1. Introduction
   1.1 Practical relevance
   1.2 Methodology
   1.3 International conflicts and uniform substantive rules
          1.3.1 The international case and the method of Private International Law
                    1.3.1.1 The international case and its consequences
                    1.3.1.2 The method of Private International Law
                                 1.3.1.2.1 Conflict rules
                                 1.3.1.2.2 Substantive rules
          1.3.2 Inconvenience of applying the domestic law to cases involving foreign elements
          1.3.3 Exclusion of domestic law
          1.3.4 Impossibility of applying uniform rules in parallel with domestic law
          1.3.5 Conclusion: autonomy and distinction of legal solutions to international cases
2. Interpretation and Appreciation Tools
   2.1 Application and interpretation of the CISG
          2.1.1 The pyramid of norms of the CISG (vertical analysis)
                    2.1.1.1 What do "international usages and international customs" mean?
          2.1.2 The interpretation within the sphere of the CISG (horizontal analysis)
                    2.1.2.1 The gap issue
                    2.1.2.2 How are gaps filled?
          2.1.3 The substantive contractual freedom role
   2.2 Are the UNIDROIT Principles applicable to the interpretation of the CISG as regards article 25?
   2.3 Value of foreign judicial precedents
   2.4 Conclusions
3. Theories and Legal Consequences
   3.1 The breach and its consequences under the CISG
   3.2 Theories on fundamental breach
          3.2.1 Theories that deny the sense of article 25 of the CISG
          3.2.2 Mere literal theories
          3.2.3 Subjective theories
          3.2.4 Objective theories
          3.2.5 Theories based on the breach of fundamental obligations
          3.2.6 Conclusions
4. Hypothesis of this Work
   4.1 Postulates
          4.1.1 Criterion
          4.1.2 Standard / Extent
          4.1.3 Subjective limit
          4.1.4 Exception
   4.2 Grounds supporting the hypothesis
          4.2.1 Criterion
          4.2.2 Basis of the measuring standard
          4.2.3 Grounds for the measuring standard
          4.2.4 Subjective limit
          4.2.5 Exception: special circumstances of the case
   4.3 The question of the burden of proof
5. Case Law
   5.1 The aim of this chapter
   5.2 Classification criteria
          5.2.1 Temporal
          5.2.2 Spacial
          5.2.3 Quantity
          5.2.4 Qualitative
          5.2.5 Issues related to international sales
                    5.2.5.1 Violation of exclusivity clause
                    5.2.5.2 Violation of administrative rules of buyer's country
                    5.2.5.3 Documentation related to the goods
                    5.2.5.4 Declaration of insolvency of one of the parties
                    5.2.5.5 Conclusions
          5.2.6 Lack of due diligence
          5.2.7 Is there a substantial difference in the sale of commodities?
   5.3 Conclusions of this chapter
6. Conclusions

Case Law Addendum

Argentina	Finland	Mexico
Australia	France	Russian Federation
Austria	Germany	Spain
Canada	Hungary	Switzerland
China (PRC)	ICC Arbitration	United Kingdom
Denmark	Italy	United States

1.1- PRACTICAL RELEVANCE

This thesis will introduce the reader to the world of the international sale of goods and, more specifically, to the legal conflicts that commonly arise in that field. He will not find the "should be" of the 1980 Vienna Convention on Contracts for the International Sale of Goods (the "CISG"),[3] but only the legal solutions to infractions of the "should be".

1.1.1.- Before thinking of legal solutions, one should think of the grounds that support them. Much has been written on the "should be" of the CISG; however, the reader will find here the exact opposite. This thesis deals with the resolution of conflicts arising from the failure to perform the obligations undertaken by the parties. It does not contain a constructive or instructive approach to the way in which international business should be carried out. On the contrary, the underlying premise is that there has been a breach and that a legal solution to such failure must be given. The discussions and analyses below will not instruct the "good merchant" on how international sales should be conducted, but rather in which cases and what remedies can be sought in the event of breach. This thesis is concerned with situations where the parties have behaved in a manner contrary to what was expected from them. There are no "good merchants" but only "bad"[4] ones in this thesis, and the way to defend against them and prevent their breaches from producing even more serious consequences. I hope that this work proves useful in international conflicts.

Therefore, the first thing that should be noted is that the law cannot make good a breach;[5] it cannot substitute for the breaching party's will. The breaching party places the other party in an unwanted situation, and consequently a solution should be found to the unexpected, since it is unreasonable to think that the parties enter into a contract with the expectation that the other party will fail to perform its obligations. The law is insufficient, within human society, to force the parties to meet their commitments. Still, it certainly can remedy those breaches with the aid of tools that will repair what has been broken, but will not prevent the breach from occurring.

