Go to Database Directory || Go to Bibliography


Publication of the Faculty of Law of the University of Turku, Private law publication series B:47. Entered on the Internet courtesy of the CISG-Finland website, Prof. Tuula Ämmälä ed.

CISG, Specific Performance and Finnish Law

Jussi Koskinen
Turku 1999

CONTENTS

ABSTRACT (Finnish)
BIBLIOGRAPHY
ABBREVIATIONS

1. INTRODUCTION

1.1 Generally
1.2 About Remedies for Breach of Contract under the CISG
1.3 Purpose of the Study
1.4 Methods used in the Study
2. SPECIFIC PERFORMANCE AND THE CISG
2.1 Introduction: Remedies for Breach of Contract; Articles 45 and 61
2.2 The Right to Require Specific Performance
     2.2.1 Generally
     2.2.2 Buyer's Right to Demand Performance; Article 46
          2.2.2.1 Right to Require the Seller to Perform; Article 46(1)
          2.2.2.2 Delivery of Substitute Goods; Article 46(2)
          2.2.2.3 Repair; Article 46(3)
          2.2.2.4 Applicability of Article 28
     2.2.3 Seller's Right to Demand Performance; Article 62
          2.2.3.1 Applicability of Article 28
2.3 Limits on Specific Performance under the CISG
     2.3.1 Generally
     2.3.2 Observance of Good Faith
     2.3.3 Obligation to Mitigate Damages
     2.3.4 Impossibility or Impracticability of Performance
     2.3.5 Nachfrist principle
     2.3.6 Trade usage
     2.3.7 Rights of Third Parties; Insolvency
3. ARTICLE 28 OF THE CISG
3.1 The Scope of Article 28
     3.1.1 Generally
     3.1.2 Court Not Bound to Enter Judgement for Specific Performance
     3.1.3 Ambiguities in Article 28
     3.1.4 Agreements
     3.1.5 Enforcement Issues
3.2 Application of Specific Performance in Finland
     3.2.1 Generally
     3.2.2 Specific Performance and the Finnish Sale of Goods Act
          3.2.2.1 Buyer's Right to Require Performance
          3.2.2.2 Repair and Delivery of Substitute Goods
          3.2.2.3 Seller's Right to Payment of the Price
     3.2.3 Execution of Specific Performance in Finland
3.3 Application of Specific Performance in Other Legal Systems
     3.3.1 Generally
     3.3.2 Germany
     3.3.3 France
     3.3.4 United States; Uniform Commercial Code
4. SPECIFIC PERFORMANCE AND INTERNATIONAL CONTRACT PRINCIPLES
4.1 Generally; Lex Mercatoria
4.2 The UNIDROIT Principles of International Commercial Contracts41
4.3 The European Contract Law Principles
5. Conclusions

1. INTRODUCTION

1.1. Generally

International trade is involved with transactions relating to the exportation of goods or services from one country to another.[1] Because different countries are almost invariably involved, this leads to the fact that different legal systems, concerning the trade in question, are also involved. When disputes arise in international trade relations, at the same time problems concerning the choice of law and predictability of judgements are also present. Therefore, many efforts have long been under way to promote international trade by unifying and harmonizing international commercial law. Creating and enacting uniform laws is a way to establish such uniformity, however, this is not sufficient as such, because the same uniform laws can still be interpreted and applied differently in different countries. Therefore, it is important to note that international uniform laws should always be interpreted with a reference to international techniques to solve interpretive problems.[2]

The United Nations Convention on Contracts for the International Sale of Goods (hereinafter referred to as the "CISG") is intended to establish uniformity and certainty in the law governing international sale of goods.[3] The CISG applies to contracts for the sale of goods between parties whose places of business are in different countries and either both of those countries are contracting countries or the rules of private international law lead to the law of a Contracting State.[4] One of the main goals of the above mentioned uniformity and certainty of the CISG is thereby to achieve a uniform and certain degree of remedies available to the buyer and the seller for a breach of a contract.[5] This is of the essence due to the fact that the parties to an international transaction are from different states and the remedies available for a breach of contract tend to vary more or less, from jurisdiction to jurisdiction.

According to Article 6 of the CISG the parties to the contract "may exclude the application of this Convention or, subject to Art. 12, derogate from or vary the effect of any of its provisions". As this is the case, the contract made between the parties plays an important role and consequently the parties can always stipulate in the contract, inter alia, the remedies available for a breach of contract.[6] Commercial practice proves, however, that many sales contracts are not made in writing. Consequently, the sales contract made between the parties often consists only of an offer and an acceptance (which can be in writing but is also often oral). The reason for this is perhaps that commercial necessities often require that business is made rapidly and efficiently which thus leads to very "bare" contracts leaving most of the possible contractual situations open. This is when the gap-filling rules [7] of the CISG enter and the importance of uniformity and certainty in the existence and interpretation of the CISG can clearly be seen.

1.2. About Remedies for Breach of Contract under the CISG

The CISG grants reciprocal remedies within three basic categories to the buyer and seller and clearly establishes that the primary remedy available to an injured party is specific relief [8] , i.e. specific performance.[9] Secondly, the Convention establishes that an injured party shall have a right to a substitutionary relief, which requires the party in breach to pay some amount of money to compensate the loss suffered by the other party. Finally, an aggrieved party shall have a right to avoid (terminate) the contract and thus put an end to the contractual relationship.[10]

As such, the remedial provisions of the CISG generally correspond with all major legal systems. The CISG is an international convention and it has therefore not been possible to achieve a totally uniform scheme of remedies compared with different domestic legal systems. The CISG thus gives, inter alia, different priority to the remedial provisions. Especially, the availability of specific performance as a primary remedy for a breach of contract under the CISG, corresponds with the civil law countries, contrary to the common law countries which regard damages as the primary remedy for a breach of contract. Generally, the CISG has features that are familiar from both of the two major legal systems, i.e. civil and common law systems.

1.3. Purpose of the Study

This study closely examines the remedy of specific performance in contractual relationships and, especially, how it applies to international sales contracts governed by the CISG. The CISG provides an aggrieved party, both the buyer and the seller, a clear right to require performance of obligations under the contract. Furthermore, the CISG limits the availability of specific performance by express limitations and additionally by certain implied limitations, the applicability of which is sometimes ambiguous. On the other hand, the right to require performance of obligations under the CISG is effectuated through the forum's own domestic law [11] so as to give the forum a right not to enter a judgement for specific performance unless that forum would do so under its own law. This provision thus limits the availability of specific performance as provided by the CISG because the domestic rules on requiring performance vary from jurisdiction to jurisdiction, and most importantly differ from the provisions of the CISG. The primary difference as regards such domestic laws is between civil law and common law systems, which take a totally different approach to specific performance. Even if the differences in civil law countries concerning their approach to specific performance are not that fundamental, there are still variations. Consequently, one must be aware of the forum's domestic laws regarding specific performance to be in a position to give a certain answer whether that forum grants performance under the general principle of the CISG.

Accordingly, the purpose of this study is to examine comprehensively the general right to require specific performance under the CISG, the prerequisites and the express and implied limitations to the general right. The examination will be extended with a focus on the Finnish rules on specific performance, especially from a point of view of the Finnish Sale of Goods Act. The examination of Finnish law and the Finnish Sale of Goods Act will be made so as to focus on the relevant issues of deliberations that a Finnish court or an arbitral tribunal meets when entering into a judgement for specific performance. Therefore, the main question of this study is to answer the question: Would a Finnish court or an arbitral tribunal enter a judgement for specific performance in a contractual dispute governed by the CISG and on what grounds it would do so? The examination will further be extended so as to make an overview to other legal systems and their approach to specific performance. The chosen legal systems in this study are the German, French (representing the civil law systems) and that of the United States (representing the Anglo-American perspective). The German and the French approaches have been chosen because they represent the two main approaches of the civil law countries' way to handle specific performance. United States have been chosen because it is one of the Contracting States to the CISG, and also because it represents a strong commercial aspect in respect of international trade.[12] However, due to the nature of this study the examination on the domestic rules of Germany, France and the United states, regarding their approach to specific performance, will be made shortly and only with an overview to such jurisdictions' general principles on the subject matter. As regards the Finnish law and the Finnish Sale of Goods Act, the examination will be made from a rather theoretical point of view, although the main purpose is to focus on the Finnish provisions on specific performance. Furthermore, the scope of the study does not allow a deeper examination on Finnish law and, thus, e.g. legal praxis has, on purpose, been left outside.

Moreover, the need of general principles in international contract law, usage and custom of international trade and lex mercatoria has led to certain other unification actions in addition to the CISG, such as the UNIDROIT Principles and the European Contract Law Principles. These principles also contains provisions regarding specific performance. Consequently, such principles and their approach to specific performance and their relationship to the CISG will also be examined shortly at the end of the study.

Furthermore, this study also focuses shortly on the executional questions of specific performance. Many scholars argue that specific performance is, de facto, an irrelevant remedy in international transactions and even in domestic commercial transactions due to the hardship and inefficiency of the execution of judgements for specific performance. It is thus often so, that parties to a contract would rather choose a substitutional relief instead.[13] Therefore, the questions of execution of specific performance shall also be examined through short notes in the relevant Sections. Even if the questions regarding execution of specific performance are interesting, the nature and the scope of this study, however, does not allow a deeper examination.

1.4. Methods used in the Study

The CISG has been a target for many commentators and scholars after the Diplomatic Conference that led to the CISG. Consequently the situation as regards English literature about the CISG is rather good. Such literature consists of books on the legislative history, commentary books and especially several articles written by different scholars around the world, which have been used in this study. In general, there are also quite many cases where the CISG has been applicable. However, the availability of cases concerning specific performance and the effect on domestic law,[14] is poor. A reason for the poor availability could be that there simply are not court or arbitral rulings on the matter, but also the fact that arbitral awards are often very hard to get due to the secret nature of arbitral proceedings. Furthermore, the availability of court or arbitral rulings where one party would have been Finnish is even worse, which has made examination as regards Finnish law quite one-sided in that it is so far only based only on scholarly writings.

Consequently, this study, as far as the CISG is concerned, is based on international literature about the CISG and its provisions on specific performance. Case law on the subject matter is minimal, due to reasons mentioned above. As regards Finnish law concerning specific performance, the sources consist of general literature on contract law, preparatory material of the Finnish Sale of Goods Act and different other literature written by various Finnish scholars. Furthermore, literature especially by Swedish scholars has also been used as a source for the study because of the Nordic co-operation in respect of their Sales Acts.

Translations of different Finnish Acts into English (headings and contents) are all the author's and are not based on official translations, should there exist any.

2. SPECIFIC PERFORMANCE AND THE CISG

2.1. Introduction: Remedies for Breach of Contract; Articles 45 and 61

The most important principle of the CISG is to regard the contract made between the parties as prevailing. Contractual freedom is thus the rule of the CISG, also reflecting the start point for various legal systems in general.[15] Kritzer separates in this respect two different tiers of importance of the CISG. The first tier is: "The contract executed by the parties - what is expressly said in it and what can be an implied part of it, e.g. practices and usages. The Convention protects the sanctity of the contract and, on subjects expressly provided in the Convention, should insulate the contract from validity challenges under domestic law." The other tier according to Kritzer is: "The individual designs of the Convention, e.g. 'the Convention's gamut of provisions on the obligations of seller and buyer and the remedies for breach all of which can be reshaped by the agreement' [16] of the parties …"[17] Accordingly, it is important to note that the remedies available for a breach of contract will be subject to, not only the agreement made between the parties, but also any practice or usage which can be regarded as an implied part of the agreement. The basis for these tiers can be found in Article 6 of the CISG, which provides that: "The parties may exclude the application of this Convention or, subject to Article 12, derogate from or vary the effect of any of its provisions."[18] and Article 9(1) which provides that: "The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves."[19] In case of a breach of contract it is, therefore, necessary to first look into the contract executed between the parties or any practice or usage of relevance. Only if the agreement and any relevant practice or usage is silent, the provisions of the CISG concerning remedies will be at hand. Although the set up described above is clear enough, one might find it problematic as regards the provisions of the subject matter of this study, i.e. specific performance. As the CISG effectuates the remedy of specific performance through domestic law, a question arises about the position of an international practice or usage compared with any domestic law provisions on the same. This question will be examined more narrowly in Section 2.3.5., below.

The remedies available to an aggrieved party for a breach of contract can in all significant legal systems be classified into three basic categories.[20] Firstly, an aggrieved party may be able to claim specific performance. As such, specific performance hardly gives the aggrieved party exactly the performance to which he was entitled to, unless it is supplemented with some kind of an additional remedy, such as a monetary relief.[21] Secondly, the aggrieved party may have the right to require substitutionary relief. A relevant relief here is compensation, and almost always a monetary compensation, for the loss that the party has suffered for performance not received. Finally, the aggrieved party may have the right to put an end to the contractual relationship.[22] In such a case the third remedy can also be seen in that the aggrieved party is put into a position where he would have been had the contract never been made. The three categories are not exclusive in that monetary compensation will also very often be available together with a claim for specific performance and an act to put an end to the contract. Furthermore, the above mentioned three basic categories of remedies also appear in different variations, such as a right to price reduction and suspension of performance.

The CISG also follows the above mentioned three-category system. The remedies available for a breach of contract are summarized in Articles 45 and 61. These Articles set forth reciprocal remedies for the buyer and seller for breach of contract. Consequently, Article 45 sets forth a buyer's remedies for a seller's breach while article 61 sets forth a seller's remedies for a buyer's breach. Furthermore, Articles 45 and 61 also represent the basis of liability for contractual breach.[23] The three basic remedies provided by the Convention in the above mentioned Articles are specific performance, damages and avoidance of the contract. Moreover, the CISG contains additional remedies besides the above mentioned, namely suspension of performance and reduction of price.[24]

Besides specific performance, the right to obtain damages for a breach of contract plays an important role within the CISG.[25] Damages (or monetary compensation) may be the only available remedy for an aggrieved party if, e.g. the requirements for granting specific performance or the right to avoid the contract are not met. It can, therefore, also be argued that damages are the primary remedy pursuant to the CISG.[26] Moreover, the aggrieved party's right to obtain monetary compensation supplements substantionally the rights to require specific performance and avoidance in that he always has the right obtain damages.[27] For the sake of putting the aggrieved party into as good a position as he would have been had the contract been performed as agreed, the aggrieved party has, therefore, always a right to claim for damages in addition to a claim for specific performance or avoidance. Article 49 of the CISG provides an aggrieved [buyer] the right to declare the contract avoided. Avoidance of contract under the CISG puts an end to the performance obligations of both parties.[28] It is, however, required that the breach is a fundamental breach.[29] In this respect the CISG provides a tool, familiar to the German legal system and known as the Nachfrist principle [30] . If delivery is delayed, it might be difficult to evaluate if the threshold of fundamental breach is reached. Therefore, the CISG gives the buyer the right to fix an additional delivery period of reasonable length. If the seller does not deliver within the given Nachfrist time period, the buyer may avoid the contract according to Article 49. [31]

The CISG's other remedial rights can be regarded as a variation of the right to obtain damages and right to avoid the contract. Firstly, the buyer has, according to Article 50, the right to a reduction of price in the case of non-conformity of goods. The right to a reduction in price serves as an alternative to damages being a kind of restitutionary measure of monetary relief, available even where the buyer is not entitled to avoidance.[32] Secondly, the CISG provides a possibility to suspend performance in certain situations. The basis for the right to suspend performance can be found in Article 71. Under this Article a party may suspend the performance of his obligations if, after conclusion of the contract, it becomes apparent that the other party will not perform a substantional part of his obligations.[33]

In the following the right to specific performance under the CISG will be examined comprehensively. First, an examination into the basic right of specific performance is made, and thereafter the limits to that right. The examination will be made separately from the buyer's and the seller's point of view.[34]

2.2. The Right to Require Specific Performance

2.2.1. Generally

When a breach of contract occurs, the buyer's primary concern may not be to receive monetary compensation for the loss of his bargain, but instead to receive actual performance of the breaching party's obligations. This is particularly true when the contract of sale concerns unique and otherwise identified or specific items. But even in cases where the goods are not especially unique or otherwise identified it might be easier and less expensive to require performance of obligations of the breaching party instead of obtaining damages and obtaining the subject matter from somewhere else. Many legal systems regard the promisee's right to claim specific performance as an obvious and as a simple consequence of the principle of pacta sunt servanda. Such is the case, especially in civil law countries which tend to consider the possible risk of speculations in requiring performance to be of less importance.[35] Consequently, damages are seen as a secondary remedy.[36] Specific performance can, furthermore, be regarded as enforcement of the contract in the sense of putting the aggrieved party into the same position as he would have had the contract been performed.[37]

A clear indication from the CISG is, thus familiar from the civil law theory, that specific performance is the primary remedy available to the buyer and the seller.[38] Article 46 lays down the general rule that the buyer may "require performance" by the seller. The intention of Article 46 can be seen in the fact that the seller should not have a right to buy himself out of the contract.[39] Similarly, Article 62 provides that "the seller may require the buyer to pay the price, take delivery or perform his other obligations". The seller's right to require performance under the CISG is, however, slightly stronger than in many domestic legal systems.

