[2nd edition: Case annotated update (March 2005)]
LL.M. of Renmin University of China; E-mail: <email@example.com>.
Key provisions at issue
The most natural remedy for a breach of contract is the right to require performance, reflecting the importance of the contract made between the parties. A buyer and a seller must have the right to rely upon the contract and that the other party keeps his word.
The general purpose of all contract remedies is to place the aggrieved party in as good a position as he would have enjoyed had the other party performed his obligations under the contract. This means that all contract remedies must seek to protect one's contractual rights. Specific performance is one such remedy available to the aggrieved party. The purpose of specific performance is to help the creditor obtain, to the fullest extent possible, the actual subject matter of his bargain.
In general terms, specific performance means that "a party may require the other party to perform its obligations under the contract (and seek enforcement through court action)." Most contracts contain a promise of performance. One party undertakes to provide goods, rights or services, and the other side undertakes to pay a sum of money in return. If one party reneges on his promise, however, the problem arises as to whether that party can be sued for specific performance or only for damages arising from non-performance.
On the one hand, granting specific performance is not free of restrictions in all legal systems. Precisely speaking, as Walt notes, "[a]ll forums limit the availability of specific performance. But important differences exist as to the extent of these limitations. A country's domestic law could take one of four approaches to specific performance. First, specific performance could be made available generally, subject to narrow exceptions. Second, specific performance could be made available only for certain types of obligations. A third possibility is to treat specific performance as an exceptional remedy, available only in a narrow range of circumstances. Finally, specific performance could be made entirely unavailable. Types of forums can be ordered according to the availability of specific relief. Because remedial rights are defined by available remedies, the right to specific relief varies among forums."
On the other hand, as another author observes, common law and civil law have different approaches to this matter. It is even stated that the importance of the role of specific performance constitutes a major difference between common law and civil law systems. Under the common law, the primary remedy is damages. This means that a court only may grant specific performance when damages would be inadequate compensation. The court also has discretionary power in granting specific performance. It is not a right of the plaintiff, but instead, is left to the court to decide whether or not to grant it. The situation is entirely different under a civil law system. Contrary to common law, damages are only a secondary remedy. The primary remedy is specific performance and a court must grant it unless the circumstances give rise to certain exceptions. A civil law court does not have the discretionary power to grant specific performance.
Thus, difficulties arise in compromising on the definition of specific performance rules within the United Nations Convention on Contracts for the International Sale of Goods (1980; "CISG" or "Convention"). Using the term "specific performance" in the CISG gives rise to a certain ambiguity as to its precise meaning. This uncertainty is not due to unclear language but due to a divergence of concepts between legal systems. Despite this, practical needs call for the granting of specific performance as a remedy. In particular, "if specific performance is the primary remedy for breach of contract, there are strong reasons for believing that more mutually beneficial exchanges of promises will be concluded in the future and that they will be exchanged at a lower cost than under any other contractual remedy. Furthermore, under specific performance, post[-]breach adjustments to all contracts will be resolved in a manner most likely to lead to the promise being concluded in favor of the party who puts the highest value on the completed performance and at a lower cost than under any alternative. The existence of a specific performance rule tends to have the effect that the parties to a contract perform their obligations under the contract, rather than start to speculate on any alternatives."
As to be demonstrated in the following sections, Arts. 46 and 62 of the CISG give the right of specific performance to both the buyer and the seller. The drafting of these articles shows that specific performance is meant to be the primary remedy in the CISG. The primacy of specific performance has also been well established either in the UNIDROIT Principles of International Commercial Contracts (1994; "UNIDROIT Principles"), through Arts. 7.2.1 to 7.2.5, or in the Principles of European Contract Law (1998; "PECL"), by Arts. 9:101 to 9:103. There are structural differences between the counterpart provisions of the CISG and the UNIDROIT Principles or PECL (the latter two resemble each other in the structure), however. As Felemegas notes in comparing the CISG approach and the UNIDROIT Principles approach (this comparison seems applicable to that between CISG and PECL), under the regime of the UNIDROIT Principles, the provisions regulating the right of a party to require performance by the other party do not follow the distinctive structure adopted in the Convention's counterpart provisions - the latter instrument makes separate, albeit similarly balanced between themselves, provisions for a seller and a buyer in an international sales contract governed by the Convention. On the other hand, the rules regarding the right of the obligee to require performance by the obligor under the UNIDROIT Principles, unlike the rules of the Convention, form what is arguably a more detailed and coherent set of regulations and they make a clear distinction between performance of monetary and non-monetary obligations.
In light of the fact that a difference exists in the structure, an overview of the CISG approach in general will be firstly presented below (section 2). Then, the following sections will respectively examine the buyer's right under CISG Art. 46 (section 3) and the seller's right under CISG Art. 62 (section 4), following which is a common review of the exercise of the right under both Arts. 46 and 62 (section 5). After that, the compromise rule reached in CISG Art. 28 is to be discussed (section 6). Following the discussions on the CISG approach, the examination, focusing on the approaches of the UNIDROIT Principles and the PECL, get down to the performance of monetary obligations (section 7) and non-monetary obligations (section 8), respectively. Additionally, a brief note will be provided on change of remedies, a problem which is peculiar to the right to require performance, (section 9). Finally, judicial penalties which have been envisaged under the UNIDROIT Principles will be briefly touched on (section 10).
As a starting point, with the structural differences kept in mind, both the Convention and the UNIDROIT Principles (and the PECL) adopt the principle of contractual performance of the parties' obligations, which is embodied in counterpart rules regarding the right of the obligee to require specific performance by the obligor.
2. CISG Approach in General
The CISG provides injured parties a broad right to contractual performance, particularly in view of the following:
(b) It is also worth noting what is not required under Arts. 46 and 62. Unlike in some domestic systems, identification of the goods to the contract is not a prerequisite to a claim for specific performance in the Convention. Also, neither Art. 46 nor Art. 62 requires the unavailability of cover or resale as a prerequisite for ordering specific relief; and
(c) The right to specific performance is broad in scope. The buyer/seller can require the seller/buyer to perform the full range of her contractual obligations.
The right to require performance under CISG Art. 46/62 is, however, subject to the reference in CISG Art. 28. As a whole, specific performance is attended to under the Convention in Arts. 46, 62 and 28. While Art. 46/62 has "civilian overtones", Art. 28 "constitutes a compromise between legal systems that deal differently with the contractual right of a party to claim specific performance of the contract." The inclusion of Art. 28 in the text of the Convention, carving out an exception from the general right of an obligee to require specific performance by a defaulting obligor, is seen as constituting a necessary compromise in order to recognize the historically divergent approaches in doctrine and civil procedure to requiring performance under different legal systems - this view is shared among many commentators of the CISG.
Essentially, CISG Art. 28 may be applied to determine the question whether an obligee can obtain the aid of a court to enforce the obligation of a defaulting obligor to perform the contract. It reads rules of the forum into a court's obligation to compel specific performance. According to CISG Art. 28, a court is not obliged to grant specific performance under the Convention if it would not do so for similar sales contracts under domestic law. That is to say, if the court does not grant such a remedy under its own national law, it will not be bound to grant it under the Convention. In this way, the courts of those jurisdictions that do not allow for specific performance may refuse to grant specific performance of the obligation in dispute and may only award other remedies. On the other hand, "where not limited by [CISG Art. 28], [CISG Arts. 46 and 62] have the effect of changing the remedy of obtaining an order by a court that a party perform the contract from a limited remedy, which in many circumstances is available only at the discretion of the court, to a remedy available at the discretion of the other party (emphasis added)." Generally speaking, courts in legal systems which as a matter of doctrine and judicial procedure grant orders of specific performance should not be affected by the application of CISG Art. 28. That is to say, if the court would give such a granting under its own law, it would be required to do so if the criteria of CISG Art. 46/62 are met.
Thus, contrary to common law (where it is subject to the court's "discretionary power" in granting specific performance), the injured party under the Convention "can choose between damages and specific performance, without any discretion left to the court." It follows, on the other hand, the aggrieved party is in no case compelled to claim specific performance. As the Court ruled in [Hungary 5 December 1995 Budapest Arbitration award Vb 94131], for instance, according to CISG Art. 46, the buyer may require the seller to remedy a breach, but he is not compelled to. It is also the case for the seller's right under CISG Art. 62. Thus, if the aggrieved party to a CISG contract, buyer according to Art. 46 or seller in accordance with Art. 62, decides to require performance by the other party, he can request that by a claim, taking into account conditions provided in the applicable rules; if he decides not to do so, on the other hand, other remedies such as price reduction, damages or avoidance are available for him to resort to, depending on the nature or extent of the claimed breach.
One should not fail to notice, however, that: "Despite its importance, the right to require performance has not been the subject of much [CISG] case law. In practice other remedies - in particular the right to claim damages - are preferred." Arguably, an injured party would in most cases prefer the certainty and simplicity of claiming damages. Nevertheless, the importance of specific performance should not be understated. Indeed, CISG Art. 46/62 recognizes that after a breach of obligations by the other party, the aggrieved party's principal concern is often that the breaching party perform the contract as he originally promised. Legal actions for damages cost money and may take a considerable period of time. Moreover, if the buyer needs the goods in the quantities and with the qualities ordered, he may not be able to make substitute purchases in the time necessary. This is particularly true if alternative sources of supply are in other countries, as will often be the case when the contract was an international contract of sale.
In any event, as stated in the UNCITRAL Digest: "The fact that the right to performance is ranking first in the list of remedies mentioned in articles 46-52 reflects that under the Convention the contractual bond should be preserved as far as possible while the termination of the contract should be available as a last resort (ultima ratio) only if the continuation of the contract would be no longer tolerable because of the severe breach of contract the seller has committed (see art. 49). The same concept applies when the buyer has breached the contract (arts. 62 and 64)."
3. Buyer's Right to Require Performance: CISG Art. 46
3.1 The right in general
CISG Art. 46, "an expression of the maxim pacta sunt servanda," describes the buyer's right to require the seller to perform the contract after the seller has in some manner failed to perform as agreed. CISG Art. 46 is divided into three subparts, reading respectively:
(2) If the goods do not conform with the contract the buyer may require delivery of substitute goods only if the lack of conformity constitutes a fundamental breach of contract and a request for substitute goods is made either in conjunction with notice given under article 39 or within a reasonable time thereafter.
(3) If the goods do not conform with the contract, the buyer may require the seller to remedy the lack of conformity by repair, unless this is unreasonable having regard to all the circumstances. A request for repair must be made either in conjunction with notice given under article 39 or within a reasonable time thereafter.
All the three subparts, reflecting "a concern for the integrity of a contract", "can be grouped under the buyer's right to specific performance because the nature of the remedy in all the subparts requires the seller to deliver conforming goods or perform other obligations." Subject to specific cases covered by Art. 46(2) and Art. 46(3), the buyer has a general right under Art. 46(1) to ask for the seller's performance of any due obligation. The obligations that the buyer may require the seller to perform are covered under Arts. 30 through 34, and under Arts. 41 and 42. Those obligations include the obligation to produce, procure, or deliver goods (or hand over relevant documents) at a place or time required by the contract and the obligation to deliver the goods free from third-party claims.
In a word, except in cases covered by Arts. 46(2) and (3), the buyer has a general right under Art. 46(1) to ask for the seller's performance of any due obligation in kind. In any case, however, if performance in kind is impossible - e.g., unique goods have been sold and afterwards destroyed - then the buyer's right to require performance is extinguished.
3.2 Claims depending on the type of breach
CISG Art. 46 deals with different situations of breach, fundamental and non-fundamental, and gives the buyer a right to require performance depending on the type of breach. While paragraphs 2 and 3 deal with replacement and repair of non-conforming goods in the sense of CISG Art. 35 and articulate some restrictions for these specific remedies, paragraph 1 applies to all other cases. Among them, two particular types of breach are to mentioned below.
Non-conformity, among the most litigated matters in the CISG, is to be recalled above all. Both Arts. 46(2) and 46(3) are articulated to be applied in cases of non-conformity. In respect of this breach, its nature, fundamental or non-fundamental, further distinguishes the two specific provisions of Arts. 46(2) and 46(3) from each other. Thus, "it is of importance to decide whether the breach occur[r]ed is fundamental. If the breach is one of a fundamental nature, the buyer has naturally a right to avoid the contract [CISG Art. 49/64] or to require delivery of substitute goods [CISG Art. 46(2)]. If, however, the requirements of a fundamental breach are not met, the buyer would nevertheless have a right to require repair [CISG Art. 46(3)]." At this juncture, two particular situations are to be mentioned. On the one hand, even when the buyer is not allowed to claim substitute goods, it is not excluded that in the event of non-conformity, the seller decides to deliver substitute goods if this is more favorable to him (provided that such substitution of goods is not an unreasonable inconvenience to the buyer). On the other hand, even in the case of a fundamental breach of contract, the buyer entitled to claim substitute goods may decide in favor of repair. It is a choice falling within the entitled party's discretion, unless the other party establishes that the claiming party has no legitimate interest in doing so.