1.1.2.- Contractual breach is present in each and every legal case concerning international sale of goods. It is inconceivable that the parties resort to court litigation or arbitration without breach occurring first. The CISG sets out different statutory types of breach and provides for different legal remedies. This is precisely the purpose of this thesis, i.e., to draw the distinction between each of them, which is of paramount importance, since different statutory types imply different legal remedies with different levels of gravity.

Given that each and every case published concerning the CISG involves past, present or potential breaches, regard must be had to the importance of fundamental breach, defined (characterized)[6] under article 25 of the CISG. Although the following analysis does not intend to be of scientific or statistical precision, it can be stated that (a) based on data from Pace University,[7] out of a total of 1,200 cases recorded, 114 of them involved fundamental breach, which means that 9.5% of the cases are related to the issue and its interpretation; and (b) in UNCITRAL (CLOUT)'s [8] database, out of 489 cases, 65 cases involve fundamental breach, which means that 13.29% of the cases are concerned with fundamental breach.

1.1.3.- A basic premise of this work is that the CISG provides for three types of breach, namely, insignificant breach (article 7(2)), simple breach (defined by negation) and fundamental breach (article 25 of the CISG). I have not found in case law or scholarly writing any other type of breach, and the language of the CISG does not seem to recognize any other characterization. This distinction is of paramount importance in order to understand the "remedy" system, and fundamental breach in particular is key to the system, as it entitles the aggrieved party to all remedies available for the other types of breach; also, some remedies are available solely upon this type of breach, especially the much sought after avoidance.[9] All the differences in the event of fundamental breach will be discussed infra;[10] however, by way of introduction, I will say that fundamental breach (and fundamental breach only) gives rise to: (1) direct and total avoidance of the contract, (2) remedies for anticipatory breach, (3) anticipatory avoidance in installment contracts and (4) specific performance.[11]

The interest legally protected under article 25 of the CISG is the general principle of favor contractus or upholding of a contract.[12] However, I think that also present are -although to a lesser extent - the principles of proportionality, legal certainty and the duty to mitigate loss. It can be anticipated that the CISG is based on two pivots as regards breach, i.e., a strong one requiring that there be a substantial economic detriment concerning the economic interest of the contract, and a weak one referred to making good any kind of breach.[13]

1.1.4.- The purpose of this work is twofold. In the first place, it is aimed at scientifically [14] analyzing a central institution of the CISG and trying to find its true meaning. To this respect, it is aimed at the legal professional. Secondly, the other purpose of this work is to provide international merchants, the true protagonists of the law, with a valuable analysis they can make use of. It does not purport to be a "popular science" work but it is intended to provide a simple and practical interpretation that every merchant can understand in its essential points and, even more important, that can provide him with legal certainty and predictability in international relations.[15] This is what the protagonists ask from their legal advisers, and it is my intention to provide legal professionals with a general rule that is easy to explain to merchants so that, once they have been given adequate advice, they can run business safely.

In order to accomplish its main function, private international law must increase the legal certainty surrounding the international private situations, so that the protagonists (international merchants) can have the best possible knowledge of the consequences of a legal conflict and the action to take in the circumstances.[16] Economic integration and globalization require international trade, and the mere removal of public law barriers is not sufficient to foster it, but it becomes necessary to take action in the sphere of private international relations as well.[17]

The scholarly writing and case law available on the subject lead to the conclusion that no uniform and clear solutions have been propounded. That is precisely what I intend to do; it is up to the reader to judge whether I have accomplished this goal and whether the outcome is equitable and practical.

1.2- METHODOLOGY

I intend to carry out a progressive analysis of the subject. This thesis will begin by discussing international legal conflicts and the distinction between international and domestic conflicts, focusing particularly on substantive rules and their consequences. At this point, the analysis will have a "dikelogical"[18] approach, and it will tend to show that regardless of the CISG's text, the solutions are equitable.

Then the thesis will move on to the interpretation of the CISG (horizontal analysis) and of related legislation governing the international sale of goods (vertical analysis). This will lead to the issue of legal gaps and the way they are to be filled, and the interaction and exclusion of different rules. At this point, the thesis will focus on two fundamental issues: the applicability of UNIDROIT Principles and the applicability of foreign case law.

Then the thesis will seek to discuss as thoroughly as possible the remedies set out in the CISG for each statutory type of breach (insignificant, simple and fundamental). This will provide an overall view of the importance of the distinction I intend to draw. Then the thesis will take a critical look at the various positions laid down on the subject by legal authors and case law.