The buyer's and, arguably also, the seller's right to require performance is, however, limited by Article 28, located in another part of the Convention. Article 28 seeks to preserve domestic law as regards the availability of specific performance by providing that "A court is not bound to order specific performance under the Convention unless it would do so under its own law". This clear distinction between CISG rules and domestic rules as regards specific performance will be examined separately. First follows an examination of the CISG rules on the application and limits of specific performance. The scope and application of Article 28 and the Finnish, German, French and the United States rules concerning specific performance shall be focused on separately in Section 3, below.

2.2.2. Buyer's Right to Demand Performance; Article 46

The CISG establishes for the buyer a clear right to require the seller to perform as originally agreed. In the Official Commentaries to the provision provided in Article 46 it is mentioned that "the buyer's principal concern is often that the seller 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."[40]

The buyer's right to compel performance under Article 46 falls within three different categories. If the seller fails to perform the buyer can: 1) require the seller to perform, 2) require the seller to deliver substitute goods or 3) require the seller to repair non-conforming goods. The three different categories of specific performance under Article 46 each provide limits to the granting of specific performance under the said paragraph. Paragraph (1) states that the buyer may require specific performance unless he has resorted to a remedy which is inconsistent with such requirements. According to Paragraph (2) delivery of substitute goods may be required only if the breach constitutes a fundamental breach. Further, Paragraph (3) allows the right to require repair of non-conforming goods only if such requirement is not unreasonable having regard to all circumstances.

It is important to note that the buyer does not lose his right to recover any damages he may have suffered thereby. Article 45(2) ensures, by providing that: "The buyer is not deprived of any right he may have to claim damages by exercising his right to other remedies". If the seller fails to perform in the agreed time period or if he delivers non-conforming goods the buyer usually suffers some kind of loss. The right to claim damages ensures that the buyer 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 buyer's right to require performance.[41]

2.2.2.1. Right to Require the Seller to Perform; Article 46(1)

The buyer's general right to demand the seller to perform his obligations under the contract derives from the first paragraph of Article 46: "The buyer may require performance by the seller of his obligations unless the buyer has resorted to a remedy which is inconsistent with this requirement". Such paragraph's purpose can be understood as seeing to it that the obligations of the seller are performed as laid down in the contract and the CISG. Therefore, it also expresses the maxim of the pacta sunt servanda -principle.[42]

The buyer's right to require performance under Article 46(1) is at hand in situations where the seller has totally failed to perform, i.e. non-delivery.[43] It is thus distinguished from the buyer's right to require delivery of substitute goods or right to demand repair. What is a total failure to perform? It is clear that if the seller refuses to deliver the goods, he is in breach, as addressed by Article 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 is a bit more complicated. Should the matter be then considered as a non-delivery? The problem lies in the right to avoid. 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." Therefore, Will concludes that the delivery of goods other than those agreed upon between the parties, should not be regarded as non-delivery, but as a non-conformity of goods, covered by paragraph (2) of Article 46. [44]

Kastely elaborates further that if the seller fails to present a certificate of ownership or deliver appropriate bills of lading or warehouse receipts, the seller breaches his obligations in the sense of Article 46(1).[45] The argument is based on the commentaries: "The seller must deliver the goods or any missing part, cure any defects or do any other act necessary for the contract to be performed as originally agreed".[46] On the other hand, as regards any missing certificates of ownership etc. I am of the opinion that it could also be argued that the seller has fulfilled his obligations, although partly, and the goods would thus be non-conforming. Consequently, the buyer's right to demand delivery would be subject to paragraph (3) of Article 46, i.e. the right to demand repair.

The same problem lies accordingly in third party claims. The question of, whether specific performance can be claimed where the defect lies in the title to the goods, was not raised at the Vienna Conference that led to the formation of the CISG. Consequently, the discussion concerned only with physical defects which has led to arguments that specific performance under Article 46 could not be claimed if the defect concerns the title to the goods.[47] Will argues, however, that Article 46 allows a different interpretation and concludes that the buyer has a right to require the seller to deliver goods free from any third-party claims.[48] Will further notes that it is also about the nature of the goods; if the goods are generic, the buyer should have a right to require specific performance and, on the other hand, if the goods are specific such right would not be possible to grant without the consent of the real owner.

If the buyer has resorted to a remedy, which is inconsistent with the requirement of specific performance, he loses the right to compel performance directly by Article 46(1). Inconsistency is clearly at hand if the buyer avoids the contract.[49] Therefore, if the buyer effectively avoids the contract, the exclusion of his right to require performance follows automatically from Article 81(1) which provides: "Avoidance of the contract releases both parties from their obligations under it …".[50] Consequently, the buyer may not compel performance if he has chosen to put an end to the contract by avoiding it. Will states furthermore that the other situation where the buyer loses his right to demand performance is where the buyer has required price reduction of the contract; he resorts to an inconsistent remedy and loses his right to compel performance.[51] The situation might not, however, be that one-sided as regards the price reduction. Consequently, 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.[52] A requirement of price reduction does not necessarily have to be an inconsistent remedy with a requirement to perform. Schlechtriem elaborates that if the buyer merely requires a reduction of price, that does not exclude the right to require performance.[53] If the seller has delivered defective goods or has not delivered at all, the buyer shall have the right to require him to perform and, in addition, require a reduction of price because, as addressed by Article 45(2), the buyer does not derive the right to claim damages by exercising his right to require performance. Accordingly, a price reduction could be seen as a compensation (damages) for a failure in delivery. Furthermore, claiming damages is not generally inconsistent with the remedy of specific performance, due to the provision of Article 45(2).[54] However, as mentioned above, 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. Such point of time must be decided in conformity with general principles of good faith.[55] 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. Treitel notes further, that "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' ".[56]

A conclusion can be drawn, that the buyer may not speculate with his remedies for a failure in performance. The seller must rely on the buyer's actions. Consequently, if the buyer has only required a price reduction or otherwise claimed for damages and the seller has accepted such requirements, the buyer may lose his right to subsequently require the seller to perform his obligations. On the other hand the buyer may, in addition to a requirement of specific performance, claim for damages or a reduction of price by the seller, provided that the buyer makes it clear to the seller that such requirements are made simultaneously.

Moreover, it is expressly mentioned in the commentaries to Article 46(1) that: "Subject to the rule in paragraph (2) relating to the delivery of substitute goods, this article does not allow the seller to refuse to perform on the grounds that the non-conformity was not substantional or that performance of the contract would cost the seller more than it would benefit the buyer. The choice is that of the buyer."[57] This is an interesting point when compared with the domestic rules of Finland regarding specific performance because under Finnish law such exemption namely does exist. [58]

2.2.2.2. Delivery of Substitute Goods; Article 46(2)

Article 35(1) provides that: "The seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract." The same Article goes further and defines in detail when the goods are non-conforming.[59] According to paragraph (2) of Article 46, the buyer can require delivery of substitute goods, if the seller delivers goods that do not conform with the contract and the non-conformity constitutes a fundamental breach. The said paragraph governs therefore the scope of specific performance when the seller has delivered goods but they do not conform to the contract made between the parties.[60] By delivery of substitute goods is meant that defective goods have been delivered and due to the defectiveness a second delivery is made to replace the first delivery. The situation where buyer rejects defective goods before delivery and demands a new conforming delivery is governed, as a matter of fact, by Article 46(1) and not by Article 46(2).[61] Such a situation shall, consequently, be evaluated under Article 46(1). The buyer's right to demand re-delivery of substitute goods reflects further the CISG's aim to respect the pacta sunt servanda principle.[62] The buyer is given the possibility to rely on the seller's promise and require him to re-deliver substitute goods and consequently perform as originally agreed between the parties.

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) [63] 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.[64] 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.[65] Consequently, the buyer would only have a right to require repair under paragraph (3) of Article 46 or claim damages.

Evaluation of the non-conformity is to be made pursuant to Article 35. According to the first paragraph of Article 35 the delivered goods must comply with the contract. The second paragraph goes further by providing, e.g. that the goods must be fit for ordinary and any particular purposes. Article 46(2) does not, however, expressly cover cases of defects in title.[66] Schlechtriem states that "… in the event of a defect in title, the buyer's right to require performance turns on Article 46(1) and is unaffected by the specific requirements of Article 46(2). The buyer may therefore demand the removal of the defect in title, and is not subject to the restrictions in Article 46(2)."[67] As discussed above, 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. And, 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.

The right to require re-delivery of substitute goods under Article 46(2) is further limited by two provisions. First, as mentioned above, the non-conformity must amount to a fundamental breach. A fundamental breach is defined in another part of the CISG: Article 25 specifies that a breach 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. Article 25 further provides that the party in breach must have reasonably foreseen the detriment, in order for the breach to be fundamental. The right to avoid [68] is similarly preconditioned with the requirement of fundamental breach. Therefore, the buyer has a possibility to choose between avoidance of the contract or requirement of re-delivery of substitute goods. Schlechtriem notes that the defect in the delivered goods must be objectively of certain importance and elaborates that if the defect can be remedied after the date of delivery, the objective importance of the defect alone is insufficient to constitute a fundamental breach.[69] Another question is, should a delivery of totally different goods than those the parties have agreed upon be regarded as a non-conformity of goods?[70] Will states that, although the question was not raised at the preparatory work at the Vienna Conference, such deliveries constitute a fundamental breach of contract.[71] Secondly, Article 46(2) provides that the request for a claim for re-delivery of substitute goods must be made either in conjunction with notice given under Article 39 or within a reasonable time thereafter. Reasonable time, as provided by Article 46(2), is not defined further. However, necessities of international trade seem to set a maximum limit of two years, as defined in Article 39(2).[72] Schlechtriem is further of the opinion that reasonable time should be determined by reference to the circumstances of the particular case, i.e. in casu.[73] The purpose of these limitations can be seen as to avoid hardship on the seller.[74]

Moreover, if the buyer requires the seller to deliver substitute goods, he must be prepared to return the non-conforming goods back to the seller.[75] The rule derives consequently from the commentaries and from Article 82(1) which provides that: "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 substantionally in the condition in which he received them." Such obligation arises immediately when the buyer claims delivery of substitute goods.[76]

It should also be noted that Article 48(1) provides the seller a right to cure his non-conforming performance after the date of delivery if he can do so without unreasonable delay. However, Article 48(1) does not directly restrict the buyer's right to demand delivery of substitute goods.[77] On the other hand, the seller's right to cure might still restrict the right to require delivery of substitute goods because Article 46 as such is subordinate to Article 28. Consequently, a court might, in light of the fact that it has the right to look to its own domestic law when adjudicating a demand for specific performance.

So far as the delivery of substitute goods cannot compensate the buyer's detriment, he still has the right under the general principle laid down in Article 45(2) to claim damages by the seller. Furthermore, Article 48(1) implicitly provides that the seller bears all costs arising from the delivery of substitute goods and consequently also the costs arising from the transporting of substitute goods even if the contract provided for the buyer to bear the cost of the original delivery.[78]

2.2.2.3. Repair; Article 46(3)

The third aspect of the buyer's right to specific performance under the CISG, is his right to require repair under Article 46(3) of delivered goods, which are defective. Like the buyer's right to re-delivery of substitute goods the right to demand repair is subject to Article 35, defining non-conformity of goods. However, unlike the right to require re-delivery of substitute goods, it naturally applies as well to specific as to generic goods.[79] Furthermore it 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.[80] When determining non-conformity of goods pursuant to Article 35, and as regards any third-party rights to the delivered goods, it is of importance to decide whether the breach occured is fundamental. If the breach is one of a fundamental nature, the buyer has naturally a right to avoid the contract or to require delivery of substitute goods.[81] If, however, the requirements of a fundamental breach are not met, the buyer would nevertheless have a right to require repair.[82] 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. Naturally, if specific goods are burdened with a third party right, there is, however, no right to require repair in case the seller cannot buy the third party out.

The right to require repair is further limited by a provision recited in the Article itself, as follows: "… unless this is unreasonable having regard to all the circumstances." Unreasonable in this context means unreasonable to the seller and it does not depend on the character of the breach, but rather on the nature of the goods delivered and all the other circumstances.[83] 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 Article 46(3) is likely to be fulfilled. Will elaborates: "Certain goods by their very nature do not allow repair at all or, if they do, would require expenditure out of all proportion." and states further that "When it comes to all the other circumstances, regard must be given to both the seller's and the buyer's interests.[84] Another point of view is presented by Enderlein and Mascow: "A claim for repair may be unreasonable 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 …"[85] Is the choice between delivery of substitute goods and repair that of the buyer? Schlechtriem notes that the relationship between costs for repair and purchase price is irrelevant and elaborates that "Where very high repair costs are involved the seller may choose whether to deliver a complete substitute for the goods".[86] The argumentation is based on Article 48 and the fact that the buyer has no interest worthy of protection in having the defect remedied by repair and not by re-delivery of substitute goods. Under Article 46(3) it should also be noted that some minor defects in the goods could be repaired more readily by the buyer, especially when the seller's facilities for repair are in a distant country.[87] Will further notes that the availability of qualified repair locally is an important point to be evaluated stating consequently that "Where qualified personnel are particularly scarce, as may be the case in some developing countries, the seller's inconvenience may have to give way to the interests of the buyer."[88]

Another limitation to the right to require repair of defective goods, also recited in the Article itself, is a limitation of time. Article 46(3), second meaning provides that: "A request for repair must be made either in conjunction with notice given under Article 39 or within a reasonable time thereafter." Article 46(3) follows thus the same principle as Article 46(2).[89]

The costs as a consequence of repair must be born by the seller, as is the case with delivery of substitute goods. The buyer also retains the general right to claim damages under Article 45(2) in addition to the claim for repair.[90]

It can be concluded that the buyer's right to require the seller to repair non-conformities, 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 a breach of contract is to require the seller to perform as originally agreed upon between the parties, is supported. Such right is limited in exceptional circumstances and to "avoid economic waste where the seller has substantionally performed or where the cost of repair exceeds the benefit to be gained."[91]

2.2.2.4. Applicability of Article 28

Article 28 provides that a court is not bound to enter a judgement for specific performance, unless it would do so under its own domestic law in respect of similar contracts of sale not governed by the CISG.[92] Such an Article is primarily concerned with the buyer [93] and therefore when it is a matter of Article 46(1), i.e. buyer's right to require the seller to perform his obligations, Article 28 will apply with full force. When, however, it is the buyer's right to require re-delivery of substitute goods in case of non-conforming goods and right to require repair of defective goods, the applicability of Article 28 is not that clear.

The conflict concerns whether paragraphs (2) and (3) of Article 46 should be regarded as lex specialis qualifying the general provisions of Article 28. [94] Treitel concludes that the rights to require delivery of substitute goods and repair are subject to Article 28. [95] Also Ziegel concludes that the right to re-delivery of substitute goods and repair is subject to Article 28. [96] A requirement to the seller to re-deliver substitute goods is, as a matter of fact, the same as to require him to perform his obligations as originally agreed. It would, thus, be natural that Article 28 also limits the scope of the buyer's right to require re-delivery of substitute goods.[97] The same principle applies accordingly to the requirement to repair non-conforming goods. Therefore, it can be concluded that Article 28 serves to limit Article 46 so as to cover all the three forms of specific performance as provided by the Article.