Another type is non-delivery, which calls for the application of CISG Art. 46(1). The buyer's right to require performance under Art. 46(1) is at hand in situations where the seller has totally failed to perform, i.e., non-delivery. It is thus distinguished from the buyer's right to require delivery of substitute goods (Art. 46(2)) or right to demand repair (Art. 46(3)). Pursuant to CISG Art. 46(1), the buyer can insist on performance as long as the seller has not delivered. The right to performance also covers the event in which the seller has delivered only part of the goods or delivered goods to the wrong place or in which documents are lacking. If he has delivered, but the goods do not conform with the contract, paras. 2 and 3 of CISG Art. 46 provide remedies for specific claims for performance.
Thus, it would appear to make specific performance routinely available under the Convention. In particular, it does not allow the seller to refuse to perform on the grounds that the non-conformity was not substantial or that performance of the contract would cost the seller more than it would benefit the buyer. The choice is that of the buyer.
3.3 Performance by delivery of substitute goods or repair
As mentioned above, CISG Art. 46(1) gives the buyer a general right to require the seller to perform its contractual obligations. This general right, "is augmented in article 46 by two more specific provisions." Following the general right in Art. 46(1), Art. 46(2) and Art. 46(3) continue to specify, in the case of seller's delivery of non-conforming goods, the aggrieved buyer's right to require performance by delivery of substitute goods or repair.
One form of performance is to require delivery of substitute goods according to Art. 46(2). The availability of this performance is subject to certain conditions: "Article 46(2) presupposes (a) that the seller has delivered non-conforming goods; (b) that the non-conformity constitutes a fundamental breach of contract; and (c) that the buyer has requested replacement within a reasonable time. Given these conditions the buyer is entitled to require delivery of substitute goods." In addition, it is to be noted that according to CISG Art. 82(1), the right to require delivery of substitute goods can in principle only be exercised if the buyer is able to return the delivered goods in substantially the condition in which he received them. Another form is granted under Art. 46(3), according to which the right to demand repair is available. The right to require repair according to Art. 46(3) is subject to conditions similar to those in Art. 46(2). It is to be noted that, however, unlike Art. 46(2) that applies only in the events of fundamental non-conformity, the wide language of Art. 46(3) indicates that the buyer will have a broad right to require the seller, by way of repair, to cure any form of non-conformity in goods.
Moreover, "although the language of Art. 46(2) and (3) shows that the remedies provided under these two sub-paragraphs are separate remedies, they are not to be regarded as alternatives but can both be resorted to in the same case (emphasis added). Thus, it is possible for a buyer to request both substitute goods and the repair of goods depending on the circumstances." Having accepted that the buyer has a right to require the seller to perform what he has undertaken under the contract, it is suggested that the Convention provisions giving the buyer a right to require the seller to cure his non-conforming delivery by delivery of substitute goods and/or repair are consistent with general principles and the authorities authorising the buyer to obtain specific performance.
Generally speaking, both Art. 46(2) and Art. 46(3) reflect the CISG's aim to respect the pacta sunt servanda principle. On the one hand, the buyer is given the possibility under Art. 46(2), in the events of fundamental non-conformity, to rely on the seller's promise and require him to re-deliver substitute goods and consequently perform as originally agreed between the parties. On the other hand, the buyer's right to require the seller to repair non-conformities according to Art. 46(3), not amounting to a fundamental breach, in delivered goods supplements the CISG's basic principle to respect the contract made between the parties. Consequently, the pacta sunt servanda principle and the thinking that the most natural remedy for the buyer for a breach is to require the seller to perform as originally agreed upon between the parties, is supported.
4. Seller's Right to Require Performance: CISG Art. 62
4.1 The right in general
Like Art. 46, Art. 62 is another expression in the Convention of the maxim pacta sunt servanda. It is designed to assist sellers who have a particular interest in the performance by the buyer, stating that:
This article provides for the right of the seller to obtain or require performance which does not, however, constitute a sanction but a pursuance of initial rights under the contract. As Knapp notes, the right to require performance as granted under Art. 62, "contrasts with other remedies provided in Article 61 because it does not create any new right to the seller or a new obligation of the buyer. It is simply a pursuance of their initial rights and obligations under the contract. Hence, the intention of Article 62 is to emphasize that the mere non-performance by the buyer of his obligations does not cause an ipso facto avoidance of the contract and that the contractual obligations continue in force even if not performed in due time."
Regardless whether the intention of Art. 62 is that stated by Knapp, it is plain from the text that: "Because there are fewer buyer's obligations, Article 62 is conceptually simpler than Article 46." The seller's right to require performance under the CISG is, however, slightly stronger than in many domestic legal systems. Frankly speaking, "the addition of a provision allowing specific performance in favor of the seller is unlikely to have a significant practical effect except in exceptional circumstances." Despite this, the right of the seller to enforce performance eliminates the expense and delay of seeking another buyer or negotiating a substitute transaction. This is an especially important right in cases where the goods have reached the destination port and the buyer refuses to take delivery. In such a situation the seller may not be able to resell the goods in that market because it may be a foreign market, unknown to the seller. In this way, specific performance provides a more appropriate form of compensation than damages because it gives a seller exactly what he expected from the contract.
Despite the conceptual simplicity in or infrequent application of CISG Art. 62, as to be further shown below (section 5), much of what is required of the buyer's right to require performance under Art. 46 applies to the seller's right to require performance under Art. 62. The rationale behind Art. 62 is the same as Art. 46: to promote respect for the agreement and to ensure there is adequate compensation.
4.2 Performance by the buyer to be required
CISG Art. 62 is designed to assist sellers who have a particular interest in the performance by the buyer, among which performance is the buyer's obligation to pay the price. Art. 62 recognizes that the seller's primary concern is that the buyer pay the price at the time it is due. Therefore, if the price is due under the terms of Arts. 58 and 59 and the buyer does not pay it, Art. 62 authorizes the seller to require the buyer to pay it.
Another rationale behind Art. 62 is "the difficult task of the seller to dispose of goods when the buyer refuses to take delivery." Accordingly, Art. 62 goes on to authorize the seller to require the buyer to take delivery. As it is noted in the Secretariat Commentary, the obligation to "take delivery", the definition of which is found in CISG Art. 60, is specifically mentioned because it is the second of the two obligations of the buyer set forth in Art. 53. However, "illustrations of recourse to this remedy in case law, involving the hypothesis that a buyer refuses to take delivery, are rare. Illustrations of the application of article 62 to the payment of the purchase price, on the other hand, are numerous." Despite this, it is to be mentioned that: "If the buyer has neither paid the price nor taken delivery, the remedy [performance to take delivery] may be used together with, or separately from, a requirement for payment. Situations can be envisaged where the seller is more anxious to receive payment than to force the buyer to take delivery of the goods. He may therefore present these requirements simultaneously or separately."
In addition to the two mentioned above, CISG Art. 62 authorizes the seller to require the buyer to perform his other obligations. It thus sets forth in broad terms the seller's right to require performance by the breaching buyer. The concept of pacta sunt servanda likely is responsible for the use of language (of Art. 62) that mirrors the broad language of Art. 46.
4.3 Distinguished from the right in domestic systems
As indicated above, the primary concern as contemplated in CISG Art. 62 is the buyer's obligations to pay the price or to take delivery. In respect of these two concerns, the CISG approach makes differences as opposed to domestic systems.
In considering the CISG provisions that govern the right to compel payment of price as one type of specific performance, the CISG is markedly different from some domestic laws. In this respect, it is noted in the Secretariat Commentary:
In contrast, under CISG Art. 62, when the buyer has a substantive obligation to pay the price under CISG Arts. 58 and 59, the seller has available a remedy to require him to pay it. Another difference between domestic systems and the CISG is that certain domestic legal systems provide that the seller cannot force the buyer to accept the goods unless he is unable to resell them after reasonable effort. The CISG gives the seller the right to compel acceptance without the aforementioned condition.
Unlike in certain domestic systems, the seller under CISG Art. 62, as a rule, is under no obligation to try to resell the goods before resorting to specific performance for failure of the buyer to perform the contract, to pay the price or to take delivery. It is to be noted, however, although Art. 62 does not directly obligate the seller to sell the goods in case the buyer is in breach, such obligation may still arise on the seller. Of particular relevance, the seller's obligation to mitigate the loss under CISG Art. 77, or its obligation to take reasonable steps to preserve goods under CISG Arts. 85 to 88, will eventually force it into resale, especially when the buyer is reluctant to take delivery of the goods.
5. Exercise of the Right to Require Performance under CISG Art. 46/62
5.1 No inconsistent remedy already resorted to
As expressly stated in the text of CISG Art. 46(1), the buyer's right to require performance by the seller is restricted if the buyer has resorted to a remedy which is inconsistent with this requirement. Despite the express language, it is not quite clear which remedies are incompatible with the remedy of requiring performance.
In this respect, the Secretariat Commentary states that, in order for the buyer to exercise the right to require performance of the contract, he must not have resorted to a remedy which is inconsistent with that right, e.g., by declaring the contract avoided under Art. 49 or by declaring a reduction of the price under Art. 50. The buyer's exercise of his right to declare the contract avoided would certainly be an "inconsistent" remedy for the purpose of CISG Art. 46(1). The buyer may not demand performance and at the same time avoid the contract under Art. 49. This appears to be a matter of course. This inconsistency will become plain when we look at what Art. 81 provides. According to CISG Art. 81, avoidance "releases both parties from their obligations" under the contract.
Equally incompatible are the claims for performance and price reduction pursuant to Art. 50 which would re-establish equivalence. As Koskinen states, "it is obvious that if the delivered goods are defective and the buyer demands a price reduction or refund for repair costs as compensation, he may not at the same time require repair or delivery of substitute goods, as provided by paragraphs (2) and (3) of Article 46, by the seller; in such a case the right to require performance and claim for a price reduction are inconsistent remedies, because they aim to compensate the same interest (emphasis added)."
In sum, Art. 46 (1) restricts the right to compel performance when the buyer has already resorted to a remedy inconsistent with performance. Such inconsistency exists between performance and avoidance, but also between performance and price reduction. In addition, it is noted that: "Although the requirement is expressly provided under Sub-para. (1) of Art. 46, it seems that the buyer's right to resort to the remedies under sub-paras. (2) and (3) of this Art. should also be subject to the same requirement; the buyer will not be entitled to require the seller to deliver replacement goods or repair defects in the goods where he has already resorted to an inconsistent remedy."
Analogous to Art. 46(1), Art. 62 also provides that in order for the seller to exercise his right to require performance by the buyer of the contract he must not have acted inconsistently with that right. Again, what is covered by the reference to an inconsistent remedy, is avoidance (according to CISG Art. 64). The ground for declaring the contract avoided is irrelevant. But avoidance under Art. 64 is not the only inconsistent remedy available to the seller. As Enderlein & Maskow note, "[t]he specification obligation is extinguished when the seller makes the specification himself (Article 65). This provision does apply, however, also when rights are given and exercised under the contract which are inconsistent with the right to obtain performance [...]."
On the other hand, however, the exercise of the right to obtain performance does not exclude transition to other rights which are also inconsistent with it when the right to require performance does not lead to the intended result. That is to say, the entitled party having once requested performance can still opt for a different remedy, e.g., declare the contract avoided if all the requirements for avoidance are met. In addition, it is to be made clear that it is the remedy, not the reason for resorting to it, that is inconsistent with a requirement for specific performance.
5.2 Claim for damages in relation to the requirement of performance
The question whether a claim for damages would be an inconsistent remedy, depriving the right to require performance gives rise to some doubt. The question of particular relevance here is: Whether the exercise of one's right to claim damages would deprive the party, under the above rule of non-recourse to inconsistent remedies, of his right to require performance?
The Convention does not make the position clear. It has been suggested that a distinction must be drawn between the case of a claim for damages for late delivery and that of non-delivery. Where the buyer has claimed damages for delay in delivery he would not be pursuing a remedy "inconsistent" with that of requiring performance, while a claim for damages for non-delivery would be inconsistent with requiring performance, since such a claim for damages can only be brought "If the contract is avoided". Treitel similarly argues, claiming damages for non-delivery, based on the difference between the contract and the market price would be inconsistent with requiring performance, for such a claim for damages can only be brought if the contract is avoided. Walt is also of the view that inconsistent remedies for the purpose of Art. 46(1) also include, together with avoidance of contract and price reduction, "a claim for damages based on the market-contract price differential under article 74."
Another author reviews the matter in question from a different approach, where it is stated in respect of the buyer's right under CISG Art. 46 that, "the buyer may lose his right to require performance if he has, without avoiding the contract, claimed damages for failure to perform or defective performance of some other obligation. Of the essence is the point of time when the buyer becomes bound by his damages claim (emphasis added). Such point of time must be decided in conformity with general principles of good faith. If the seller has expressly or impliedly indicated his agreement to the buyer's damages claim, a further requirement to perform could constitute an inconsistent requirement especially if the seller has had reason to rely on the buyer's notification of a damages claim." Supposing this argument withstands scrutiny, a similar reason would apply to the seller's right under CISG Art. 62.