Once the interpretative elements and scholarly opinions are presented, the hypothesis of this work will be outlined. Then the premises, reasoning and conclusions underpinning the hypothesis will be set out.

Case law will be dealt with on two levels. Firstly, scholarly opinions deriving from it will be drawn in chapter three. Secondly, a converse analysis will be carried out by examining the facts reflected in case law and contrasting these facts and court decisions with the hypothesis. In that chapter, I will test the validity of the hypothesis rather than assessing the intrinsic value of case law (which is done together with scholarly writing). At this point, the reader will be able to judge for himself if the proposed interpretation is useful and equitable. Such an analysis will begin with the infinite nature of facts and conclude with the finite nature of law.

Finally, I will evaluate the work and draw the conclusions, assess the contrast between the hypothesis and case law and analyze the implications of CISG's principles and legally protected interests.

1.3- INTERNAL CONFLICTS AND UNIFORM SUBSTANTIVE RULES

1.3.1- The international case and the method of Private International Law

1.3.1.1- The international case and its consequences

In order for a legal conflict between individuals to be considered international there must be some foreign element,[19] and whichever the conflict is it will be governed by private international law.[20] That foreign element will have a normative function that will elicit an ad hoc legal solution from the private international legal system, an individual normative or regulatory function.[21]

Private international conflicts are governed by a normative system with its own principles, specific rules and institutions especially adjusted to international relations; said institutions can be derived from no other branch of law than private international law.[22] These solutions are not neutral with respect to the parties' interests, since they reflect the legislator's own regulatory criteria and intentions (regardless of the domestic or international source) and will never be neutral, impartial or accidental.[23] Since the legal conflict is scattered in space and heterogeneous, the substantive conception of the function of private international law is to cure that discontinuity, providing an equitable solution to the case.[24]

Defining the problem of private international law in terms of an alleged contradiction between legal systems or simply an extra element to bear in mind is erroneous. On the contrary, the sole and exclusive function of private international law is to solve conflicts through its own rules. The opposite is a perverse vision that does not conform with the minimum standards of argumentative rigor.[25]

Private international law is not an instrumental branch of law, a mere solution to conflicts between systems which have not been designed to coordinate with each other. Instrumental justice is insufficient,[26] and it is better to seek equitable solutions to international conflicts, which constitutes both a prerequisite and a corollary of the purpose of private international law. The purpose of private international law is to administer justice, and in order to accomplish this it is necessary to harmonize conflicting solutions provided by different legal systems.

Even in the context of Common Law, where this discipline is referred to as "Conflict of Laws", it has been held that this theory is much more than a mere tool for choosing the law to be applied to the conflicts, and that it is far from being so, as it indicates the attitude of a legal system and a particular approach to the conflicts involving foreign elements.[27]

To sum up, private international law provides equitable solutions to cases where foreign elements are involved, covering all of its aspects, rather than being a machine fashioned to automatically find the applicable law or an optional or consultative system of the law of the judge's jurisdiction.

1.3.1.2- The method of Private International Law

It is necessary to go back to some basic notions concerning private international law and its method. In 1973, in the famous course at the Hague Academy of International Law, Henri Batifol noted the multiple methods used in private international law, going beyond the theories exclusively based on conflict rules.[28]

Three basic methods can be identified:

1.3.1.2.1- Conflict rules

The structure of a conflict rule consist of a "statutory type" that states the object of the rule (where the foreign element is found) and a legal consequence stating the remedy applicable to the category. In the second part of the rule is the typical element of this kind of rules: the link, the connection between the conflict rule and the applicable law.

There are no rules of this kind in the CISG, so one must refer to the conflict rules applicable in the jurisdiction of the competent court, in accordance with article 7(2) of the CISG. This resort to indirect rules is ultima ratio and has a very limited sphere of application.

1.3.1.2.2- Substantive rules

The technique used by substantive rules consists of providing direct solutions for an international conflict, a uniform law governing the acts of merchants and private international relations in general. They usually originate in international conferences or institutions established with the purpose of unifying international law. This is the case of the CISG, all of whose rules, save for one controversial exception,[32] are substantive.[33]

1.3.2- Inconvenience of applying the domestic law to cases involving foreign elements

Private international law is independent from and exclusive of domestic law in its own field. It is concerned with a defined social object, distinct from that of domestic law. Domestic private law is a system intended to exclusively regulate domestic affairs, and lacks the power to govern international affairs. These need the legal approach that is proper to them, which approach must be provided solely by private international law; in this way only is the adequate treatment of the international social object. It is always best to avoid the inadequate projection of domestic law onto international affairs.[34]

