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AVOIDANCE IN THE CASE OF AN INSTALLMENT CONTRACT

[2nd edition: Case annotated update (June 2005)]

Chengwei Liu
LL.M. of Renmin University of China; E-mail: <lexway@mail.com>.

  1. General
  2. Avoidance in Respect of Installment(s)
          2.1 Avoidance in respect of a single installment: CISG Art. 73(1)
          2.2 Avoidance in respect of future installment(s): CISG Art. 73(2)
          2.3 Avoidance of the contract as a whole: CISG Art. 73(3)
  3. CISG Art. 73 in Context
          3.1 The role in defining a fundamental breach (Art. 25)
          3.2 Narrow possibility to invoke Nachfrist provisions (Arts. 47/49(1)(b), 63/64(1)(b))
          3.3 Overlapping with Art. 71/72 to the extent anticipatory breach is concerned
          3.4 Interrelationship between Arts. 51 and 73
          3.5 A summary

Key provisions at issue

[CISG Art. 73] provides special rules for installment contracts. These rules set out when a seller or a buyer is entitled to declare the contract avoided with respect to a single installment, future installments, or the contract as a whole.[1]

1. General

In a contract for delivery by installments, a breach by a party in respect of one or more installments can affect the other party in respect of that installment, in respect of future installments and in respect of installments already delivered.[2]

The basic problem concerns whether installment contracts should be considered as one contract, i.e., in their totality, whereby a difficulty of performance in regard to one installment would affect the contract as a whole, thus enabling one to avoid the whole contract, or whether they should be regarded as a series of separate contracts. Since abuses are possible in cases involving installment contracts, the rights and duties of the parties should be analyzed very carefully.[3] In this respect, Art. 73 of the United Nations Convention on Contracts for the International Sale of Goods (1980; "CISG" or "Convention") provides the following guidelines:

(1) In the case of a contract for delivery of goods by instalments, if the failure of one party to perform any of his obligations in respect of any instalment constitutes a fundamental breach of contract with respect to that instalment, the other party may declare the contract avoided with respect to that instalment.

(2) If one party's failure to perform any of his obligations in respect of any instalment gives the other party good grounds to conclude that a fundamental breach of contract will occur with respect to future instalments, he may declare the contract avoided for the future, provided that he does so within a reasonable time.

(3) A buyer who declares the contract avoided in respect of any delivery may, at the same time, declare it avoided in respect of deliveries already made or of future deliveries if, by reason of their interdependence, those deliveries could not be used for the purpose contemplated by the parties at the time of the conclusion of the contract.

Article 73 describes the right to avoid the contract where the contract calls for the delivery of goods by installments and where there has been or will be a fundamental breach in respect of one or more installments.

Clearly, it is a condition for the avoidance of a contract under Art. 73 that the contract provides for the delivery of goods by installments.[4] The first issue then bound to arise is to determine what constitutes an instalment contract in the sense of Art. 73 CISG. Generally speaking, a contract calls for the delivery by installments if it requires or authorizes the delivery of goods in separate lots.[5] Thus, an installment contract must be distinguished from "basic agreements" which contain "no exact quantitative definition of the obligation."[6] But an instalment contract need not determine the quantity of individual installments under Art. 73 as precisely as partial deliveries under Art. 51,[7] although the two articles overlap to some extent. This is in conformity with the Tribunal in [21 March 1996 Hamburg Arbitration award], where it is held:[8]

"A contract for the delivery of goods by instalments connects the individual instalments and regulates the obligation to deliver the individual instalments; if not in such a concrete manner as in the case of partial deliveries in the sense of Art. 51 CISG, but anyway individual instalments of a total quantity stipulated in the contract."

Furthermore, the goods do not have to be fungible so that an installment contract may cover delivery of different kinds of goods in each instalment,[9] or may provide for partial deliveries in a given installment.[10] Thus, for instance, the Court in [Switzerland 30 November 1998 Handelsgericht [Commercial Court] Zürich] characterizes the sales agreement as a contract in question for the supply of goods by installments and holds that, even though the instalment deliveries were not of the same kind of goods, Art. 73 of the CISG, which differs in that regard from Swiss law, is applicable.[11] In addition, a contract on the delivery of goods by installments does not require agreement of fixed dates. Instead of setting dates for delivery, there might be agreement in that deliveries can be asked for when needed.[12] Some authors see them as contracts for the delivery of goods by installments under Art. 73 CISG, if at least a supply according to need has been agreed upon -- Art. 33 CISG.[13]

Still, according to the Tribunal's opinion in [10 December 1997 Vienna Arbitration award S 2/97], even two separate contracts may represent a contract for the delivery of goods in installments to be governed by CISG Art. 73, when such two separate contracts have been characterized as "a unitary transaction from an economic point of view insofar, as they provide for the delivery of the absolute same kind of goods in installments during the period January to June 1997 under the same legal terms -- with slightly differing terms of payment -- and they had been concluded the same day."[14]

But it should be stressed that, for subjection to the provision for contracts for delivery of goods by installment in the sense of Art. 73 CISG, the contract has to provide for "the successive delivery of goods,"[15] or the separate contracts have to be regarded as "a contractual unity, which actually comprise a total amount of [...] the object of sale."[16] One should also note that the application of Art. 73 is limited to a contract for delivery of goods by installments. Art. 73 is not applied to cases where the buyer of a delivery, as a whole, has the right to pay in installments. In this context, non-fulfilment of the obligation to pay in installments may lead to avoidance of contract under Art. 64 or 72.[17] That is to say, this provision is concerned with successive deliveries, not installment payments. By analogy, however, Art. 73(2) can also apply to missed payments if they coincide with installment deliveries. Otherwise, the entire contract may be avoided under Art. 72 (or 64). Art. 73(2) is also applicable to other breaches by the buyer, such as not taking delivery of an installment.[18]

In any event, in a contract for delivery by installments a breach by a party in respect of one or more installments can affect the other party in respect of that instalment, in respect of future installments and in respect of installments already delivered.[19] The three paragraphs of Art. 73 CISG treat these three aspects of the problem, which will be respectively discussed below.

