A Study On The Theory Of Risk Under The United Nations Convention On International Sale Of Goods

In International Trade the handover of goods is a critical point, especially if multiple transport companies and methods are involved. Commercial trade over the course of history has been a fundamental operation of human nature. Peoples from different geographical positions sought to improve their financial worth via the establishment of trade networks. This work will examine risk allocation ("passage of risk") in international commercial contracts with special emphasis placed on the United Nations Convention on Contracts for the International Sale of Goods (Vienna, 11 April 1980), ("CISG")The concept of risk allocation in international commercial contracts breaches the question of who will bear the ultimate responsibility for goods that are either damaged or lost in transit. It is feasible and customary that transit losses be covered by a form of insurance. Moreover, loss of or damage to goods is generally revealed only at the end of the line; as a rule the buyer is usually in a superior position than the seller to determine the damage, undertake the appropriate steps for a claim with the insurance company and salvage the remaining goods. This issue breaches the question of payment and the responsibility of the buyer to support the goods irrespective of loss attributed to third parties. These issues will resinate throughout this study and form the basis of our examination.The transfer of risk in the contract of sale is a question of great practical significance because of its potential for harsh consequences, that has intrigued numerous jurists, judges and practitioners since the Roman period. As a consequence of attracting so much attention, different theories about it have been developed and it is clear that there is more that one approach to the problem.. Risk of loss rules establish whether the seller may still recover the price of the goods, and whether the buyer must pay for the goods and take delivery, despite the fact that they are partially damaged or totally destroyed. Although risk has been dealt with extensively, it still creates numerous unsolved problems by reason of the constant changes in modern commerce: container and multimodal transport, bulk consignments, loss of unascertained goods and interpretation of 'loading' are only some of the problematic areas for which the present study attempts to propose solutions.More specifically, this study concentrates on the transfer of risk in the contract of sale involving carriage of goods and mainly examines international sales. The starting point is the Vienna Convention on International Sales of 1980 .In an 'ideal' contract of sale the parties conclude the contract and simultaneously perform their contractual obligations, e.g. where a consumer buys widgets from a supermarket. Nevertheless, in international transactions where the seller and buyer are situated in different states and the object of the sale is often of great value, between the time a contract is formed (quite often by exchange of telex or fax messages) and the time the buyer receives the goods, many unfortunate events may occur that affect the goods. These events may occur during loading at the seller's premises, in a vessel during ocean transit, during inland transit, or during unloading at the destination.Indeed, Article 69 which deals with residual cases, gives the general rule for passage of the risk of loss in those cases which do not fall within articles 67 and 68 by providing that 'in cases not within articles 67 (sale of goods involving carriage) and 68 (sale of goods in transit), risk passes to the buyer when he takes over the goods or, if he does not do so in due time, from the time when the goods are placed at his disposal and he commits a breach of contract by failing to take delivery'. This study refers to cases where the seller has to put the goods at the buyer's disposal at the seller's own place of business ('Ex Works'), or if the goods are situated in his own warehouse ('Ex Warehouse'). This provision in fact has a subsidiary function, as in international sales transactions the whole transport obligation is assumed by the buyer only in exceptional circumstances . Furthermore, the goods are placed at the buyer's disposal only when the seller has taken the necessary preparatory measures for so doing, in particular, by identifying the goods to the contract (article 69(3)) and informing the buyer of that fact.Finally, the handover is in fact the real sale, because after the handover the buyer has the goods and is now responsible. In this thesis the §66-§69 of the XXX-Convention are analysed and different situations and problems during handover are being discussed. Most critical in the process of handover is the question who bears the risk of damage or destruction of the goods during transport. Furthermore the question, at which point the handover of the goods is finished is of utmost importance. In cases with more than one transport company and transport method, there are some handovers until the final handover of the goods.Who bears the risk here and who is responsible. Of course buyer and seller are trying to minimize their risk and will therefore try to limit their responsibility. The different aspects of the theory of risk, regarding the Vienna Convention are discussed in this thesis and some problems and unclear situations are analysed.