With the elaboration of substantive rules of international origin, nations have given up certain sovereign powers in order to guarantee individuals access to effective justice, which is the ultimate purpose of substantive law. An inevitable consequence of this is that substantive rules improve international trade and increase the security of transactions.[35]

In the context of the Common Law, courts use the following guidelines in determining international cases, in no particular order of priority: (a) the needs of the interstate and international systems, (b) the relevant policies of other interested states, (c) the protection of justified expectations, (d) the basic policies underlying the particular field of law, (e) certainty, predictability and uniformity of result, and (f) ease in determination and application of the law to be applied.[36] It should be noted that these principles do not refer to domestic law. Ever since Savigny, uniformity has been taken into account in providing solutions to international conflicts as the main objective of private international law. Disputes must be decided under the same substantive rules, regardless of the court hearing the case.[37]

The above discussion has attempted to draw a general picture of private international law and substantive rules. I have shown very clearly how inconvenient and unjust it is to apply any one domestic law. Still, in the case of the CISG, this is even more inconvenient and dangerous.

Filling the gaps of the CISG by analogy with the domestic law of individual states is inconvenient since it is the very language and spirit of the CISG that precludes that possibility. Questions concerning matters governed by the Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or by analogy with other provisions contained therein.[38]

So far I have taken the CISG as a uniform law convention, and I have not gone deep into its particular provisions governing the matter (in an external view), as it is dikelogically inadvisable to resort to domestic law in order to supplement the Convention or to fill its gaps. In the following section, I will intend to show with the same technique that not only is it inadvisable but it is also illicit, pursuant to the rules of private international law.

1.3.3- Exclusion of domestic law

In the past, private international law used to be defined as the special law applied to individuals involved in private international relations, the adjective "special" implying that private international law did not necessarily take into consideration the full regulations of the matter at issue, which resulted in the possibility of projecting certain domestic law rules onto private international law. Such a conception must be rejected on the basis of the autonomy and independence of private international law as a system. The exclusiveness of private international law means that in deciding private international disputes the remedies provided for by that particular branch of law must be applied to the exclusion of any other system, projecting the assurances of equity that the legislator intended for international relations.[39]

The notion of an internationally harmonious private international law is prior, as it does not need individual state systems to be comprehended but is easily accepted in the scientific field, and its influence over the autonomous dimension is evident. A private international law "principle" can only find its own niche wholly and unquestionably in the autonomous dimension of a complex system and cannot be reasonably equalled to the "principle-purpose" of international harmonization, as it would even constitute an offense to the latter.[40]

International conventions on uniform law rule out the states' domestic regulations and impose their applicability both on domestic and international transactions.[41] This is grounded on the principle that a later special law repeals an earlier general one and, above all, on the superior legal status of international treaties over domestic law. For instance, in Argentina, in a leading case,[42] the Argentine Supreme Court of Justice acknowledged the superiority of international treaties over domestic law [43] in recognizing the necessary application of article 27 of the Vienna Convention on the Law of Treaties, (1969).[44] [45] [46] In the realm of private international law, article 1 of the Inter-American Convention on General Rules of Private International Law, signed at Montevideo on May 6, 1979,[47] also sets out the superiority of international treaties. At present, the matter is governed by Section 75.22 [48] of the Argentine Constitution. In Spain, sections 95 and 96.1 of the Spanish Constitution [49] and in the United States, Article VII, Cl. 2, of the USA Constitution,[50] give international treaties a supralegal status.[51]

In the scope of the CISG, there is consensus among legal authors [52] that the international character stressed in article 7(1) of the CISG requires an autonomous interpretation, i.e., it is not possible to interpret the language of the CISG with the meaning ascribed by domestic law. International context prohibits the application of domestic law. The only way to reach domestic law is through conflict-of-law rules of private international law and only to the extent permitted by the CISG, which only leaves the door open for cases of external gaps, express references or very exceptional cases.[53]

To sum up, it is forbidden to apply domestic law when there is an international convention of substantive law, except that domestic law may be applied if Private International Law conflict rules so provide for it, and to the extent permitted by the convention.

1.3.4- Impossibility of applying uniform rules in parallel with domestic law

As discussed in the previous section, there is a relation of exclusion between international substantive rule and domestic law. Both cannot coexist on a same level. Domestic law will only be applicable insofar as it is so allowed by the international convention and it is so established by private international law conflict rules. Still, even in this case the principles of internationality, independence and autonomy of private international law must be complied with.