2. Avoidance in Respect of Installment(s)

2.1 Avoidance in respect of a single installment: CISG Art. 73(1)

Art. 73(1), the basic provision in CISG Art. 73,[20] implies that as a general rule, a breach of an installment performance gives the other party the right to declare the contract avoided only with respect to the installment.[21]

CISG Art. 73(1) basically repeats the contents of Arts. 49(1)(a) and 64(1)(a) with respect to the parties' failure to perform a particular installment.[22] What is particular is that, the approach established by Art. 73(1) makes the rules on avoidance for fundamental breach (Arts. 25, 49 and 64) applicable separately to each instalment.[23] That is to say, according to Art. 73(1), in the case of an installment contract, a fundamental breach of obligations concerning a partial delivery warrants avoidance of the contract (only) for this partial delivery.[24]

The purpose of Art. 73(1) is to permit a party to treat each installment of an installment contract as a severable contract for purposes of avoidance.[25] Such an explicit provision is useful to avoid misunderstanding that can result from the concept "avoidance of the contract."[26] Thus, when a seller fails to deliver only an installment of the goods covered by the contract, the buyer cannot avoid all of "the contract." Of course, on the other hand, if a buyer refuses to pay for an installment under a contract governed by CISG, the seller can avoid the contract "with respect to that instalment" even if the refusal to pay would not constitute a fundamental breach of the entire contract.[27] In the latter case, Art. 73(1) adapts the general concept of "avoidance of the contract" to a narrower issue: What may the aggrieved party do with respect to a specific delivery or a specific payment? Once the issue has been made specific and concrete, the Convention's general rules on avoidance for fundamental breach (Arts. 25, 49 and 64) may be applied without added difficulty.[28]

The most significant policy that underlies Art. 73(1) is, however, that indicated in the former case; namely, to avoid unnecessarily drastic consequences from the failure to perform a separate installment of the contract. Those circumstances in which breach with respect to an installment invoke more drastic remedies with respect to the rest of the contract are defined in paragraphs (2) and (3) of Art. 73.[29] Therefore, the following will continue to discuss both Arts. 73(2) and 73(3).

2.2 Avoidance in respect of future installment(s): CISG Art. 73(2)

Depending on the circumstances, a breach by one party as regards a single installment may serve to indicate a prospective non-performance of greater dimension and thus affect the other party's avoidance rights as regards future installments as well.[30] Therefore, Art. 73(2) continues to deal with future installments. The purpose of Art. 73(2) is,[31]

"to state a special rule of anticipatory repudiation applicable to future deliveries under an installment contract -- i.e., if defaults (material or otherwise) as to past installments give 'good grounds' to anticipate a fundamental breach as to future deliveries, the aggrieved party can infer an anticipatory repudiation that justifies avoidance with respect to the future installments."

Avoidance in respect of future installments under Art. 73(2) is dependent on the satisfaction of three inseparable conditions: 1) a breach by the defaulting party with respect to any of the installments has occurred, 2) such breach "gives the [non-breaching] party good grounds to conclude that a fundamental breach of contract will occur with respect to future installments," and 3) the declaration of avoidance must be made "within a reasonable time of the failure to perform."[32] Among the three, it should be stressed: What is required by Art. 73(2) is that there must have already been a failure by the other party to perform one of his obligations in respect of an installment and that failure must give the party proposing to take the avoidance action "good grounds to conclude that a fundamental breach of contract will occur with respect to future instalments."[33]

It should be noted that the failure itself is not required to constitute a fundamental breach. A breach which is not by itself fundamental may in its context, for example, a series of such breaches over a period, provide the necessary ground for concluding that a fundamental breach will occur. Nor is it a condition precedent to the applicability of the paragraph that avoidance action has been taken for the installment in which the failure occurred. Indeed, if that failure did not constitute a fundamental breach of the installment, it would not give rise to a right to take action under paragraph (1).[34]

In any event, unlike in Art. 73(1), the failure by one party to perform any of his obligations in respect of any installment need not be a fundamental breach of contract under Art. 73(2). Also a simple breach of contract may lead to the conclusion that a fundamental breach might be committed in the future.[35] What is important is the seriousness of the anticipatory breach as to future installments that the non-breaching party fears will occur in view of the current breach.[36] This is made clear in the Secretariat Commentary:[37]

"It should be noted that the test of the right to avoid under article 64(2) [draft counterpart of CISG article 73(2)] is whether a failure to perform in respect of an instalment gives the other party good reason to fear that there will be a fundamental breach in respect of future instalments. The test does not look to the seriousness of the current breach. This is of particular significance where a series of breaches, none of which in itself is fundamental or would give good reason to fear a future fundamental breach, taken together does give good reason for such a fear."

Another point worth noting is that Art. 73(2) deals only with avoidance as to future performance.[38] In this sense, both Art 73(1) and 73(2) enable a party to avoid a given installment, but neither addresses avoidance of an entire contract. As a result the contract would in effect be modified to a contract at a proportionately reduced price.[39] However, under certain circumstances, there may be the avoidance of a contract as a whole:[40]

   -    If a default in a completed delivery constitutes a fundamental breach with respect to that delivery and gives the aggrieved party good grounds to anticipate a fundamental breach as to future installments, the past deliveries can be avoided under Art. 73(1) and the future installments can be avoided under Art. 73(2).
 
   -    Except for the above situation, a party who wishes to avoid an entire installment contract would have to show that defaults as to past deliveries constitute a fundamental breach of the entire contract (Art. 49/64), or that the party can avoid under the general anticipatory breach provisions (Arts. 71 and 72).

However, there may be another situation leading to avoidance of a contract as a whole, especially when under the principle in Art. 73(3) to which we will turn below, the breach affects only a part of the contract directly, but has an impact on the performance of the entire contract.[41]

2.3 Avoidance of the contract as a whole: CISG Art. 73(3)

In some contracts it will be the case that none of the deliveries can be used for the purpose contemplated by the parties to the contract unless all of the deliveries can be so used. Therefore, Art. 73(3) provides that a buyer who avoids the contract in respect of any delivery, may also avoid in respect of deliveries already made or of future deliveries "if, by reason of their interdependence, those deliveries could not be used for the purpose contemplated by the parties at the time of the conclusion of the contract."

Above all, it is to be noted that unlike paragraphs (1) and (2) of Art. 73 which grant both parties the right to avoid the contract, paragraph (3) refers exclusively to the rights of the buyer.[42] Thus, if an aggrieved seller wishes to avoid an installment contract as a whole, he cannot invoke Art. 73(3) but rather should show that defaults as to past deliveries constitute a fundamental breach of the entire contract and thereby declare avoidance according to Art. 64; or he can avoid under the general anticipatory breach provisions of Arts. 72. Furthermore, it is to be noted that a buyer may avoid the contract under Art. 73(3) as to past or future installments only if it avoids the contract as to a present installment under 73(1).[43] But if the buyer wants to avoid the contract not only in regard to the latest, but also to earlier and future installments, he has to so declare at the same time.[44] That is to say, the declaration of avoidance of past or future deliveries must take place at the same time as the declaration (under Art. 73(1)) of avoidance of the current delivery.[45]

Of most crucial significance, however, in invoking Art. 73(3) to declare avoidance of the entire contract, is the factor "by reason of their interdependence." Under Art. 73(3), no breach or anticipated breach is necessary in relation to past or future deliveries; the right to avoid the contract in relation to them rests upon their interdependence with the delivery that is the subject of the primary avoidance.[46] Relatively, there are no particular difficulties in determining whether a breach in respect of an installment is fundamental. However, it may be more difficult where the individual installments are parts of an integrated whole. This would be the case, for example, where the sale is of a large machine which is delivered in segments to be assembled at the buyer's place. In such a case, the determination as to whether the breach in respect of that installment was fundamental should be made in the light of the detriment suffered by the buyer in respect of the entire contract, including the ease with which the failure in respect of the individual installment can be remedied by repair or replacement. If the breach is fundamental and, because of their interdependence, installments already delivered or to be delivered could not be used for the purpose contemplated by the parties at the time of the conclusion of the contract, Art. 73(3) authorizes the buyer to declare the contract avoided in respect of those deliveries.[47]

