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The Remedy of Reduction of Price
Eric E. Bergsten and Anthony J. Miller

Drafting History

The 1939 Draft
The 1956 Draft
The 1963 Draft and 1964 Hague Conference

The drafting history of art. 46 of the Draft Convention is an unusually good example of the difficulties inherent in the process of preparing a provision which seeks to introduce into all legal systems a concept known only to some. Not only were there the conceptual difficulties suggested above arising out of differences in the domestic legal systems, but mistakes in translation (probably caused in part by these difficulties) exacerbated the problem.

The 1939 Draft

The 1939 Draft Uniform Law on Intentional Sale of Goods (Corporeal Movables) approved by the International Institute for the Unification of Private Law (UNIDROIT)  33  adopted the traditional Civil law distinction between delivery of an insufficient quantity of goods and delivery of goods which failed to meet the requisite quality standards.

In the case of partial delivery, art. 32 of the 1939 Draft enabled the buyer to "avoid the contract for the whole, if the delivery of the whole is an essential condition of the contract." Art. 33 went on to provide that "even though the buyer may not be entitled to avoid the whole of the contract, he may avoid it in part, and only pay so much of the price as is proportionate to the value of the part which has been duly delivered to him."

On the other hand, art. 47 of the Draft provided that when the quality of the goods was defective,  34  the buyer who had duly notified the seller of the existence of the defects could elect:

"(a) either to avoid the contract and claim damages as provided by Articles 87 to 91, or

"(b) to demand reduction of the price in proportion to the diminution, by the defect, of the value of the goods as of the time of the conclusion of the contract, or

"(c) to demand compensation for the loss caused by the defect according to Article 85."  35 

In consequence, the buyer could reduce the price for delivery of an insufficient quantity (art. 33) or for delivery of defective goods (art. 47(b)). Since the drafters realized that at times it would be difficult to distinguish partial delivery of conforming goods from delivery of goods a portion of which were defective,  36  art. 38 provided that in cases of doubt the rules on defect of quality would apply. Needless to say such distinctions were too subtle for a text intended for adoption by a large number of different legal systems. As a result, when work on the unification of the law of sales was resumed after World War II at the 1951 Hague Conference relative to a Uniform Law on the International Sale of Goods, the Conference recommended that as "a matter of general principle . . . it would be appropriate to unify the rules governing non-delivery with those relating to the delivery of defective goods."  37 

The 1956 Draft

This recommendation was carried out in the 1956 Draft.  38  Art. 40 provided that the seller had not delivered goods in conformity with the contract where, inter alia, he had delivered only part of the goods sold or where he had delivered a larger or smaller quantity of the goods than that which he had contracted to sell. Therefore, since art. 50(b) authorized the buyer to reduce the price when the goods delivered were not in conformity with the contract, the remedy was available both for defects in quantity and in quality, subject to the proviso in art. 40 that no excess or deficiency in quantity, lack of part of the goods or absence of any quality or characteristic was to be taken into consideration where it was not material to the interests of the buyer or where it was permitted by usage.

Whatever difficulties might have been encountered by Common lawyers in understanding the nature of the remedy of price reduction were increased by the unsatisfactory drafting in French. The French version of art. 50(b) of the 1956 Draft provided that the disappointed buyer could:

"(b) réduire le prix d'un montant correspondent à la diminution que, par rapport au prix de vente, le défaut de conformité fait subir à la valeur de la chose appréciée lors de la conclusion du contrat, sans préjudice, s'il y a lieu, des dommages-intérêts prévus à l'article 94."

The text of art. 50(b) was undoubtedly sufficient for most Civil lawyers who understood the mechanism by which the price reduction would be effectuated. It was certainly much clearer in these respects than, e.g., the equivalent provision in the French Civil Code, art. 1644, which provides that in the case of latent defects in the goods

"l'acheteur a le choix de rendre la chose et de se faire restituer le prix, ou de garder la chose et de se faire rendre une partie du prix, telle qu'elle sera arbitrée par experts."

However, the text of art. 50(b) was not clear to those who translated it into English.  39  The phrase "par rapport au prix de vente" was omitted and the English translation provided that the buyer could reduce the price "by an amount corresponding to the diminution which the lack of conformity has caused in the value of the goods as of the time of the conclusion of the contract."

This discrepancy between the French and the English versions of art. 50(b) was noted in the written comments submitted by the Federal Republic of Germany on the 1956 Draft.  40  The German comments queried whether the French text of art. 50(b) was sufficiently clear as to the proportionate nature of the price reduction to be effected. Moreover, it was pointed out that the English text seemed to say that art. 50(b) provided for subtracting from the contract price the difference between the ordinary value of non-defective goods at the moment of the conclusion of the contract and the value that the defective goods would have had at that time.