Unfortunately, case law has erred in this regard and both international substantive law and domestic law have been applied on the same level. The following cases serve as examples:

In conclusion, it is not possible to apply domestic rules on the same level as international substantive rules, nor can they be combined. That would go against the private international legal system, the hierarchy of norms and the principles of autonomy and independence. Unfortunately, many judicial decisions and legal authors, immediately after declaring the autonomy of the CISG (and substantive rules of international origin), resort to domestic law in the presence of the slightest hint of gap in the law, ignoring that the CISG itself provides for a system to integrate them. I think it is necessary to overcome the fear of the unknown and avoid facile solutions consisting of resorting to domestic law, which is contrary to international tolerance.[60]

Fortunately, in many cases a true autonomous interpretation of the CISG has been made, as shown throughout this work. Among those cases, the valuable efforts of German courts and the arbitral courts of the International Chamber of Commerce are noteworthy.

1.3.5- Conclusion: autonomy and distinction of legal solutions to international cases

The international character of a case calls for the application of private international law, which offers self-contained solutions to cases involving foreign elements, and constitutes much more than a system designed to reach the domestic law; ergo, all solutions will bear its mark. Applying the domestic law to international cases is dikelogically inconvenient, as well as being expressly prohibited where there are uniform substantive rules of international origin, since they repeal domestic law inasmuch as they constitute a later special law and are hierarchically superior. Thus, it can be concluded that the application of uniform rules of international character in parallel with domestic rules is not only inappropriate, but it is also prohibited. The only way to resort to domestic law is through private international law conflict rules, but only to the extent permitted by substantive rules of international origin.

These above statements constitute the dikelogical grounds for the ones in chapter two concerning the autonomous interpretation of the CISG and its imperviousness to domestic law.

The aim of this chapter is to provide a brief review of the interpretation rules of the CISG. I will discuss the tools for the analysis later used to support the hypothesis stated in this thesis and to show that the different theories stated above are, either, insufficient, or do not comply with the interpretation requirements for the CISG. Last, I will devote some headings to the possible application of the UNIDROIT Principles and the binding force of judicial precedents of foreign countries in different matters related to the CISG. These last two topics are of paramount importance for the interpretation of the CISG at present.[61]

2.1- APPLICATION AND INTERPRETATION OF THE CISG

As regards the sphere of application and the interpretation of the CISG, it is necessary to make a distinction between, first, the pyramid of norms created by the CISG and second, the interpretation of its provisions. In the first sense, the analysis shall be done vertically and, in the second sense, horizontally. The first type of analysis will determine whether the CISG provisions are applicable or not. The horizontal analysis will determine which of such provisions are applicable and if there exists any gap in the legal text and how it should be filled by the CISG, according to its auto-regulatory rules.

2.1.1- The pyramid of norms of the CISG (vertical analysis)

Under the CISG there is a hierarchy of rules applicable to the international sale of goods.[62]

This pyramid of norms shall not be construed as a subsidiary source for the solution of every case. This means that it should not be used automatically.

The source stated in (a) above shall be applied whenever it was agreed by the parties, as the CISG itself which so establishes (articles 6 and 9(1) of the CISG). The source stated in (b) above also overrides the CISG, but it can be avoided due to the substantive contractual freedom.

Where the CISG is mentioned in third place, it shall not be considered just like any other source, as many authors and judges do, to apply the domestic law which they very well know and therefore find easier to apply. This level of the pyramid of norms is self-contained and constitutes a close and consistent system. This means that its provisions are to be taken as a whole in an harmonic body, neither separate nor in combination with other sources if a precise and complete knowledge of each legal concept wants to be achieved. The CISG provides a solution for every case and it is the CISG itself which resorts to inferior sources when it considers it to be necessary. The same legal solution must be found taking as a starting point a statutory type, and no contrary solution shall be reached from another statutory type. This topic of essential importance will be later discussed infra in 2.1.2.- .

Finally, the sources referred to in (d) and (e) are secondary sources and their application shall be of ultima ratio. However, due to the choice-of-law freedom, the CISG may be overridden, if the parties agree that the law of a non-Contracting State shall be applicable. The need to promote uniformity in its interpretation (article 7(1) of the CISG) involves considering the CISG as self-contained and as a Code in itself (in the Continental System meaning) and that secondary sources shall only be consulted when the CISG so provides.[65]

The following diagram represents the idea stated herein. It must be taken into account that the sources above and below the CISG are represented by a line and that the CISG is represented by a horizontal plane crossed by the first line. The following section will discuss how the rules work within this plane and how it permits the application of inferior sources. The diagram in infra 2.1.2.-, will show the plane, here in blank, which represents the CISG. (Diagram omitted.)