In certain other cases, for the goods to be interdependent they need not be part of an integrated whole, as in the example of the large machine. For example, it may be necessary that all of the raw material delivered to the buyer be of the same quality, a condition which might be achievable only if they were from the same source. If this was the case, the various deliveries would be interdependent and Art. 73(3) would apply.[48] In any event, under Art. 73(3) the crucial question bound to arise is as to whether deliveries are interdependent. In this regard it should be noted that the paragraph refers to "the purpose contemplated by the parties." In many cases it is likely that the purpose for which the deliveries were to be used would have been within the contemplation of the buyer only. In that event, it would seem the paragraph would be inapplicable. To guard against this possibility, a buyer of interdependent installment deliveries may be wise to inform the seller, at the time of contracting, of the purpose for which the goods are to be used.[49]

In a word, Art. 73(3) sets out rules for the avoidance of past or future installments when the installments are so interdependent that the purpose contemplated by the parties at the time the contract was concluded is frustrated.[50] However, this is true only if the purpose of the entire contract was clear to both parties at the conclusion of the contract (Article 73(3)). The buyer's interest in receiving complete performance must, therefore, have been recognizable to the seller.[51] In this, Art. 73(3) seems to support the approach that focuses on the purpose of the contract in determining fundamental breach, even though it is not expressly stated that the lack of utility of past or future deliveries can alone constitute a fundamental breach.[52]

3. CISG Art. 73 in Context

3.1 The role in defining a fundamental breach (Art. 25)

Evident from the text of Art. 73(1), the failure by a party to perform one installment gives the other party the right to avoid the contract only where the breach "constitutes a fundamental breach of contract with respect to that instalment." Thus, the right in Art. 73(1) is dependent upon the breach being a fundamental breach with respect to the installment in question.[53] Avoidance under Art. 73(2) refers to "that a fundamental breach of contract will occur with respect to future instalments," thus is also dependent on an anticipatory fundamental breach. It is also noted above that Art. 73(3) seems to support the approach that focuses on the purpose of the contract in determining fundamental breach.[54]

Thus, as for avoidance in other circumstances (CISG Arts. 49/64, 51(2) and 72), the concept of fundamental breach (or anticipatory fundamental breach) plays a significant role in justifying the avoidance under Art. 73 as well. Unfortunately, however, neither Art. 73(1) nor Art. 73(2) or 73(3) itself provides any assistance to determine when a particular act or occurrence justifies the conclusion that a fundamental breach is to be expected.[55] The same standards for determining whether a party commits a fundamental breach apply both to a contract that requires a single delivery and to a contract that requires delivery by installments.[56] In defining a "fundamental breach" within Art. 73, it is also Art. 25 that determines; this "calls for close examination of the facts of the case in relation to the policies served by avoidance."[57]

Particular regard should be had to the character of an installment contract: Whether or not non-performance of an obligation relating to an installment constitutes a fundamental breach of contract, will in the first place have to be clarified in regard to that instalment itself (paragraph 1). Only from the context of the contract as a whole can it be judged whether conclusions will have to be drawn for future (paragraph 2) and earlier (paragraph 3) installments.[58]

3.2 Narrow possibility to invoke Nachfrist provisions (Arts. 47/49(1)(b), 63/64(1)(b))

As a rule, in cases where it is clear that the other party's non-performance amounts to a fundamental breach of its obligations, the aggrieved party is entitled to declare the contract avoided without having to first fix an additional time for performance. This rule is applicable to an installment contract as well. Thus, for instance, if the seller was in fundamental breach, the buyer is not required to set the seller a further deadline for deliveries. The buyer could declare the contract avoided in respect of the overdue delivery and future deliveries.[59]

However, the fundamentality of a breach or anticipatory breach, which is to be ascertained according to CISG Art. 25, can prove complex to establish. Therefore, if a party to an installment contract is not sure whether a fundamental breach of contract occurred in respect of an installment, he may want to set the other party a Nachfrist to perform his obligations in respect of that installment. As may be seen in connection with Arts. 47 and 49(1)(b), and the similar provisions in Arts. 63 and 64(1)(b), in some situations avoidance may be based on the failure of the other party to perform in compliance with a notice "fixing an additional period of time of reasonable length"--the Nachfrist notice; in these situations the aggrieved party need not show that the breach was "fundamental."[60]

Thus, some argue that by providing recourse to the Nachfrist provisions, there are circumstances in which the aggrieved party does not need to show the fundamental breach required by CISG Art. 73.[61] In [Switzerland 5 February 1997 Handelsgericht [Commercial Court] Zürich], where an installment contract is concerned, it is the Court's opinion that the buyer validly declared the avoidance of the contract according to Arts. 73(1) and 49(1)(b) CISG, as the sellers has not performed within the additional period of time for performance set by the buyer. According to the Court, the seller's failure to perform its obligations in respect to the first installment gave the buyer good grounds for concluding that a fundamental breach would occur also with respect to future installments (Art. 73(2) CISG).[62]

In this regard, however, Honnold notes that each paragraph of Art. 73 states that avoidance must be based on "a fundamental breach of contract." Therefore, it is argued that the Nachfrist avoidance remedy is intrinsically inapplicable to the problems of future performance covered by Arts. 73(2) and (3) (cf. Art. 72(1)), and also to Art. 73(1) in so far as it applies to the delivery of defective goods.[63] This is arguable; a Nachfrist notice applies logically only to late performance, i.e., non-performance where the date for performance has been already due; whereas Arts. 73(2) and 73(3) contemplate situations of anticipatory breach where the date for the threatening party's performance is still due objectively speaking. On the other hand, since Art. 49(1)(b) / 64(1)(b) expressly refers to non-delivery, non-payment or failure to take delivery, therefore, when the breach concerned is the delivery of defective goods, the Nachfrist avoidance remedy is intrinsically inapplicable. Thus, there is only a very narrow scope for the application of a Nachfrist procedure in the case of installment contracts.

Nevertheless, as the above Court in [Switzerland 5 February 1997 Handelsgericht [Commercial Court] Zürich] notes, the failure to perform during the Nachfrist in respect to the first installment usually gives the aggrieved party good grounds to conclude that a fundamental breach would occur with respect to future installments, hence justifying the application of Arts. 73(2) and 73(3).[64]

3.3 Overlapping with Art. 71/72 to the extent anticipatory breach is concerned

CISG Art. 73 represents, in principle, an application of the rule of Art. 72 in the special case of installment contracts.[65] Of particular relevance is Art. 73(2), which provides that a fundamental failure to perform one installment of the contract may empower the aggrieved party to avoid the contract with respect to future performance.