The 1963 Draft and 1964 Hague Conference

The Special Commission redrafted art. 50(b) in light of these comments.  41  The French text of the 1963 Draft clearly indicated that a proportionate reduction of the price was to be made.  42  However, the nature of the remedy continued to elude the English translator and the English version of art. 50(b) still appeared to call for a deduction from the price of the absolute amount of the loss in the value of the goods by reason of the defect rather than to call for a proportionate reduction of price.  43  On the other hand, both the French and the English versions of the comments of the Special Commission indicated that the drafters intended a proportionate reduction of price.  44 

Given the fact that the English version of the article on price reduction seemed to say that a sum in the nature of damages was to be deducted from the price, it was not surprising that some Common law delegates to the 1964 Hague Conference were disturbed that the time of calculation of these particular damages differed from that used in the calculation of other damages.  45  When this objection was referred to a Working Group at the Conference, the Working Group replied that

"article 50(b) does not contain an error; the proportional reduction of the price must in fact be calculated on the basis of the value of the goods as of the time of the conclusion of the contract. On the other hand, it should be stressed that in the case provided for in article 50(b), the buyer is entitled to damages, which will be determined on the basis of the actual position."  46 

It is not surprising that this explanation did not resolve the matter, especially in view of the fact that none of the English language versions of the various proposals for the price reduction provision submitted to the Conference correctly set forth the means by which the price was to be reduced.  47 

It is not clear by what mechanism the English version of the price reduction provision was finally translated correctly. The report of the Drafting Committee to the Plenary Session of the Conference contained the incorrect text.  48  The records show that the text as adopted was that contained in a proposal by France, which proposal was said to contain purely drafting amendments.  49  However, that particular document was not reproduced in the Official Records of the Conference.  50  It may even be that the English text was corrected after the end of the Conference.  51  Be that as it may, art. 46 of ULIS  52  as finally adopted provided:

"Where the buyer has neither obtained performance of the contract by the seller nor declared the contract avoided, the buyer may reduce the price in the same proportion as the value of the goods at the time of the conclusion of the contract has been diminished because of their lack of conformity with the contract."

 33. The sequence of events leading to the preparation of this draft is succinctly described in UNIDROIT, Unification of Law 103 (1948). The English text of the draft is at page 105. See also Nadelmann, "The Uniform Law on the International Sale of Goods: A Conflict of Laws Imbroglio," 74 Yale L.J. 453 (1964-5).

 34. Art. 36 provided that the seller undertook that the goods would be free from "defects." Arts. 37-42 defined the concept of "defects."

 35. Art. 85 set forth the amount of damages which could be recovered if the contract was not avoided.

 36. 1939 UNIDROIT Report, supra n. 21 at 74.

 37. Part of Resolution IV of the Final Act of the Conference on a Draft Convention Relative to a Uniform Law on the Sale of Goods, held at the Hague (1-10 November 1951). The Final Act in the French original with an English translation is contained in Unification of Law 282-305 (1954).

 38. The 1956 Draft may be found in I Unification of Law 70-115 (1956).

 39. The original text of the 1939 and the 1956 Drafts was in French. The English text was indicated to be a translation. Supra n. 33 and 38. The 1963 Draft was original in both English and French, which were also the languages in which ULIS was adopted in 1964 with "both texts being equally authentic." Unofficial Russian and Spanish translations of ULIS were published in the Russian and Spanish language versions of I U.N. Register of Trade Law Texts (1971) (UN Sales Nos. R.71.V.3 and S.71.V.3 respectively). These unofficial translations served as the basis for the Russian and Spanish language versions of the text of the Draft Convention as adopted by UNCITRAL. In addition to the four language versions in which the Draft Convention was adopted by UNCITRAL, the U.N. translation service has translated the Draft into Arabic and Chinese as part of UNCITRAL, Report on Eleventh Session(1978), A/33/17.

The anticipated 1980 U.N. Diplomatic Conference will probably adopt a final text in all six official languages of the U.N. even though UNCITRAL did not consider the Arabic and Chinese versions.

 40. Diplomatic Conference on the Unification of Law Governing the International Sale of Goods, The Hague, 2-25 April 1964 Vol. I: Records: Vol. II: Documents (1966), vol. II, p. 98. (These records will be referred to as "Hague Official Records" with citation to the appropriate volume and page.) See also text supra at n. 22.

 41. Id. at 192. The establishment and activities of this Special Commission are described at 26-27.

 42. The French text read: "(b) réduire le prix dans la proportion o&ugrave; la valeur que la chose avait au moment de la conclusion du contrat a été réduite du fait de défaut de conformité au contrat. . . ."

 43. The English text read: "(b) to reduce the price by the amount by which the value of the goods at the time of the conclusion of the contract has been diminished because of the lack of conformity. . . ."

 44. Hague Official Records, supra n. 40, vol. II at 192.

 45. E.g., the observation of the delegates from the U.S.A., Hague Official Records, Vol. I at 79 and 177.

 46. Hague Official Records, supra n. 40, vol. II at 315.

 47. 1963 Draft, art. 50(b), Hague Official Records, vol. II at 220; text of art. 56 prepared by the Drafting Committee of the 1964 Hague Conference Committee on Sales, (id. at 385); text of art. 56 prepared by Drafting Committee during Plenary Session (id. at 409).

 48. Text of art. 56, Hague Official Records, vol. II at 409.

 49. Hague Official Records, vol. I at 290-291.

 50. In the Preface to the Official Records the Secretary-General of the Conference noted that some parts of the documentation "are still somewhat brief and incomplete; the excuse for this is the high pressure under which the records were made during the Conference." (Hague Official Records, vol. I at ix).

 51. "The revision of the text was not completed when the final Act was signed on April 25, and a penultimate text was circulated to delegates on May 12, 1964, for their observations. The Secretariat, having received observations, examined them in consultation with the President of the Drafting Committee and corrected the text in so far as it appeared necessary, without finding it possible to comply with all observations." Ellwood, "The Hague Uniform Laws Governing the International Sale of Goods," in Some Comparative Aspects of the Law Relating to Sale of Goods, Int. and Comp. L.Q. Supp. Pub.No.9 (1964) at 42-3.

 52. By coincidence, the price reduction provision is found in art. 46 of both ULIS and the current text of the Draft Convention revising ULIS.

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