2.2.3. Seller's Right to Demand Performance; Article 62

Article 53 sets forth the buyer's obligations by providing that: "The buyer must pay the price for the goods and take delivery of them as required by the contract and by this Convention." Articles 55 to 59 define in more detail, e.g. the time, place and amount of payment. If the buyer fails to perform his obligations the CISG provides the seller a right to require the buyer to perform his obligations. Consequently, Article 62 states that: "The seller may require the buyer to pay the price, take delivery or perform his other obligations, unless the seller has resorted to a remedy which is inconsistent with this requirement." Article 62 recognizes that the seller's primary concern is to obtain performance [98] , and, thus, it also represents the pacta sunt servanda principle. The seller must have a right to rely upon the buyer to perform his obligations and pay the price and take delivery. Knapp states that the seller's right to performance "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."[99] Therefore, the seller has to declare the contract avoided according to Article 64 [100] in order not to be bound by the contract.

Article 62 is limited, similarly as in Article 46(1) [101] , to situations where the seller has not resorted to an inconsistent remedy with the right to require performance. Consequently, if the seller declares the contract avoided under Article 64 he loses the right to require performance of the buyer's obligations.[102] Furthermore, Article 63(2) provides the seller a possibility to fix an additional period of time for the buyer to perform [103] (in order to avoid uncertainty arising from the the vagueness of the concept of fundamental breach) and further states that "Unless the seller has received notice from the buyer that he will not perform within the period so fixed, the seller may not, during that period, resort to any remedy for breach of contract." Sevón notes that the additional period of time must be of reasonable length, which is to be ascertained in casu.[104] Correspondingly, when such specification made by the seller has become binding, he resorts to an inconsistent remedy and cannot require the buyer to make the specification itself.[105] Claiming damages is, however, not an inconsistent remedy with that of requiring performance as it is expressly provided in Article 61(2) that "The seller is not deprived of any right he may have to claim damages by exercising his right to other remedies."

It is clear that if the buyer has received conforming goods he is under an obligation to perform his obligations under the contract and pay the price for the goods.[106] But can the seller require the buyer to pay the price if the seller is in possession of the goods? Or, in other words, can the seller require the buyer to pay the price where the buyer has not received the goods or has not accepted them and does not even wish to receive the goods? Article 62 does not give a clear answer to this question. The approach of the CISG to the seller's right to specific performance is that if the buyer has not received the goods and does not want to receive them, recovering the full price is functionally the equivalent of compelling the buyer to consummate the transaction.[107] This indicates strongly an interpretation that the seller may require the buyer to pay the price even where the seller has not received the goods. On the other hand, as Article 62 expressly provides that the seller may require the buyer to take delivery, it is obvious that a buyer who is unwilling to receive the goods is still obliged to perform and take the delivery. Honnold notes, however, that the domestic rules in this question may be decisive and lead to another solution.[108]

Does the seller have an obligation to sell the goods if he still is in possession of them and the buyer has failed to perform his obligations? As mentioned above, the purpose of Article 62 is to respect the contract and not to put an end to the obligations of the parties, unless the contract is declared avoided. In this point Knapp states that: "… the seller, whether or not he has declared the contract avoided, is under no obligation to try to resell the goods before resorting to remedies for failure to perform the contract by the buyer." and elaborates further that the seller is "… not authorized to resell the goods before declaring the contract avoided."[109]

A further point, as regards the seller's right to require performance by the buyer, is of relevance. According to Article 85, "If the buyer is in delay in taking delivery of the goods … the seller must take such steps as are reasonable in the circumstances to preserve them." Consequently, if the seller is in possession of the goods and the buyer has failed to take the delivery, Article 85 sets forth an obligation to the seller to preserve the goods. Honnold notes accordingly, that Article 85 leads to another important provision, i.e. the provision in Article 88(2).[110] Article 88(2) states that: "If the goods are subject to rapid deterioration or their preservation would involve unreasonable expense, a party who is bound to preserve the goods in accordance with article 85 or 86 must take reasonable measures to sell them." Therefore, although Article 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.[111]

2.2.3.1. Applicability of Article 28

According to Article 28 a court is not bound to enter a judgement for specific performance, unless it would do so under its own domestic law in respect of similar contracts of sale not governed by the CISG.[112] Article 28 concerns primarily the buyer's right to specific performance and it is, thus, unclear whether it also applies to the seller's right to require performance.[113] The question is of utmost importance, because some jurisdictions do not accept a right of the seller to require specific performance.[114] Consequently, if Article 62 is made subject to Article 28, the certainty of the seller's right to obtain specific performance as addressed by the CISG decreases substantionally.

Many commentators disagree whether Article 28 is applicable as regards the seller's right to demand performance. The main problem lies in the concept of specific performance as the promisee's right.[115] E.g. Farnsworth states that: "the words 'judgement for specific performance' which are used in Article 28 suggest that Article 28 does not apply to a suit in which the seller tenders the goods to the recalcitrant buyer and claims the price. Such a suit, traditionally one at law rather than equity, is not commonly thought of as one for 'specific performance' even thought it gives the seller relief that might accurately be described as 'specific.' "[116] Consequently, Farnsworth is of the opinion that Article 28 does not apply to actions to compel payment of the price. However, Schlechtriem winds up with a different conclusion and states that Article 28 should be applicable also to an action for the price.[117] He further notes that it is unambiguous that Article 28 applies to an action to require the seller to take the delivery and to perform his other obligations. Also Sevón is of the opinion that Article 28 applies to an action for the price under Article 62.[118] It is difficult to conclude whether Article 28 limits the scope of Article 62. I will, however, presume in my study, that Article 28 is also applicable to the seller's right to require performance and that it covers both the right to require payment for the delivery and the obligation to take delivery and perform other obligations.

2.3. Limits on Specific Performance under the CISG

2.3.1. Generally

As discussed above, the CISG provides a clear right for the buyer and the seller to require a breaching party to perform his promise as originally agreed. The buyer's and the seller's right to require performance is provided separately by two different Articles, i.e. 46 and 62. Such Articles provide also direct limitations to the right to require a breaching party to perform, such as the provision that when requiring performance, it is not allowed to resort to an inconsistent remedy with the remedy of specific performance. The limits directly provided by Articles 46 and 62 have been examined above. Also certain other limits, which are not expressly mentioned in the Articles, as regards granting specific performance have been discussed. There are, however, further a number of other limits on specific performance which are not expressly mentioned in the Articles, but which originate from other parts of the CISG. These limits are, however, far from being unambiguous when applied to specific performance. Different commentators of the CISG disagree whether these limits can be applied to specific performance and to what extent. The first and the most important limit is, of course, the provision in Article 28 concerning the effect of domestic law on specific performance actions under the CISG. As such, Article 28 is maybe the most unambiguous provision. I shall, however, examine Article 28 closer in Section 3, below.[119] Furthermore, it is important to note that the limits to specific performance under the CISG are, as a matter of fact, of utmost importance. The reasoning for the importance is that, when a court is considering an action for specific performance, and if it has concluded that it would enter a judgment for specific performance under its own law, these possible limits come into play.[120] Consequently, in the following, certain other possible limits, that may have an effect on specific performance, shall be examined.

2.3.2. Observance of Good Faith

Article 7 of the Convention provides that: "In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade". Sometimes, a requirement of performance could allow the other party to, e.g. speculate on the market.

"Illustration: In January 1996 seller S in Austria contracts to sell 100 silver bars at a fixed price to buyer B in Spain, with delivery to be made in Vienna later that month. On the agreed date of delivery (when the market price of silver exceeds the contract price by 25%), S declares that he will not perform. Despite repeated refusals by S to deliver the goods, B stands firm and brings an action seeking specific performance in a Vienna court. By the time the case reaches final judgment, the market price of silver bars is twice the price originally agreed."[121]

In situations, such as the illustration above, the buyer's right to compel performance seems to be fair as Article 46 gives the buyer a clear right to require performance. But what if the buyer requires performance only for reasons that he knows that the market is going to rise sharply? Is the buyer then acting against the good faith requirement and does he then lose the right to require damages?

The principle of good faith, as provided by Article 7, is not defined clearly, and further, even its placement in the CISG is problematic. It cannot be said with certainty whether it applies to actions for specific performance. However, many commentators are of the opinion that the good-faith principle applies to actions of specific performance and thus limits the scope for requiring performance. Honnold states that "The 'good faith' principle of Article 7 … may call for a restrained interpretation of the Convention's provisions on compelling performance when a party seeks this remedy only after a delay that permits him to speculate at the expense of the other party - as when a buyer seeks to compel delivery (rather than damages) only after a sharp rise in the market …"[122] Kastely is of the same opinion and states that: "The recognition of a right to performance should not permit one party to inflict undue pain or punishment on the breaching party, and Article 7 authorizes the court to prohibit such bad faith behavior.[123] It has even been argued that the obligation of good faith should be treated as a part of the parties' contractual obligations, rather than as a principle for interpretation of the CISG.[124] The argumentation is based on a widely accepted good faith principle, where the parties are always expected to act in good faith in international transactions covered by the CISG.

Consequently, the good faith principle under Article 7 could be a significant limit to the right to require performance in cases where, for example, a party delays in action for performance in order to speculate on the market or until there has been a market collapse, or where a party pursues specific performance for the purpose of harassing the other party or in circumstances where specific performance will be particularly onerous to the breaching party.[125]

On the other hand, I am of the opinion that the good faith principle should not be accepted as all too wide. From a seller's point of view, enforced performance is often harder than just paying damages in case the seller has breached the contract and refused to deliver. If the good faith principle is accepted as a wide contractual obligation of the parties, one problem could be met. The breaching party could then, in the worst case, without restrictions claim as a cause of action that performance leads to a detriment worse than that of just paying damages and consequently the seller would not have to perform as originally agreed. Such possibility may be rather theoretical but is still important to note. Accordingly, the good faith principle is an important principle and should be available for a seller who has been required to perform, but only in very exceptional circumstances and when the above described bad faith behavior has been duly and obviously evidenced.

Therefore, when enforcing a right to specific performance, Article 7 should be taken into consideration, and an infliction of undue pain or punishment on the breaching party should not be allowed.

2.3.3. Obligation to Mitigate Damages

Another important possible limit to the right to require performance by the other party, having relevance also to the above discussed good faith principle, is the obligation to mitigate damages. According to Article 77 "A party who relies on a breach of contract must take such measures as are reasonable in the circumstances to mitigate the loss … If he fails to take such measures, the party in breach may claim a reduction in the damages in the amount by which the loss should have been".

However, although the CISG provides in Article 77 a clear obligation to mitigate damages, it does not expressly mention such Article's application to the right to require performance. As in the illustration set forth above in Section 2.3.1, the buyer did not make a substitute contract but kept to the contract and required the seller to perform as originally agreed upon between the parties. Consequently, according to the wording of Article 77, the buyer would, however, not lose his right to compel performance merely because he could by acting reasonably have made a substitute contract. Failure to make such a substitute contract clearly amounts to a failure to mitigate losses but the only consequence of such failure expressly stated by the CISG is to reduce the injured party's damages because no reference is made at this point to the right to require performance.[126]

The drafting history of the CISG indicates that the right to require performance is not affected by the obligation to mitigate damages under Article 77. [127] Kastely makes, furthermore, certain notes on why Article 77 should not be interpreted as a restricting provision on the general right to require performance by stating that "… Under this wording, the duty to mitigate applies only when the aggrieved party claims damages, not when that party pursues the right to performance" and that "… Article 77 is placed within a section of the Convention entitled 'damages'.…The organization of these remedial provisions creates an important distinction between the right to performance and a claim for damages, including the duty to mitigate damages ..."[128]

However, many commentators to the CISG argue that the obligation to mitigate damages exists also as regards specific performance and thereby limits its scope. Consequently, the right to require performance could be affected by a failure to mitigate losses because such a result follows from Article 7, i.e. the good-faith principle.[129] The illustration, set forth above in Section 2.3.1, is a good example. One might argue that, in such a situation, a buyer requiring performance has breached his obligation to mitigate losses under an obligation to act in good faith. Treitel notes, however, that this method of leading to the desired result would also lead to great uncertainty.[130]

In examining the possible limiting effect of Article 77, Honnold notes that certain questions should be considered: "If a buyer notifies the seller that he cannot use the goods he has ordered, may the seller thereafter lay out labor and materials in manufacturing goods to the buyer? If not, the seller's remedy must be damages rather than an action for the full price."[131] Honnold concludes that Article 77 may have an restricting effect upon granting specific performance.[132] Also Feltham believes that Article 77 requires the non-breaching party to mitigate damages if his request for specific performance is unreasonable.[133]

It is difficult to conclude whether Article 77 restricts the right to require performance under the CISG. A requirement to mitigate is not consistent in light of the CISG's trend toward specific performance [134] since it would allow a remarkable speculation on the availability of specific performance.[135] However, in some situations, the aggrieved party might, by requiring performance, act so as to amount to bad faith behavior. Consequently, I am of the opinion that Article 77 should not automatically restrict the right to require performance. However, in some situations such restricting effect should be allowed. Where a party requires performance only to speculate on the market and where the party is acting against the good faith principle provided by Article 7, some degree of an obligation to mitigate damages should be expected from the party requiring performance. The threshold for Article 77 to affect the right to specific performance should, accordingly, be rather high.

It should also be noted, that, although the effect of Article 77 as a restricting provision on the right to require performance under the CISG is somewhat vague, Article 28 might still make a mitigation requirement relevant by directing the court to look into its own domestic law when considering an action to perform.[136]

2.3.4. Impossibility or Impracticability of Performance

According to Article 79(1) "A party is not liable for failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract." It is further provided by Article 79(5) that "Nothing in this article prevents either party from exercising any right other than to claim damages under this Convention." This provision seems to be, at first sight, applicable even to actions for specific performance but proves to be irrelevant when focusing on paragraph (5) of the same Article.

Article 79 deals with situations of force majeure and is rather difficult as far as application is concerned.[137] Ziegel recognizes three problems: "First, because of the conceptual differences in approach to frustration among the major legal systems; secondly, because of lack of unanimity about the solutions to the policy issues; and thirdly, because of the unsettled state of the law even with given system....[138] However, as regards the limiting effect on specific performance, Article 79 does not seem to be ambiguous as it expressly provides that an aggrieved party can always claim for performance even in case of impossibility. Furthermore, paragraph 8 of the Secretariat Commentary states expressly that "The effect of article 79(1) [65] in conjunction with article 79(5) [65(5)] is to exempt the non-performing party from liability for damages. All of the other remedies are available to the other party, i.e. demand for performance, reduction of the price or avoidance of the contract."[139] Consequently, impossibility of performance does not seem to excuse the breaching party from performance under the CISG.[140]

Therefore, if one party is confronted by an impediment, the other party still has a right to require the other party to perform. However, the party having the right to require performance may be required to accept a substitute performance, e.g. in situations where the physical delivery of the goods is impossible.[141] Accordingly, the principle of good faith is of the essence as regards the right to require performance. A breaching party may, consequently, be relieved even of the obligation to make a substitute delivery if it is exceptionally burdensome.[142]

As discussed, the rule of the CISG, regarding impossibility of performance, is that specific performance is not limited in situations of impossibility of performance. This is clearly indicated by the language of Article 79 and by the drafting history. According to Kastely, the obligation to perform in situations where performance is impossible may be excepted by the good faith rule. Clear enough, however, Schlechtriem takes a totally different point of view, as regards specific performance in situations of impossibility or impracticability of performance.[143] According to Schlechtriem, the spirit of Article 46(1) excludes the right to performance, although Article 79 does not lay down an express rule to that effect and merely excludes liability in damages. Schlectriem further states that "It would be inconsistent to allow a buyer to require performance where performance is prevented by an impediment which, by virtue of Article 79, the seller is not required to overcome."[144]

Schlectriem's point of view is easy to accept. The CISG approach to the subject matter seems to be problematic especially if the goods to be delivered, under the contract made between the parties, are specific and they have been destroyed.[145] As delivery of the goods or a substitute cannot, de facto, in such a situation be made, Article 79(5) seems to be rather conflicting. On the other hand, does it, as a matter of fact, impose a practical problem on the breaching party because the aggrieved party is anyway excepted from claiming damages for the failure to perform. Accordingly, a party entitled to performance would probably not wait for performance while the impossibility of performance lasts [146] but would instead use his other remedial rights or make a substitute contract.

Moreover, it should once again be emphasized that, pursuant to Article 28, it is the law of the forum in which the action is brought which determines whether or not an action for specific performance will be present.[147] Consequently, the CISG provisions regarding the subject matter are applicable only in situations where a domestic law would similarly not except performance in situations where performance is impossible, as directed by Article 79.