With the matter in question open for further discussion, the converse is of no doubt. What is certain is that, as expressly stated in CISG Art. 45(2)/61(2), the aggrieved party is not deprived of any right he may have to claim damages by exercising his right to other remedies, including the exercising of his right to claim performance under Art. 46/62. Thus, even in seeking specific performance, CISG Art. 45(2)/61(2) ensures that the claim for damages remains untouched. Therefore, the buyer can combine its request for performance and a claim for any remaining damage, e.g., caused by delayed performance. Indeed, compensation for damages suffered through delay is frequently asked for apart from the claim for performance.
In substance, the right to claim damages ensures that the aggrieved party is put into as good a position as if he would have been had the contract been performed. Therefore, the right to claim damages essentially supplements the right to require performance.
5.3 Non-conformity preconditioning buyer's specific claims under Art. 46(2)/46(3)
(a) The precondition in general
As clearly indicated in the text, both Art. 46(2) and Art. 46(3) refer to cases where "the goods do not conform with the contract". That is to say, they deal with situations "where there has been performance in fact, but where the performance does not conform with the provisions and requirements of the contract."
Generally speaking, non-conformity of goods not only comprises defective quality and deficiencies in quantity but also wrong deliveries (Art. 35). Goods do not conform with the contract when they are not free from third party rights or claims (Arts. 41 and 42), either. However, it is to be noted that, the situation where buyer rejects defective goods before delivery and demands a new conforming delivery is governed, as a matter of fact, by Art. 46(1) and not by Art. 46(2). For a better understanding of the definition of non-conformity in the sense of CISG Art. 46(2) or 46(3), several particular cases will be get down to below.
(b) Delivery of different goods (aliud)
From a factual perspective, the delivery of an aliud (delivery of the wrong goods) is to be distinguished from the delivery of a peius (delivery of non-conforming goods). This distinction gives rise to the question of whether the aliud-delivery can be qualified as non-delivery. The Convention does not specifically address this problem.
It is true that if the seller refuses to deliver the goods, he is in breach, as addressed by Art. 46(1). But if the seller delivers goods that are totally different from what has been agreed upon, i.e., apples instead of pineapples, the answer (to whether such a breach should be addressed by Art. 46(1) or 46(2)/46(3)) is a bit more complicated. The very fact, however, that the relevant CISG provisions dealing with seller's obligations do not differentiate between the delivery of an aliud or peius allows the conclusion that both have to be treated equally.
Indeed, case law supports this view. For instance, the Court in [Germany 3 April 1996 Bundesgerichtshof [Supreme Court]] rules, contrary to domestic law (e.g., German law), "the CISG does not differentiate between delivery of different goods and delivery of goods that do not conform to the contract. Under the CISG, an aliud delivery does therefore, at least generally, not constitute a non-delivery, but constitutes a delivery of non-conforming goods (emphasis added)." It is reaffirmed in a subsequent case. The Court in [Germany 12 March 2001 Oberlandesgericht [Appellate Court] Stuttgart] rules: "Regarding goods that do not conform to the specifications of the contract, the CISG does not distinguish between the delivery of defective goods and the delivery of different kinds of goods. The delivery of an aliud does in any case not constitute a non-delivery [...]."
Leading scholars are also of the opinion that the delivery of goods other than those agreed upon between the parties, i.e., delivery of an aliud, should not be regarded as non-delivery, but as a non-conformity of goods. Moreover, according to Will, delivery of an aliud always constitutes a fundamental breach of contract. If an aliud, non-conformity of the goods, were not to be considered a fundamental breach, as Enderlein & Maskow note, "the buyer would only have the right to repair; which would seem a rather senseless demand in the case of an aliud." Therefore, in case of the delivery of an aliud, the aggrieved buyer may invoke his right to declare the contract avoided in accordance with CISG Art. 49, or resort to his right to require delivery of substitute goods according to CISG Art. 46(2).
(c) Defects in specific goods
Another situation to be clarified is which right, the right to require substitute goods or that to require repair, would be available when the non-conformity involves specific goods. In particular, whether the buyer of specific goods can require the delivery of substitute goods on the basis of Art. 46(2)?
In this respect, it is noted that: "Although the question was expressly addressed by ULIS, which provided that the buyer could only require the seller to deliver substitute goods where the sale related to unascertained goods, the present Convention does not expressly state that the remedy should only be applied to unascertained goods. Nevertheless, it seems that the same rule should be applied here since under a contract for specific goods the seller has not undertaken any duty other than to deliver the particular goods. Requiring him to deliver substitute goods would be contrary to the mutual agreement of the contracting parties."
Therefore, it has been suggested that: "When applying Article 46(2), as regards conformity of goods, it is important to separate generic and specific goods. If the contract made between the parties consists of generic goods, it follows directly from Article 46(1) that the buyer is entitled to require the seller to perform as agreed in case of non-conformity, and accordingly require re-delivery of substitute goods under Article 46(2). Therefore, the precondition of an absence of resorting to an inconsistent remedy must also exist. When, on the other hand, the contract consists of specific goods, a requirement of re-delivery of substitute goods seems to be irrelevant as the nature of the goods makes such re-delivery impossible, de facto. Consequently, the buyer would only have a right to require repair under paragraph (3) of Article 46 or claim damages."
However, it should be stressed that in the case of sale of unascertained (generic) goods, the buyer is not required to request delivery of substitute goods; he can keep the defective goods and resort to the remedy of requiring the seller to repair the lack of conformity. It follows, on the other hand, unlike the right to require delivery of substitute goods under Art. 46(2) which applies, de facto, only to the non-conformity in generic goods, the right to require repair under Art. 46(3) naturally applies as well to specific as to generic goods.
(d) Defects in title
Of most frequent occurrence is the non-conformity as defined in CISG Art. 35, which includes "the delivery of defective goods, of different goods (aliud), defects in packaging, and deficiencies in quantity." Then, the question arises as to whether the case where the goods delivered have defects in title could be considered as non-conformity for the purpose of the application of Art. 46(2)/46(3).
Neither Art. 46(2) nor Art. 46(3) expressly covers cases of defects in title. Despite this, it is argued that goods do not conform with the contract when they are not free from third party rights or claims as specified in CISG Arts. 41 and 42. The nature of the goods also plays here an important role. If the goods, which are burdened with a third party claim, are generic, the buyer has generally a right to require the seller to re-deliver substitute goods. Alternatively, the buyer can keep the defective goods and resort to the remedy of requiring the seller to repair the lack of conformity. In the latter situation, it is up to the seller to take the necessary measures to relieve such third party rights, i.e., by "buying out" the third party.
On the other hand, if specific goods are burdened with a third party right, the nature of the goods, as discussed above, makes a requirement of re-delivery of substitute goods impossible, de facto; and the buyer would only have a right to require repair under Art. 46(3) (or claim damages). However, there would be no right to require the repair of defects in title if the seller cannot buy the third party out. Accordingly, if the goods are specific and the seller cannot "buy himself out" of such a third party right, a right to require specific performance would anyway seem to be impossible.
5.4 Fundamental breach as a further precondition for the delivery of substitute goods under Art. 46(2)
Expressly, the right to require delivery of substitute goods under Art. 46(2) is further limited by the requirement that the non-conformity constitute a fundamental breach; hence not in the case of minor defects as was the case under ULIS. That is to say, only in cases where one assumes a fundamental breach of contract are the requirements for the delivery of substitute goods, in the meaning of Art. 46(2) CISG, met (supposing other conditions satisfied).
Economic reasons are the consideration underlying this further precondition:
This is in line with CISG Art. 49, according to which avoidance of a contract can only be requested if a fundamental breach of contract is committed, for the economic consequences of a delivery of substitute goods may be the same for the seller as in the case of an avoided contract. The economic consequences could even surpass those of an avoidance of contract because the additional expenses incurred and the risks involved in transporting substitute goods are to be born by the seller. It follows, on the other hand, where non-conforming goods are delivered and the non-conformity constitutes a fundamental deficiency, the buyer has a possibility to choose between avoidance of the contract or requirement of re-delivery of substitute goods. In addition, it also follows that even where the goods accidentally perish or are damaged after the risk has passed, the buyer is not deprived of his right to require delivery of substitute goods (nor deprived of the right to declare avoidance) because of a fundamental breach of contract, since CISG Art. 70 clearly states: "If the seller has committed a fundamental breach of contract, articles 67, 68 and 69 [on the passage of risk] do not impair the remedies available to the buyer on account of the breach."
Under the Convention, the definition of fundamental breach is found in Art. 25, following which a breach of contract is fundamental "if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result." Of particular relevance here, is the fundamental breach which consists of a lack of conformity. In this respect, it is generally stated in the UNCITRAL Digest: "A fundamental breach with regard to non-conformity of the goods occurs when the delivery of the defective goods substantially deprives the buyer of what the buyer is entitled to expect under the contract (art. 25). A fundamental breach under article 46(2) has to be determined in the same way as under article 49 and in accordance with the general definition given in article 25."
Special problems arise, however, "when the goods are - even seriously - defective but reparable. Several courts have found that easy reparability of defects excludes any fundamentality of the breach. At least when the seller offers and effects speedy repair without any inconvenience to the buyer courts will not find that a breach is fundamental. This is in line with seller's right to cure as provided for in article 48 of the Convention." As stated by the Appellate Court in [Germany 31 January 1997 Oberlandesgericht Koblenz], in determining a fundamental breach with regard to non-conformity of the goods, regard must be had not only to the gravity of the breach, but also to the willingness of the seller to cure the defect. Where the seller is willing to make substitute delivery and such delivery would not cause the buyer unreasonable inconvenience even non-conformity of major significance does not constitute a fundamental breach. It is even held in [Germany 12 March 2001 Oberlandesgericht [Appellate Court] Stuttgart] that, "it is decisive whether the buyer was without unreasonable expenditure able to process the goods differently or sell them in the normal course of business, if only with a price discount, and if the buyer could reasonably be expected to take such measures (citations omitted)."
It is further noted in the UNCITRAL Digest:
In any event, as required by CISG Art. 46(2), if the delivery of non-conforming goods is not a fundamental breach of contract, "no delivery of substitute goods can be requested but, rather, only repair. Even if repair is not possible, the defect does not automatically turn into a fundamental breach of contract. The buyer is left only with the right to claim a reduction of the price and/or compensation for damages." In short, when the breach (non-conformity) is not fundamental, the buyer has recourse to repair, price reduction or damages; but in no case to delivery of substitute goods (nor to avoidance of the contract), unless the seller of his own accord re-delivers substitute goods.
5.5 Reasonableness as a further condition for remedying the non-conformity by repair under Art. 46(3)
Although the buyer's right to require repair under CISG Art. 46(3) "is not restricted by a requirement of fundamental breach and can therefore be regarded as a more lenient right than the right to demand substitute goods," that right is nevertheless further limited to situations where the repair is not "unreasonable having regard to all the circumstances."
The same concern for not causing hardship to the seller is the underpinning of the provision that governs the right to repair. The buyer can require repair if it is reasonable to do so. This means that the buyer cannot claim repair, "if there is no reasonable ratio between the costs involved and the price of the goods or if the seller is a dealer who does not have the means for repair (Article 42 ULIS made a difference between producer and manufacturer, on the one hand, and distributor and dealer, on the other), or if the buyer himself can repair the goods at lesser cost (citation omitted)."
Of particular importance are the extra costs that the seller would have to suffer as a result of the repair. If such cost would be unreasonably high especially compared to a delivery of substitute goods, the precondition of Art. 46(3) is likely to be fulfilled. Although the reference to reasonableness in Art. 46(3) recognizes mainly practical difficulty in repair, i.e., expense, a claim for repair may also be unreasonable having regard to other circumstances, especially when it is possible for the buyer himself to easily repair the goods. The flexible language of Art. 46(3) is designed to encourage a reasonable and flexible approach to cases where the buyer can readily make repair, particularly when the seller's facilities for repair are in a distant country. Accordingly, a buyer will not be entitled to require the seller to make good minor defects which can readily be repaired by him. But the seller remains liable for any costs of such repair.
In any event, it is necessary that the goods are reparable so that the defect can be cured by repair. It would, therefore, be regarded unreasonable if repair is impossible, whether because of the nature of the goods, such as agricultural products, or because of technical difficulties. As Will notes, certain goods by their very nature do not allow repair at all or, if they do, would require expenditure out of all proportion. Enderlein & Maskow further note that: "Repair may not only be unreasonable; it may be technically impossible (this could, however, constitute a fundamental breach of contract). The nature of some goods is such as to exclude repair at all, e.g. in the case of agricultural products. A repair can also be impractical, e.g. as with throw-away goods." In other words, the reasonableness of the request to repair does not depend on the nature of breach, but, as some commentators have suggested, on the character of the goods delivered, technical difficulties and all the other circumstances.