There is considerable overlap between Art. 72 and Art. 73(2). Both are concerned with anticipatory breaches.[66] Thus, sometimes an aggrieved party may be allowed to avoid its contractual obligations to make further performance under either Art. 72 or 73.[67] For instance, the Tribunal in [Switzerland 31 May 1996 Arbitration ZHK 273/1995 Zürich Chamber of Commerce] cites both Arts. 72 and 73 for remedies available to an anticipatory repudiation of an installment contract.[68] On the other side, as in [Finland 30 June 1998 Helsingin hovioikeus [Appellate Court] Helsinki], where it has been found that the buyer had notified the seller in a reasonable manner of his intention to declare the contract avoided, as required by Art. 72 of CISG, the Court holds that "it bears no significance whether it was a question of successive deliveries as defined in Article 73 of CISG."[69] The Tribunal in [10 December 1997 Vienna Arbitration award S 2/97] provides a valuable guidance in this regard:[70]

"[Where] [n]either the negotiated text of the contract, nor the 'usages' give an answer to this question [whether an aggrieved party has the right to avoid the contract with regard to the further installments] [...] the CISG with its regulations in that regard has to be consulted. The regulations of the CISG are contained in Arts. 72 and 73, which both provide for anticipated breach of contract as a reason for the avoidance of contract, while Art. 73, specifically for contracts for delivery of goods by installments, allows the avoidance of contract due to the apprehension of a future fundamental breach of contract in respect of future installments due to a fundamental breach of contract that has already occurred with installments already performed."

But, on the other hand, by considering concurrently Arts. 72 and 73, some very important distinctions between the two articles may be overlooked. Above all, the scope differs: whereas under Art. 72 a breach of contract is generally to be anticipated; under Art. 73, only paragraphs (2) and (3) cover future performance, while Art. 73(1) deals with a fundamental breach of contract that has occurred. Furthermore, as regards the most considerably overlapping Art. 72 and Art. 73(2), the applicability of the two provisions depends on different grounds. It is noted that the grounds for the assumption that a fundamental breach will occur are different under Art. 73(2) from those under Art. 72. Neither the promisor's failure to provide adequate assurance on demand due to a deterioration of creditworthiness, nor his declaration that he will not perform, gives the promisee the right to avoid the contract under Art. 73(2). An actual failure to perform must instead be the basis for avoidance of future installments.[71] It is doubtful, therefore, whether the grounds under Art. 73(2) can derive from, say (as the case under Art. 72), the bankruptcy of the other party or a statement by him that he does not intend to perform his obligations with respect to future instalments. In such a case, according to Bennett, the appropriate course would be to proceed under Art. 72, if it is otherwise applicable.[72]

A most questionable issue, regarding the distinction, seems to be related to the measure of certainty. There is a dispute among scholars whether the different formulations under Art. 71(1) ("it becomes apparent"), Art. 72(1) ("clear") and Art. 73(2) ("good grounds to conclude") require different degrees of certainty. Some authors hold the view that there is a gradation of remedies, increasing from Art. 71(1) via Art. 73(2) to Art. 72, in the sense that the latter requires the highest degree of certainty.[73] Of particular concern here is, while the test of Art. 73(2) is whether the initial breach gives "the other party good grounds to conclude that a fundamental breach of contract will occur with respect to future instalments," under Art. 72 it is required that it must be "clear" that a fundamental breach of contract will be committed. Thus, it is argued the formulation "good grounds to conclude" in Art. 73(2) seems to require a less strict and more subjective standard for avoidance than under Art. 72(1).[74] This reading is confirmed by the Secretariat Commentary:[75]

"It should be noted that the test of the right to avoid under article 64(2) [draft counterpart of CISG article 73(2)] is whether a failure to perform in respect of an instalment gives the other party good reason to fear that there will be a fundamental breach in respect of future instalments. The test does not look to the seriousness of the current breach. This is of particular significance where a series of breaches, none of which in itself is fundamental or would give good reason to fear a future fundamental breach, taken together does give good reason for such a fear."

It is also supported by the Tribunal in [10 December 1997 Vienna Arbitration award S 2/97], where it is held that:[76]

"According to the dominant opinion in the literature concerning the CISG, a less strict standard is to be applied to the level of probability with which equal fundamental breaches of contract are to be expected on future installments after the breaches of duty so far, as is demanded in the case of Art. 72 CISG (citation omitted) which governs the anticipated breach of contracts which are not contracts for delivery of goods by installments. In that regard [Art. 73(2)], a 'common assumption' or 'plausible reasons' are generally mentioned, sometimes also the opinion that the future breach of contract had to be 'sure to expect' (citation omitted)."

Thus, it is argued Art. 73(2) seems to permit the avoidance of the contract in respect of future performance of an installment contract even though it is not "clear" that there will be a fundamental breach of the contract in the future as would be required by Art. 72.[77] This may be due to the reasoning that avoidance of the contract in the future under Art. 73(2), as a reaction to a breach of contract, although not necessarily fundamental in nature, is at a lesser level than avoidance of the whole contract (as that under Art. 72).[78] According to Honnold, this may also be explained by the fact that in the setting of Art. 73(2) (unlike the situations invoking Arts. 71 and 72), a breach of contract has already occurred. Under this more flexible standard (of Art. 73(2)) a series of breaches, none of which would justify avoidance, taken together may give the other party good grounds to conclude that a "fundamental breach" of the remainder of the contract will occur.[79]

But it should be stressed that, in substance, it is not the different wording itself that enables any distinction to be drawn, but the severity of the remedy's interference with the contract.[80] Bennett (similar to Honnold, the text keyed to supra. n. 79) properly notes that although under Art. 73(2) the test is less stringent (i.e., it is sufficient that there be "good grounds to conclude that a fundamental breach of contract will occur"), those grounds must have been preceded by, and indeed derived from, an actual failure to perform obligations.[81]

Nevertheless, declaration of avoidance under Art. 73(2) does not have to be preceded by a notice of intention to the other party as is required under Art. 72(2) where time allows. However, the declaration must be made "within a reasonable time," a requirement which is not included in Art. 72 at least in express terms. But there is no opportunity contemplated under Art. 73(2) for the other party to give an assurance of performance as would be possible in Art. 72.[82] Another point worth noting is that Art. 73(2) deals only with avoidance as to future performance. It does not address avoidance of an entire installment contract.[83] Reference is made here, like in Art. 72, to a fundamental breach of contract to occur in the future.[84] In its wording, Art. 72 provides for avoidance of the entire contract whereas the Art. 73(2) provides for the contract to be avoided "for the future." According to Bennett, however, the practical effects of these two types of avoidance will often be much the same.[85]

Finally, it is noted that in certain circumstances, an aggrieved party may have the right (or choice) to suspend its performance under Art. 71(1) or to avoid the contract as to future installments under Art. 73(2).[86] In this regard, the Austria Supreme Court in [12 February 1998 Oberster Gerichtshof] provides a helpful ruling:[87]

"Irrespective of the right to avoid individual installments of an installment contract, Art. 71 CISG offers a right of suspension (citation omitted). [...]. The right of suspension according to Art. 71 CISG exists independent of the right to avoid an installment contract pertaining to individual installments; the aggrieved party may choose between exercising one or the other legal remedy (citation omitted)."