2.3.5. Nachfrist principle

A clear limit to the parties right to require performance by the breaching party is the one provided in the so called Nachfrist principle.[148] Article 47(1) states that "The buyer may fix an additional period of time of reasonable length for performance by the seller of his obligations." and correspondingly Article 63(1) states that "The seller may fix an additional period of time of reasonable length for performance by the buyer of his obligations."

The primary reason for the Nachfrist principle is the fact that in case a delivery is delayed, reasonable minds may differ as regards when the threshold of fundamental breach, as provided by Article 25 of the CISG, is reached. Therefore, Articles 47(1) and 63(1) give the other party the right to fix an additional delivery period of reasonable length; if the breaching party does not deliver the goods within the given additional period of time, he will have the right to avoid the contract.[149]

If the other party has fixed an additional period of time for delivery, he may not require his remedial rights under the CISG. Such limitation is expressly provided in the second paragraph of Articles 47 and 63: "… the buyer/seller may not, during that period, resort to any remedy for breach of contract …" Consequently, the aggrieved party cannot during that period compel performance by the other party and thus Articles 47(1) and 63(1) clearly limit the specific performance principle of the CISG.

2.3.6. Trade usage

According to Article 9(1), trade usage and practices established between the parties to a CISG contract become part of their bargain. Therefore, pursuant to Article 6 of the CISG -- the freedom of contract rule -- it can be expected that much of international sales law is to be found in the private contracts themselves including course of dealing, course of performance and usage of trade.[150] Trade usage and practices will be applicable in situations where the parties have expressly agreed upon an adoption but in addition in situations where the parties are considered to have impliedly agreed to a given usage in the particular international trade concerned. Article 9(2) further provide: "The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to …". Because, in addition to expressly accepted usage and practices also impliedly established usage and practices can become as part of the parties' contract, the variety of remedies available for a breach of contract increase between the parties.

Consequently, one could argue that a natural limit to specific performance as granted by the CISG, would be a trade usage if such usage does not recognize a party's right to compel performance in case of a breach of a contract. Support for this view is presented by Ziegel who states that "Seller may … be entitled to rely on a trade usage under Article 9(1) of the Convention to resist a claim for specific performance".[151]

While the adoption of trade usage as a prevailing source of law, compared with the CISG, is quite natural, it still important to note one problem. The problem has to do with Article 28 - the effect of domestic law when considering the remedy of specific performance under the CISG. The other limits discussed in this Section 2.3 do not cause a problem as regards Article 28. As it has been noted above, the limiting effect of certain other provisions of the CISG has been treated differently by different commentators on the CISG. Some such commentators, e.g. are of the opinion that the CISG provides directly an obligation to mitigate damages while others are of the opinion that such an obligation anyway derives indirectly from domestic law,[152] thus limiting the right to performance under Articles 46 and 62. The situation of the effect of Article 28 as regards Article 9 is, however, a bit more complicated. Consequently, the question is can a court enter a judgement for specific performance based on a trade usage if it would not do so under its own law? In other words, does Article 28 limit the scope of specific performance, which would be provided by a trade usage under Article 9? The party who requires performance could claim that according to the trade usage (express or implied) established between the parties, specific performance is clearly accepted as a primary remedy for a breach of contract. Such would be the case, e.g. as regards the UNIDROIT Principles.[153] Is a court then bound to enter a judgement for specific performance or is it allowed to apply Article 28 and deny such judgement, if it would not do so under its own domestic law? This rather theoretical question should, in my opinion, be interpreted so as to give priority to Article 9 because it is situated in the first part of the CISG, defining the general provisions and pursuant to Article 6 respect the contractual freedom aspect of the CISG. This view is also supported in light of the fact that the reference "in accordance with the provisions of this Convention … is entitled to require performance …" in Article 28, de facto, refers to the specific performance provision of the CISG, i.e. Article 46 and 62, not to possible specific performance rules provided by a trade usage.[154]

Consequently, it can be concluded that Article 9 can serve as a limit to the parties general right to require performance under the CISG. And further that Article 9, with its reference to usage and practices, is to be regarded as an independent source of law as regards other CISG provisions and, thus, that it is not effected by Article 28 of the CISG.

2.3.7. Rights of Third Parties; Insolvency

As it has already been mentioned above, the issue of, whether specific performance can be claimed where the defect lies in the title to the goods, was not raised at the Vienna Conference that led to the formation of the CISG.[155] Accordingly, rights of third parties can also limit the right to specific performance. Flechtner states: "If creditors of the seller have acquired rights in the goods to be delivered or if the seller has entered into bankruptcy or similar proceedings, the question of the priority of the buyer's claim for performance will be governed by applicable non-Convention law. If such law does not give the buyer's claims for performance priority, the buyer's attempt to compel performance may be defeated …".[156] Consequently, such third-party claims can limit the availability of specific performance, however, again through Article 28.

3. ARTICLE 28 OF THE CISG

3.1. The Scope of Article 28

3.1.1. Generally

As has been set forth above, in Section 2.2 of this study, the primary remedy for a breach of a contract under the CISG, is specific performance. The remedy of specific performance is furthermore limited, under the CISG, to certain situations. The most important limitation is, however, the one provided by Article 28. According to Article 28, a court is not bound to enter a judgement for specific performance unless it would do so under its own domestic law.

In civil law systems the right to require performance by the breaching party is regarded as the most natural remedy for a breach of contract. Giving respect to the pacta sunt servanda principle, the aggrieved party is allowed to rely on the contract made between the parties and to require the breaching party to fulfill his obligations under it. Contrary to the civil law system, in the common law system a claim for damages is regarded as the primary remedy for a breach of contract. Specific performance is thus granted only in exceptional circumstances where the goods are unique or otherwise specific.[157] Consequently, the language of Article 28 seems to reflect a compromise, as civil law countries tend to grant specific performance more routinely and the common law countries usually view specific performance as an extraordinary remedy.[158] In essence, Article 28 provides "an exception for countries whose legal systems differ from the specific performance bias of the Convention."[159]

The limit provided by Article 28 seems a bit confusing. The other limitations to the right to require performance under the CISG, as discussed comprehensively above in Section 2, define different situations where performance would be unfair or otherwise wasteful. From such limitations the limit provided by Article 28 makes the interpretation of the CISG as regards specific performance not only difficult but also almost impossible. As Kastely accordingly states: "This section creates an irreconcilable conflict in the Convention's remedial provisions."[160] Consequently, Article 28 seems to make the whole discussion about specific performance under the CISG and the other limits thereto, somewhat meaningless, by giving a court a possibility to look into its own domestic law when entering a judgement for specific performance.

I shall, in the following discuss comprehensively the scope, meaning and purpose of Article 28. The application of specific performance in Finland will be examined in more detail with some comparisons to the specific performance provisions of the CISG as provided by Articles 46 and 62. Furthermore, an examination of the legal systems of Germany, France and United States and their application of specific performance will also be made.

3.1.2. Court Not Bound to Enter Judgement for Specific Performance

The Convention effectuates the application of the remedy of specific performance through Article 28 which provides that "If, in accordance with the provisions of this Convention, one party is entitled to require performance of any obligation by the other party, a court is not bound to enter a judgement for specific performance unless the court would do so under its own law in respect of similar contracts of sale not governed by this Convention." The article thus directs a court to look to its domestic law when adjudicating a demand for specific performance, and thereby limits the scope of the specific performance remedy provided by Articles 46 and 62.[161] The primary purpose of Article 28 can be seen in the fact that it preserves domestic law as regards the availability of specific performance.[162] Consequently, a court is not bound to enter a judgement for specific performance unless it would do so in a similar case under its own domestic law.[163]

Two reasons for the adoption of Article 28 can be identified from the drafting history of the CISG.[164] Under some legal systems the courts do not recognize specific performance because they do not have the authority or the procedural mechanisms to order specific performance. This reason was advanced by the United Arab Republic and certain other Socialist countries. Consequently, the early draft of Article 28 read that "a court would not be bound to order specific performance unless it could do so under its own law." Therefore, under such language, the specific performance provided by the CISG would have governed only if the forum's legal system authorized or had established procedures to implement a remedy of specific performance. However, the United States and United Kingdom advanced a different and opposite rationale for Article 28. They sought to preserve domestic law regarding the conditions under which specific performance would be granted and accomplished this by amending Article 28 to read that "a court is not required to grant the performance remedy unless it would do so under its own domestic law".[165]

Therefore, it is important to note that Article 28 is not obligatory to the court. It gives the court the power to refuse a decree for specific performance but the court is not bound to do so. Accordingly, nothing prevents the court from entering a judgement for specific performance in cases where it would not do so under its own law.[166] Or in other words, "a forum court may still enforce the Convention's broader scope of specific performance, it is simply not require to do so".[167]

Moreover, although Article 28 is primarily provided for the benefit of common law courts, it can as well be applied by the courts of civil law countries.[168] As a matter of fact, such application makes the provisions of specific performance under Articles 46 and 62 very unsure. Accordingly, one cannot say for sure, whether a court enters a judgement for specific performance, not being aware of the domestic law provisions regarding specific performance of the forum court.

Article 28 does not affect or change other remedial provisions available under the CISG other than the right to require performance. Therefore, if the aggrieved party wishes to bring an action against the breaching party for a breach of contract in a court, which does not allow specific performance in the particular case, he must pursue one of his other remedies.[169] Consequently, such appropriate remedies will be avoidance of contract with a claim for damages. Accordingly, it is the CISG, not the law of the forum court, which determines when and how the contract may, e.g. be avoided.

According to the above mentioned, when a court is asked to require performance under the CISG and pursuant to Articles 46 and 62, it must engage a two step process. First it has to determine whether Articles 46 or 62 of the CISG allows specific performance and then proceed by testing the safety valve provided by Article 28. [170] Even though the court establishes that specific performance is available to the aggrieved party under the CISG and pursuant to Articles 46 and 62, it is not bound to enter a judgement for specific performance. The choice is, consequently, that of the forum court's.

3.1.3. Ambiguities in Article 28

At least three ambiguities can be identified in Article 28. The first is its reference to "its own law" and the second is its reference to "similar contracts of sale not governed by this Convention". The third ambiguity is whether an arbitral tribunal is bound by Article 28.

The language of Article 28 states that "... a court is not bound to enter a judgement for specific performance unless the court would do so under its own law ..." leaving thus open a question, whether the expression "own law" includes the court's conflict of law rules, i.e. private international law. The question is of importance because, if the statement "its own law" is interpreted so as to include the conflict of law rules of the forum court, the result could be that the forum court would be required to apply a foreign state law that allows specific performance, even though such a remedy is not permissible or otherwise differs in the original forum.[171] Kastely elaborates by stating that " ... the practical effect of such an interpretation would be to resurrect difficult choice of law issues in many international contract disputes, and to make enforcement of the right to performance recognized by the Convention even more uncertain."[172] Furthermore, the purpose of Article 28 to preserve domestic law as regards the availability of specific performance would be totally disregarded, if such an interpretation is allowed. Consequently, the expression "under its own" refers to the domestic law of the forum and excludes its choice of law rules, i.e. private international law.[173] This is the most logical conclusion in light of the fact that Article 28 is meant to allow the forum state to avoid application of specific performance if such a remedy is not available under its own domestic law.

The second ambiguity in Article 28 is its reference "in respect of similar contracts of sale not governed by this Convention." The importance of this language is that it directs the forum court to examine its domestic law regarding contracts comparable to those to which the CISG applies.[174] Article 2 of the CISG sets forth situations into which the CISG is not to be applied. Consequently, all contracts which do not fall within the ambit of Article 2 of the CISG are potentially "similar contracts". The CISG distinguishes in this regards between two aspects: the promisor's obligation and the remedy available to the promisee if the promisor does not perform his obligation. The promisor's obligations, whether he is the buyer or the seller, are governed solely by the contract made between the parties and by the CISG. Accordingly, Article 28 does not cause a change in that the court's own law is not applicable.[175] Therefore, "if the promisor has failed to perform an obligation based on the contract or the Convention and the promisee brings an action for specific performance, the court must ask itself whether it would allow the action under its own law in a similar case. A case is 'similar' where a contract would give rise to the same obligations on the promisor."[176]

The third ambiguity concerns arbitral tribunals in that Article 28 does not specifically refer to arbitral tribunals (unlike, e.g. Articles 45(3) and 61(3)). However, it cannot be interpreted so [that] arbitral tribunals would be excluded from the application of Article 28.[177] Furthermore, the arbitral tribunal's "own law" is, here too, the law governing the arbitral procedure. An arbitral tribunal in Zürich Chamber of Commerce in 1996 concluded that where according to the buyer's and the seller's domestic laws (Russian and Swiss) specific performance was not an available remedy, a request for specific performance under Article 46 was not either available.[178] Specific performance was in this case claimed only as an alternative and was denied by the tribunal. However, the case shows that the arbitral tribunal noted the both domestic laws, with an emphasis on the applicable law of procedure, and their approach to specific performance and thereafter concluded that Article 28 of the CISG gave the possibility not to enter the requested judgement for specific performance.

3.1.4. Agreements

The parties to a contract governed by the CISG, may want to specify in the contract that specific performance will or will not be an available remedy for a breach of contract, in order to avoid possible uncertainty caused by the affect of Article 28. Such exclusion of the availability of specific performance would seem to be justifiable in light of the fact that freedom of contract pursuant to Article 6 of the CISG is the main principle throughout the CISG. It is, however, proposed by many commentators that such exclusion would not always be possible. Lando states as follows: "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 Article 28 is inconsistent with Article 6 which permits the parties to derogate from or vary the effect of any of the provision of the Convention."[179] Also Schlechtriem is of the opinion that Article 28 is "mandatory law" and thus parties to a contract cannot exclude its application. Schlechtriem states: "Notwithstanding Article 6, the parties may not exclude Article 28, since Article 28 restricts the scope of application of the Convention in relation to specific performance and thus also restricts the scope of Article 6. If the parties reach agreement on specific performance, it is solely the 'own law' of the court hearing the action for specific performance which decides what significance is to be attached to such an agreement."[180] However, Kastely winds up with a different interpretation by stating that Article 6 should be interpreted so as to permit waiver of Article 28 and consequently allow the parties to expressly agree upon specific performance in their contract.[181] Kastely elaborates further by stating that "… a court may refuse to give effect to a clause requiring specific performance, not under Article 28, but rather under its own domestic law, preserved by Article 4."[182] According to Article 4, the CISG "governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such contract … It is not concerned with: (a) the validity of the contract...." Accordingly, the next question would be that "is a domestic rule that denies the effectiveness of a contract term regarding specific performance a rule of validity?"[183] Kastely winds up, not giving weight to Article 4, with a conclusion that "an express contract term concerning specific performance should be enforceable, then, under the general provisions of Article 30 and 53"[184] and further that "if the contract indicates that specific performance should be granted, then the court should do so, in order to carry out the agreement of the parties".[185]

If Kastely's point of view about the possibility to derogate from Article 28 is accepted, then another question arises: What if the forum court does not recognize a remedy of specific performance and, most importantly, does not even have the procedural mechanism for granting specific performance? Is the court then obliged to grant specific performance or can it, pursuant to Article 28, deny the request for performance? Kastely points out that the court should still be bound to the parties contract.[186]

A conclusion about the effect of Article 28 and whether it is mandatory as regards any contract provisions on specific performance, is not a simple task. However, I am of the opinion that the problems regarding agreements of specific performance, as discussed above, are highly theoretical, and, thus, not of further importance. Therefore, I would conclude, pursuant to the views of Schlechtriem and Lando, that Article 28 is to be regarded as "mandatory law". Such interpretation will not cause any problems if the main principle of courts discretion, as provided by Article 28, is remembered: "… the court is not bound to enter …" A forum court is thus faced with two aspects: First, its domestic rules regarding freedom of contract [187] and the question whether it allows an agreement of the parties deviating its domestic rules regarding specific performance. Secondly, it is the choice of the forum court whether it will apply Article 28 and not enter a judgement for specific performance.[188] Consequently, after evaluation on such aspects it is up to the court whether it will give effect to a contract provision regarding specific performance and enter a judgement for specific performance, even if it would not do so under its own legal principles.