When judging what is unreasonable, all circumstances have to be taken into account. When it comes to all the other circumstances, Will believes that regard must be given to both the seller's and the buyer's interests. That is to say, as Boghossian similarly states, the reasonableness of the demand is judged according to the circumstances surrounding the contract and the conflicting interests of the parties. According to von Hoffmann, however, it is doubtful whether the (little) interest of the buyer in performance in conformity with the contract must be considered. Indeed, as Enderlein & Maskow submit in this respect, "there can be no doubt. The requirement of repair is a right and not an obligation of the buyer (emphasis added). When the buyer is not interested in having goods repaired, he will not require it. The little interest of the buyer could, however, constitute a problem of Article 48 when the seller of his own accord offers repair." Practically speaking, unreasonable in the sense of Art. 46(3) means mainly unreasonable to the seller.
As a matter of law, the requirement of repair is a right and not an obligation of the buyer. Such right is limited in exceptional circumstances, which, including the reasonableness requirement, "are designed to avoid economic waste where the seller has substantially performed or where the cost of repair exceeds the benefit to be gained." Even in cases where the required repair is unreasonable having regard to all the circumstances, the aggrieved buyer "nevertheless retains the right to a reduction in price and compensation for damages." In all cases of repair, it is to be stressed that, repair is effectively executed only when after repair the goods can be used as agreed. If the repaired goods subsequently become defective the buyer must give notice of the defects. Art. 39 CISG shows that the Convention evidently requires a proper notice of the lack of conformity of the goods to the other party. Indeed, as to be shown below, it is a general rule that the aggrieved party may require specific performance under CISG Art. 46/62 only under the condition that he has made such a request within the required periods.
5.6 Request to be made within the required periods
As noted above, the application of both CISG Arts. 46(2) and 46(3) is limited to cases of non-conformity. As a rule, with regard to non-conformity under the Convention, "if the buyer does not give proper notice of the defects in accordance with Art. 39 CISG, the buyer generally loses all rights regarding these defects that he would have had under Art. 45 et. seq. CISG, as long as the exceptions of Art. 40 and Art. 44 CISG do not apply. In particular, a damages claim for defective goods requires that the buyer give proper notice of non-conformity within the given time limits in accordance with Art. 39 CISG. Also, claims for delivery of substitute goods and repair under Art. 46(2) and (3) CISG are only available only under this condition."
CISG Arts. 46(2) and 46(3) both expressly require that a request for substitute goods or repair be made. As clearly stated in both texts, that request should be made "either in conjunction with notice given under article 39 or within a reasonable time thereafter". Put it in a plain way, the request for substitute goods under Art. 46(2) can be coupled with the notice of lack of conformity under Art. 39. It can, however, also be given within a reasonable time afterwards. The right to require repair under Art. 46(3) follows the same principle as Art. 46(2). Above all, regard should be had to the notice of non-conformity given under CISG Art. 39, in conjunction with which the request for substitute goods or repair may be made according to Art. 46(2)/46(3). There exists clearly a time limit in CISG Art. 39 with regard to the notice of non-conformity, where it is stipulated that the buyer loses his right to rely on the non-conformity if he does not give proper notice of that non-conformity to the seller within a reasonable time after he has discovered it or ought to have discovered it, or in any event, at the latest within a period of two years from the date on which the goods were actually handed over to the buyer, unless this time-limit is inconsistent with a contractual period of guarantee.
On the other hand, if the buyer does not through immediate notice (in conjunction with the notice of non-conformity given under CISG Art. 39) request a delivery of substitute goods or repair, CISG Arts. 46(2) and 46(3) each makes it clear that he has to do so within a reasonable time (after the notice of non-conformity given according to CISG Art. 39). However, neither Art. 46(2) nor Art. 46(3) further defines what is "a reasonable time". Thus, Enderlein & Maskow suggest that: "What is appropriate here is therefore to fix a short time and by no means another two-year period as allowed for under Article 39, paragraph 2." Possibly, however, regard might be had to, so far as it applies, the UN Convention on the Limitation Period in the International Sale of Goods, which sets forth a period of four years.
Indeed, either the notice of non-conformity given under CISG Art. 39 or the request for substitute goods or repair made under CISG Art. 46(2)/46(3), is required to be served within a reasonable time, which is defined in none of the relevant provisions. In respect of the limit in CISG Art. 39, it was pointed out that what is a "reasonable time" is, of course, a question that depends on the circumstances of each case. And it is recently elaborated by leading scholars that:
Arguably, framing the time for notice in terms of a reasonable time is designed to promote flexibility, and the period varies with the facts of each case. The phrase within a reasonable time in Art. 46(2)/46(3) follows the same underpinning and should be interpreted in the same way as under Art. 39. That is to say, it cannot be generally or abstractly said what constitutes a reasonable time, and it should only be decided by the seized tribunal on a case-by-case basis, taking all the relevant circumstances into account.
In any event, "[f]ailure to request the remedy either in conjunction with the notice given under Art. 39 or within a reasonable time thereafter would deprive [buyer] of the right to require the seller to deliver substitute goods or repair the defects." The time limitation serves the interests of both parties. Usually the buyer is interested in receiving conforming goods as quickly as possible, and the seller wants to know the claims of the buyer. It should be avoided in any case that the buyer can speculate on rising market prices.
In addition, it is to be noted that there is no similar expression in either Art. 46(1) or Art. 62 in respect of a request to be given. Nevertheless, the wording "require" found in either text seems to imply "a clear demand that the disputed obligation should be fulfilled". Interestingly, however, it has also been noted that: "The general right to require performance [under Art. 46(1) or Art. 62 ] need not be claimed within a certain period of time apart from the normal period of limitation according to the applicable national law or, as far as it applies, according to the United Nations Convention on the Limitation Period in the International Sale of Goods. This contrasts with the notice requirement in article 46(2) and (3); but also under article 46(1) [or Art. 62] a clear declaration that the buyer [or the seller] requests the performance of a contractual obligation is needed."
6. The Compromise Reached in CISG Art. 28
Although the regime of the Convention's remedies includes these general rules (CISG Arts. 46 and 62) that a party in breach may be compelled to perform his obligations, thus establishing the primacy of the remedy of specific performance under the Convention, it does not specify and instead leaves to the domestic law of the forum any procedural measures necessary to enforce the remedies available under the Convention. Of particular importance is CISG Art. 28, which applies to both Art. 46 and Art. 62. CISG Art. 28, expressly using the common law phrase "specific performance", states that:
In this way, the right to require performance under the Convention is limited to a certain degree. The practical effect of CISG Art. 28 is to restrict in some cases an aggrieved party's general right, which is granted pursuant to CISG Arts. 46 (buyer's right) and Art. 62 (seller's right) to require specific performance of the other party's obligation after a breach of contract by the latter.
6.2 Forum's rule conditioning the availability of specific performance
Although, as demonstrated above, it appears that specific performance is "routinely available under the Convention," CISG Art. 28, which "constitutes a compromise between legal systems that deal differently with the contractual right of a party to claim specific performance of the contract," has regard to forum's rule which "conditions the availability of specific performance" under the Convention.
From the compromise reached in CISG Art. 28, it follows that "a court is not bound to enter a judgement providing for specific performance unless the court could do so under its own law in respect of similar contracts of sale not governed by this Convention, e.g., domestic contracts of sale"; even though the buyer/seller had a right to require performance under Art. 46/62. Moreover, according to Lando, even if the parties have expressly agreed that the contract must be performed specifically a court may refuse to order specific performance of the contract. In this respect, Lando argues that, "Article 28 is inconsistent with Article 6 which permits the parties to derogate from or vary the effect of any of the provisions of the Convention. The same contradiction was found in ULIS. Article 16 of ULIS was, however, sustained by the argument that it does not concern the rights and the duties of the parties, but is directed to the courts whose powers it regulates (citation omitted). This argument is not convincing. Article 28 of the Convention and Article 16 of ULIS may be read as directives to the courts - you do not have to grant specific performance - and as directives to the parties - in certain jurisdictions you have no right to require specific performance. Besides, there are other provisions of the Convention which are directed to the courts, such as Article 45(3) and 61(3) (no court may grant a period of grace), and these provisions may be derogated from by the parties."
However, keeping in mind that "the worth [or weight] of a provision should not be determined on the basis of its frequency of use," it is interesting to note that, "the degree of practical importance of this provision [CISG Art. 28] has been questioned by several other commentators, mainly because the right to require specific performance is rarely asserted in international trade. It also seems that the legislative history of the Convention supports the latter body of opinion." In any event, it is to be stressed that, "if a court has the authority under any circumstances to order a particular form of specific performance, e.g. to deliver the goods or to pay the price, [CISG Art. 28 does not limit the application of [CISG Art. 46 or 62]. [CISG Art. 28] limits their application only if (emphasis added) a court [would] not under any circumstances order such a form of specific performance." That is to say, courts in legal systems which as a matter of doctrine and judicial procedure grant orders of specific performance should not be affected by the application of CISG Art. 28.
In addition, Art. 28 of the CISG does not raise the issue of enforcement of foreign judgments. It only concerns the freedom (but only to the extent consistent with their own domestic law) of the courts not to enter a judgment for specific performance. As a whole, Koskinen has properly explained the provision of Art. 28 in the way that,
6.3 Impediment on unification imposed by the compromise
Although meant only as a concession to Common Law countries, CISG Art. 28 may be misused as "a door-opener" for provisions of domestic law allowing the denial of or derogation from obligations. This would, of course, destroy the uniformity. Moreover, "a parochial or variable application of the specific performance provisions will lead to uncertainty in international commercial transactions. Parties will be unsure whether specific performance will be available in a given transaction if a suit can be brought in two or more places, one of which disfavors specific performance."
The impediment that Art. 28 imposes on achieving a uniform and international interpretation of CISG is quite real, although Art. 28 was useful for the Convention to be brought into force in common law systems which could not be expected to alter fundamental principles of their judicial procedure. Fitzgerald has suggested several solutions to the matter. One obvious solution is for the parties to state in the contract whether specific performance is available as a remedy, or to exclude the application of whatever specific performance provisions they wish. Also, a choice of forum clause will add certainty to the transaction by eliminating the Art. 28 problem. Another solution is for the party who is uncertain about the availability of specific performance to sue for damages instead. These solutions are certainly practical, but not without their own problems. International agreements are hard enough to conclude when the parties concentrate only on substantive performance and ignore the possibility of breach. Damages might not be what the aggrieved party wants. In no event are the problems of specific performance under the Convention caused by CISG Art. 28 easily solvable.
CISG Art. 28 is evidently inconsistent with the aim of the CISG - to create a uniform law for international sales and ensure that countries apply the same rules to similar cases, to the extent that it "has a potential for mischief because 'parties will be encouraged to forum-shop for a national court system that will or will not grant specific performance'."
6.4 Future improvements expected
As a result, Art. 28 gives rise to uncertainties in the application of the CISG. The outcome of litigation regarding remedies depends on the law of the forum. While it was a useful compromise to allow the international delegates to approve the Convention, CISG Art. 28 is an unsatisfactory solution and is unlikely to be adopted in future legal unification or harmonization efforts.
Indeed, there have been several calls in recent years for the increased availability of specific performance, among which are the uniform approaches adopted under the UNIDROIT Principles and the PECL.
In stark contrast to the Convention (CISG Art. 28), however, the Principles (both the UNIDROIT Principles and the PECL) do not treat specific performance as a discretionary remedy which is dependant on domestic law and the rules of the forum. Thus, for the sake of a better understanding of the remedy of specific performance, discussions will be moved on in the following sections to the approaches of the UNIDROIT Principles and the PECL which may be deemed as authoritative sources or inspirations for future improvements to the CISG approach.
7. Performance of Monetary Obligations
7.1 Money due always recoverable
In accordance with the general principle of pacta sunt servanda, continental law allows a creditor to require performance of a contractual obligation to pay money. Also according to Common Law an action for an agreed sum is often available, although it is limited in certain respects.
It is also the rule in Art. 7.2.1 of the UNIDROIT Principles, which reads:
This Article reflects the generally accepted principle that "payment of money which is due under a contractual obligation can always be demanded and, if the demand is not met, enforced by legal action before a court"; and it applies "irrespective of the currency in which payment is due or may be made. In other words, the right of the obligee to require payment extends also to cases of payment in a foreign currency."
Similarly, PECL Art. 9:101(1) prescribes in a refined sentence that:
It is further clarified in the companying Comment that: "A monetary obligation for the purposes of this rule is every obligation to make a payment of money, regardless of the form of payment or the currency (emphasis added). This includes even a secondary obligation, such as the payment of interest or of a fixed sum of money as damages."
The principle of contractual performance of the parties' (monetary) obligations is also generally recognized in the Convention as well as specifically embodied in CISG Art. 62 which sets forth the seller's right to require buyer to pay the price for the goods. As a rule, it is always possible to enforce monetary obligations. This is the basis of the rule in either UNIDROIT Principles Art. 7.2.1 or PECL Art. 9:101(1). But in each case, the monetary obligation must have been earned by the creditor, i.e., it must be due.
7.2 Recovery of payment to be earned with future performance
Most legal systems do not recognize restrictions upon a claim for monetary obligations. It is a generally accepted principle, as evidenced by UNIDROIT Principles Art. 7.2.1 or PECL Art. 9:101(1), that payment of money which is due can usually be demanded and enforced.
