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Published in J. Herbots editor / R. Blanpain general editor, International
Encyclopaedia of Laws - Contracts, Suppl. 29 (December 2000) 1-192. Reproduced with permission of the publisher Kluwer Law International, The Hague.
[For more current case annotated texts by this author, see Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed. (2003) and Lookofsky, Understanding the CISG in the USA, 2d ed. (2004).]
excerpt from
The 1980 United Nations Convention on Contracts
for the International Sale of Goods
Joseph Lookofsky
Article 25
Avoidance and Fundamental Breach
A. Fundamental Breach Defined
B. Substantial Detriment
A. Fundamental Breach Defined
136. The first - and certainly the most important - general provision in Chapter 1 of Part III relates to the rules which permit an injured party to 'put an end to the contract,' i.e. the remedy of avoidance.
In most cases the relevant CISG rules (set forth in Chapters II and III of Part III) require
that a breach be 'fundamental' before an injured party will be permitted to avoid.[1] Article 25 supplements these rules by providing the necessary definition of the term 'fundamental breach':
'A breach of contract committed by one of the parties is fundamental if it results in
such detriment to the other party as substantially to deprive him of what he is entitled
to expect under the contract, unless the party in breach did not foresee and a
reasonable person of the same kind in the same circumstances would not have
foreseen such a result.'
1. Regarding Article 49 (avoidance for seller's breach) see infra No. 224 et seq.; regarding Article 64 (avoidance for buyer's breach) see infra No. 259 et seq. [page 78]
B. Substantial Detriment
137. Article 25 defines fundamental breach in terms of (foreseeable) 'substantial detriment.' For example, as regards the buyer's right to avoid upon seller's late delivery, the Convention requires that the delay in question amount to a fundamental breach. [1] Therefore, in order to avoid in such a case, the buyer (the injured party) must allege and prove that he has suffered a detriment which substantially (perhaps even more than 'materially') deprives him of what he is entitled to expect under the contract.[2]
In addition, the detriment must also be
one which the breaching party (in this
example: the seller) reasonably ought
to foresee.
Whether the injured party suffers a
'substantial' detriment as a result of a
given breach and whether such
detriment is 'foreseeable' by the other
party requires a concrete evaluation of
the circumstances of the particular
case, and even the breach of a
'secondary' obligation can amount to a
fundamental breach.[3] On the other
hand, it should also be noted that
avoidance is generally regarded as an
exceptional CISG remedy, to be
exercised restrictively.
A closer examination of the right to
avoid will be undertaken in connection
with the more specific rules regarding
seller's and buyer's breach.[4] For the
present, it may be noted that the
uncertainty which may sometimes
surround the elastic fundamental
breach standard has been
counterbalanced to some degree by
the establishment of a supplementary
'Nachfrist' avoidance rule, in that the
issuance of a (reasonable) Nachfrist
warning may obviate the injured
party's need to demonstrate a 'fundamental' breach.[5] It may also be noted
that the buyer's right to avoid by
reason of the delivery of non-conforming goods is restricted by the
seller's right to cure.[6] [page 79]
1. Article 49: see infra No. 224 et seq.
2. It has been suggested that a
'substantial' deprivation may be more
than what Common lawyers would consider as 'material' under
their corresponding domestic law.
See Ziegel, J., 'The Remedial
Provisions of the Vienna Sales
Convention,' in International
Sales (Galston and Smit ed., New
York 1984) §9.03[2] [a], [b] [available at <http://www.cisg.law.pace.edu/cisg/biblio/ziegel6.html>] and
Flechtner, H., 'Remedies Under the
New International Sales
Convention: The Perspective from
Article 2 of the U.C.C.' Vol. 8
Journal of Law and Commerce
53, 75 (1998) [available at <http://www.cisg.law.pace.edu/cisg/biblio/flecht.html>]. The application of
similar terminology in the
Convention provisions dealing
with anticipatory breach tends to
support this argument: see
Flechtner at id. and infra No. 280
et seq.
3. See, e.g. the decision of
Oberlandesgericht a.M. (5 U 164/90) of
17 September 1991 (CLOUT Case No. 2 [reported at <http://www.cisg.law.pace.edu/cisg/text/casecit.html>]): fundamental breach of
duty to preserve exclusivity.
4. Regarding avoidance for seller's
fundamental breach under Article 49,
see infra No. 224. Regarding Article 64 (avoidance for
buyer's breach) see infra No. 259 et seq.
5. The CISG rule owes its nickname to
the corresponding, but
substantially different rule in
German domestic law: regarding
seller's non-delivery and Articles
47(1) and 49(1) (b), see infra Nos.
219 and 225. Regarding buyer's
non-payment and Articles 63(1)
and 64(1)(b), see infra Nos. 258
and 259.
6. Regarding Article 48, see infra No. 220 et seq.
Pace Law School
Institute of International Commercial Law - Last updated April 1, 2005
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