3.1.5. Enforcement Issues

Article 28 does not provide how a judgement for specific performance is to be enforced. The enforcement questions are also left out from Articles 46 and 62. Consequently, the enforcement issues are left to the procedural laws of the country where enforcement of performance for a breach of contract is sought.[189] Enforcement of performance has been a much discussed matter with regard to specific performance. It has been argued that due to the problems as regards enforcement of performance, the remedy of specific performance is, as a matter of fact, an irrelevant remedy to the aggrieved party because of its economical inefficiency. That was also perhaps the most influential argument made in favor of Article 28. [190] The legislative history of the CISG indicates that it was noted that enforcement of the right to performance is often subject to delays of litigation and further that even in legal systems where specific performance is theoretically available in the normal cases it is seldom invoked in legal proceedings.[191] Furthermore, one arbitral tribunal raised, ex officio, accordingly some interesting discussion regarding the enforcement of specific performance. Specific performance was in such case denied, but the tribunal nevertheless noted that the parties could "hardly expect to be able, under the New York Convention or otherwise, to have an award enforced in Russia providing the seller must specifically perform its obligations under the various contracts for the next eight or ten years, producing the aluminum and delivering it to buyers".[192] The tribunal noted consequently the long-term nature of the contract but also the special problems in enforcing the contract in Russia. Accordingly, the tribunal granted damages instead.

Moreover, Article 28 does not concern the recognition and enforcement of foreign judgements because it only gives the courts a freedom not to enter a judgement for specific performance. As this is the case, other conventions on the enforcement of foreign judgements are not affected by Article 28. [193]

However, as the CISG leaves the questions concerning enforcement of performance to the domestic law, it further establishes uncertainty because the procedural laws of the domestic laws as regards enforcement of performance obviously differ from each other.[194] An aggrieved party, thus, is obliged to consider two aspects when requiring a judgement for specific performance under Articles 46 and 62 of the CISG: First, does the forum court's domestic law recognize specific performance as a valid remedy for a breach of contract and secondly, how will such judgement be enforced in that legal system. Only after evaluation of these aspects can a party requiring performance, decide whether specific performance would be an efficient remedy for him; a procedure, itself, which is not so efficient!

As the CISG leaves enforcement issues to a domestic level, I shall discuss generally enforcement of specific performance from a Finnish law point of view, in Section 3.2.3, below.

3.2. Application of Specific Performance in Finland

3.2.1. Generally

Finnish contract law is based on the principles of contractual freedom and pacta sunt servanda. Furthermore, a characteristic feature of Finnish contract law is that general principles which are the basis of legislation are often not expressly codified in different acts,[195] also accordingly, the concept of specific performance [196] has been traditionally classified as a general principle of the law of contract.[197] The right to specific performance, as established as a general principle of contract law, is further confirmed also in the codified legislation.[198] The general right to specific performance is clearly accepted in the Finnish legal system, stemming its acceptance from the pacta sunt servanda principle and the reasoning, that the right to keep to the contract and to require the other party to perform his obligations as originally agreed upon between the parties, is the most desirable way to carry out the pacta sunt servanda principle. It is thereby possible not only to enforce a promisor to act but to also, passively, not to act. Furthermore, the approach under Finnish contract law is practically to put an aggrieved party into as good a position as he would have been had the contract been performed by the promisor by primarily enforcing him to perform.[199]

Although the primary principle under Finnish law is that of specific performance, the principle has general limitations.[200] Hemmo divides such limitations into to two different categories:[201] First, specific performance is limited where the nature of the obligation is such as to make performance excepted. In these cases there is no right to performance at all. Good examples of this category are obligations, which, if enforced, would cause undue interference with the personal freedom of the promisor.[202] Furthermore, it is generally not seen as possible for the promisee to obtain specific performance which is an interesting point in situations of international trade and where the CISG is applicable.[203] Secondly, specific performance is limited in situations where it otherwise would be available but the special circumstances at hand make performance impossible or impracticable. In this category specific performance would otherwise be an appropriate remedy, it is just hinders of the circumstances that makes for an excuse. Accordingly, if a specific item that was intended to be delivered by the promisor, has been destroyed, there are naturally no possibilities for enforced performance. Similarly, where the performance would lead to illegality there is be no obligation to perform.[204] Furthermore, the impossibility or impracticability releases from the obligation to perform irrespective of the reason of it and consequently not even the promisor's culpable behavior releases him from his obligations.[205] The obligation to perform can further be limited because it would be exceptionally burdensome to the promisor. This limitation is naturally subject to further definitions.[206] Hemmo further points out that a limiting effect on specific performance under Finnish law could exist where necessary measures for mitigation of loss have not been taken.[207]

As has been discussed in the preceding Sections of this study, the CISG provides the aggrieved party a clear right to specific performance for a breach of contract. The right to require performance under the CISG is, however, effectuated through Article 28, according to which a court is not bound to enter a judgement for specific performance unless it would do so under its own law in respect of similar contracts of sale not governed by the CISG.[208] Therefore, the reference "similar contracts" leads to a closer examination of the Finnish Sale of Goods Act. At first sight there seems to be few ambiguities because the Finnish Sale of Goods Act takes the same position to specific performance as does the CISG, i.e. providing that the right to require performance of obligations under the contract is the primary remedy for breach of contract. One reason for the general similarities is that the Finnish Sale of Goods Act was prepared with the CISG as a starting point. Accordingly, in the interpretation of the Finnish Sale of Goods Act various commentaries and preparatory works of the CISG can serve as a significant help.[209] Nevertheless, upon closer examination, differences can however be identified. In the following the right to require performance by the breaching party, as provided by the Finnish Sale of Goods Act, will be examined with a focus on the limitations provided by the Act. Due to the scope of this study, such examination is made through a theoretical approach, leaving it on purpose outside the Finnish legal praxis on specific performance.

3.2.2. Specific Performance and the Finnish Sale of Goods Act

The Finnish Sale of Goods Act is not mandatory law and it is accordingly provided in paragraph 3 of the Act that "The regulations in this Act, shall not be applicable if otherwise provided by the agreement, practice, usage of trade or other usage established between the parties." Consequently, the parties to a contract can freely [determine for themselves] the remedies for breach of contract and whether specific performance will be an available remedy. However, it is important to note that, according to the Government Proposal on the Finnish Sale of Goods Act, the contractual-freedom principle as provided by paragraph 3 of the Act is limited by the general reasonableness principle as provided by paragraph 36 of the Finnish Contract Act (Oikeustoimilaki) [210]

The remedies available to the buyer, under the Finnish Sale of Goods Act, depend on the type of default in the seller's delivery. First, if the seller fails to deliver in agreed time or does not deliver at all, the Act speaks about delay in delivery and provides that the aggrieved party can choose between requiring the seller to perform, avoiding the contract or claiming damages.[211] Secondly, if the seller has delivered but the delivery is defective, i.e. non-conforming with the contract, the Act speaks about failure in quality, which can also extend to the title to the goods.[212] In case of such non-conformity, the buyer can require performance by requiring the seller to repair the defect or deliver substitute goods or alternatively the buyer can require reduction in price, avoid the contract and additionally claim for damages. On the other hand, the Finnish Sale of Goods Act does not provide the seller a similar right to specific performance, as does the CISG. Consequently, under the Finnish Sale of Goods Act, the seller's right to require performance is basically limited to a requirement to pay the price.

The Finnish Sale of Goods Act, like the CISG, does not expressly separate between specific and generic goods. Consequently, the same rules and especially the right to require performance apply to both specific and generic goods. However, it is sometimes necessary to separate between the nature of the goods, when examining the limits to the right to require performance, and especially as regards re-delivery of substitute goods and impossibility of performance.[213]

3.2.2.1. Buyer's Right to Require Performance

In case of delay in delivery or non-delivery by the seller, paragraph 23 of the Finnish Sale of Goods Act sets forth the buyer's right to specific performance by providing that "The buyer has the right to keep to the contract and require performance of obligations under it." The buyer has the right to choose between requiring performance or avoidance of contract and claiming damages.[214] The buyer's right to require the seller to perform his obligations reflects the general principle under the Finnish legal system.[215] As such, the provision of paragraph 23 corresponds with Article 46 of the CISG. Paragraph 23 does not, however, include a similar exception as does Article 46 in that it provides that the buyer may not resort to an inconsistent remedy in order to maintain the right to require performance.[216] However, it is quite natural, that the language "the buyer has the right to keep to the contract" and the fact that effective avoidance releases both parties from obligations under the contract, makes also the availability of specific performance irrelevant. On the other hand, the absence of such a provision from paragraph 23 is, as a matter of fact, of little interest in situations where the CISG is applicable to a dispute concerning specific performance, because a court would nevertheless have to look first to Article 46 of the CISG which does make the limitation.

The buyer's general right to require performance is further subject to important limitations recited in the same paragraph. Consequently, paragraph 23 goes further by stating that "The seller is, however, not obliged to perform, if the seller is hindered by an impediment beyond his control, or if the performance of obligations under the contract would require sacrifices which are unreasonable compared with the benefit the buyer would receive, if the seller performs his obligations under the contract". paragraph 23 states further that "If the impediment or unbalance ceases within a reasonable time, the buyer may nevertheless require that the seller perform his obligations under the contract." and that "The buyer loses his right to require performance of obligations under the contract, if he unreasonably delays with his requirement."

First, the seller is not obliged to perform his obligations under the contract if the performance is hindered by an impediment which, the seller cannot win. By an impediment, which the seller cannot win, the provision refers to factual situations where performance is impossible.[217] It has been stated that the provision is self-evident and thus lacking importance, the reasoning being that the seller cannot be required to do something that is impossible to do.[218] Especially, this is also where the evaluation of specific and generic goods is relevant. If a specific item, such as a valuable painting, has been destroyed it is definitely impossible for the seller to perform.[219] Furthermore, it is not enough that performance has merely turned out to be more expensive or harder for the seller. A factual impediment is required.[220] Therefore, if for example a subcontractor used by the seller is hindered by an impediment, as addressed by the paragraph, the seller is not excused if he can reasonably obtain the goods from another subcontractor and the buyer requires him to perform. The same applies to situations where the seller's transporting methods are not available as intended but other means of transporting methods would have been available; there is no excuse from performing the obligation to perform.[221] However, the paragraph does not require an objective impossibility by the seller, i.e. that, in addition to the seller, no one else could deliver. Therefore, the seller may have a right to be excused from performance even if the impediment meets only the seller and other producers of the same goods exist on the market. The seller, to be excused from performance, is thus not required to be in an absolute impossibility to perform, but it is rather required that performance would be a totally disproportionate economical sacrifice.[222] Furthermore, the reason that has led to the impediment is not of relevance. Thus, as noted in Section 3.2.1, above, even the seller's culpable behavior releases him from the obligation to perform.[223]

Secondly, paragraph 23 makes an exception to the seller's obligation to perform, in situations where the performance of obligations under the contract would require sacrifices which are unreasonable compared with the benefit the buyer would receive, if the seller performs his obligations under the contract. With this exception it is especially intended to excuse the seller from performance where the circumstances have changed radically after the entering into the contract by causing a significant unbalance in the parties' contractual relationship.[224] Neither is this exception dependent on the reason that has led to the unbalance.[225] The threshold for the unbalance should further be kept high and the seller is not, thus, excused from performance only because the performance would involve him a loss or would otherwise be harder than what the seller had calculated when entering into the contract. Moreover, the nature of the sacrifices can be either physical or economical. The exception concerns, most importantly, an open question for comparison of evaluation on the unbalance. If the seller's performance leads to an obvious unreasonableness compared with the benefit to be gained by the buyer, after a change in the circumstances, excusing the seller from performance could be acceptable. The evaluation shall be made comprehensively, having regard to all circumstances, such as the values of the parties obligations, nature of the contract and the goods and so forth. The more the unbalance is seen as unreasonable, the more likely the seller will be excused from his obligation to perform.[226] It has also been noted that when considering the unbalance, regard is to be had to the buyer's availability to obtain the goods from another deliverer. Accordingly, where it would be easier for the buyer to obtain the goods from somewhere else than the original seller who cannot perform as intended, the buyer's general obligation to mitigate damages by making such a purchase could excuse the seller from his obligation to perform.[227] Ramberg notes accordingly, that such interpretation of the exception at hand would also be pursuant to the Anglo-American principles on the same.[228]

Furthermore, as mentioned above, it should also be noted that the general mitigation principle as provided by paragraph 36 of the Finnish Contract Act (Oikeustoimilaki) can have a limiting effect on the availability of specific performance even in situations where the unbalance have been present prior to entering into the contract.[229] Under such a paragraph, a Finnish court has a possibility to mitigate unreasonable contracts or contractual provisions. Accordingly, the possibility of mitigation of contracts or contractual provisions may lead to situation where a court considers enforced performance as unreasonable in the circumstances and that the court will not enter a judgement for specific performance.

As provided by paragraph 23, the two above discussed exceptions concerning impediment of performance and unbalance of the contractual relationship between the parties are effective only as long as the factual situations of the exceptions last. If the impediment of performance, which the seller cannot win or the unbalance in the contractual relationship between the parties has ceased within a reasonable time, the seller will again be under an obligation to perform and thus cannot claim for the exceptions. On the other hand, if the time period is long and exceeds a reasonable time, the seller is again excused from his obligation to perform. Whether the time period ceases within a "reasonable time" depends, inter alia, on the nature of the obligation and the contract and on all the other circumstances.[230] Accordingly, it has been suggested that such time period can vary from weeks to a couple of months.[231]

Thirdly, the buyer loses directly his right to compel performance, under paragraph 23, if he delays unreasonably long with his requirement of specific performance. An unreasonable delay in the requirement to perform is effective only as regards specific performance. Therefore, a buyer in delay with his specific performance requirement does not lose his right to avoid the contract and claim damages.[232] Whether a delay is unreasonable depends on the nature of the contract and on the circumstances and thus the time period, which can still be seen as reasonable, can vary significantly. It is, however, clear that unreasonable delay must be a rather long period of time, because losing the right to require performance is generally seen to be a strong loss of remedial rights and thus not desirable.[233]

The above discussed exceptions included in paragraph 23 of the Finnish Sale of Goods Act do not generally correspond with Article 46 of the CISG. As noted above, an express provision concerning impossibility or impracticability of performance was excluded in the CISG. However, as discussed in Section 2.3.3, above, it could be argued that even the CISG allows an interpretation of the existence of an impossibility rule, then based on, inter alia, the good faith principle. On the other hand, if the performance of obligations has turned out to be impossible, de facto, it is clear that the seller cannot be enforced to perform, either based on the CISG or any domestic law.[234] However, the other provision of paragraph 23 of the Finnish Sale of Goods Act concerning unreasonable sacrifices of the buyer as limit to specific performance is clearly not provided in the CISG. As Article 28 gives the right to the court to look into its domestic law when considering whether it will enter a judgement for specific performance, [it] allows also the adoption of such limits under the CISG, if the case is tried in Finland by a Finnish court or an arbitral tribunal. Furthermore, it is important to note that also the general mitigation principle as provided by paragraph 36 of the Finnish Contract Act (Oikeustoimilaki) may serve as a limit the scope of specific performance under the CISG.

3.2.2.2. Repair and Delivery of Substitute Goods

In case the buyer has indeed received the goods from the seller but they are non-conforming, the Finnish Sale of Goods Act speaks about defect in delivery. Even in situations of defect in delivery, the Act provides the buyer a right to require specific performance, reflecting further the primary principle of the Finnish contract law that promises and contracts shall be kept, i.e. pacta sunt servanda. Accordingly, the Act gives the buyer a right to require repair of the defective goods or a right to require re-delivery of substitute goods.

If the defect in non-conforming goods can be repaired, then the buyer has a right to require repair. paragraph 34(1) provides that "The buyer has the right to require the seller to repair the defect, without costs to the buyer, if such repair can be done without unreasonable costs or unreasonable harm to the seller." It is required that the repair can, de facto, be made from a practical point of view and it is thus especially directed to factual defects in goods.[235] The right to require repair is limited with a similar exception as provided in paragraph 23, i.e. where the repair would involve unreasonable costs or harm to the seller. Consequently, the same argumentation as set forth above, of what can be seen as unreasonable, applies even as regards the right to require repair. Furthermore, paragraph 34 expressly provides the seller an alternative right to deliver substitute goods if such re-delivery is possible, and thereby it also limits the buyer's right to require repair.[236]

Similarly as the CISG, the buyer may require re-delivery of substitute goods if the non-conformity of the delivered goods amounts to a significant defect and if the prerequisites of avoiding the contract are present. Consequently, paragraph 34(2) states that "The buyer has the right to require a new delivery, if the breach of contract amounts to a significant defect to the buyer and the seller knew or should have known that." The buyer's right to require re-delivery of substitute goods is further limited by a provision recited in the same paragraph which makes a reference to the general limitations of paragraph 23, concerning delay in delivery, valid. Consequently, the obligation to make a re-delivery of substitute goods is limited in cases of impediment (impossibility) and contractual unbalance.[237] In case the goods are specific, there is, naturally, not an obligation to re-delivery.[238] The buyer's right to require re-delivery of substitute goods is furthermore limited by the seller's right to cure, as provided by paragraph 36 of the Finnish Sale of Goods Act.[239]

Under the Finnish Sale of Goods Act, similarly to the CISG, the buyer must, in order to maintain his right, make the request of repair or re-delivery of substitute goods within a certain time. According to paragraph 35 of the Finnish Sale of Goods Act such request must be made in conjunction with a notice of the general reclamation or within a reasonable time thereafter. Paragraph 35 further provides that if the buyer fails to do so, he looses the right to require repair and re-delivery unless the seller's actions amount to gross negligence or bad behavior.