2.1.1.1- What do "international usages and international customs" mean?

The CISG refers to "international trade usages and customs" in article 9. This concept has often been confused by legal authors and case law. However, such distinction is essential for the CISG. The term "usages" (article 9(1) of the CISG) refers to the parties exercising their substantive contractual freedom, under article 6 of the CISG. The substantive contractual freedom principle is above the CISG and, as a consequence, it overrides the CISG. As regards the term "customs", (article 9(2) of the CISG), substantive contractual freedom shall not apply. The CISG provides for the application of custom, as a superior source for its interpretation and for the interpretation of the contract. The term "custom" (article 9(2) of the CISG) acts as an independent source between the substantive contractual freedom principle and the sphere of application of the CISG and even within the CISG itself. "Custom" shall always be applied, unless the parties agree otherwise according to the substantive contractual freedom (articles 6 and 9(1) of the CISG).

One author [66] makes a distinction between (a) the usages agreed on by the parties, under article 9(1) of the CISG, which states that usages must be agreed by the parties and, that according to substantive contractual freedom, they will modify what is provided for by the CISG [67] and, (b) the customs objectively applicable to international trade, which means that, they are usually applied by international merchants (widely known) with the certain conviction that such usages are binding (regularly observed by the parties) under article 9(2). This author and the CISG do not use the term "customs", which is not rare as both terms "usages" and "customs" are commonly treated as synonyms.

Another author, who is much more specific about such distinction,[68] explains that even if the distinction made between the legal concepts included in article 9 is not clear, it seems that, in essence, the usages and practices stated in the first paragraph are only and exclusively valid to what the parties had agreed to or to their usual practices; and that the usages stated in the second paragraph are valid per se, which means that, as their application is general, their existence is independent from an actual commercial transaction. The contract consideration is qualitatively different: on one side, the substantive contractual freedom and. on the other side, a legal presumption. According to substantive contractual freedom (article 6 of the CISG), the usages stated in article 9(1) of the CISG are above the CISG and the usages (customs) stated in article 9(2) of the CISG are within and above the CISG itself.

This author sets aside the term "legal usage" (article 9(2) of the CISG) to refer to the absence of contract intention and the presence of trade customs understood as trade practices, widely known and observed in a particular trade, which are impliedly made applicable to their contract, its formation and the interpretation of the CISG. It involves certain practice carried out in trade communities in a particular trade, which is widely known and regularly observed because there is a conviction that it must be done in that way or because there exists a current practice. It is not necessary that it be universally applied, but the "legal usage" must be observed regularly within the frame of international trade transactions in local areas. Another author follows the basic guidelines of this line of thought distinguishing between usages (articles 6 and 9(1) of the CISG) and customs (article 9(2) of the CISG).[69]

A third author makes a distinction between both concepts and states that they should be defined individually due to their different consequences.[70] He states that article 9(2) of the CISG lists mandatory usages and that if the parties have not excluded them based on the substantive contractual freedom they shall be applicable and be made actual international usages. This means that, within certain professional communities they will be considered mandatory. Last, he relates the mandatory usages to the Lex Mercatoria. Another author makes the same distinction between agreed on usages and mandatory usages.[71]

Another author distinguishes between usages as a consequence of the exercise of substantive contractual freedom and mandatory usages which are regularly observed and may be excluded on the base of this source. However, he requires a traditional and strong nationalism and the non-existence of local mandatory usages.[72]

Other authors,[73] state that usages under article 9(1) of the CISG are a consequence of substantive contractual freedom (article 6 of the CISG) and that those usages under article 9(2) should be regarded by the community as mandatory.

One author [74] is of the opinion that article 9(2) of the CISG is an internationalization of the requirements stated in the Continental System of law, which establishes that for a mandatory custom to exist there must be both, the intention of traders (not necessarily parties to the contract), and a certain period of time. Another author, from the Common Law,[75] has the same opinion to this respect.

Some authors do not discuss this issue and make no distinctions.[76]

In my opinion, the distinction between international "usages" and "customs" is necessary. As regards the former, the parties agree to the application of widely known and accepted rules. For example, when the parties agree on an INCOTERM, in this case the parties only state "FOB Buenos Aires" and they are bound to the dispositions under the respective chapter of the ICC publication overriding articles 31 to 34 of the CISG. I think it is just an interpretation of the substantive contractual freedom stipulated in articles 6 and 9(1) of the CISG.