However, the principle that monetary obligations always can be enforced is not quite so certain where the monetary obligation has not yet been earned by the creditor's own performance and it is clear that the debtor will refuse to receive the creditor's future performance. At common law, in particular, an action for an agreed sum is limited in certain respects: it may be brought only when the price has been "earned" by performance, e.g., the performance of a service or the passing of property in the goods.
In this regard, PECL Art. 9:101(2) provides the following guidance:
Of particular notice, even in the above Article, it is the sum due that may be recovered, although it is a sum to be earned by the non-performing creditor with its future performance. Thus, the true issue turns on to the creditor's entitlement to proceed with its performance (future performance). In this respect, it is noted that: "Under the principle of pacta sunt servanda the creditor is entitled to make its performance and thereby to earn the price for it. The debtor's unwillingness to receive the creditor's performance is therefore, as a rule, irrelevant (emphasis added)."
In that case, however, "the debtor is at risk of having forced upon it a performance which it no longer wants." Two exceptions, therefore, are contemplated in PECL Art. 9:101(2). The first exception is indicated in PECL Art. 9:101(2)(a) as "it [the creditor] could have made a reasonable substitute transaction without significant effort or expense." It expresses "the general rule which seems to prevail in most continental European countries." The other exception is expressed in PECL Art. 9:101(2)(b), which "Continental European legal systems do not know" and "is based on considerations to be found in experience gained from ENGLISH, IRISH and SCOTTISH practice." It refers to the situations where "performance would be unreasonable in the circumstances." The consideration underlying both exceptions is that, "a debtor should not have to pay for a performance which he does not want in cases where the creditor can easily make a cover transaction or in other cases where it would be unreasonable to oblige the debtor to pay the price."
Under PECL Art. 9:101(2)(a), a creditor which can make a reasonable cover transaction without involving itself in significant trouble or expense is not entitled to continue with performance against the debtor's wishes and cannot demand payment of the price for it. The creditor should terminate the contract and either make a cover transaction thus claiming the difference, or simply claim damages without making any cover transaction. However, it is to be stressed that the debtor cannot invoke Art. 9:101(2)(a) unless two conditions are satisfied: the first is that the creditor can make a cover transaction on reasonable terms because there is a market for its performance or some other way of arranging a substitute transaction; the second is that the cover transaction does not substantially burden the creditor with effort or expense.
In certain situations, the creditor may even be bound by commercial usage to effect a cover transaction. Here it is recalled that the restriction in PECL Art. 9:101(2)(a) has "a precursor" in ULIS Art. 61, whereas CISG Art. 62 has dropped this restriction. Lando notes further in this respect:
Nevertheless, it seems that this restriction has been reintroduced under the broad Art. 7.2.1 of the UNIDROIT Principles, the Comment of which states that: "Exceptionally, the right to require payment of the price of the goods or services to be delivered or rendered may be excluded. This is in particular the case where a usage requires a seller to resell goods which are neither accepted nor paid for by the buyer."
Once an action for the price was available there was no requirement that it must be reasonable to pursue it rather than to enter a cover transaction. This gave rise to difficulties, however, when a party had announced in advance that it no longer required a service but the other performed it nonetheless and then sued for the price. Thus, a very different situation is dealt with in PECL Art. 9:101(2)(b): Here performance by the creditor would be unreasonable. A typical example is where, before performance has begun, the debtor makes it clear that it no longer wants it. This situation can arise, for example, in construction contracts, other contracts for work and especially long term contracts. Of particular relevance, it is further noted that the rule in contracts other than sale of goods now appears to be that if at the date of the repudiation the innocent party has not yet performed his part of the contract, he may complete his performance and claim the price only if he has a legitimate interest in doing so. If he has no legitimate interest in performing he is confined to an action for damages, and his recovery will be limited by the principle of mitigation. In any event, however, the guilty party has the onus to show that the innocent party has no legitimate interest in performing.
As a rule, however, "[t]he burden of proving that the existence of one of the exceptions applies is on the debtor." Once the exceptions either established, on the other hand, the creditor may not demand the money owed under the contract for the counter-performance, in particular the price. However, damages for non-performance may be claimed. In addition, it is to be noted that none of the two exceptions affects the right of a beneficiary under a letter of credit to claim payment from the bank. This is because letters of credit are treated as independent of the underlying contract.
8. Performance of Non-monetary Obligations
8.1 The approaches in general
In accordance with the general principle of the binding character of the contract, each party should as a rule be entitled to require performance by the other party not only of monetary, but also of non-monetary obligations, assumed by that party. While this is not controversial in civil law countries, common law systems allow enforcement of non-monetary obligations only in special circumstances.
In this respect, particularly in respect of the performance of non-monetary obligations, traditionally there are important differences between the common law and civil law, at least in theory: in the common law specific performance is a discretionary remedy that will only be granted if damages are inadequate; whereas in the civil law countries the aggrieved party's right to performance is generally recognized. Indeed, however, the basic differences between common law and civil law are of theoretical rather than practical importance. Even in civil law countries an aggrieved party will pursue an action for performance, in general, only if he has a special interest in performance which would not be satisfied by damages.
Nevertheless, following the basic idea of CISG Art. 46, UNIDROIT Principles Art. 7.2.2 adopts the principle of specific performance, subject to certain qualifications. PECL Art. 9:102 also allows the aggrieved party to require performance of a contractual obligation other than one to pay money by the non-performing party. The principle is particularly important with respect to contracts other than sales contracts. Unlike the obligation to deliver something, contractual obligations to do something or to abstain from doing something can often be performed only by the other contracting party itself. In such cases the only way of obtaining performance from a party who is unwilling to perform is by enforcement.
Notably, due to lack of a better, generally understood term, the common law phrase "specific performance" is used in PECL Art. 9:102. The aggrieved party has not only a substantive right to demand the other party's performance as spelled out in the contract. The aggrieved party has also a remedy to enforce this right, e.g., by applying for an order or decision of the court. Although this common law phrase is not found in Art. 7.2.2 of the UNIDROIT Principles, it is believed that the term "require" used in Art. 7.2.1 covers "both the demand addressed to the other party and the enforcement, whenever necessary, of such a demand by a court." This interpretation seems applicable to the "require" used in Art. 7.2.2. Indeed, this common law phrase has been frequently used in the Comment companying the UNIDROIT Principles, and especially, it has been stated in the Comment on Art. 7.2.2 that, "under the Principles specific performance is not a discretionary remedy, i.e. a court must order performance, unless one of the exceptions laid down in the present article applies." Similarly, it is also stated in the Comment companying PECL Art. 9:102 that: "Under these Principles the aggrieved party has a substantive right to demand and to enforce performance of a non-monetary obligation. Granting an order for performance thus is not in the discretion of the court; the court is bound to grant the remedy, unless the exceptions of paragraphs (2) or (3) apply. National courts should grant performance even in cases where they are not accustomed to do so under their national law."
In this way, both the UNIDROIT Principles and the PECL make specific performance more available and clear away uncertainties as opposed to the compromise reached in CISG Art. 28. Nevertheless, it cannot be ignored that whether an aggrieved party should be entitled to require performance of a non-monetary obligation, is very controversial, especially in consideration of the significant distinction between the common law and civil law systems: The common law treats specific performance as an exceptional remedy whilst the civil law regards it as an ordinary remedy. Thus, either UNIDROIT Principles Art. 7.2.2 or PECL Art. 9:102 has sought a compromise: a claim for performance is admitted in general but excluded in several special situations.
8.2 The general right to require performance
A general right to performance has several advantages. Firstly, through specific relief the creditor obtains as far as possible what is due to it under the contract; secondly, difficulties in assessing damages are avoided; thirdly, the binding force of contractual obligations is stressed. A right to performance is particularly useful in cases of unique objects and in times of scarcity.
Consequently, Art. 7.2.2 of the UNIDROIT Principles grants the right to require performance of the non-monetary obligations by stating that:
PECL Art. 9:102 also provides in paragraph (1) a general right to require the performance of non-monetary obligations, stating that:
This general right, envisaged in the above articles, covers all obligations other than monetary obligations, e.g., to do or not to do an act, to make a declaration or to deliver something. In some cases a court order itself will act as a substitute for performance by the non-performing party. Specifically speaking, the right to require performance of a non-monetary obligation applies to three situations: first, if no performance at all is tendered by the non-performing party; second, where tender of a non-conforming performance has been made but has been validly rejected by the aggrieved party; third, where the performance is defective but has not been rejected.
At this juncture, it is recalled that the uniform laws on international sales grant a right to performance in natura in case of "non-conforming" goods. Also, the general right to require performance as granted under PECL Art. 9:102(1) expressly includes "the remedying of a defective performance." Thus, if the non-performing party performs, but its performance does not conform to the contract, the aggrieved party may choose to insist upon a conforming performance. This may be advantageous for both parties. The aggrieved party obtains what it has originally contracted for and the non-performing party eventually obtains the full price. And a conforming performance may be achieved in a variety of ways: for example, repair; delivery of missing parts; or delivery of a replacement. In this respect, a separate rule dealing with defective performance has been contained in Art. 7.2.3 of the UNIDROIT Principles, which reads under the heading "Repair and Replacement of Defective Performance" as:
The above Article applies the general principles of Arts. 7.2.1 and 7.2.2 to "a special, yet very frequent, case of non-performance, i.e., defective performance"; and confirms that "the right to require performance includes the right of the party who has received a defective performance to require cure of the defect." UNIDROIT Principles Art. 7.2.3 expressly mentions two specific examples of cure, namely repair and replacement. Repairing defective goods (or making good an insufficient service) is the most common case and replacement of a defective performance is also frequent. According to the Comment, the right to require repair or replacement may also exist with respect to the payment of money (hence indicating an application broader than PECL which deals with the remedying of the defective performance under Art. 9:102 thereby limited to non-monetary obligations), for instance in case of an insufficient payment or of a payment in the wrong currency or to an account different from that agreed upon by the parties. On the other hand, apart from repair and replacement there are other forms of cure, such as the removal of the rights of third persons over goods or the obtaining of a necessary public permission.
The right to require cure of a defective performance is, of course, subject to the same limitations as the right to performance in general. Most of the exceptions to the right to require performance of non-monetary obligations are easily applicable to the various forms of cure of a defective performance. Thus, as to be furthered below, a non-performing party cannot be forced by court order to accomplish a performance conforming to the contract if the aggrieved party has failed to demand performance within a reasonable time or if the latter may reasonably be expected to make someone else effect repair of the performance.
8.3 Exceptions to the general right
Comparative research of the laws and especially commercial practices demonstrate that even in the Civil Law countries, the principle of performance must be limited; therefore, the general right to performance under both sets of Principles is subject to several exceptions, which are "variously based upon natural, legal and commercial considerations."
Under the UNIDROIT Principles, exceptions to the general right to require performance are contemplated in the sub-paragraphs (a) to (e) of Art. 7.2.2, including:
(b) performance or, where relevant, enforcement is unreasonably burdensome or expensive;
(c) the party entitled to performance may reasonably obtain performance from another source;
(d) performance is of an exclusively personal character; or
(e) the party entitled to performance does not require performance within a reasonable time after it has, or ought to have, become aware of the non-performance.
Similarly, the general right to performance under the PECL is also subject to four exceptions according to Art. 9:102(2), sub-paragraphs (a)-(d), in addition to which is a time limit set forth in Art. 9:102(3). The relevant paragraphs of PECL Art. 9:102 state that:
(3) The aggrieved party will lose the right to specific performance if it fails to seek it within a reasonable time after it has or ought to have become aware of the non-performance.
It is arguable that the basis of the stated exceptions is provided by the application of the general principle of reasonableness - also recognized in the Convention - to the various contexts in which UNIDROIT Principles Art. 7.2.2 (a) to (e) is applicable. Exclusion of specific performance in these situations can be seen as an extension of operation of the principle of good faith. One of the consequences that arises from these exceptions is expressly set out: performance cannot be demanded by the aggrieved party. In such exceptional cases, "other remedies, especially damages and, in appropriate cases, termination, are more adequate remedies for the aggrieved party."
(b) Impossibility in law or in fact
Both UNIDROIT Principles Art. 7.2.2(a) and PECL Art. 9:102(2)(a) express the rule "impossibilium nulla est obligation". If restricted to the right to performance as such (as distinct from subsidiary remedies), the rule seems to be common to the laws of Europe.
For obvious reasons, there is no right to require performance if it is impossible. This is particularly true in case of factual impossibility, i.e., if some act in fact cannot be done. However, impossibility does not nullify a contract: other remedies may be available to the aggrieved party (whether or not the impossibility makes the non-performing party liable in damages is irrelevant in this context). The same is true if an act is prohibited by law. Even if this prohibition does not nullify the contract, its performance may be illegal. But, if the refusal of a public permission which is required under the applicable domestic law and which affects the validity of the contract renders the contract void, the problem of enforceability of the performance cannot arise. When however the refusal merely renders the performance impossible without affecting the validity of the contract the present exception applies and performance cannot be required. Similarly, specific performance is not available where a third person has acquired priority over the plaintiff to the subject matter of the contract.
