Study Of The Risk-bearing System Under The Sales Contract On A Free Carrier Basis

This paper is a comparative study of the risk-bearing system under the salescontract on a free carrier basis. With reference to the German law and the relevantsystems as stipulated in the United Nations Convention on the International Sale ofGoods, this paper aims to discuss the system construction, legal basis, and particularlythe legal effects thereof, as well as the application of the corresponding system inChina.Part I summarizes the sales contract on a free carrier basis. According to thedifferent places of performance, the traditional continental civil law classifies debts asdebt to be paid at the creditor’s place, debt to be paid at the debtor’s place and debt tobe paid at the carrier’s place. In principle, the place of performance is the decisivefactor for where the debtor performs its obligations (also to some extent of the scopeof obligations), and causes the legal effect of performance. However, debts to be paidat the carrier’s place, is an exception of debt, the legal effect does not occur at theplace of performance. Therefore, it is necessary to make research thereof. Part Isummarizes the sales contract on a free carrier basis. According to the different placesof performance, the traditional continental civil law clarifies debts as debt to be paid at the creditor’s place, debt to be paid at the debtor’s place and debt to pay at thecarrier’s place. In principle, the place of performance decides where the debtorperforms its obligations (also to some extent of the scope of obligations), and causesthe legal effect of performance. However, in terms of debts to be paid at the carrier’splace, an exception of debt, the legal effect does not occur at the place of performance.Therefore, it is necessary to make research thereof.Part II introduces the risk and risk-bearing system. During the term from theconclusion of a contract to the fulfillment of debts, risk of performance from eachparty usually exists. Generally, the person who shall bear the risk is subject to thedifferences between certain obligation and indefinite obligation. In general, risk ofperformance from the other party transfers upon the occurrence of legal effect ofperformance. But debt to be paid at the carrier’s place is an exception. Because of thedifferences between the place of performance and the place of legal effect, the legaleffect does not occur when the seller performs his/her obligation, but the risk ofperformance from the other party transfers. In conclusion, risk of performance fromthe other party transfers after performance while before the occurrence of legal effect.Part III analyzes the constitutive requirements of risk-bearing in debt to be paidat the carrier’s place. Article447of German Civil Code stipulates the rules of risktransfer in debt to be paid at the carrier’s place. Therefore, it is necessary to discusseach constitutive requirements, so as to decide whether it is necessary, and if so, howto be applied under the Chinese law.Part IV mainly emphasizes the obligation of delivery of the seller in debt to bepaid at the carrier’s place. Delivery is part of the obligations of the seller for thebuyer’s interest. Therefore, the seller bears a special obligation--delivery obligation.A violation of such obligation will have a material impact on the legal effect regardingthe risk transfer. Therefore, it is necessary to discuss the scope of the delivery and theconsequences of such a violation.Part V refers to the reliefs to the buyer after it bears the price risk in debt to bepaid at the carrier’s place. After the buyer bears the price risk, there will be a dilemmathat the damage and the right to claim for damage are separated. Namely, though the buyer suffers damage, due to the lack of contract relationship between the buyer andthe carrier, and the fact that the buyer has not been the owner of the goods yet, thebuyer is not entitled to claim for his/her damage. The separation of the damage andthe right to claim for damage is unjust. Therefore, the German law develops acompensation-for-third-party theory, namely, the seller is entitled to claim against thecarrier for the damages suffered by the buyer, and then the seller shall assign suchcompensation to the buyer as an indemnification. Though the relative stipulations inGerman Commercial Code limit the application of the theory, the theory still has thepotential to be introduced into Chinese law as a relief of the buyer.