ACCA Applied Skills · Corporate and Business Law (Global)

Obligations of the seller and buyer, and provisions common to both: formula sheet

Full chapter guide

Key formulas

Core duties (Article 30): Seller must: deliver the goods + hand over documents + transfer property; All three must be done as the contract and the CISG require.
Place of delivery: carriage involved: Deliver by handing the goods over to the first carrier for transmission to the buyer; Applies where the contract involves carriage and no other place is agreed.
Place of delivery: no carriage, goods at a known place: Deliver by placing the goods at the buyer's disposal at that place; Applies where the goods are specific, or drawn from a specific stock or being made, and both parties knew where they were at contracting.
Place of delivery: other cases: Deliver by placing the goods at the buyer's disposal at the seller's place of business at contracting; The residual rule.
Time of delivery (Article 33): Fixed date, or any time within a fixed period, or else within a reasonable time after contracting; If a period is fixed, the seller may choose the date unless circumstances show the buyer chooses.
Conformity (Article 35(1)): Quantity + quality + description + contained or packaged as the contract requires; The contract comes first.
Default conformity tests (Article 35(2)): Ordinary purpose + particular purpose made known + sample or model + usual or adequate packaging; Apply only unless the parties have agreed otherwise.
Buyer's knowledge (Article 35(3)): No liability for defaults (a) to (d) if buyer knew or could not have been unaware of the defect at contracting; Applies to the Article 35(2) default tests, not to express contract terms.
Third-party rights: Goods must be free from any right or claim of a third party, unless the buyer agreed to take them subject to it; Intellectual property claims have a separate rule with extra conditions.
Core buyer duties (Article 53): Buyer must: (1) pay the price + (2) take delivery; Both duties come from the contract and the Convention. Learn them as a pair.
Price not stated: Price = price generally charged at contract date for such goods in comparable circumstances in the trade; Applies where a contract is validly made but the price is not fixed or fixable.
Price fixed by weight: Unless agreed otherwise, the net weight decides the price; So packaging weight is not charged for.
Place of payment (default): Seller's place of business, or the place of handover if payment is against goods or documents; Only applies if the contract is silent. Any increase in expense from the seller moving is for the seller.
Time of payment (default): When the seller places goods or documents at the buyer's disposal; No reminder or formality is needed from the seller. The buyer may first examine the goods unless the arrangements exclude this.
Taking delivery: Do acts reasonably expected to enable delivery + take over the goods; Includes cooperation such as nominating a vessel or collecting at the agreed place.
Article 71: suspension: Suspend if it becomes apparent that the other party will not perform a substantial part of its obligations; Grounds: serious deficiency in ability to perform or creditworthiness, or its conduct in preparing to perform or performing. Notice must be given immediately.
Article 71: duty to continue: Suspension ends if the other party gives adequate assurance of performance; The suspending party must then continue with performance.
Article 72: avoidance before the due date: Avoid if it is clear that the other party will commit a fundamental breach; Give reasonable notice so assurance can be offered, unless the other party has declared it will not perform.
Article 73(1): current instalment: Fundamental breach of one instalment → avoid that instalment; The test is fundamental breach in relation to that instalment.
Article 73(2): future instalments: Good grounds to conclude fundamental breach of future instalments → avoid for the future; Declare avoidance within a reasonable time.
Article 73(3): interdependence: Avoid delivered or future instalments if they are interdependent; Interdependent means they cannot be used for the purpose the parties contemplated at contract.
Effect of risk passing (Article 66): Risk passed → buyer must still pay, unless loss caused by seller's act or omission; Loss after risk passes does not release the buyer from paying the price.
Carriage, no named place (Article 67(1)): Risk passes on handover to the first carrier; Applies where the contract involves carriage and the seller need not hand over at a particular place.
Carriage, named place (Article 67(1)): Risk passes on handover to the carrier at that place; Handing over to an earlier carrier elsewhere does not pass risk.
Identification (Articles 67(2) and 69(3)): No risk passes until goods are clearly identified to the contract; Identification can be by markings, shipping documents, notice to the buyer or otherwise.
Goods in transit (Article 68): Risk passes at contract date by default (or from handover to the carrier if circumstances indicate); Where risk is treated as passing from handover to the carrier, the seller still bears loss or damage it knew or ought to have known of at the time of the contract and did not disclose.
Other cases (Article 69): Risk passes when buyer takes over, or when goods are at buyer's disposal and buyer breaches by not taking delivery; If delivery is at a place other than the seller's, risk passes when delivery is due and the buyer knows the goods are at its disposal.
Seller's preservation (Article 85): Buyer delays or fails to pay (concurrent) + seller holds goods or can otherwise control their disposal → seller must take reasonable steps to preserve; Seller may retain goods until reimbursed its reasonable expenses.
Buyer's preservation (Article 86): Buyer received goods + intends to reject → take reasonable steps to preserve; Buyer may retain until reimbursed. At destination, buyer must take possession for the seller if no price payment and no unreasonable inconvenience or expense, unless the seller or its representative is there.
Warehousing and sale (Articles 87-88): Deposit in third-party warehouse at other party's expense (if reasonable); sell on reasonable notice after unreasonable delay; Must take reasonable steps to sell if goods deteriorate rapidly or storage is unreasonably costly, giving notice where possible. The selling party keeps proceeds equal to its reasonable costs and pays over the balance.
Exemption test (Article 79): Exempt from damages = impediment beyond control + not reasonably foreseeable at contract + not reasonably avoidable or surmountable; The party claiming exemption must prove all three. Failing any one means no exemption.
Notice of impediment: Notice of the impediment and its effect must be received by the other party within a reasonable time after the non-performing party knew (or ought to have known) of the impediment; Sending is not enough. If the notice is not received in time, the non-performing party is liable for damages resulting from the non-receipt.
Scope of exemption: Article 79 exempts from damages only; Under Article 79(5), every right other than damages stays available to the other party, such as avoidance, price reduction (buyer), specific performance and interest.
Interest on arrears (Article 78): Interest is due on the price or any other sum in arrears; Article 78 does not set the rate. The applicable law or approach is disputed (for example, the law governing the contract under private international law rules). The right is without prejudice to a damages claim.
Effect of avoidance (Article 81): Avoidance releases both parties, subject to damages; each can claim back what they supplied or paid; Mutual restitution must be carried out concurrently.
Refund and benefits: Seller refunding price pays interest from the date of payment; buyer returning goods accounts for benefits derived; This keeps restitution fair on both sides.