In any event, a performance which is impossible in law or in fact, cannot be required. However, it is to be stressed that in either case if an impossibility is temporary, enforcement of performance is excluded only during that time.
(c) Unreasonable burden
Another exception is found in UNIDROIT Principles Art. 7.2.2(b) or PECL Art. 9:102(2)(b), underlying which is the idea that "[s]pecific performance will not be ordered if the performance would be quite different to the original obligation, e.g. a lessee which has carelessly burned down the leased premises will not be ordered to re-build them."
In exceptional cases, particularly when there has been a drastic change of circumstances after the conclusion of a contract, performance, although still possible, may have become so onerous that it would run counter to the general principle of good faith and fair dealing to require it. According to this exception, performance cannot be required if it would involve the non-performing party in unreasonable effort or expense. No precise rule can be stated on when effort or expense is unreasonable. However, considerations as to the reasonableness of the transaction or of the appropriateness of the counter-performance are irrelevant in this context. Nor is this exception limited to the kind of supervening event cases covered by the "hardship", which calls for more specific rules that prevail over the present exception.
Of particular notice, with regard to the remedying of defective performance, it has been noted that: "In many cases involving small, insignificant defects, both replacement and repair may involve 'unreasonable effort or expense' and are therefore excluded." In addition, the wording "where relevant, enforcement" contained in Art. 7.2.2(b) of the UNIDROIT Principles is to be mentioned. It takes account of the fact "that in common law systems it is the courts and not the obligees who supervise the execution of orders for specific performance. As a consequence, in certain cases, especially those involving performances extended in time, courts in those countries refuse specific performance if supervision would impose undue burdens upon courts."
(d) Possibility of a cover transaction
The third exception, found in both UNIDROIT Principles Art. 7.2.2(c) and PECL Art. 9:102(2)(d), is based on the consideration that: "Many goods and services are of a standard kind, i.e. the same goods or services are offered by many suppliers. If a contract for such staple goods or standard services is not performed, most customers will not wish to waste time and effort extracting the contractual performance from the other party. Instead, they will go into the market, obtain substitute goods or services and claim damages for non-performance."
In view of this economic reality, the present exception, like the exception restricting the performance of price not yet due, excludes specific performance whenever the party entitled to performance may reasonably and more easily obtain performance from other sources. In no case, however, does the present exception introduce any kind of a test of adequacy of damages in the sense that performance could only be required if damages were an inadequate remedy. Rather, this rule should encourage the aggrieved party to choose from among the remedies which would fully compensate it the one which can most simply be obtained. According to practical experience, termination and damages will often satisfy its requirements faster and more easily than enforcement of performance. That is to say, the aggrieved party in the present situation may terminate the contract and conclude a replacement transaction with the result to claim the difference as damages.
On the other hand, however, if the aggrieved party chooses to require performance, this will generally create a presumption that this remedy optimally satisfies its needs. Consequently, the non-performing party will have to prove that the aggrieved party can obtain performance from other sources without any prejudice and that therefore it may reasonably be expected to make a cover transaction. In any event, the word "reasonably" indicates that the mere fact that the same performance can be obtained from another source is not in itself sufficient, since the aggrieved party could not in certain circumstances reasonably be expected to have recourse to an alternative supplier. It is nevertheless to be noted: An aggrieved party may reasonably be expected to obtain performance from other sources, even if the cost is higher than the contract price, but only if the defaulting party is in a position to pay the damages for the difference. If this is not so, the present exception does not exclude a request for performance.
(e) Performance of an exclusively personal character
Generally, the aggrieved party may require performance by the non-performing party in regard to any obligation of the latter. However, where a performance has an exclusively personal character, enforcement would interfere with the personal freedom of the obligor. Moreover, enforcement of a performance often impairs its quality. The supervision of a very personal performance may also give rise to insuperable practical difficulties, as is shown by the experience of countries which have saddled their courts with this kind of responsibility.
For these reasons, UNIDROIT Principles Art. 7.2.2(d) excludes enforcement of performance of an exclusively personal character. The precise scope of this exception depends essentially upon the meaning of the phrase "exclusively personal character". The modern tendency is to confine this concept to performances of a unique character. The present exception does not apply to obligations undertaken by a company. Nor are ordinary activities of a lawyer, a surgeon or an engineer covered by the phrase for they can be performed by other persons with the same training and experience. On the other hand, a performance is of an exclusively personal character if it is not delegable and requires individual skills of an artistic or scientific nature or if it involves a confidential and personal relationship.
Similarly, PECL Art. 9:102(2)(c) excludes a right to require performance of services or work of a personal character. It adds in the PECL Comment that the term "services or work of a personal character" used in PECL Art. 9:102(2)(c), does not cover services or work which may be delegated. A provision in the contract that work may not be delegated does not necessarily make the work of a personal character. If the contract does not need the personal attention of the contracting party but could be performed by its employees, the clause prohibiting delegation may be interpreted as preventing only delegation to another enterprise, e.g., a sub-contractor. The signing of a document would not usually constitute service or work within the meaning of this provision. Such an obligation can mostly be enforced since the non-performing party's declaration can be replaced by a court decree. Also, specific performance is excluded in PECL Art. 9:102(2)(c) where the parties would be forced to enter or to continue a personal relationship. In case of agreements to enter into a partnership, this second alternative applies if and insofar as the partnership presupposes a close personal contact. But as in case of a contract to form a public company, the specific personal element is sometimes lacking; in this case this rule does not prevent the promise being enforced.
In any case, however, it is to be noted that the performance of obligations to abstain from doing something does not fall under either UNIDROIT Principles Art. 7.2.2(d) or PECL Art. 9:102(2)(c). It speaks only of positive acts. It is possible to require performance of a negative obligation, e.g. to forebear from rendering services for someone else or from entering into a partnership with someone else. If, however, enforcement of a negative obligation concerning services, work or a personal relationship would result in indirect enforcement of a positive act to provide or maintain the same, the present exception applies.
(f) Delay in the request
It is recalled that under the Convention, such a time requirement as under UNIDROIT Principles Art. 7.2.2(e) or PECL Art. 9:102(3), is limited to cases where the buyer claims delivery of substitute goods and repair of non-conforming goods under Arts 46(2) and 46(3). Further, either UNIDROIT Principles Art. 7.2.2(e) or PECL Art. 9:102(3) has followed in general "the Common Law view that an aggrieved party who delays unreasonably in requiring performance in natura may lose his claim."
In practice, performance of a contract often requires special preparation and efforts by the obligor. If the time for performance has passed but the obligee has failed to demand performance within a reasonable time, the obligor may be entitled to assume that the obligee will not insist upon performance. If the obligee were to be allowed to leave the obligor in a state of uncertainty as to whether performance will be required, the risk might arise of the obligee's speculating unfairly, to the detriment of the obligor, upon a favorable development of the market. For these reasons, the present exception excludes the right to performance if it is not required within a reasonable time after the obligee has become, or ought to have become, aware of the non-performance.
As a rule, a request for performance of a non-monetary obligation must be made within a reasonable time. This exception is supplementary to provisions on limitation and is intended to protect the non-performing party from hardship that could arise in consequence of a delayed request for performance by the aggrieved party. The latter party's interests are not seriously affected by this limitation because it may still choose another remedy. The length of the reasonable period of time is to be determined in view of the rule's purpose. In certain cases, it may be very short, e.g., if delivery can be made out of the non-performing party's stock in trade, in other cases it may be longer. It is the non-performing party which has to show that the delay in requesting performance was unreasonably long.
9. Change of Remedies
In general, the aggrieved party may abandon the remedy of requiring performance of a non-monetary obligation and opt instead for another remedy or remedies. This matter, peculiar to specific performance, is dealt with in UNIDROIT Principles Art. 7.2.5 as follows:
(2) Where the decision of a court for performance of a non-monetary obligation cannot be enforced, the aggrieved party may invoke any other remedy.
This choice, implied under the approach of either CISG or PECL, is permitted on the account that performance may have become useless for the aggrieved party. In such cases it may then be vexatious to force the non-performing party to stick to its promise. On the other hand, it is also in the consideration of the difficulties usually involved in the enforcement of non-monetary obligations. Even if the aggrieved party first decides to invoke its right to require performance, it would not be fair to confine that party to this single option. The non-performing party may subsequently become unable to perform, or its inability may only become evident during the proceedings.
However, it is to be noted that where the aggrieved party has required performance but changes its mind before execution of a judgment in its favor and now wishes to invoke one or more other remedies, such a voluntary change of remedy can only be admitted if the interests of the non-performing party are duly protected, as that party may have prepared for performance, invested effort and incurred expense. For this reason, UNIDROIT Principles Art. 7.2.5(1) clearly states that the aggrieved party is entitled to invoke another remedy only if it has not received performance within a fixed period or otherwise within a reasonable period of time. How much additional time must be made available to the non-performing party for performance depends upon the difficulty which the performance involves.
On the other hand, UNIDROIT Principles Art. 7.2.5(2) addresses the second and less difficult case in which the aggrieved party has attempted without success to enforce a judicial decision or arbitral award directing the non-performing party to perform. In this situation, it is obvious that the aggrieved party may immediately pursue other remedies.
10. Judicial Penalty
Neither CISG Art. 28 nor Arts. 46 and 62 provide how a judgment for specific performance is to be enforced. This is left to the procedural law of the country where enforcement is sought. On this issue there are remarkable differences between the laws of the various countries. More generally, as Honnold properly states:
In particular, the Convention does not provide penalties for non-compliance, nor does it make provision for judicial penalties, which seems particularly due to the fact that the Convention is mainly concerned with the rights and the duties of the parties. By contrast, UNIDROIT Principles Art. 7.2.4 sets forth a provision to which there is no counterpart in the Convention; i.e., a judicially imposed sanction to ensure compliance with judgments ordering the performance of contractual obligations. This Art. 7.2.4 deals with the matter by stating:
(2) The penalty shall be paid to the aggrieved party unless mandatory provisions of the law of the forum provide otherwise. Payment of the penalty to the aggrieved party does not exclude any claim for damages.
As stated in the Comment, experience in some legal systems has shown that the threat of a judicially imposed penalty for disobedience is a most effective means of ensuring compliance with judgments ordering the performance of contractual obligations. Other systems, on the contrary, do not provide for such sanctions because they are considered to constitute an inadmissible encroachment upon personal freedom. Thus, the present Article takes a middle course by providing for monetary but not for other forms of penalties, applicable to all kinds of orders for performance including those for payment of money.
Specifically, UNIDROIT Principles Art. 7.2.4(1), in contradistinction to the provisions of the Convention, provides that when a court orders a party to perform, it may also direct that party to pay a penalty if it does not comply with the order. The use of the word "may" in UNIDROIT Principles Art. 7.2.4(1) makes it clear that the imposition of a penalty is a matter of discretion for the court. Its exercise depends upon the kind of obligation to be performed. In the case of money judgments, a penalty should be imposed only in exceptional situations, especially where speedy payment is essential for the aggrieved party. The same is true for obligations to deliver goods. Obligations to pay money or to deliver goods can normally be easily enforced by ordinary means of execution. By contrast, in the case of obligations to do or to abstain from doing something, which moreover cannot easily be performed by a third person, enforcement by means of judicial penalties is often the most appropriate solution.
Legal systems differ as to the question of whether judicial penalties should be paid to the aggrieved party, to the State, or to both. Some systems regard payment to the aggrieved party as constituting an unjustified windfall benefit which is contrary to public policy. Thus, while rejecting this latter view and indicating the aggrieved party as the beneficiary of the penalty, the first sentence of UNIDROIT Principles Art. 7.2.4(2) expressly mentions the possibility of mandatory provisions of the law of the forum not permitting such a solution and indicating other possible beneficiaries of judicial penalties. The second sentence UNIDROIT Principles Art. 7.2.4(2) also makes it clear that a judicial penalty paid to the aggrieved party does not affect its claim for damages. Payment of the penalty is regarded as compensating the aggrieved party for those disadvantages which cannot be taken into account under the ordinary rules for the recovery of damages. Moreover, since payment of damages will usually occur substantially later than payment of a judicial penalty, courts may to some degree be able, in measuring the damages, to take the payment of the penalty into account.
Additionally, it has been noted that since according to UNIDROIT Principles Art. 1.10 "court" includes an arbitral tribunal, the question arises of whether arbitrators might also be allowed to impose a penalty. While a majority of legal systems seems to deny such a power to arbitrators, some modern legislation and recent court practice have recognised it. This solution, which is in keeping with the increasingly important role of arbitration as an alternative means of dispute resolution, especially in international commerce, is endorsed by the UNIDROIT Principles. Since the execution of a penalty imposed by arbitrators can only be effected by, or with the assistance of, a court, appropriate supervision is available to prevent any possible abuse of the arbitrators' power.