3.4 Interrelationship between Arts. 51 and 73

There is also considerable overlap between Arts. 51 and 73. As shown below, Art. 73 should be read in conjunction with Art. 51,[88] which states:

(1) If the seller delivers only a part of the goods or if only a part of the goods delivered is in conformity with the contract, articles 46 to 50 apply in respect of the part which is missing or which does not conform.

(2) The buyer may declare the contract avoided in its entirety only if the failure to make delivery completely or in conformity with the contract amounts to a fundamental breach of the contract.

This Article envisages two cases of partial default: partial default in quantity and partial default in quality. In dealing with such partial default, Art. 51 contains two paragraphs, with the following functions, respectively:[89]

   -    Paragraph (1) follows the general policy of the Convention to save as much of the contract as possible. The buyer shall not be able to avail himself of remedies addressed to the entire contract when only a part of the performance is faulty.
 
   -    Paragraph (2), without an express reference, underlines the restrictive policy of Art. 49(1)(a), allowing for avoidance of the entire contract only in a fundamental breach situation. Its function must probably be seen in relation to the general rule in paragraph (1), to which it forms an exception.

Thus, Art. 51 (in conjunction with Art. 49) also provides a buyer with a right to avoid a part of a contract and such a part could, but need not, be an installment. The buyer may therefore have to decide whether to proceed under Art. 51 or Art. 73.[90] For instance, in [ICC 1995 International Court of Arbitration, Case 8128], where a contract for delivery of goods by installments is concerned, it is held:[91]

"Under Article 51(1) of the Convention a partial cancellation of the contract is possible. The contract between the parties is a contract for delivery of goods by installments [...]. A partial cancellation is possible in case of a contract for delivery of goods by installments if there is a fundamental breach with respect to an installment as it is stated in Article 73 of the Vienna Convention 1980."

No doubt, CISG Arts. 51 and 73 are often considered concurrently as they both deal with the scenario where only part of a contract has been performed. However, by doing so, some very important distinctions between the two articles may be overlooked.[92] In this regard, particular regard should be had to the following:

   -    A most express distinction lies in the scope of application: Art. 51, which appears under the heading Remedies for Breach of Contract by the Seller, does as one would expect provide rights only exercisable by the buyer. The first two sub-articles of Art. 73, on the other hand, are provisions common to both the seller and the buyer.[93]
 
   -    A further crucial distinction within the subject matter of the two articles is the type of contract considered by each: Whereas Art. 51 apparently applies to deliveries under both installment and single-delivery contracts;[94] Art. 73 provides specifically for installment deliveries and for avoidance of not only the installment in respect of which a breach has occurred but of future and interdependent installments.[95]
 
   -    Thus, should the seller deliver only a part of the goods, the general consensus of scholarly opinion tends to favor the buyer applying the CISG Art. 51 approach in the absence of a very clearly defined installment contract.[96]

For a better comparison between the two articles, an insight into the two paragraphs of Art. 51 is necessary. In applying Art. 51(1), it seems to create a "de facto division" in the contract.[97] According to Art. 51(1), the remedies (both the conditions and the effects) provided for in Arts. 46 to 50 apply only with respect to the non-conforming or missing part.[98] Of course, this presupposes that the performance of the seller can be divided into conforming and non-conforming parts; otherwise Arts. 46 to 50 apply directly.[99] In this regard, it is recalled that, the purpose of Art. 73(1) is also to permit a party to treat each installment of an installment contract as a severable contract for purposes of avoidance. Art. 73(1), therefore, is analogous to Art. 51(1) -- the provision which permits the buyer to sever, for remedy purposes, the portion of a contract relating to a missing or non-conforming part of a single delivery.[100] Of particular relevance, apart from Art. 73(1), a buyer has a right under Art. 51(1) to partially avoid a contract (but a seller has no corresponding right. Art. 51).[101]

Specifically as to the remedy of partial avoidance under Art. 51(1), however, the language in Art. 49 may seem confusing.[102] Here it is recalled that Art. 49 provides that a buyer who encounters serious non-performance "may declare the contract avoided." When the seller's breach involves only part of the goods this broad rule has to be refined; this is done in Art. 51. When "the seller delivers only a part of the goods or if only a part of the goods delivered is in conformity with the contract," Art. 51 provides that the remedies for breach (including the right to avoid the contract) apply "in respect of the part that is missing or which does not conform." Such explicit provisions are useful to avoid misunderstanding that can result from the concept "avoidance of the contract"; when a buyer refuses to receive only a part of the goods covered by the contract he does not avoid all of "the contract."[103] That is to say, the wording in Art. 49 "declare the contract avoided," has to be interpreted so as to refer not to the entire contract but only to that part which is fundamentally breached.[104]

In this regard, it is noted that the basic problem underlying Art. 73 is also, on the one hand, to make the rules governing avoidance of contract (Arts. 49 and 64) applicable to each and every partial delivery and, on the other, to punish the violation of obligations in regard to a partial delivery only in regard to that partial delivery.[105] The approach of Art. 73 is thus similar to that established in Art. 51. Arts. 51 and 73 both adapt the general concept of "avoidance of the contract" to a narrower issue: What may the aggrieved party do with respect to a specific delivery or a specific payment? Once the issue has been made specific and concrete, the Convention's general rules on avoidance for fundamental breach (Arts. 25, 49 and 64) may be applied without added difficulty. The policy that underlies both Arts. 51 and 73 is to avoid unnecessarily drastic consequences from the failure to perform a separable part of the contract.[106]

As to the entire avoidance, Art. 51(2) simply restates the remedy contained in Art. 49(1)(a) in the particular context of partial default: where partial default amounts to a fundamental breach, and only in this case, the buyer is given the possibility to avoid the entire contract.[107] Flechtner thus argues: At first glance, Art. 51(2) appears redundant. Art. 49(1) makes it clear that, absent use of the Nachfrist procedure, the buyer can avoid the contract only if the seller committed a fundamental breach. Nothing in Art. 49 suggests that this rule does not apply when the seller delivers non-conforming goods or fails to deliver a full complement of goods.[108] Indeed, in some respects, Art. 51(1) also sets forth a rule which would seem hardly necessary to (re)state. As regards avoidance, paragraph (1) of Art. 51, represents that the general rule for part-performance is avoidance in part. Against this background, paragraph (2) of Art. 51 re-states the obvious.[109] Art. 51(2), nevertheless, is not mere verbiage.[110] Honnold notes that: "One of the purposes of paragraph (2) of Article 51 is to make clear that paragraph (1) does not force the buyer to sort out the non-conforming goods for separate handling. The buyer may 'avoid' (reject) as to the entire delivery if the breach as to part causes detriment that is so substantial as to constitute a 'fundamental breach' of the contract as a whole."[111]

In a word, although Art. 51(2) reiterates the rule which would otherwise be applied under Art. 49(1)(a), it is useful that it be made clear.[112] In any event, Art. 51(2) does contemplate those circumstances in which breach with respect to a part may invoke more drastic remedies with respect to the rest of the contract. At least, from a buyer's perspective, Art. 51 offers a considerably more certain method of avoiding the offending part of the contract.[113] This resembles the structure of Art. 73(3). Both Arts. 51(2) and 73(3) enable a buyer to avoid as to the entire delivery if the breach as to part or installment(s) causes detriment that is so substantial as to constitute a fundamental breach of the contract as a whole.

