Q.B. 44

[5] Sale of Goods Act 1979, § 13 & 14

[6] Ibid, § 15A

[7] Ibid, § 30(1)

[8] Ibid, § 11

[9] Ibid, § 11(4)

[10] Hong Kong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd [1962] 2 Q.B. 26, at 66 (per Diplock L.J.)

[11] Toepfer v. Lenersan-Poortman [1981] 1 Lloyd’s Rep. 143

[12] Sales of Goods Act 1979, § 35.

[13] Phillips v. Lamdin [1949] 2 K.B. 33

[14] United Nations Convention on Contracts for the International Sale of Goods, § 46.

[15] The buyer loses his right to avoid the contract if he fails to give notice of avoidance to the seller within the times specified in Article 49 (2) of the CISG.

[16] Articles 40, 43(2), and 44 of the CISG.  Article 44 allows the buyer to reduce the price or claim damages (except for loss of profit) where he has a reasonable excuse for his failure to give the required notice.

[17] Article 45 of the CISG.

[18] Section 61(1) of SGA.

[19] Re Wait [1927] Ch 606, at 630, per Atkin, L.J.

[20] Societe des Industries Metallurgiques SA v. Bronx Engineering Co. Ltd. [1975] 1 Lloyd’s Rep. 465

[21] CN Marine Inc. v. Stena Lin e[1982] 2 Lloyd’s Rep. 336

[22] [1974] 1 WLR 576.

[23] Articles 26, 49, & 81 of the CISG.

[24] Article 50 of the CISG

[25] Section 30(1) of the SGA

[26] Article 46(3) of the CISG

[27] Additional time may also be granted to the buyer who incurs delay in payment; however, the paper focuses on the remedies of the buyer, not seller.

[28] Bunge Corporation v. Tradax SA [1981] 2 All ER 513, 540.

[29] Hong Kong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd [1962] 2 Q.B. 26, at 66 (per Diplock L.J.)

[30] The Julia [1949] A.C. 293, per Lord Porter.

[31] Smyth v, Bailey, per Lord Wright.

[32] Hindley v. E. India Produce Co. Ltd [1973] 2 Lloyd’s Rep 515.

[33] Ibid.

[34] Sassoon ‘C.I.F. and F.O.B. Contracts’ (Sweet & Maxwell, 4th ed.) at 3-11.

[35] The Julia [1949] A.C. 293, per Lord Porter, at 309.

[36] Kwei Tek Chao v. British Traders and Shippers Ltd. [1954] 2 Q.B. 459.

[37] [1954] 2 Q.B. 459, at 480.

[38] Articles 34 and 49(1)(a) of the CISG.

[39] Articles 34 and 49(1)(a) of the CISG.

[40] Late shipment of the goods may be regarded as either, a late shipment and, therefore, a breach of Article 33(b) of the CISG or, as a failure to deliver goods of the contract description and, therefore, a breach of Article 35(1). The right to avoid, of course depends on the breach being fundamental.

[41] J.O. Honnold ‘Uniform Law for International Sales Under the 1980 United Nations Convention, 2^nd Ed.’ (Deventer: Kluwer, 1991) at 152-154.

[42] Bundeskammer der gewerblichen Wirtschaft Wien SCH-4318 [1995] UNILEX, D. 94-11.

[43] E.Clemens Horst Co. v. Biddell Bros. [1912] A.C. 18

[44] Ibid.

[45] Mash & Murrell Ltd. v. Emmanuel (Joseph I.) Ltd. [1962] 1 W.L.R. 16

[46] Article 58(1) of the CISG.

[47] Article 58(3) of the CISG.

[48] Section 13 of the SGA.

[49] ‘Benjamin’s Sale of Goods’ (Sweet & Maxwell, 4th edition, 2000) at 18-115.

[50] Arcos v. Ronaasen & Son [1933] A.C. 470

[51] Section 15A(1) of the SGA.

[52] Bowes v. Shand (1877) 2 App. Cas. 455

[53] (1877) 2 App. Cas. 455

[54] A breach of the term implied by Section 14(2B)(e) of the SGA

[55] Article 35(1) of the CISG

[56] Guenter Heinz Treitel ‘The Law of Contract’ (9th ed., 1995) at 718

[57] Kwei Tek Chao v. British Traders and Shippers Ltd, n.57.

[58]Ibid.

[59] Hansson v. Hamel & Horley

[60] Cehave v. Bremer Handelsgesellschaft [1976] Q.B. 44, at 70

[61] Ibid.

[62] [1977] 2 Lloyd’s Rep 604.

[63] Ibid., at 612.

[64] Ibid.

[65] ‘Benjamin’ at 19-127.

[66] Ibid.

[67] Section 30(1) of the SGA

[68] Articles 40, 43(2), and 44 of the CISG.  Article 44 allows the buyer to reduce the price or claim damages (except for loss of profit) where he has a reasonable excuse for his failure to give the required notice.

[69] Article 35(1) of the CISG.