Although such a judicial penalty has been envisaged, it is to be noted that even under UNIDROIT Principles, "the procedure relating to the imposition of a judicial penalty is governed by the lex fori." Also, attention must be drawn to the problems of recognition and enforcement, in countries other than the forum State, of judicial decisions and of arbitral awards imposing penalties. Special rules on this matter are sometimes to be found in national law and to some extent in international treaties.
Judicial penalties are moreover to be distinguished from agreed payments for non-performance, i.e. contractual penalties, although the latter fulfill a function similar to that of the former. If the court considers that the contractual stipulation of the payment of a sum in case of non-performance already provides a sufficient incentive for performance, it may refuse to impose a judicial penalty. Essentially, contractual penalties come under the general heading of damages. And such penalties have been occasionally granted by courts seized in international commercial disputes, particularly where understood as "an agreement between the parties providing for the fixed amount of liquidated damages, determined in advance, to be paid by the [non-performing party] to the [aggrieved party] in the event of [non-performance]." But again, the procedure for enforcing the payment of such contractual penalties is governed by the lex fori.
1. See Jussi Koskinen in "CISG, Specific Performance and Finnish Law": Private law publication series B:47, Publication of the Faculty of Law of the University of Turku (1999); available at: <http://www.cisg.law.pace.edu/cisg/biblio/koskinen1.html>.
2. See Nayiri Boghossian in "A Comparative Study of Specific Performance Provisions in the United Nations Convention on Contracts for the International Sale of Goods": Pace Review of the Convention on Contracts for the International Sale of Goods, Kluwer (1999-2000), p. 6; available at: <http://www.cisg.law.pace.edu/cisg/biblio/boghossian.html>.
3. See UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods (8 June 2004), A/CN.9/SER.C/DIGEST/CISG/28: Digest 2; available at: <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.
4. See Ole Lando in "Salient features of European contract law": Study of the systems of private law in the EU with regard to discrimination and the creation of a European Civil Code; European Parliament, Directorate General for Research, Working Paper, Legal Affairs Series, JURI 103 EN (June 1999), p. 6; available at: <http://www.cisg.law.pace.edu/cisg/biblio/lando1.html>.
5. See Nayiri Boghossian, supra. n. 2.
6. See Steven Walt in "For Specific Performance Under the United Nations Sales Convention": 26 Tex. Int'l L. J. (1991), p. 213; available at: <http://www.cisg.law.pace.edu/cisg/biblio/walt.html>.
7. See Nayiri Boghossian, supra. n. 2; pp. 6, 38. It is also deemed "a profound difference in the system and structure of the law of contract of the two families of law" in the eyes of Lando, who states similarly that: "In the civil law systems the right to obtain specific performance of goods sold is the natural remedy in case of non-performance by a party; this right can be denied [to] the aggrieved party only in exceptional cases. In the common law systems the claim for damages is the primary remedy available to the aggrieved party. Specific performance is granted only exceptionally at the court's discretion as an equitable relief." (See Ole Lando in Commentary on the International Sales Law: The 1980 Vienna Sale Convention, Cesare Massimo Bianca & Michael Joachim Bonell eds., Milan (1987), p. 232; available at: <http://www.cisg.law.pace.edu/cisg/biblio/lando-bb28.html>.)
8. See Nayiri Boghossian, supra. n. 2; p. 30.
9. See Jussi Koskinen, supra. n. 1.
10. See Nayiri Boghossian, supra. n. 2; p. 61.
11. See John Felemegas in "Comparison between provisions of the CISG regarding the right to require specific performance (Arts. 28, 46 and 62) and the counterpart provisions of the UNIDROIT Principles (Arts. 7.2.1 - 7.2.5)", (February 2005); available at: <http://www.cisg.law.pace.edu/cisg/biblio/felemegas13.html>.
12. See Comment on UNIDROIT Principles Art. 7.2.5: Comment 1; available at: <http://www.cisg.law.pace.edu/cisg/principles/uni46.html>.
13. See John Felemegas, supra. n. 11.
14. See Steven Walt, supra. n. 6; pp. 213-216.
15. In respect of the scope of specific performance, Herman observes that: "The CISG recognises a universal feature of sale contracts: a seller's essential performance consists of delivery of the goods (art 46), and a buyer's essential performance consists of payment of the purchase price (arts 60-62). In addition to these essential duties, the CISG authorises compulsory fulfilment of several others. Besides delivery of the merchandise, the buyer may require the seller to hand over documents (art 34); transfer property in the goods (art 30); deliver substitute goods (art 46); or in some circumstances repair non-conforming goods (art 46). Performance may include even a seller's assembly of the items." (See Shael Herman in "Specific Performance: a Comparative Analysis": 7 Edinburgh Law Review, Issue 1 (January 2003) 5-26 and Issue 2 (May 2003), p. 195; available at: <http://www.cisg.law.pace.edu/cisg/biblio/herman1.html>.)
16. See Vivian Grosswald Curran in "CROSS REFERENCE AND EDITORIAL ANALYSIS: Article 46"; available at: <http://www.cisg.law.pace.edu/cisg/text/cross/cross-46.html>.
17. Digest 1, supra. n. 3.
18. See John Felemegas, supra. n. 11.
20. See Vivian Grosswald Curran, supra. n. 16.
21. See UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods (8 June 2004), A/CN.9/SER.C/DIGEST/CISG/46: Digest 2; available at: <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.
22. See Secretariat Commentary on Art. 26 of the 1978 Draft [draft counterpart of CISG Art. 28]: Comment 4; available at: <http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-28.html>.
23. See John Felemegas, supra. n. 11.
24. See Secretariat Commentary on Art. 42 of the 1978 Draft [draft counterpart of CISG Art. 46]: Comment 9; available at: <http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-46.html>. Also see Secretariat Commentary on Art. 58 of the 1978 Draft [draft counterpart of CISG Art. 62]: Comment 6; available at: <http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-62.html>.
25. Supra. n. 10.
26. See Judgment by Arbitration Court of the Chamber of Commerce and Industry of Budapest, Hungary 5 December 1995; Case No. Vb 94131. Translation by Marko Maljevac, translation edited by Dr Loukas Mistelis; available at: <http://www.cisg.law.pace.edu/cases/951205h1.html>.
27. Digest 4, supra. n. 21.
28. Comment 2 on Art. 42 of the 1978 Draft, supra. n. 24.
29. Digest 3, supra. n. 21.
30. See Fritz Enderlein & Dietrich Maskow, International Sales Law: United Nations Convention on Contracts for the International Sale of Goods, Oceana Publication (1992), p. 177; available at: <http://www.cisg.law.pace.edu/cisg/biblio/enderlein.html>.
31. See Nayiri Boghossian, supra. n. 2; p. 22.
32. See John Fitzgerald in "CISG, Specific Performance, and the Civil Law of Louisiana and Quebec": 16 Journal of Law and Commerce (1997), pp. 291-313; available at: <http://www.cisg.law.pace.edu/cisg/biblio/1fitz.html>.
34. Digests 7 and 8, supra. n. 21.
35. Supra. n. 10.
36. Digest 1, supra. n. 21.
37. See Jussi Koskinen, supra. n. 1.
38. See Fritz Enderlein & Dietrich Maskow, supra. n. 30; p. 179.
39. See Jussi Koskinen, supra. n. 1.
40. See Fritz Enderlein & Dietrich Maskow, supra. n. 30; p. 178.
41. See Judgment by U.S. District Court, Northern District of Illinois, Eastern Division 7 December 1999 [No. 99 C 5153] in Magellan International v. Salzgitter Handel; available at: <http://www.cisg.law.pace.edu/cases/991207u1.html>.
42. Comment 11 on Art. 42 of the 1978 Draft, supra. n. 24.
43. See Siegfried Eiselen in "A Comparison of the Remedies for Breach of Contract under the CISG and South African Law": Basedow et al. eds, Aufbruch nach Europa - 75 jahre Max-Planck-Institut für Privatrecht, Mohr Siebeck: Tübingen (2001); available at: <http://www.cisg.law.pace.edu/cisg/biblio/eiselen2.html>.
44. Digest 11, supra. n. 21.
45. Digest 16, supra. n. 21. (CISG Art. 82(1) reads: "The buyer loses the right to declare the contract avoided or to require the seller to deliver substitute goods if it is impossible for him to make restitution of the goods substantially in the condition in which he received them.")
46. See Mirghasem Jafarzadeh in "Buyer's Right to Specific Performance: A Comparative Study Under English Law, the Convention on Contracts for the International Sale of Goods 1980, Iranian and Shi'ah Law" (2001); available at: <http://www.cisg.law.pace.edu/cisg/biblio/jafarzadeh.html>. (For instance, the seller may only be able to supply a portion of replacement goods but be in a position to repair the remainder of the defective goods. Another possible case is that, due to the different extent (nature) of breach, only a portion of the defective goods bears a non-conformity of fundamental nature whereas the remaining part does not. In that case, the aggrieved buyer may only, according to CISG Art. 51, be entitled to require delivery of substitute goods with respect to the part fundamentally breached; and to require repair with respect to the remaining part.)
48. See Jussi Koskinen, supra. n. 1.
49. See UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods (8 June 2004), A/CN.9/SER.C/DIGEST/CISG/62: Digest 2; available at: <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.
50. See Fritz Enderlein & Dietrich Maskow, supra. n. 30; p. 235.
51. See Knapp in Commentary on the International Sales Law: The 1980 Vienna Sale Convention, Cesare Massimo Bianca & Michael Joachim Bonell eds., Milan (1987), p. 453; available at: <http://www.cisg.law.pace.edu/cisg/biblio/knapp-bb62.html>.
52. See John Fitzgerald, supra. n. 32.
53. See Jussi Koskinen, supra. n. 1.
54. See Peter A. Piliounis in "The Remedies of Specific Performance, Price Reduction and Additional Time (Nachfrist) under the CISG: Are these worthwhile changes or additions to English Sales Law?": 12 Pace International Law Review (Spring 2000), pp. 1-46; available at: <http://www.cisg.law.pace.edu/cisg/biblio/piliounis.html>.
55. See Nayiri Boghossian, supra. n. 2; p. 25.
56. See Nayiri Boghossian, supra. n. 2; p. 24.
57. Comment 2 on Art. 58 of the 1978 Draft, supra. n. 24.
58. Supra. n. 56.
59. Fn. 3 attached in Comment 8 on Art. 58 of the 1978 Draft, supra. n. 24.
60. Supra. n. 49.
61. See Leif Sevón in "Obligations of the Buyer under the UN Convention on Contracts for the International Sale of Goods": Petar Sarcevic & Paul Volken eds. International Sale of Goods: Dubrovnik Lectures, Oceana (1986), p. 233; available at: <http://www.cisg.law.pace.edu/cisg/biblio/sevon1.html>.
62. See John Fitzgerald, supra. n. 32.
63. In certain domestic systems, as a commentator notes, the right to compel payment of the price when the buyer has accepted the goods is presented as a right to collect a debt. This right to collect, however, does not fall under the rules regulating specific performance. (Supra. n. 55.)
64. Comment 3 on Art. 58 of the 1978 Draft, supra. n. 24.
65. Comment 4 on Art. 58 of the 1978 Draft, supra. n. 24.
66. Supra. n. 55.
67. However, it is noted in the Secretariat Commentary, such a claim for the price by the seller pursuant to Art. 62 is not affected even by the seller's obligation to mitigate the loss under CISG Art. 77. (See Secretariat Commentary on Art. 73 of the 1978 Draft [draft counterpart of CISG Art. 77]: Comment 3; available at: <http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-77.html>.)
68. See Mirghasem Jafarzadeh, supra. n. 46.
69. Comment 7 on Art. 42 of the 1978 Draft, supra. n. 24.
70. See Mirghasem Jafarzadeh, supra. n. 46.
71. Supra. n. 40.
72. See Mirghasem Jafarzadeh, supra. n. 46.
73. Supra. n. 40.
74. See Jussi Koskinen, supra. n. 1.
75. Digest 9, supra. n. 21.
76. See Mirghasem Jafarzadeh, supra. n. 46.
77. See Leif Sevón, supra. n. 61.
78. See e.g., John Fitzgerald, supra. n. 32.
79. See Fritz Enderlein & Dietrich Maskow, supra. n. 30; p. 236.
81. Supra. n. 75.
82. See Leif Sevón, supra. n. 61.
83. See Mirghasem Jafarzadeh, supra. n. 46.
85. See Treitel, Remedies for Breach of Contract: A Comparative Account (1988); pp. 50-51.
86. See Steven Walt, supra. n. 6; p. 214.
87. See Jussi Koskinen, supra. n. 1.
88. Supra. n. 75.
89. Supra. n. 40.
90. See Jussi Koskinen, supra. n. 1.
91. See Siegfried Eiselen, supra. n. 43.
92. Supra. n. 40.
93. See Jussi Koskinen, supra. n. 1.
94. See Robert Koch in "Commentary on Whether the UNIDROIT Principles of International Commercial Contracts May Be Used to Interpret or Supplement Articles 47 and 49 of the CISG", (December 2004); available at: <http://www.cisg.law.pace.edu/cisg/biblio/koch2.html>.