Of course, for such an entire avoidance (under either Art. 51(2) or 73(3)), the partial breach must deprive the buyer of the main benefit of the whole contract (Art. 25). (This is, however, the exception rather than the rule.)[114] In this regard, one factor of special significance with respect to a partial avoidance under Art. 51(2) is properly noted, namely, whether the non-performance of a part interferes with the use or salability of the remainder.[115] But it has to be admitted: As under Art. 73, Art. 51(2) itself does not provide any assistance to determine when a particular act or occurrence justifies the conclusion that a fundamental breach is to be expected. The same standards specified in Art. 25 for determining whether a party commits a fundamental breach apply both to the "fundamental breach" in other circumstances and the one within Art. 51(2). Thus, if the buyer is not sure whether a fundamental breach of contract occurred, the question arises as to whether he can proceed following Art. 51 and set the seller a Nachfrist to perform his obligations.

As already seen (section 3.2 above), there is only a narrow application of Nachfrist to an installment contract under Art. 73. How does the Nachfrist operate under Art. 51? In particular, whether the avoidance under Art. 51(2) may invoke the Nachfrist under Art. 49(1)(b). According to Will, the use of the word "only" in Art. 51(2) seems to indicate that there was no intention to let the buyer avoid the entire contract in Art. 49(1)(b) cases.[116] In this regard, Honnold similarly notes: Art. 51(2) makes an additional point in stating that avoidance of the entire contract may "only" be based on fundamental breach. Thus, the buyer may not base avoidance of the entire contract on the failure to comply with the Nachfrist notice, but must show that the breach was fundamental as to the entire contract (Arts. 49(1)(a), 51(2)).[117]

In contrast, Art. 51(1) expressly refers to the remedies provided for in Arts. 46 to 50. Thus, Art 51(1) attracts the provision in Art. 47 for the fixing of an additional period for the seller to perform his obligations and the related provision in Art. 49(1)(b) for avoidance on the ground that delivery is not effected within that time, irrespective of whether this constitutes a fundamental breach of the relevant part of the contract. If, as could often be the case, the buyer fixes such an additional period for delivery of an installment and the installment then is not delivered within that additional time, he can avoid any question as to whether there has been a fundamental breach by acting under Art. 51.[118] So, by acting under Art. 51 the buyer will not have to ascertain if the breach has been fundamental.[119] Thus, from a buyer's perspective, Art. 51 offers a considerably more certain method of avoiding the offending part of the contract.[120]

But in respect of invoking Nachfrist under Art. 51(1), one should particularly note that, Art. 51(1) expressly refers to not only the non-conforming but also the missing part. No doubt, the fixing of an additional period of time for the delivery of conforming goods cannot help establish a right of avoidance since the mechanism of Art. 49(1)(b) applies only in case of non-delivery but not in case of delivery of defective goods. The buyer may, however, fix an additional period of time for delivery of the missing part and may declare the contract partially avoided when delivery is not effected during the period so fixed.[121] In contrast, with regard to the defective part, a Nachfrist mechanism adds nothing in determining its fundamentality. In such a case, therefore, the general standards of Art. 25 apply. In this sense, there is also a relative narrow scope for applying Nachfrist under Art. 51.

In any event, since Art. 51, functionally similar to Art. 73, was created to promote one of the fundamental tenets of the CISG -- to keep contracts "on foot," an unintended consequence has been competition with CISG Art. 73.[122]

3.5 A summary

Indicated in the above,  the interrelationship of Art. 73 with other articles, particularly Arts. 51 and 72, could give rise to some problems.[123] But in no event does Art. 73 preclude application of other articles of the Convention. When a party fails to deliver the goods or to pay for an installment, the aggrieved party is entitled (albeit narrowly) under Art. 47 or 64 to give the breaching party an additional period of time and to avoid the installment when that party fails to perform within the additional time. When some but not all installments are delivered, Art. 51 on partial delivery and Art. 73 may be applicable. An aggrieved party may have the right to suspend its performance under Art. 71(1) or to avoid the contract as to future installments under Art. 73(2). An aggrieved party may be able to avoid its contractual obligations to make further deliveries under either Art. 72 or Art. 73.[124]


FOOTNOTES

1. See UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods (8 June 2004), A/CN.9/SER.C/DIGEST/CISG/73: Digest 1; available at: <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.

2. See Secretariat Commentary on 1978 Draft Art. 64 [draft counterpart of CISG Art. 73]: Comment 2; available at: <http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-73.html>.

3. See Jelena Vilus in "Provisions Common to the Obligations of the Seller and the Buyer": Petar Sarcevic & Paul Volken eds., International Sale of Goods: Dubrovnik Lectures, Oceana (1986); pp. 246-247; available at: <http://www.cisg.law.pace.edu/cisg/biblio/vilus.html>.

4. See Fritz Enderlein & Dietrich Maskow, International Sales Law: United Nations Convention on Contracts for the International Sale of Goods, Oceana Publication (1992), p. 294; available at: <http://www.cisg.law.pace.edu/cisg/biblio/enderlein.html>.

5. Comment 2 of Secretariat Commentary on 1978 Draft Art. 64 [draft counterpart of CISG Art. 73]; supra. n. 2.

6. See Judgment by Schiedsgericht der Handelskammer [Arbitral Tribunal] Hamburg, Germany, 21 March 1996; Partial award of 21 March 1996: Yearbook comm. Arb'n XXII, Albert Jan van den Berg ed. (Kluwer 1997); available at: <http://www.cisg.law.pace.edu/cases/960321g1.html>.

7. UNCITRAL Digest 3 on CISG Art. 73; supra. n. 1.

8. See Judgment by Schiedsgericht der Handelskammer [Arbitral Tribunal] Hamburg, Germany, 21 March 1996; supra. n. 6.

9. UNCITRAL Digest 3 on CISG Art. 73; supra. n. 1.

10. See Anna Kazimierska in "The Remedy of Avoidance under the Vienna Convention on the International Sale of Goods': Pace Review of the Convention on Contracts for the International Sale of Goods, Kluwer (1999-2000); p. 99; available at: <http://www.cisg.law.pace.edu/cisg/biblio/kazimierska.html>.