Quick revision

The CISG must apply to the contract before any of its duties matter.
The seller must deliver the goods, hand over documents and transfer property in them.
Goods must match the contract in quantity, quality, description and packaging.
The buyer must pay the price and take delivery of the goods.
Remedies depend on how serious the breach is, so check whether it is fundamental.
Avoidance of the contract is generally a remedy of last resort for serious breach.
Anticipatory breach lets the other party act before the due date in the right circumstances.
In instalment contracts, a breach of one instalment may affect only that instalment or later ones, depending on its effect.
Risk rules decide who bears loss or damage to goods after risk has passed.
A party in possession of goods may need to take reasonable steps to preserve them.
An impediment beyond a party's control can exempt it from damages, but not from every remedy.
Interest is payable on sums in arrears, and avoidance releases both parties from their main duties.

Common mistakes

Saying delivery always means the goods reach the buyer's premises. Fix: Under the CISG, where carriage is involved, delivery is complete when the goods are handed to the first carrier.
Applying the Article 35(2) defaults when the contract already sets a standard. Fix: Express contract terms come first. The defaults apply only to fill gaps and where the parties have not agreed otherwise.
Saying the buyer pays at the buyer's own place of business. Fix: Remember the default: the seller's place of business, or the place of handover if payment is against goods or documents.
Saying the buyer need not pay until the seller sends a demand. Fix: Under the CISG the buyer must pay on the due date without a request or formality from the seller.
Treating suspension and avoidance as the same remedy. Fix: Suspension only pauses your performance. Avoidance ends the contract. Avoidance needs a clearly fundamental breach.
Forgetting the duty to give notice of suspension. Fix: Always state that notice must be given immediately, and that performance resumes on adequate assurance.
Saying risk passes when the goods arrive at the buyer's premises in a carriage contract. Fix: Under Article 67 the default is handover to the first carrier. Arrival only matters in Article 69 cases.
Treating risk and ownership as the same thing. Fix: The CISG governs risk, not when ownership passes. Answer only the risk question.
Treating any cost increase or supplier failure as an Article 79 impediment. Fix: Check all three limbs. A supplier's failure counts only if that supplier would itself be exempt, and a price rise rarely meets the test.
Saying the exemption stops all remedies. Fix: State that it only exempts from damages. Article 79(5) leaves every other right intact, such as avoidance, price reduction (for the buyer), specific performance and interest.

Exam tips

In objective questions, find the sentence that states the contract terms. If it sets a standard, the Article 35(2) defaults are a trap answer.
Learn the three delivery rules by their triggers: carriage, known location, everything else.
Look for words like 'knew' or 'inspected before signing'. They usually signal the buyer's knowledge exception.
In a six-mark multi-task question, name the duty, state the rule, apply it to the facts, then conclude in one sentence.
Do not cite Article numbers unless you are sure. Stating the rule in plain words earns the marks.
Learn Article 53 as two duties: pay and take delivery. Many objective options test only one of them.
Always check whether the contract overrides the default. 'Unless otherwise agreed' is the key phrase.
Watch for options that add a demand or formality before payment is due. They are wrong under the CISG.