95. See Jussi Koskinen, supra. n. 1.
96. See Robert Koch, supra. n. 94.
97. See Judgment by Bundesgerichtshof [Federal Supreme Court], Germany 3 April 1996; No. VIII ZR 51/95. Translation by Dr. Peter Feuerstein; translation edited by Ruth M.Janal; available at: <http://www.cisg.law.pace.edu/cases/960403g1.html>.
98. See Judgment by Oberlandesgericht [Provincial Court of Appeal] Stuttgart, Germany 12 March 2001; No. 5 U 216/99. Translation by Ruth M. Janal; available at: <http://www.cisg.law.pace.edu/cases/010312g1.html>.
99. See Will in Commentary on the International Sales Law: The 1980 Vienna Sale Convention, Cesare Massimo Bianca & Michael Joachim Bonell eds., Milan (1987), p. 336; available at: <http://www.cisg.law.pace.edu/cisg/biblio/will-bb46.html>. See also Jussi Koskinen, supra. n. 1; Fritz Enderlein & Dietrich Maskow, supra. n. 30; p. 178.
100. See Will, ibid., p. 337. Will states that "If the answer were positive the buyer might find it difficult to avoid the contract. For the mere delay in performance caused by the delivery of apples instead of pineapples does not necessarily amount to a fundamental breach."
101. Supra. n. 40.
102. See Mirghasem Jafarzadeh, supra. n. 46.
103. See Jussi Koskinen, supra. n. 1.
104. See Mirghasem Jafarzadeh, supra. n. 46.
105. See Jussi Koskinen, supra. n. 1.
106. Digest 12, supra. n. 21.
107. Supra. n. 40.
108. See Jussi Koskinen, supra. n. 1.
109. See Mirghasem Jafarzadeh, supra. n. 46.
110. See Jussi Koskinen, supra. n. 1.
112. Supra. n. 38.
113. Supra. n. 98.
114. See Mirghasem Jafarzadeh, supra. n. 46.
115. Supra. n. 38.
116. See Fritz Enderlein & Dietrich Maskow, supra. n. 30; p. 279.
117. See Jussi Koskinen, supra. n. 1.
118. Digest 13, supra. n. 21.
119. Digest 14, supra. n. 21.
120. See Case Abstract by Robert Koch on the Judgment by Oberlandesgericht [Provincial Court of Appeal] Koblenz, Germany 31 January 1997, No. 2 U 31/96; available at: <http://www.cisg.law.pace.edu/cases/970131g1.html>.
121. Supra. n. 98.
122. Supra. n. 118.
123. See Fritz Enderlein & Dietrich Maskow, supra. n. 30; p. 180.
124. See Nayiri Boghossian, supra. n. 2; p. 20.
125. See Jussi Koskinen, supra. n. 1.
126. See Nayiri Boghossian, supra. n. 2; p. 21.
127. Supra. n. 123.
128. See Jussi Koskinen, supra. n. 1.
129. See John Fitzgerald, supra. n. 32.
130. See Mirghasem Jafarzadeh, supra. n. 46.
131. Digest 18, supra. n. 21.
133. See Mirghasem Jafarzadeh, supra. n. 46.
134. See Will, supra. n. 99, p. 338.
135. See Fritz Enderlein & Dietrich Maskow, supra. n. 30; p. 181.
136. See Mirghasem Jafarzadeh, supra. n. 46.
137. Supra. n. 135.
138. See Will, supra. n. 99, p. 339.
139. Supra. n. 126.
140. Citing Fritz Enderlein & Dietrich Maskow, supra. n. 30; p. 181.
141. Supra. n. 135.
142. See Jussi Koskinen, supra. n. 1.
143. Supra. n. 135.
144. See Jussi Koskinen, supra. n. 1.
145. See Amy H. Kastely in "The Right to Require Performance in International Sales: Towards an International Interpretation of the Vienna Convention": 63 Washington Law Review (1988), p. 619; available at: <http://www.cisg.law.pace.edu/cisg/biblio/kastely1.html>.
146. Supra. n. 135.
147. Digest 19, supra. n. 21.
148. See Judgment by Landgericht [District Court] Stendal, Germany 12 October 2000; No. 22 S 234/94. Translation by Ruth M. Janal; translation edited by Camilla Baasch Andersen; available at: <http://www.cisg.law.pace.edu/cases/001012g1.html>.
149. See Judgment by Oberster Gerichtshof [Supreme Court], Austria 14 February 2002; No. 7 Ob 301/01t. Translation by Todd J. Fox; available at: <http://www.cisg.law.pace.edu/cases/020114a3.html>.
150. Supra. n. 123.
151. See 3rd Session of the Working Group on the International Sale of Goods (held in Geneva from 17 to 28 January 1972), Annex II, para. 78, A/CN.9/62, Add 2. (In respect of this "reasonable time" in CISG Art. 39, Enderlein & Maskow note that the reasonable time is in any case a short period (just like in Article 39, paragraph 1 ULIS). Such time is a relative time. It is in the interest of the buyer himself to inform the seller because the latter can do nothing to cure the lack before he becomes aware of it. In the event that a lack cannot be remedied, like in the case of perishable goods, there would be need for speed so that impartial control would be possible. Reasonable, in many cases, will mean giving notice immediately. (See Fritz Enderlein & Dietrich Maskow, supra. n. 30; p. 159.))
152. See CISG-AC Opinion no 2, Examination of the Goods and Notice of Non-Conformity: Articles 38 and 39, 7 June 2004; available at: <http://www.cisg.law.pace.edu/cisg/CISG-AC-op2.html>.
153. See UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods (8 June 2004), A/CN.9/SER.C/DIGEST/CISG/39: Digest 15; available at: <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.
154. See Mirghasem Jafarzadeh, supra. n. 46.
155. Supra. n. 126.
156. Supra. n. 123.
157. Digest 6, supra. n. 21.
158. Digest 10, supra. n. 21.
159. See John Felemegas, supra. n. 11.
160. See Nayiri Boghossian, supra. n. 2; p. 34.
161. Supra. n. 24.
162. See John Felemegas, supra. n. 11.
163. Supra. n. 41.
164. Supra. n. 17.
165. Supra. n. 41.
166. Comment 3 on Art. 26 of the 1978 Draft, supra. n. 22.
167. Supra. n. 24.
168. See Ole Lando in Commentary on the International Sales Law: The 1980 Vienna Sale Convention, Cesare Massimo Bianca & Michael Joachim Bonell eds., Milan (1987), p. 239; available at: <http://www.cisg.law.pace.edu/cisg/biblio/lando-bb28.html>.
169. See Peter A. Piliounis, supra. n. 54.
170. See John Felemegas, supra. n. 11.
171. Supra. n. 166. Quotation modified to reflect the fact that at the 1980 Vienna Diplomatic Conference, the word "could" was changed to "would".
172. See John Felemegas, supra. n. 11.
173. See Ole Lando, supra. n. 168; p. 238. Such issues of enforcement of foreign judgments seem to be handled under such instruments as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) or, for EU Members, the Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
174. See Jussi Koskinen, supra. n. 1.
175. See Peter Schlechtriem in "Uniform Sales Law - The Experience with Uniform Sales Laws in the Federal Republic of Germany": Juridisk Tidskrift (1991/92), pp. 1-28; available at: <http://www.cisg.law.pace.edu/cisg/text/schlechtriem28.html>.
176. See John Fitzgerald, supra. n. 32.
177. Supra. n. 166.
178. See John Fitzgerald, supra. n. 32.
179. See John Felemegas, supra. n. 11.
180. See Nayiri Boghossian, supra. n. 2; p. 29.
181. See John Felemegas, supra. n. 11.
182. See Comment and Notes on PECL Art. 9:101: Note 1; available at: <http://www.cisg.law.pace.edu/cisg/text/peclcomp46.html>.
183. See Comment on UNIDROIT Principles Art. 7.2.1; available at: <http://www.cisg.law.pace.edu/cisg/principles/uni46.html>.
184. Comment A, supra. n. 182.
185. See John Felemegas, supra. n. 11.
186. Supra. n. 184.
187. Comment B, supra. n. 182.
188. Supra. n. 182.
189. Comment B(i), supra. n. 182. (It is also noted that CISG Art. 62 has followed a similar approach. The seller is bound to the contract; it is therefore obliged to tender performance to the buyer even if the latter is unwilling to receive performance, and may claim the purchase price. (Note 2, supra. n. 182.))
190. Comment B(iv), supra. n. 182.
191. Note 2, supra. n. 182.
192. Note 3, supra. n. 182.
193. See Ole Lando, supra. n. 4.
194. Comment B(ii), supra. n. 182.
196. Supra. n. 191.
197. See Ole Lando, supra. n. 4.
198. Supra. n. 182.
199. Supra. n. 192.
200. Comment B(iii), supra. n. 182.
201. Supra. n. 192.
202. Supra. n. 190.
203. Comment B(v), supra. n. 182.
204. Supra. n. 190.
205. See Comment on UNIDROIT Principles Art. 7.2.2: Comment 1; available at: <http://www.cisg.law.pace.edu/cisg/principles/uni46.html>.
206. See Comment and Notes on PECL Art. 9:102: Notes 1, 2; available at: <http://www.cisg.law.pace.edu/cisg/text/peclcomp46.html>.
207. Supra. n. 205.
208. Comment A, supra. n. 206.
209. Supra. n. 205.
210. Supra. n. 208.
211. Supra. n. 183.
212. Comment 2, supra. n. 205.
213. Comment D, supra. n. 206.
214. Comment B, supra. n. 206.
216. Supra. n. 208.
217. Note 5, supra. n. 206.
218. Comment C, supra. n. 206.
219. See Comment on UNIDROIT Principles Art. 7.2.3: Comment 1; available at: <http://www.cisg.law.pace.edu/cisg/principles/uni46.html>.
220. Comment 2, ibid.
221. Comment 3, supra. n. 219; see also supra. n. 218.
222. Supra. n. 214.
223. See John Felemegas, supra. n. 11.
224. See Jarno Vanto in "Remarks on the manner in which the Principles of European Contract Law may be used to interpret or supplement Article 46 of the CISG"; available at: <http://www.cisg.law.pace.edu/cisg/text/peclcomp46.html>.
225. Comment J, supra. n. 206.
226. Supra. n. 214.
227. Note 3(b), supra. n. 206.
228. Comment 3(a), supra. n. 205; see also Comment E, supra. n. 206.
230. Note 3(c), supra. n. 206.
231. Comment 3(b), supra. n. 205; see also Comment F, supra. n. 206.
232. Comment 3, supra. n. 219.
233. Comment 3(b), supra. n. 205.
234. Comment 3(c), supra. n. 205; see also Comment F, supra. n. 206.
235. Ibid.; see also Comment H, supra. n. 206.
237. Comment 3(d), supra. n. 205.
239. Comment G, supra. n. 206.
240. Ibid.; see also supra. n. 237.
241. Note 4, supra. n. 206.
242. Comment 3(e), supra. n. 205.
243. Comment I, supra. n. 206.
244. Supra. n. 12.
245. Comment F, supra. n. 206.
246. Supra. n. 1226.
247. Comment 2, supra. n. 1226.
248. Comment 3, supra. n. 1226.
249. See Ole Lando, supra. n. 168; p. 238.
250. See John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed., Kluwer Law International, The Hague (1999), p. 219; available at: <http://www.cisg.law.pace.edu/cisg/biblio/ho28.html>.
251. See John Felemegas, supra. n. 11.
252. See Comment on UNIDROIT Principles Art. 7.2.4: Comment 1; available at: <http://www.cisg.law.pace.edu/cisg/principles/uni46.html>.
253. See John Felemegas, supra. n. 11.
254. Comment 2; supra. n. 252.
255. Comments 3, 4; supra. n. 252.
256. Comment 6; supra. n. 252.
257. Comment 5; supra. n. 252.
258. Comment 7; supra. n. 252.
259. Comment 4; supra. n. 252. At this juncture, it is recalled that in the Common Law stipulated payment clauses are divided into penalty and liquidated damages clauses. The former are invalid, the latter are valid. Penalty clauses are clauses stipulated "in terrorem" in order to coerce the debtor to perform the principal obligation. Liquidated damages clauses are clauses by which an attempt is made to pre-estimate the loss suffered by a breach of contract. The latter clauses cannot be modified. A clause will be regarded as a penalty clause if it is extravagant and unconscionable in amount in comparison with the greatest loss that could be proved to follow from such a breach. A stipulation is a liquidated damages clause if the circumstances were such that an accurate or precise pre-estimate of the loss was impossible and the stipulated payment was a genuine attempt to make a pre-estimate of the loss. (See Comment and Notes on PECL Art. 9:509: Note 4; available at: <http://www.cisg.law.pace.edu/cisg/text/peclcomp74.html>.)
260. See Judgement by Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, Russia 13 May 1997; No. 3/1996. English translation by Mykhaylo Danylko, translation edited by Djakhongir Saidov; available online at <http://cisgw3.law.pace.edu/cases/970513r1.html>.