11. See CLOUT Abstract No. 251, Handelsgericht [Commercial Court] Zürich, Switzerland 30 November 1998; No. HG 930634/O; available at: <http://www.cisg.law.pace.edu/cases/981130s1.html>.

12. See Fritz Enderlein & Dietrich Maskow, supra. n. 4; p. 294.

13. See Judgment by Schiedsgericht der Handelskammer [Arbitral Tribunal] Hamburg, Germany, 21 March 1996; supra. n. 6.

14. See Judgment by Schiedsgericht der Börse für landwirtschaftliche in Wien [Arbitral Tribunal - Vienna]; Austria 10 December 1997; No. S 2/97. English translation by Tobias Koppitz; available at: <http://www.cisg.law.pace.edu/cases/971210a3.html>.

15. See Judgment by Cour d'appel [Appeal Court] Grenoble, France, 22 February 1995; No. 93/3275; available at: <http://www.cisg.law.pace.edu/cases/950222f1.html>.

16. See Judgment by Schiedsgericht der Börse für landwirtschaftliche in Wien [Arbitral Tribunal - Vienna]; Austria 10 December 1997; supra. n. 14.

17. See Fritz Enderlein & Dietrich Maskow, supra. n. 4; p. 295.

18. See Peter Schlechtriem in "Uniform Sales Law -- The UN-Convention on Contracts for the International Sale of Goods"; Manz, Vienna: 1986; p. 96, available at: <http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem-73.html>.

19. Comment 2 of Secretariat Commentary on 1978 Draft Art. 64 [draft counterpart of CISG Art. 73]; supra. n. 2.

20. See Trevor Bennett in Commentary on the International Sales Law: The 1980 Vienna Sale Convention, Cesare Massimo Bianca & Michael Joachim Bonell eds., Milan (1987), p. 533; available at: <http://www.cisg.law.pace.edu/cisg/biblio/bennett-bb73.html>.

21. See Larry A. DiMatteo, Lucien Dhooge, Stephanie Greene,Virginia Maurer and Marisa Pagnattaro in "The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence": 34 Northwestern Journal of International Law and Business (Winter 2004); p. 411; available at: <http://www.cisg.law.pace.edu/cisg/text/anno-art-73.html>.

22. See Robert Koch in "The Concept of Fundamental Breach of Contract under the United Nations Convention on Contracts for the International Sale of Goods (CISG)": Pace Review of the Convention on Contracts for the International Sale of Goods (CISG) 1998, Kluwer Law International (1999); p. 310; available at: <http://www.cisg.law.pace.edu/cisg/biblio/koch.html>.

23. See John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed., Kluwer Law International, The Hague (1999), p. 442; available at: <http://www.cisg.law.pace.edu/cisg/biblio/ho73.html>.

24. See Judgment by Schiedsgericht Hamburger Freundschaftliche Arbitrage [Arbitral Tribunal]; Germany 29 December 1998. Translation by Todd Fox, translation edited by Dr Loukas Mistelis; available at: <http://www.cisg.law.pace.edu/cases/981229g1.html>.

25. See Harry M. Flechtner in "Remedies Under the New International Sales Convention: The Perspective from Article 2 of the U.C.C.": 8 Journal of Law and Commerce (1988), p. 88; available at: <http://www.cisg.law.pace.edu/cisg/biblio/flecht.html>.

26. See John O. Honnold, supra. n. 23; p. 442.

27. See Harry M. Flechtner, supra. n. 25; p. 88.

28. See John O. Honnold, supra. n. 23; p. 442.

29. See John O. Honnold, supra. n. 23; p. 443.

30. See Joseph Lookofsky in "The 1980 United Nations Convention on Contracts for the International Sale of Goods": J. Herbots editor/R. Blanpain general editor, Suppl. 29 International Encyclopaedia of Laws - Contracts, Kluwer Law International (December 2000), p. 151; available at: <http://www.cisg.law.pace.edu/cisg/biblio/loo73.html>.

31. See Harry M. Flechtner, supra. n. 25; p. 90.

32. See Jianming Shen in "Declaring the Contract Avoided: The U.N. Sales Convention in the Chinese Context": New York International Law Review, Vol. 10, No. 1, New York State Bar Association (Winter 1997), p. 23; available at: <http://www.cisg.law.pace.edu/cisg/biblio/shen.html>.

33. See Trevor Bennett, supra. n. 20; p. 534.

34. See Trevor Bennett, supra. n. 20; pp. 534-535.

35. See Fritz Enderlein & Dietrich Maskow, supra. n. 4; p. 296.

36. See Jianming Shen, supra. n. 32; p. 24.

37. Comment 6 of Secretariat Commentary on 1978 Draft Art. 64 [draft counterpart of CISG Art. 73]; supra. n. 2.

38. See Harry M. Flechtner, supra. n. 25; p. 91.

39. See Trevor Bennett, supra. n. 20; p. 534.

40. See Harry M. Flechtner, supra. n. 25; pp. 91-92.

41. See Anna Kazimierska, supra. n. 10; p. 99.

42. See Fritz Enderlein & Dietrich Maskow, supra. n. 4; p. 296.

43. UNCITRAL Digest 10 on CISG Art. 73; supra. n. 1.

44. See Fritz Enderlein & Dietrich Maskow, supra. n. 4; p. 296.

45. Comment 7 of Secretariat Commentary on 1978 Draft Art. 64 [draft counterpart of CISG Art. 73]; supra. n. 2.

46. See Trevor Bennett, supra. n. 20; p. 535.

47. Comment 4 of Secretariat Commentary on 1978 Draft Art. 64 [draft counterpart of CISG Art. 73]; supra. n. 2.

48. Comment 8 of Secretariat Commentary on 1978 Draft Art. 64 [draft counterpart of CISG Art. 73]; supra. n. 2.

49. See Trevor Bennett, supra. n. 20; p. 537.

50. UNCITRAL Digest 10 on CISG Art. 73; supra. n. 1.

51. See Peter Schlechtriem; supra. n. 18; p. 96.

52. See Robert Koch, supra. n. 22; p. 321.

53. See Trevor Bennett, supra. n. 20; p. 534.

54. See Robert Koch, supra. n. 22; p. 321.

55. See Robert Koch, supra. n. 22; p. 310.

56. UNCITRAL Digest 5 on CISG Art. 73; supra. n. 1.

57. See John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed., Kluwer Law International, The Hague (1999), p. 345; available at: <http://www.cisg.law.pace.edu/cisg/biblio/ho51.html>.

58. See Fritz Enderlein & Dietrich Maskow, supra. n. 4; p. 295.

59. See Judgment by Zürich Chamber of Commerce; Germany 31 May 1996. No. ZHK 273/95; available at: <http://www.cisg.law.pace.edu/cases/960531s1.html>.