A different thing is the topic about "usages" in the sense of article 9(2) of the CISG, from its analysis it can be seen that it refers to the international "custom". It seems that the definition provided in the article above mentioned is closely related to the standard definition of "custom", which means that the regular and uniform observance of certain practice by members of a community (in the case of international traders) with the conviction that such conduct is the result of a mandatory provision.[77]

The ancient legal authors' tradition states the need of two elements: one (a) objective: a series of similar, uniform and constantly repeated acts, in the wording of the CISG, "(...) which the parties knew or ought to have known and which in international trade (...)" and another (b) subjective: the parties' conviction that the observance of such practices result from a mandatory provision, in the wording of the CISG, "(...) is widely known to, and regularly observed by, parties (...)". In this sense we can talk about international custom.

This distinction is of practical importance. If the parties did not agree on the INCOTERMS, they cannot claim for their application if they state that "the transfer of risk shall take place when the goods cross the board at the port of origin" and the (acronym) FOB is not mentioned. The INCOTERMS and the obligations set forth in them shall not apply in this case. Instead, articles 31 and 34 of the CISG, as amended by the substantive contractual freedom shall be applicable. On the contrary, if there exists an international custom, it should be applicable, under according to article 9(2) of the CISG. This topic is in dispute especially if related to the UNIDROIT [78] Principles.

I think the reference made by some authors to the "Lex Mercatoria"[79] has no grounds to be supported. Although it is outside the scope of this work, I want to state my opinion that the "Lex Mercatoria" is just a title without content, that there is no distinction to be made between the traditional concepts of "usages" and "customs" under the interpretation of the Continental System of Law and the Common Law which derive from the early Roman Law.[80]

The "Lex Mercatoria" is like the invisible dress of the naked king of the fairy tale, everybody talks about it and says to see it, but it does not exist or, at least, there is no practical aim in establishing such distinction between the traditional concepts from early Roman Law,[81] which are clearer and more precise. It must be taken into account that two important authors, one from the Common Law and another from the Continental System of Law,[82] affirm that article 9(2) of the CISG is related to the mandatory custom, under the CISG itself. This shows that in relation to the above mentioned issue, the Roman Law principles, from which both legal systems derive, are still applicable.

2.1.2- The interpretation within the sphere of the CISG (horizontal analysis)

Before carrying out an exhaustive analysis on this issue, it is necessary to make reference to the important observation of one author.[83] He analyzes the psychological and cultural tendency of persons of law from the Continental System of Law and Common Law. Persons of law from the Continental System are used to finding within the law provisions (to which they are used to) general principles from which they can infer the solution to a problem not expressly regulated. In the absence of a specific rule, persons of law from the Common Law are apt to think that this issue is not regulated by written law. This could lead to a deliberate and involuntary exclusion of the application of the CISG, due to their educational background. The specific purpose of article 7(2) of the CISG is to prevent this exclusion, which is against uniform interpretation.

The ratio legis of the CISG is to regulate in an harmonious and uniform way the international sale of goods. For this purpose, it is necessary that the CISG be interpreted in a uniform way.[84] Otherwise, the legislative task carried out for more that 50 years would be worthless. If the CISG is interpreted in a permeable way, allowing the application of domestic law (which means that, such rights will be reached through the private international law conflict rules), such interpretation will lead to a situation in which the adherence of a new country will only deteriorate the coherence of the CISG text.

2.1.2.1- The gap issue

2.1.2.1.1.- The issue stated in 2.1.2.- is not a minor problem. The CISG purports to be self-contained, which is not possible taking into account its restricted and literal interpretation. It shall not be an aim to find a rule without gaps, as gaps will always exist. In order to solve the infinite number of facts it is necessary to resort to the law, which is finite in nature. However, this does not mean that the objectives of systematization and completezza are not valid. This can be a closed system if it foresees its own deficiencies and prepares not the rule to fill the gaps, but the rules to find the necessary rules to fill them.

The systematic and psychological distinction between the Common Law and the Continental System of Law may be appreciated by certain legal authors who criticize the restricted interpretation of the possibility of the CISG filling its own gaps.[85] This author criticizes the statement that promotes the application of articles 31 and 32 of the Vienna Convention, 1969 [86] "Law of Treaties",[87] which means that it should be interpreted that the parties' intent was to restrict their freedom to a minimum degree and, therefore, the CISG shall always be applied in a restrictive way. As discussed above, this is related to the Common Law system. It is known that the CISG must be interpreted in the light of the Continental System of Law;[88] however, such statement is criticized by arguing that the CISG governs over the relationships between persons and not between different States. Moreover, as the CISG has its own interpretation rules, the restricted interpretation of its applications should not be admitted.[89]

2.1.2.1.2.- Once it is clear for the interpreter that the issue to be solved is related to the international sale of goods, it is the CISG that must be applied and which will provide for a solution to any legal issue. In this case, the CISG will expressly provide, or not, for a legal solution. Otherwise, the interpreter will face the gap, which may be either internal or external.