Generally, the buyer's right to require repair and re-delivery of substitute goods are mainly similar under the Finnish Sale of Goods Act and the CISG. The main difference is in that the Finnish Sale of Goods Act restricts the availability of such rights slightly more than the CISG, because the right to require re-delivery of substitute is made subordinate to the limitation of paragraph 23. Furthermore, the CISG does not have a similar limiting provision than the CISG, as regards seller's gross negligence or bad behavior in the right to re-delivery.[240]

3.2.2.3. Seller's Right to Payment of the Price

Under the general principle of pacta sunt servanda, the buyer is in obligation to pay the price of the contract. In addition to this general rule, paragraph 52 of the Finnish Sale of Goods Act provides that the buyer is entitled to keep to the contract and require the seller to perform his obligations, i.e. to pay the price as agreed upon between the parties. Such right is generally not excepted for example under situations of impossibility, as was the case with seller's obligations.[241] The seller's rights under the contract concerns of a monetary obligation by the buyer and it is thus separated clearly from the buyer's right to performance in natura.[242] Consequently, one could argue that the seller's right to require the buyer to pay the price can be regarded as a stronger right than the buyer's right to performance. However, paragraph 52 states further, that if the goods are not delivered to the buyer, and the seller does not within a reasonable time notify the buyer of his requirement to performance, the seller loses his right to claim for payment of the price.

As already mentioned above, under Finnish law the seller's right to require specific performance takes form in a more lenient way than that of the CISG. Consequently, the seller cannot require the buyer to take the delivery. The traditional view under Finnish law has been that the promisor does not have a general right to require specific performance.[243] Accordingly, if the buyer has failed to take the delivery, the seller's only remedial rights are avoidance of the contract and a claim for damages.[244] Naturally, the buyer is still under an obligation for payment of the price.

3.2.3. Execution of Specific Performance in Finland

A court order where the promisee is obligated to perform his obligations of a contract is executed in accordance with Section 3, paragraph 4 of the Finnish Execution Act. Under the Finnish Execution Act, the bailiff can enforce the promisee to perform his obligations, with a threat of a penalty fine, provided that the obligation can only be done by the promisor alone.[245] On the other hand, if the obligation can be performed by someone else, the Finnish Execution Act establishes another possibility: The bailiff provides the promisee with a right to make the delivery with another deliverer on the cost of the promisor. To be exact, such a possibility is not to be regarded as specific performance. Therefore, the possibility to contract with a substitute deliverer offers in fact a further dimension of the promisee's remedial rights.[246] Of course, the promisee is under no obligation to obtain such judgement for specific performance, which he thereafter files for execution to further obtain a right to contract with a substitute deliverer. He can do so even without such procedure and claim for damages for the costs of a substitute delivery from the other deliverer. However, sometimes it is in the promisee's interests to obtain the judgement and the right to contract with a substitute deliverer, in order for him to be sure of his remedial rights.[247]

3.3. Application of Specific Performance in Other Legal Systems

3.3.1. Generally

The right to require performance of a contract is an axiom of many civil-law legal systems. In theory such right is the most satisfactory remedy for an aggrieved party because it is the only way that he gets what he is supposed to get, i.e. the performance he bargained for. As it has been discussed above, the right to require performance, under Articles 46 and 62 of the CISG, is restricted in certain situations. Similarly, under Finnish law, the right to performance is subject to certain limitations. Two general considerations can be identified for the limitation of the availability of specific performance. First, specific performance is limited if it causes undue interference with the personal freedom of the debtor. Secondly, specific performance is limited because the balance between the benefit that the promisee can achieve by performance and the problems in the enforcement of performance is often thought to be too severe.[248]

For these fundamental reasons the availability of specific performance is limited under the CISG, the German, French and United States law and under Finnish law, as it was noted in Section 3.2.2. However, the general right to specific performance and especially the limits to the right differ significantly in different jurisdictions. Accordingly, Treitel distinguishes three different approaches: First, specific performance is the primary principle, subject to certain limitations; secondly, specific performance is available in respect of obligations of certain content but not in respect of others and; thirdly, specific performance is regarded as an exceptional remedy available only in rare instances. Treitel further points out that such approaches can be identified respectively as the German, French and Common law approaches.[249] Accordingly, the Finnish approach can be identified as the German approach.

Generally, all three approaches to handle problems concerning specific performance seem to differ from each other. The most difficult task appears when the three approaches are matched with the CISG. Above has been discussed the approach of the Finnish legal system to specific performance and the differences with the CISG thereto, from the point of view of Article 28 of the CISG. In order to get a better view on the problems of Article 28 and specific performance under the CISG, the German, French and the Anglo-American approaches to specific performance will be examined in the following with an overview to such legal systems and their approach to specific performance.

3.3.2. Germany

The source for the German rules for remedies for a breach of contract can be found in the Civil Code of Germany (Bürgerliches Gesetzbuch or BGB). Although the starting point of German law is that specific performance is the primary remedy for a breach of contract and that a promisee is entitled to a judgement for performance it is not mentioned in so many words in the BGB but a number of provisions assume its existence.[250] Furthermore, the BGB rather handles the right to require performance as a right of the promisee than as a remedy for a breach of contract. Consequently, the most important provision concerning specific performance under German law can be found in paragraph 249 of the BGB which provides that the primary duty of a debtor who is bound to make Schadenersatz is to bring about the state of affairs that would have existed had the circumstances giving rise to the duty to make reparation not occurred. Such duty is under German law referred to as one to make Naturalherstellung.[251]

The general right to require the other party to perform his obligations is subject to a number of limitations. The practical effect of such limitations is, as a matter of fact, far more important than the general rule.[252]

The first limitation to specific performance under German law arises where, in situations of personal injury or damage to property, the promisee exercises his option to claim the amount of money required to restore the situation that would have existed if the default had not been committed instead of claiming Naturalherstellung. Consequently, this limitation has little relevance in the law of contract. The second limitation arises out of a number of provisions to the effect that the promisee can set a Nachfrist.[253] If the debtor fails to comply with the Nachfrist, the promisee can claim compensation in money but the claim for performance is excluded.[254] The third limitation concerns impossibility. If actual reparation or performance is impossible, but for which impossibility does not operate as an excuse, the promisee only has the right to claim damages. The fourth limitation arises when reparation in kind cannot compensate the promisee adequately. The fifth limitation arises when the cost of putting the promisee into the position he would have been, had the contract been performed, involves unreasonable efforts or expense or where the result of so doing would leave him with a more valuable item than he had before.[255] The sixth limitation arises in the so-called positive Vertragsverletzung cases giving rise to a claim for Schadenersatz. The nature of the injury will often lead to the result that this is a claim for compensation in money.[256]

The rules concerning specific performance under German law are regulated in connection with the rules of enforcement of performance.[257] Rules regarding enforcement of performance other than in money can be found in the Zivilprozessordnung (ZPO), which consequently plays an important role as regards the German rules on specific performance. The method of enforcing a judgement for performance in German law depends on the nature of the obligation. The method of enforcement is specifically made for the needs of the judgement to be enforced and cannot therefore be used for another judgement.[258] Different methods of enforcement can be identified: First, if the obligation concerns moveable property, the judgement can be enforced, pursuant to § 883 of the ZPO, by taking the property from the debtor and handing it over to the promisee or, pursuant to § 885 of the ZPO, if the obligation concerns immoveable property (e.g. real property and ships) the debtor can be required to vacate the property whereafter the promisee may then be put into possession of it. Furthermore the promisee can, pursuant to § 887 of the ZPO, ask the court to authorize him to have the act performed at the expense of the debtor and he may ask the court to condemn the debtor to pay the cost of such performance in advance. It is naturally provided in such a case, that the obligation can be done vicariously. If the judgement cannot be vicariously performed, enforcement can be done by means of fines and even imprisonment. However, such method of enforcement is available only in rare cases.[259]

Treitel states, regarding the enforcement of performance under German law, that one noteworthy feature is the great variety of means of execution provided by the law and further that the exercise of physical force (which is traditionally considered to be an argument against specific performance) is a comparative rarity.[260] Treitel points further out that the "second remarkable feature of the scheme is its treatment of judgments for services due under a contract of service. Such judgments are excepted from the general rule that judgments for acts which cannot be vicariously performed are enforceable by fines and imprisonment."[261]

It can be concluded that the German rules on specific performance, as is the case under Finnish law too, clearly represent the system where the remedy of specific performance is accepted as the primary remedy. As regards the application of Article 28 of the CISG, it is, consequently, so that a German court generally does not have too many problems. The basic approach to specific performance is the same, however, with the exception that limits to the right to require performance under German law seem to differ from the limits that of the CISG, e.g. because the approach is so strongly attached to the enforcement procedures. Schlechtriem concludes, however, that German courts will apply Article 28 only in rare cases stating in particular that "Article 28 does not enable a promisor, against whom an action is brought in a German court for performance or for damages on account of his failure to perform, to rely as a defence to that action on any grounds of exemption under German law that are more extensive than those under Article 79 (Such as "Wegfall der Geschäftsgrundlage" (clausula rebus sic stantibus))."[262]

3.3.3. France

The fundamental principles and rules regarding specific performance under French law can be found in the French Civil Code (Code Civil or CC). The main principle according to Article 1134 of the CC is that agreements are binding. Such principle has been seen to lead to the fact that the promisee has a right to require performance of obligations under the contract. If enforced performance is not possible the promisee has a right to claim damages.[263]

French law, like German law, also distinguishes different obligations in which enforced performance is based. Consequently, it may take the form of restoring the state of affairs which would have existed had the default not occurred or of compensating the promisee by a substitute which is usually a monetary compensation.[264] French law and the CC differs, however, from German law when performance has become impossible. Consequently, under French law there is generally not an obligation to deliver substitute goods.[265] The French law recognizes in principle the availability of specific performance, i.e. exécution en nature (direct execution). The general principle is, however, subject to an important exception, which is in turn also subject to a qualification, making the subject matter complex. The complexity appears only in a theoretical point of view, and is thus, of little importance in practice because in practice the most important remedy for an aggrieved party under French law is the possibility to claim for damages and his right to refuse to perform and avoid the contract.[266]

The CC provides different regulations as to how different obligations shall be performed. It is furthermore distinguished in the CC obligations such as "obligation de donner", "obligation de faire" and "obligation de ne pas faire". The first of these obligations refers to an obligation to convey and is enforced "automatically" by the agreement itself. The second refers to obligations to do and the third to obligations not to do.[267] The two last obligations are seen generally as obligations not possible to enforce.[268]

An obligation de donner is an obligation which often does not require enforcement because it is self-executing in the sense that ownership in specific items can be transferred by the mere agreement of the parties.[269] Consequently, this is the obligation where the right to specific performance most clearly exists. The promisee has the right to get possession of the items that has been agreed upon with the promisor.

The case becomes more complicated as regards generic goods. The promisor's duty to appropriate and deliver appears here to be an obligation de faire which cannot be directly enforced. According to Article 1142 of the CC, the only available remedy for a breach of an obligation de faire and obligation de ne pas faire is damages. Consequently, for these obligations there is no right to performance.[270] However, the CC gives some possibilities to specific performance even in the cases of obligation de faire and obligation de ne pas faire. According to Article 1144 of the CC, the promisee is entitled to a judgement authorizing him to buy against the promisor at the promisor's expense. Treitel notes, that "this appears to be regarded as indirect exécution en nature though in practical effect it appears to differ little from damages".[271] Article 1144 does not expressly draw any distinction, which is drawn in German law, between acts which can be performed vicariously and which cannot. Accordingly, Article 1142 of the CC only prevents the direct enforcement of obligations, which cannot be vicariously performed.[272] Therefore, e.g., a contract by an artist to complete and deliver a picture cannot be enforced under the general principle of the CC.

Article 1142 of the CC, and its underlying idea that the enforcement of private obligations by remedies which restrict personal liberty is not acceptable and the very wide terms as regards its references to all obligations, has been a target of frequent criticism. Therefore, the French courts have developed the so called astreinte to further define the various qualifications discussed above.[273] An astreinte is a judgement for performance. It is coupled with a condemnation by which the debtor is obligated to pay a fixed sum of money for each day that he remains in default. Astreintes are further divided to provisional and definitive astreintes.[274]

Under the provisional astreinte (astreinte provisoire), a sum which is to be paid for each specified period of non-performance, is simply fixed. Such sum is not based on any actual or prospective loss of the promisee. It is purely to coerce the promisor into complying with the judgement to perform the principal obligation. The reason why this form of astreinte is called provisional is that the promisee does not automatically receive the amount specified but he has to apply for it by a new application from the court. At this stage the court might adjust the specified sum so as to comply with the promisee's actual loss. Consequently, provisional astreinte may become compensatory by being reduced to the amount of the actual loss suffered. However, if the promisor continues to be in breach, the astreinte may also be increased in amount with a view to overcoming his obstinacy. Furthermore, the original judgement normally fixes a period during which the astreinte operates. If the promisor has not at the end of the period performed, the promisee can apply for liquidation of the astreinte and for the issue of a further astreinte.[275]

The definitive astreinte (astreinte definitive) is not subject to revision. Only if the promisor's failure to perform is due to events outside his control, the definitive astreinte could be subject to revision. Therefore the promisee is entitled to the fixed sum multiplied by the number of periods of delay specified in the judgement. Like the provisional astreinte, the definitive astreinte is not based on any actual or prospective loss of the promisee. Consequently, the definitive astreinte appears to have a greater coercive force than the provisional astreinte.

The main use for the astreintes in the contract law is to secure the availability of specific performance in situations where Article 1142 of the CC would not allow it. The institution has, however, been criticized to certain extent. Accordingly, there have been argument such as, that the astreinte is not supported at all by the CC, which basically only provides for compensatory damage and that astreinte serves as a penalty enriching the promisee. However, the astreinte is now a well established institution under French law.[276]

As regards the institution of astreinte, Treitel notes that it "seems to have no parallel in systems not based on French law, though the concept of giving a remedy so as to bring pressure to bear on the debtor to perform an obligation which cannot be directly enforced is not unknown in common law jurisdictions."[277] The French provisions on specific performance establish further obvious uncertainty as regards the remedial scheme of the CISG, in light of Article 28, because its approach to specific performance is obviously rather different and complicated compared to the CISG. If a dispute is brought in a French court and the plaintiff is suing for specific performance, or say, specific performance would be the most satisfactory remedy to him for the promisor's failure to perform his obligations under the contract, the plaintiff might must consequently consider carefully his requirement to performance.

