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Cite as Date-Bah, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 222-225. Reproduced with permission of Dott. A Giuffrè Editore, S.p.A.

Article 26

Samuel K. Date-Bah

1. History of the provision
2. Meaning and purpose of the provision
3. Problems concerning the provision

ARTICLE 26

A declaration of avoidance of the contract is effective only if made by notice to the other party.

1. History of the provision

     1.1. - Article 26, previously Article 24 in the UNCITRAL Draft Convention, was adopted at the Vienna Conference with no amendment. It was derived from Article 10 of the Sales Draft as adopted by the Working Group (see Yearbook, VII (1976), 90). The Working Group's formulation then read:

(1) Notices provided for by this Convention must be made by the means appropriate in the circumstances.
(2) A declaration of avoidance of the contract is effective only if notice is given to the other party.
(3) If a notice of avoidance or any notice required by Article 23 is sent by appropriate means within the required time, the fact that the notice fails to arrive or fails to arrive within such time or that its contents have been inaccurately transmitted does not deprive the sender of the right to rely on the notice.

     1.2. - The Commission decided that paragraphs (2) and (3) of Article 10 of the Sales Draft should be formulated as separate articles. Paragraph (1) was deleted and the requirement of appropriate means was introduced into paragraph (3). Accordingly, the Commission adopted as the text of Article 9 of the Sales Draft language identical to the present Article 26 (see Yearbook, VIII (1977), 33).

     1.3. - This provision has no equivalent in ULIS since it is the instrument through which one of the basic concepts of ULIS is negated. Through this provision, the notion, of ipso facto [page 222] avoidance adopted in ULIS is abandoned. Under ipso facto avoidance, the sales contract could be terminated without any notice to the seller.

2. Meaning and purpose of the provision

     2.1. - This is one of three articles in which the Convention departs from the notion of automatic or ipso facto avoidance that appeared in ULIS. The other Articles are 49 and 64. Under Article 49, a buyer may declare the contract avoided in certain specified situations; Article 64 permits the seller to declare likewise under certain specified circumstances. But in both situations, avoidance of the contract is conditioned on a declaration of avoidance by the buyer or seller. The Convention, unlike ULIS, makes no provision for situations in which the contract would be automatically avoided or terminated. Article 26 then complements Articles 49 and 64 by insisting that notice of the declaration of avoidance be given before it can be legally effective.

     2.2. - The present position embodied in the Convention is the product of careful study by the Working Group of the desirability of retaining the automatic or ipso facto avoidance contained in ULIS. The Secretary-General was asked by the Working Group to submit a report on «ipso facto Avoidance in ULIS» and this was duly done (see Yearbook, III (1972), 41-54). After careful consideration of this report and also of an analysis prepared by the Secretary-General of various comments and proposals made by the delegations from various governments, the Working Group in 1972 «agreed that in the remedial system of the law avoidance of the contract should be made dependent on notice by the injured party to the party in breach. If the injured party did not declare the contract avoided the contract continued to be in force» (see Yearbook, III (1972), 85).

     2.3. - The reason given by most representatives and observers of the Working Group for reaching this conclusion was that the concept of ipso facto avoidance created confusion and uncertainty with regard to the rights and duties of parties to an international sales contract of which one party was in breach. [page 223] Although the concept was acknowledged to be useful in checking the buyer's profits from price fluctuations, the predominant view was that this problem could be tackled successfully without resorting to the notion of ipso facto avoidance.

     2.4. - When a buyer rejects goods sold to him, it makes good sense that he should notify the seller of his rejection so that the seller can take appropriate steps to avoid waste. If he is not notified, waste may occur, for instance, through his use of resources on further performance of a contract which, unknown to him, is no longer in force. Failure to notify also usually leads to delay in salvaging and redisposing of the rejected goods, when these goods have left the custody of the seller. Such delay is a waste of resources. The rule embodied in Article 26 is therefore a manifestation of practical good sense in trading relations.

3. Problems concerning the provision

     3.1. - What is the meaning of «notice» as used in this article? The word «notice» could suggest some kind of formal or written notice. But this is not the intended meaning, if one refers to the legislative history of the provision. At UNCITRAL a proposal that the declaration of avoidance must be made by written notice, or, alternatively, be immediately followed by written notice, was rejected (see Yearbook, VIII (1977), 32).

The present text of Article 26 was retained in preference to the above-mentioned proposal. This must mean that the Commission understood the present text to refer not only to written but also to oral notices.

     3.2. - By whom should the notice be given? Although this is not specified in the article, the party seeking to avoid is the one who, it can be inferred, would normally be expected to give the notice. But, could anyone else give such notice? Clearly, since this notice is required in a commercial context, the normal rules of agency should apply and thus an agent of the party seeking the avoidance may also give notice.

     3.3. - However, since the notice need not be in writing, let us consider the following hypothetical case: A is a buyer of goods [page 224] from B. For reason of breach by B, A decides to avoid their contract. A does not communicate his decision directly to B, but rather calls a news conference at which he announces his decision to avoid the contract. C, a journalist, then informs B of A's decision. Is there notice to B of A's declaration of avoidance?

          3.3.1. - On the one hand, it could be argued that the language of Article 26 contemplates notice by the party seeking the avoidance as an essential element of the whole exercise of declaring the contract void. But then, what is to be understood «by notice to the other party»? Must such notice always be direct? Can it not be indirect? The argument on the other hand would be that where disclosure to a particular person or group of persons is foreseeably likely to result in the information reaching the other party, such disclosure can be regarded as notice, though indirect, to such party. The issue of interpretation arising then would be whether such indirect notice should be considered as coming within the intended meaning of notice in Article 26.

          3.3.2. - Including indirect notice within Article 26 would result in confusion and uncertainty that the legislative history of Article 26 indicates was to be avoided. Thus, indirect notice should not be effective although the language of Article 26 does not specifically say so. [page 225]


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