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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 73
Instalment Contracts: Avoidance for Fundamental Breach

286. Article 73 of the Convention provides a special set of rules applicable to sales contracts involving the delivery of goods by instalments. Depending on the circumstances, a breach by one party as regards a single instalment may serve to indicate a prospective non-performance of greater dimension and thus affect the other party's avoidance rights as regards the contract overall.

First, according to Article 73(1), if a seller's or buyer's failure to perform any of its 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 (alone).

Moreover, if the seller's or buyer's failure to perform any of its 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, that other party may declare the contract avoided for the future, provided that he does so within a reasonable time.[1]

Article 73(3) contains a special rule regarding buyer's instalment contract rights: 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.

1. Article 73(2). See, e.g., the decision of Handelsgericht Zürich (Switzerland), 5 February 1997, SZIER 1, 1998,75-77, also reported in UNILEX. See also the decision of Schiedsgericht der Borse für Landwirtschaftliche Produkte - Wien, 10 December 1997, reported in UNILEX (2 separate contracts considered unitary transaction under Art. 73(2); lack of conformity in first instalments gave buyer 'good grounds' to avoid with respect to future instalments). [page 151]

Pace Law School Institute of International Commercial Law - Last updated April 5, 2005
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