3.3.4. United States; Uniform Commercial Code

Under Anglo-American law, the basic remedy for a breach of contract involves awarding damages to compensate the aggrieved party for the loss of the benefits which that party would have received had the contract been performed. Accordingly, when the other party breaches, the aggrieved party is entitled to receive a judgement for that amount of money which will place the aggrieved party, as nearly as possible, in the position he would have been had the contract been performed. In other words, the aggrieved party is entitled to the benefit of the bargain and should receive money damages to compensate for the loss of that benefit when the other party breaches.[278]

Specific performance, on the other hand, is not available as the primary remedy for a breach of contract and is only exceptionally available.[279] Historically, in the Anglo-American legal system, common law courts could not specifically enforce a contract. Orders compelling a breaching party to perform could only be decreed by a court of equity and a court of equity would not act unless the remedy at law, i.e. damages, was inadequate. However, courts of law and equity do not exist separately any more but have been merged. This merger has not changed substantially the requirements for obtaining specific performance. Therefore, specific performance is not available in most contract breaches under Anglo-American law because the money damage remedy at law is seen to be adequate to place the aggrieved party in the position he would have been had the contract been performed as originally agreed upon between the parties.[280] As a general rule, specific performance is not available for an aggrieved party as a contractual right. Thus, specific performance has been regarded as a discretionary remedy which can be used by the court at its discretion.[281]

Under Anglo-American law specific performance can be obtained only where the money damage remedies, which the courts primarily grant, do not suffice to provide a sufficient remedy for the aggrieved party for a breach of contract. Accordingly, the most common ground for finding that the damage remedy available at law is inadequate is that the subject matter of the contract is unique. If the contract involves the sale of unique property, then money damages will not place the injured party in as good a position as performance of the contract because the money cannot be used to buy the same property elsewhere.[282] What is then unique? Real property is traditionally regarded as unique.[283] In a particular case, goods may also be unique. Article 28 of the CISG directs us to look to the domestic law of the forum and thereby especially the sale of goods. Accordingly, as regards Anglo-American law and especially the United States, of interest is the Uniform Commercial Code (the "UCC") and its provisions regarding specific performance which in most cases will be applicable.[284]

The preparation of the UCC begun in 1942 as a joint project of the American Law Institute and the National Conference of Commissioners on Uniform State Laws. The reason for the starting of the preparation of the UCC was to establish a uniform legislation in the law merchant on a federal level. However, the UCC has been adopted by the American states differently. Different states also interpret the UCC in different ways. Furthermore, it can be mentioned that at least three different official texts of the UCC are in force in each of the American states.[285] Accordingly, a uniform interpretation of the UCC and its provisions is often seen as slightly problematic. Case law and commentaries of the application of specific performance under the UCC allow, however, to distill some features which govern the determination as to whether a court or an arbitral tribunal in the United States will grant specific performance.[286] Having regard to the scope and purpose of this study, such features serve as good guidelines in the examination of the availability of specific performance under the UCC.

The basis for specific performance under the UCC can be found in Section 2-716 which provides that "(1) Specific performance may be decreed where the goods are unique or in other proper circumstances. (2) The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just." Consequently, such provision does not give the aggrieved party an unrestricted right to elect specific performance as it is limited to instances in which the contracted goods are unique or in other proper circumstances.[287] According to the Official Comment to the UCC concerning Section 2-716 it is suggested that specific performance is no longer limited to goods which are already specific or ascertained at the time of contracting and further that the test of uniqueness must be made in terms of the total situation which characterizes the contract.[288] The Official Comment further states that "Output and requirements contracts involving a particular or peculiarly available source or market present today the typical commercial specific performance situation, as contrasted with contracts for the sale of heirlooms or priceless works of art which were usually involved in the older cases."[289] When a court in the United States is considering whether it will grant specific performance, based on Section 2-716 of the UCC, to the aggrieved party, some useful criteria can be identified. First, the replaceability, or the availability of substitute goods, is generally an important issue in applying Section 2-716 of the UCC.[290] It is, however, unclear what is to be regarded as replaceable and what is not. It has been suggested that where the aggrieved party can demonstrate scarcity or that procuring a substitute can only be accomplished through considerable expense, trouble, or loss, a court is likely to grant specific performance.[291] Secondly, as regards the concept of uniqueness which is closely related to the replaceability of the goods, it is expressly mentioned in Section 2-716 that specific performance is available "where the goods are unique". Accordingly, if close substitutes are available, a court in the United States will not regard the goods as unique. This is not, however always the case because the courts sometimes grant specific performance even if the goods of the same kind exist on the open market.[292] Thirdly, if the court finds damages as an inadequate remedy because measuring them accurately is specifically difficult, it may grant specific performance as a more appropriate remedy. Fourthly, although many courts recognize that Section 2-716 was enacted to liberalize the availability of specific performance [293] they do not perceive such a policy to lessen the UCC's emphasis on the commercial feasibility of replacement as the most desirable approach.[294] Treitel states in this regard further that commercial feasibility is mandated by certain provisions in the UCC under which also good faith is required in the enforcement of contracts.[295] Finally, the UCC does not grant the seller a right, as does the CISG, to require the buyer to take delivery. Consequently, damages are regarded as the more economical remedy.[296]

The Anglo-American legal system has traditionally been reluctant to enter a judgement for specific performance. Such is the approach of the UCC too, although it has taken a little more liberal attitude towards specific performance. This is also the main reason why Article 28 was included in the CISG; to give an Anglo-American court or arbitral tribunal the possibility not to enter a judgement for specific performance unless it would do so under its own law. However, many commentators have noted that American courts have taken an even more liberal attitude towards specific performance, than what the UCC provides.[297] Nevertheless, even if the approach to specific performance under Anglo-American legal systems and the UCC would be such as to more easily grant specific performance than traditionally, the gap compared to the civil law systems still exists. Therefore, parties to a "specific performance dispute" governed by the CISG, and where Anglo-American law is the law of the forum, must take into consideration the effect of the Anglo-American approach.

4. SPECIFIC PERFORMANCE AND INTERNATIONAL CONTRACT PRINCIPLES

4.1. Generally; Lex Mercatoria

Gap-filling of international commercial contracts can also be achieved by the application of the so-called lex mercatoria or law merchant. Lex mercatoria does not derive from any formal legislation, such as conventions, but rather from acceptance of the need for a basic international order in contract law.[298] An international consensus does not exist as to the meaning of lex mercatoria, except that everyone agrees upon the negation of the concept, i.e. what it is not.[299] Consequently, Ramberg states that "lex mercatoria is not national legislation but rather an anational system of principles and rules generally accepted in international commerce." Accordingly, international usage of the trade could become a part of an international commercial contract and even standard contract terms - if consistently used in the relevant trade.[300] Does lex mercatoria comprise also legal principles or standards of a more general nature, such as the main principles that the parties should be held to their bargain under the principle of pacta sunt servanda or that they should observe good faith and fair dealing in their contractual relationship? The answer is problematic, due to the fact that although such principles would be accepted in most jurisdictions, the application of the principles varies. Ramberg concludes that " ... many of the principles and rules actually used in international commercial contracts stem from the general acceptance of the international trading community, although for their actual application the adoption by the contracting parties themselves -- expressly or impliedly -- may be necessary in the absence of an acknowledged validity by the law applicable to the contract."[301]

There have been efforts made to create comprehensive principles for international commercial contracts. The UNIDROIT Principles of International Commercial Contracts and the European Contract Law Principles represent the core of such principles.[302] As these principles were introduced in 1994 and 1996 it is perhaps premature to consider these principles as a "generally accepted lex mercatoria". However, these rules have potential to be generally accepted by the international trading community and thereby achieve a position to be regarded as lex mercatoria.[303] Especially the principles' coverage of practically all aspects of contract is a feature that is easily acceptable.[304] The following examination on the principles and their approach to specific performance proves that they take a modern and uniform way to handle specific performance.

4.2. The UNIDROIT Principles of International Commercial Contracts

The UNIDROIT Principles of International Commercial Contracts (UNIDROIT Principles) was published in 1994 as a result of comparative research and deliberations by a group composed of representatives of all the major legal systems of the world. The UNIDROIT Principles have, in practice, only a persuasive value. The Principles can, however, have significant role in international and domestic legislator's adoption policy, court and arbitration proceedings, contract drafting or choice of law clauses. The reason for such significance can generally be seen in the modern and functional solutions adopted in the principles. The potential users of the UNIDROIT Principles to which they are addressed to are especially international law firms, corporate lawyers, arbitration courts and the like. The Principles have so far proved to be successful and widely accepted.[305]

According to the preamble of the UNIDROIT Principles the Principles set forth general rules for international commercial contracts.[306] They will be applicable if the parties to a contract expressly agree upon adoption of the principles or even in situations where the contract refers to general principles of law or such as lex mercatoria. The UNIDROIT Principles are regarded to be especially useful in arbitration proceedings.[307]

The UNIDROIT Principles provide a clear right to performance.[308] Article 7.2.2, of the Principles, stipulates, as follows:

"Where a party who owes an obligation other than one to pay money does not perform, the other party may
require performance, unless
(a) performance is impossible in law or in fact;
(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."

Consequently, it can be noted that the UNIDROIT Principles have features from all the above discussed legal systems.[309] Following the basic principle of the CISG (Article 46) such article adopts the principle of specific performance, however, subject to rather many limitations. According to the comment of the UNIDROIT Principles the article is particularly important with respect to contracts other than sales contracts.[310] The comment further notes that under the Principles the remedy is not discretionary remedy (unlike the CISG; Article 28), i.e. a court must order performance unless the exceptions of the article provide otherwise.[311] The Principles make furthermore a clear distinction between monetary obligations [312] and non-monetary obligations, providing, however, that the right to perform for both is the starting point.

The UNIDROIT Principles' relationship to the CISG is not regarded as competing. On the contrary, it has been suggested that the Principles would serve a significant help in the interpretation and gap-filling of the CISG.[313]

4.3. The European Contract Law Principles

The Commission on European Contract Law (CECL) has produced another collection of international contract principles, the Principles of European Contract Law (CECL Principles). Such Principles were primarily meant for the use within Europe, and therefore their applicability is not as extended, as is the situation with the UNIDROIT Principles.[314]

Also the CECL Principles establish a clear right to specific performance. According to article 4.102 of the Principles:

"(1) The aggrieved party is entitled to specific performance of an obligation other than one to pay money,
including the remedying of a defective performance.

"(2) Specific performance cannot, however, be obtained where:
     (a) performance would be unlawful or impossible; or
     (b) performance would cause the obligor unreasonable effort or expense; or
     (c) the performance consists in the provision of services or work of a personal character or depends upon
     a personal relationship; or
     (d) the aggrieved party may reasonably obtain performance from an other source.

"(3) The aggrieved party will lose the right to specific performance if he fails to seek it within a reasonable time
after he has or ought to have become aware of the non-performance.

The CECL Principles take generally the same approach as the UNIDROIT Principles. Consequently, the Principles accept the right to specific performance, however, making it subject to rather many exceptions.[315] Also the CECL Principles make a clear distinction between monetary and non-monetary (specific) performance. Generally, under the CECL Principles a right to require performance is accepted for both obligations.[316]

As the CECL Principles were first published in 1996 [317] their practical importance has not perhaps yet reached a similar success as the UNIDROIT Principles. However, the CECL Principles were drafted with an intention for them to provide a necessary legal foundation for measures taken and to be taken in the future by the organs of the European Community.[318] Consequently, it can be expected that even the CECL Principles finds their place within the international sales community.

5. CONCLUSIONS

It has been argued that specific performance under the CISC scheme leads to disparate results in different forum courts. The reasoning to this is mainly Article 28, which makes the remedial uniformity uncertain by providing the court the possibility to effectuate specific performance through its own domestic law. It has also been stated that the effect of Article 28 leads to a risk of forum shopping by the parties.[319] The main reasoning for this is also clear: the basic difference of the common law and civil law systems to approach specific performance.

Many commentators argue, however, that the problems arising from Article 28 of the CISG are not that significant, arguing that even United States forums typically grant specific performance if "the relevant subset of contract is identified".[320] Furthermore, an argument has been that parties to a CISG contract do not generally seek specific performance due to the problems and difficulties in execution, and as a commercial solution rather claims damages.

While these notes are of the essence, the specific performance rule is an important rule, even in international trade. 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. Therefore, 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 postbreach 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.[321] 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.[322]

However, it must be remembered that, in situations, where the CISG will be the applicable law of the dispute, Article 28 may cause significant problems concerning the possibilities to predict whether the court or arbitral tribunal will enter a judgement for specific performance if the remedy is sought. If the case is tried in Finland, and Finnish law is the applicable law as regards the evaluation to be made according to Article 28, the party requiring performance will at least theoretically, meet further limitations to the CISG's right to specific performance. The situation is the same also as regards German and French law, not even to mention United States law. Therefore, one must have some degree of knowledge about the forum law in question, in order to make sure, whether the forum will or will not grant specific performance.


FOOTNOTES

1. Schmitthoff, p. 3. Schmitthoff uses a general expression of "export transactions".

2. Ferrari, p. 7.

3. See Convention, Article 7 and Honnold (1987), pp. 113-123 generally.

4. CISG Article 1.

5. See Catalano, p. 1808.

6. See Honnold (1987), pp. 47-48.

7. The term "gap-filling rule" is here used so as to refer to situations where the contract and any trade usage or custom is silent and where the CISG will accordingly guide.

8. See Bernstein and Lookofsky pp.81-82.

9. The common law concept "specific performance" will be used in this study to refer to specific relief and the right to require performance.

10. Bernstein and Lookofsky pp. 81-82

11. See Article 28.

12. The Uniform Commercial Code will be examined in respect of the United States.

13. See e.g., Honnold (1987) for evaluation on the relevance of specific performance, pp. 302 and 303.

14. Article 28.

15. Bernstein & Lookofsky, p. 18.

16. Honnold in Kritzer, p. 363.

17. Kritzer, p. 363.

18. The reference to Article 12 concerns the formality requirements as to the contract of certain countries.

19. Article 9(2) further provides that the parties are also bound by a usage or practice which they have impliedly made applicable to their contract. Of relevance is the acceptance of such usage or practice and the fact that did the parties know or should have known about it.

20. Treitel, p.1

21. Here it is presumed that a late delivery (or a granted judgement for specific performance which leads, de facto, to a late delivery) always leads to a loss.

22. See Treitel pp. 1-2 for further discussion about the termination or avoidance rule.

23. See Bernstein & Lookofsky pp. 83, 97 and 99 and Schlechtriem (1998), p. 356 for further discussion about the "no-fault type rule".

24. Schlechtriem characterizes the provisions on remedies as the "backbone" of the CISG. See Schlechtriem pp. 21-22.

25. Bernstein & Lookofsky, p. 96

26. Bernstein & Lookofsky, p. 82

27. Article 45(2) provides that: "The buyer is not deprived of any right he may have to claim damages by exercising his right to other remedies". (Article 61(2) provides similarly).

28. Bernstein & Lookofsky, p. 87.

29. Article 25 defines fundamental breach in terms of "foreseeable substantial detriment".

30. See Article 47(1).

31. See Kritzer, pp. 428-431.

32. Bernstein & Lookofsky, p.94.

33. For more details and restrictions, see Article 71 and Kritzer, pp. 557-

34. Also the CISG separates the buyer's and the seller's right to specific performance.

35. See generally Section 3, infra.

36. Schlechtriem (1998), p. 199.

37. Treitel, p. 43.

38. See Honnold (1987), p. 300 and Gonzales p. 96.

39. Schlechtriem (1998), p. 376.

40. Honnold (1989), p. 428.

41. See Honnold (1989), p. 428 and p. 96 and Schlechtriem, p. 368.

42. Bianca & Bonell, p. 335.

43. Bernstein & Lookofsky, p. 84.

44. Bianca & Bonell, p.336.

45. See Kastely p. 612. Kastelys opinion could be seen in light of Art. 34 which provides for the seller's obligation to deliver proper documentation relating to the goods.

46. Honnold (1989), p. 428.

47. Bianca & Bonell, p. 339.

48. Bianca & Bonell, pp. 339-340.

49. See Honnold (1987) p. 300.

50. Schlechtriem, p. 378.

51. Bianca & Bonell, p. 336, see also Honnold (1989), p. 428 for the Official Comment stating the same.

52. Schlechtriem (1998, p. 428.

53. Schlechtriem (1998), p. 378.

54. Art. states 45(2): "The buyer is not deprived of any right he may have to claim damages by exercising his right to other remedies".

55. Schlechtriem (1998), p. 378.

56. See Treitel pp. 50-51. See also Herber p. 117 stating the same.

57. Honnold (1989), p. 428.

58. See Section 3.2.2.1, infra.

59. See Article 35(2).

60. Honnold (1987), p. 301.

61. Schlechtriem (1998), p. 383.

62. Bianca & Bonell, p. 336.

63. See Section 2.2.2.1, infra.

64. Schlechtriem (1998), p. 381.

65. Schlechtriem (1998), p. 382.

66. See discussion in Section 2.2.2.1, supra.

67. Schlechtriem (1998), p. 383.

68. Article 49(1)

69. See Schlechtriem (1998), p. 384.

70. See also discussion in Section 2.2.2.1, supra.

71. Bianca & Bonell, p. 337.

72. See Will's argumentation in Bianca & Bonell p. 337.

73. See Schlechtriem (1998), p. 390.

74. See Bianca & Bonell pp. 337-338. Will states that the seller "finds himself in the same economic position as if the buyer had chosen avoidance of the contract under Article 49. That is, the seller bears the risk of being unable to deliver substitute goods or to dispose of the goods returned and of all transport costs involved. Such a risk would hardly be justified as long as the defects are only of minor importance."

