PASSING OF RISK IN INTERNATIONAL SALE CONTRACTS: A COMPARATIVE EXAMINATION OF THE RULES ON RISK UNDER THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (VIENNA 1980) AND INCOTERMS 2000

Abstract

The allocation of risk is an issue which preoccupies equally both the seller and the buyer in an international sale contract, since it can affect the course and outcome of their transaction to a great extent. The rules on passing of risk answer the question of whether the buyer is obliged to pay the price for the goods even if they have been “accidentally” lost or damaged or whether the seller is entitled to claim their price. Because of its harsh and sometimes unfair consequences, the passing of risk forms a subject, which the parties specifically refer to in their contract in an attempt to avoid confusion and possible litigation. Owing to its importance, it could not be left out from the scope of one of the most successful attempts at unification of international sales law, which is the 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG). Analogous rules are included in the International Chamber of Commerce’s standard trade terms, INCOTERMS, which are widely used by commercial men and companies around the world. The present study will commence, in the first chapter, with some remarks on the history and scope of the Vienna Convention and some thoughts on trade terms and INCOTERMS. It will also examine the notion of risk and the theories on its transfer, which have been formulated in different legal systems. Next, the second chapter will focus on the rules on risk allocation under the Vienna Convention and INCOTERMS 2000. The third chapter will concentrate on a thorough comparison between the two voices and an analysis of some intrinsic issues related to the transfer of risk, while making proposals for their most efficient settlement. Finally, the present study will conclude with an overall evaluation of the rules pertaining to risk allocation and a wish that soon satisfactory solutions will be found for the problems that trouble this area of law.