60. See John O. Honnold, supra. n. 23 at fn. 3.

61. See Christopher Kee in "Remedies for breach of contract where only part of the contract has been performed: Comparison between provisions of CISG (Articles 51, 73) and counterpart provisions of the Principles of European Contract Law" (July 2002); p. 283; available at: <http://www.cisg.law.pace.edu/cisg/text/peclcomp51.html>.

62. See Case Abstract of the Judgment by Handelsgericht [Commercial Court] Zürich, Switzerland 5 February 1997; No.: HG 95 0347; available at: <http://www.unilex.info/case.cfm?pid=1&do=case&id=305&step=Abstract>.

63. See John O. Honnold, supra. n. 23 at fn. 3.

64. See Case Abstract of Handelsgericht [Commercial Court] Zürich, Switzerland 5 February 1997; supra. 62.

65. See Jelena Vilus, supra. n. 3; p. 246.

66. See Trevor Bennett, supra. n. 20; p. 536.

67. UNCITRAL Digest 2 on CISG Art. 73; supra. n. 1.

68. See Judgment by Zürich Chamber of Commerce; Germany 31 May 1996. No. ZHK 273/95; supra. n. 59.

69. See Judgment by Helsinki Court of Appeal; Finland 30 June 1998. No. S 96/1215. Translation by Jarno Vanto; available at: <http://www.cisg.law.pace.edu/cases/980630f5.html>.

70. See Judgment by Schiedsgericht der Börse für landwirtschaftliche in Wien [Arbitral Tribunal - Vienna]; Austria 10 December 1997. No. S 2/97. English translation by Tobias Koppitz; available at: <http://www.cisg.law.pace.edu/cases/971210a3.html>.

71. See Robert Koch, supra. n. 22; p. 311.

72. See Trevor Bennett, supra. n. 20; pp. 536-537.

73. See Robert Koch, supra. n. 22 at fn. 478.

74. See Robert Koch, supra. n. 22; p. 310.

75. Comment 6 of Secretariat Commentary on 1978 Draft Art. 64 [draft counterpart of CISG Art. 73]; supra. n. 2.

76. See Judgment by Schiedsgericht der Börse für landwirtschaftliche in Wien [Arbitral Tribunal - Vienna]; Austria 10 December 1997; supra. n. 70.

77. Comment 5 of Secretariat Commentary on 1978 Draft Art. 64 [draft counterpart of CISG Art. 73]; supra. n. 2.

78. See Robert Koch, supra. n. 22 at fn. 478.

79. See John O. Honnold, supra. n. 23; p. 443.

80. See Robert Koch, supra. n. 22 at fn. 478.

81. See Trevor Bennett, supra. n. 20; p. 536.

82. See Trevor Bennett, supra. n. 20; pp. 533, 537.

83. See Harry M. Flechtner, supra. n. 25; p. 91.

84. See Fritz Enderlein & Dietrich Maskow, supra. n. 4; p. 296.

85. See Trevor Bennett, supra. n. 20; p. 536.

86. UNCITRAL Digest 2 on CISG Art. 73; supra. n. 1.

87. See Judgment by Oberster Gerichtshof [Supreme Court]; Austria 12 February 1998. No. 2 Ob 328/97t. Translation Dr. Peter Feuerstein, translation edited by Ruth M. Janal; available at: <http://www.cisg.law.pace.edu/cases/980212a3.html>.

88. See Jacob S. Ziegel in "Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods"; available at: <http://www.cisg.law.pace.edu/cisg/text/ziegel73.html>.

89. See Will in Commentary on the International Sales Law: The 1980 Vienna Sale Convention, Cesare Massimo Bianca & Michael Joachim Bonell eds., Milan (1987), p. 378; available at: <http://www.cisg.law.pace.edu/cisg/biblio/will-bb51.html>.

90. See Trevor Bennett, supra. n. 20; p. 536.

91. See See Judgment in ICC Arbitration Case No. 8128 of 1995; available at: <http://www.cisg.law.pace.edu/cases/958128i1.html>.

92. See Christopher Kee, supra. n. 61; p. 281.

93. Ibid.

94. See Harry M. Flechtner, supra. n. 25; pp. 86-87.

95. See Trevor Bennett, supra. n. 20; p. 536.

96. See Christopher Kee, supra. n. 61; p. 284.

97. See Leser, Hans G. in "Commentary on the UN Convention on the International Sale of Goods (CISG)"; Schlechtriem, ed.; 2d ed., Clarendon Press, Oxford, 1998; p. 545.

98. One should note, however, although Art. 51(1) expressly refers to the remedies in Arts. 46 to 50, this does not mean that the remedy of damages is excluded. On the contrary, this remedy remains unimpaired and can be exercised in addition to or instead of the remedies referred to in Art. 51(1). Even if the buyer has lost its right to declare a part of the contract avoided because of lapse of time, it may still claim damages. (See UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods (8 June 2004), A/CN.9/SER.C/DIGEST/CISG/51: Digest 5; available at: <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.)

99. See Will, supra. n. 89; p. 378.

100. See Harry M. Flechtner, supra. n. 25; p. 89.

101. See Trevor Bennett, supra. n. 20; p. 533.

102. See Will, supra. n. 89; p. 378.

103. See John O. Honnold, supra. n. 57; p. 344; also John O. Honnold, supra. n. 23; p. 442.

104. See Will, supra. n. 89; p. 378.

105. See Fritz Enderlein & Dietrich Maskow, supra. n. 4; p. 295.

106. See John O. Honnold, supra. n. 23; pp. 442-443.

107. See Will, supra. n. 89; p. 378.

108. See Harry M. Flechtner, supra. n. 25; p. 87.

109. See Joseph Lookofsky in "The 1980 United Nations Convention on Contracts for the International Sale of Goods": J. Herbots editor/R. Blanpain general editor, Suppl. 29 International Encyclopaedia of Laws -- Contracts, Kluwer Law International (December 2000), p. 127; available at: <http://www.cisg.law.pace.edu/cisg/biblio/loo51.html>.

110. See Harry M. Flechtner, supra. n. 25; p. 87.

111. See John O. Honnold, supra. n. 57; p. 345.

112. See Secretariat Commentary on 1978 Draft Art. 47 [draft counterpart of CISG Art. 51]: Comment 3; available at: <http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-51.html>.

113. See Christopher Kee, supra. n. 61; p. 283.

114. UNCITRAL Digest 6 on CISG Art. 51; supra. n. 98.

115. See John O. Honnold, supra. n. 57; p. 345.

116. See Will, supra. n. 89; p. 378.

117. See John O. Honnold, supra. n. 57; pp. 345-346.

118. See Trevor Bennett, supra. n. 20; p. 536.

119. See Anna Kazimierska, supra. n. 10; p. 100.

120. See Christopher Kee, supra. n. 61; p. 282.

121. UNCITRAL Digest 4 on CISG Art. 51; supra. n. 98.

122. See Christopher Kee, supra. n. 61; p. 282.

123. See Trevor Bennett, supra. n. 20; p. 535.

124. UNCITRAL Digest 2 on CISG Art. 73; supra. n. 1.


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