75. See Honnold (1989), p. 429.

76. Schlechtriem (1998), p. 390.

77. See discussion in Kritzer, pp. 388-389 and Ramberg (1995), p. 413.

78. Schlechtriem (1998), p. 391.

79. Schlechtriem (1998), p. 391.

80. See Honnold (1987), p. 301.

81. See discussion in Sections 2.2.2.1 and 2.2.2.2, supra.

82. See Will's discussion in Bianca & Bonell, p. 339-340.

83. Will in Bianca & Bonell, p. 338.

84. Bianca & Bonell, pp. 338-339.

85. See Enderlein & Mascow in Kritzer, p. 391.

86. Schlechtriem (1998), p. 392 and 393.

87. Honnold (1987), p. 301.

88. Bianca & Bonell, p. 339.

89. See discussion in Section 2.2.2.2, supra, for what is to be regarded as a reasonable time.

90. See discussion in Section 2.2.2.2, supra.

91. Kastely, p. 619.

92. Section 3, infra, will discuss Article 28 more comprehensively.

93. Schlechtriem (1998), p. 482.

94. Kritzer, p. 382.

95. See Treitel, pp. 44-45.

96. See Ziegel, p. 105. See also Honnold and Kastely in Kritzer, p. 392a, who both disagree.

97. Bernstein & Lookofsky, p. 86.

98. Honnold (1989), p. 438.

99. Bianca & Bonell, p. 453.

100. Article 64 provides that the seller may declare the contract avoided if a failure in performance by the buyer amounts to a fundamental breach or if the buyer has not paid within a given additional (Nachfrist) time.

101. See discussion in Section 2.2.2.1, and also Section 2.2.2.2 (limiting the right to require delivery of substitute goods).

102. Honnold (1989), p. 439

103. Also called as "Nachfrist", familiar from the German legal system. See Section 2.3.4, infra.

104. Sevón, p. 340.

105. Bianca & Bonell, p. 454. See further Knapps discussion about special problems concerning Article 46(2).

106. Honnold (1987), p. 356. As Honnold notes: " ... Article 62 ... will apply with full force."

107. Honnold (1987), p. 357.

108. See Honnold (1987), p. 357. Reference is here made to Article 28. The effect of Article 28 will be examined in Section 2, infra.

109. Bianca & Bonell, p. 452.

110. Honnold (1987), p. 358.

111. See also Bernstein & Lookofsky, pp. 112-113.

112. For a comprehensive examination on Article 28, see Section 3, infra.

113. See Schlechtriem (1998), p. 483.

114. See especially discussion about this under Finnish law in Section 3.2, infra.

115. See Honnold (1987), p. 357.

116. Farnsworth, pp. 249-250.

117. Schlechtriem (1998), pp. 484 and 203. Schlechtriem attaches more weight on the Secreteriat's Commentary and the dubious nature, in terms of legal policy, of an unrestricted right to bring an action for the price, in winding up to his conclusion.

118. Sevón, p. 339.

119. See also Sections 2.2.2.4 and 2.2.3.1, supra.

120. This is also the over all effect of Article 28.

121. Bernstein & Lookofsky, p. 84.

122. Honnold in Kritzer, p. 383.

123. Kastely p. 619.

124. See Kastely, pp. 619-620.

125. Kastely, p. 619.

126. Treitel, p. 73.

127. See Kastely, p. 622. Kastely details how the CISG delegates repeatedly rejected amendments proposed by the United States to require mitigation in such situations.

128. Kastely, p. 622.

129. Treitel, pp. 73-74. See also Section 2.3.1, supra.

130. Treitel, p. 74.

131. Honnold (1987), p. 222.

132. Honnold (1989), pp. 364-365.

133. See Feltham, p. 355. See also Lookofsky (1989), p. 43.

134. Gonzales, p. 98.

135. See Section 2.3.1, supra, for a same conclusion.

136. Kritzer, p. 232. See Section 3 infra. On the other hand, see also Ulen, pp. 390-393 noting that the duty to mitigate does not apply in an action for specific performance under United States law and nevertheless concluding that a rule favoring specific performance would not inefficiently induce promises to increase their losses.

137. See Kritzer, pp. 623-624.

138. Ziegel, pp. 150-151.

139. Honnold (1989), p. 539.

140. See Catalano, p. 1811.

141. See Kastely, p. 621.

142. Kastely, p. 621.

143. Schlechtriem (1998), pp. 378-380.

144. Schlechtriem (1998), p, 378.

145. See Honnold (1989), p. 551, where Honnold states that "There is no intention that the legislators intended such an absurd result".

146. See paragraph 3 of Article 79.

147. Kritzer, p. 642.

148. This principle was shortly discussed in Sections 2.2.3 and 2.1, supra.

149. See also Section 2.2.2.2, infra, discussing the aggrieved party's right to require re-delivery of substitute goods.

150. See Bernstein & Lookofsky, pp. 29-30.

151. Ziegel in Kritzer, p. 383.

152. As directed by Article 28. See Section 2.3.2, supra.

153. See Section 4.2, infra. If the aggrieved party e.g. proves that the UNIDROIT Principles have been made impliedly applicable to their contract, a right to performance could exist.

154. See e.g. Lookofsky (1993), p. 66.

155. See Section 2.2.2.1, supra.

156. See Fletchner pp. 60-61. See also Winship p. 68: "The Convention does not specifically address the issue of the buyer's rights on the seller's insolvency… The Convention is concerned only with the rights of the seller and the buyer so that the priority of third-party claims is lef to other law".

157. See Sections 3.2 and 3.3.

158. See Walt p. 218.

159. Gonzales p. 96.

160. Kastely, p. 624.

161. For the application of Article 28 to Articles 46 and 62, see Sections 2.2.2.4 and 2.2.3.1, supra.

162. Kastely, p. 625.

163. See Honnold (1987), p. 223.

164. See Kastely pp. 625-626 for discussion about the reasons. Kastely quotes the Secretariat Commentary.

165. See Ziegel, p. 75.

166. Lando in Bianca & Bonell, p. 237.

167. Gonzales, p. 97.

168. Bianca & Bonell, p. 237 and Bernstein & Lookofsky, p. 85.

169. Schlechtriem (1998), p. 207.

170. Lookofsky (1993), p. 66.

171. See Catalano, p. 1819.

172. Kastely, p. 636.

173. Kastely, p. 637 and Schlechtriem (1998), p. 205. See also Kritzer p. 226 for Grigera Naón's opposite opinion.

174. Walt, p. 220.

175. Schlechtriem (1998), p. 206.

176. Schlechtriem (1998), p. 206.

177. Schlechtriem (1998), p. 208.

178. Zürich Chamber of Commerce, ZHK 273/95, available at: cisgw3.law.pace.edu

179. Bianca & Bonell, p. 239. See also Bonell in Bianca & Bonell, p. 62 who states that "Article 28 by its very nature does not seem capable of being derogated from by the parties".

180. Schlechtriem (1998), 208.

181. Kastely, p. 643.

182. Kastely, p. 644.

183. Kastely, p. 644.

184. Articles 30 and 53 basically require the parties to comply with their obligations under the contract.

185. Kastely, p. 646.

186. See Kastely, p. 647.

187. In addition with the CISG's freedom of contract principle, as provided by Article 6.

188. See Section 3.1.1, subsection three, supra.

189. Lando in Bianca & Bonell, p. 238.

190. Kastely, p. 628.

191. Honnold (1989), pp. 226-227.

192. Zürich Chamber of Commerce, ZHK 273/95.

193. Lando in Bianca & Bonell, pp. 238-239.

194. See Lando in Bianca & Bonell, p. 238 and Zweigert-Kötz, pp. 178-201.

195. Routamo, p. 35.

196. The (common law) expression specific performance will be used in this context. Finnish legislation uses mostly the expression "right to require performance of the contract".

197. Hemmo (1997), p. 230.

198. The most important of such Acts is naturally the Finnish Sale of Goods Act, which shall be examined in the following Sections.

199. See Aurejärvi, p. 132.

200. See Treitel, p. 47 and Section, 3.3, infra.

201. Hemmo (1997), pp. 230-234.

202. Taxell, p. 192.

203. Rodhe, p. 167 and Olsen (1987), p. 518. See discussion in Section 3.2.2.3, infra.

204. Ljungman, pp. 42-43. Ljungman notes that specific performance cannot be granted in situations where the performance of an obligation has changed to be illegal,

205. Taxell, pp. 196-197 and Olsen (1987), p. 520.

206. Such limitation is included in the Finnish Sale of Goods Act and shall thus be discussed below.

207. Hemmo (1997), pp. 233-234.

208. See Section 3.1.1, supra.

209. Routamo, pp. 2-3.

210. HE 93, p. 50. See Section 3.2.2.1, infra for discussion about the reasonableness principle.

211. Section 5 of the Finnish Sale of Goods Act.

212. Sections 6 and 7 of the Finnish Sale of Goods Act. See Routamo, pp. 52-53.

213. Routamo, p. 44

214. HE 93, p. 67. Avoidance of contract; paragraph 25 of the Act.

215. Sevón-Wilhelmsson-Koskela, p. 65, Routamo - Ramberg, p. 185.

216. See Section 2.2.2.1, supra.

217. Wilhelmsson - Sevón - Koskelo, p. 66, HE 93, p. 67.

218. Routamo - Ramberg, p. 186.

219. See Routamo, p.44.

220. Wilhelmsson - Sevón - Koskelo, p. 66.

221. HE 93, p. 68.

222. Wilhelmsson - Sevón - Koskelo, pp. 66-67. Therefore the impediment rule is closely related to the other exception in the paragraph.

223. See Olsen (1987), p. 520 and Routamo - Ramberg, p. 186. However, seller's culpable behavior does effect the liability in damages, which question is outside the scope of this study.

224. HE 93, p.69.

225. HE 93, p. 69. See also Olsen (1987), pp. 520-521.

226. See Wilhelmsson - Sevón - Koskelo, pp. 68-69 and HE 93, p. 69.

227. HE 93, p. 70.

228. Routamo - Ramberg, p. 187.

229. HE 93, p. 69, Routamo, pp. 69-70 and Wilhelmsson - Sevón - Koskelo, p. 70.

230. HE 93, p. 70.

231. See Routamo - Ramberg, p. 188 and Wilhelmsson - Sevón - Koskelo, p. 70.

232. HE 93, p. 70.

233. See Routamo - Ramberg, p. 188.

234. This is a rather self-evident interpretation.

235. Ramberg (1995), p. 404.

236. Routamo, pp. 111-112. If the goods are specific such right to re-delivery would naturally not exist.

237. See Section 3.2.2.1, supra.

238. Routamo, p. 112. This is also expressly mentioned in the paragraph, contrary than e.g. in paragraph 23.

239. See Ramberg (1995), pp. 404-405.

240. See Ramberg (1995), p. 411.

241. Routamo, p.155.

242. Ramberg (1995), p. 515.

243. Hemmo (1997), pp. 231-232. See also Rudanko, pp. 249-251.

244. Routamo, pp. 155-156.

245. Wilhelmsson - Sevón - Koskela, p. 65.

246. See Hemmo (1994), p. 7. See also Hemmo (1997), pp. 234-238.

247. Hemmo (1994), p. 7.

248. Treitel, p. 47.

249. Treitel, p. 47.

250. Treitel, p. 51. As is the case under Finnish law, parties right to performance of obligations under their contract is considered as a fundamental right, not expressly codified. Therefore it can be seen as a general principle of the law of contract. See Section 3.2, supra.

251. See Treitel, p. 51-52. Treitel points out that Schadenersatz is to be regarded as a right to performance in this respect, even if it in translation seems to be damages instead.

252. Zweigert & Kötz, p. 183.

253. For a definition on Nachfrist, see Section 2.3.4, supra.

254. BGB §326.

255. BGB §251,2.

256. See Treitel, pp. 52-52., and Olsen p. 457.

257. Olsen (1997), p.458.

258. Olsen (1997), p. 459 and Treitel p. 54.

259. BGB § 888. See Zweigert & Kötz, p. 184. See also Treitel, pp. 54-55 and Olsen pp. 459-461 for discussion about the different methods.

260. Treitel, p. 55.

261. Treitel, p. 55.

262. Schlechtriem (1998), p. 209.

263. Olsen (1997), p. 451.

264. Treitel, p. 55.

265. Treitel, pp. 55-56.

266. Treitel, p. 56.

267. Olsen (1997), pp. 451-452 and Treitel, p. 56.

268. Olsen (1997), p. 452.

269. Articles 1583 1138 of the CC. Treitel, p. 56.

270. Olsen (1997), p. 453. This view has, however, been criticized. See e.g. Treitel, p. 59.

271. Treitel, p. 57 and Olsen, p. 453.

272. Treitel, p. 58.

273. Treitel, p. 59.

274. Olsen (1997), pp. 455 and 456 and Treitel, pp. 59-60.

275. Treitel, p. 60.

276. Treitel, pp. 61-62. Act number 72/626 du 5 juillet 1972 established the institution officially.

277. Treitel, p. 62.

278. Schaber - Rohwer, pp. 241-242.

279. Treitel, p. 63.

280. Schaber - Rohwer, p 246.

281. Treitel, p. 63.

282. Schaber - Rohwer, p 270.

283. Dobbs, p. 257.

284. Flechtner, p. 59.

285. The state of Louisiana and the districts of Columbia and Virgin Islands has not adopted the UCC at all.

286. See Stone, pp.IX-XVI, White - Summers, pp. 1-10 and Catalano, p. 1834.

287. See Walt, p. 224.

288. Baird - Eisenberg - Jackson, p. 156.

289. Baird - Eisenberg - Jackson, p. 156. See also Stone, pp. 125-126.

290. Walt, p. 225.

291. Catalano, p. 1827.

292. Catalano, pp. 1827-1828.

293. See the Official Comment to Section 2-716, Baird - Eisenberg - Jackson, p. 156.

294. Treitel, p. 66 and Catalano, p. 1829.

295. Treitel, p. 66. See also Section 2.3.1, supra discussing the good faith principle under the CISG.

296. Kritzer, p. 228.

297. See e.g., Honnold and Lookofsky in Kritzer, p. 224.

298. Honka, p. 154.

299. Ramberg (1998), p. 20.

300. See Ramberg (1998) pp. 20-21.

301. Ramberg (1998) p. 21.

302. See Sisula-Tulokas, p. 78. The principles take the so-called "soft law" position in the law of contract.

303. Ramberg (1998), p. 21.

304. Honka, p. 163. The European Contract Law principles are not, so far, as extensive as the UNIDROIT Principles.

305. UNIDROIT, Presentation, pp. 1-2 (website). See also Bonell, p. 26 and Sisula-Tulokas, pp. 78-79. The UNIDROIT Principles are meant to be globally applicable.

306. UNIDROIT Principles, pp. 1-6.

307. Olsen (1997), p. 466.

308. Note that the UNIDROIT Principles use the expression "right to performance" instead of the common law concept "specific performance". The European Contract Law Principles on the other hand, see Section 4.3, infra, uses the concept to "specific performance".

309. See Olsen (1997), pp. 466-467.

310. UNIDROIT Principles, p. 173.

311. UNIDROIT Principles, p. 173.

312. Specific performance for breach of a monetary obligation is stipulated in Article 7.2.1.

313. See Bonell, pp. 33-38 and Sisula-Tulokas, pp. 79-80.

314. Olsen (1997), pp. 466-467.

315. Lando, p. 156. See also Olsen, pp. 466-468 and Sisula-Tulokas, pp. 78-84.

316. Olsen (1997), p. 467. As regards a requirement to payment of the price the CECL Principles are more extensive than the UNIDROITS Principles.

317. The first part of the Principles was published in 1996. The second part was estimated to be published during 1998.

318. Lando, p. xvii.

319. See Gonzales, p. 98.

320. Walt, p. 237.

321. Ulen, p. 343.

322. See Sevón-Wilhelmsson-Koskela p. 67


[These pages were taken from a posting on the
CISG-Finland website and were posted on the Pace website on 16 March 2001.]

Comments/Contributions
Go to Database Directory || Go to Bibliography