External gaps are those the subject matter of which is expressly excluded by the CISG, i.e., the questions referred to in articles 4 and 5 of the CISG. In this case, the interpreter must refer to the international private law of the court with competent jurisdiction.

Internal gaps deal with legal issues related to the international sale of goods (article 1 of the CISG), which are not expressly excluded by the CISG, as stated in the above paragraph, and which are not expressly regulated by the CISG (article 7(2)). Such gaps shall be filled according to the CISG and its general principles.[90]

In the event that questions to certain matters are not settled by the CISG, ultima ratio, it is possible to resort to the inferior sources of international private law. The autonomous interpretation (article 7(1) of the CISG) requires an extra effort on the part of the interpreter to find a solution within the text of the CISG; and only if this is impossible he will be allowed to refer to secondary sources.[91]

It is necessary to analyze the situation and to be very careful before resorting to another source outside the CISG. The interpreter must be completely sure that the facts beyond the provisions set out in the CISG and he must also ask himself if the has made an exhaustive investigation on the matter. The CISG pretends to be a Code (in the Continental System of law meaning) as regards every aspect related to the international sale of goods and it would be not so simple to find a matter which is not included in it (if there is not an external gap). Domestic rules are usually easier to apply as they are known to the interpreter who is usually tempted to their application. However, the CISG establishes that application of domestic rules shall be avoided (article 7).

There are some judicial precedents [92] and some authors [93] that, after declaring the CISG to be applicable and stating that the CISG is independent and self-contained, apply the domestic laws and create and hybrid between the CISG and the domestic rules. This situation should, under no circumstance be admitted.

It is necessary to point out that the fact that the CISG resorts to the application of another source is not a controversial issue, and in these cases a gap cannot be considered as a simple reference, i.e., article 28 of the CISG.[94] In the following diagram the system of the CISG and its gaps is illustrated: (Diagram omitted.)

2.1.2.2- How are gaps filled?

As explained in the above section, there are certain matters which exceed the sphere of application of the CISG (art. 1), external gaps (i.e., articles 4 and 5 of the CISG), cases where the CISG refers to the application of another source (i.e., article 28 of the CISG) and legal concepts included in the CISG (most of the issues). These cases do not present major interpretation problems. The CISG has its own system of subsidiary rules to settle any question concerning any matter not specifically settled by it.[95]

Some internal gaps will also be found (article 7(2) of the CISG). Such gaps shall be filled promoting the uniformity of the application of the CISG and international trade good faith (article 7(1)). The general principles of the CISG shall be considered first and, ultima ratio, the private international law.

The question is: How should gaps be filled by the CISG? The reference to the general principles is too vague to draw a conclusion a priori, it is more useful when considering each case in particular than in the general interpretation of the CISG.

General principles of the CISG include:[96]

Due to the uncertainty and lack of interpretative practical use of the general principles, the possibility of applying analogy within the CISG must be analyzed. However, can it be used to fill CISG gaps?

According to one author,[104] the common opinion about article 7(2) of the CISG is that it is admissible. For some authors it is so clear that they do not even ask themselves about its arguments or they just avoid the issue, however, the main supporting argument is that, resorting to the general principles implies, major minoris, referring to analogy. Thus, as the general principles are be inferred form special rules, it seems to be that said rules may be referred to, in order to settle such issues.

In my opinion this supporting argument is quite sensible, when elevating the rules to general principles, the result is necessarily is ambiguous, and when applying general principles directly to the case, such ambiguity must disappear. In consequence, if said ambiguity disappears, two reasoning stages to reach the same result can be avoided.

The same author [105] states that traditionally, there are two types of analogy: one, which refers to a different rule of law [106] and other, which refers to several rules of law simultaneously.[107] As the CISG refers to the general principles, which are general common rules of law of the CISG, the second definition of analogy shall be regarded as valid, as it is part of the method used to reach the general principles. The general principles are the outcome of a valid line of reasoning, which starts from a true premise (each of every special rule), ergo, the first type of analogy must be admitted.

I agree with this author in a practical point of view but it is my opinion that in a wider and more generalized view, the first type of analogy [108] is the more accurate and useful. The second type [109] could be too vague and presents the problem of having to reconcile different solutions to different problems, so that it may later adapt such synthesis to a third problem. Moreover, general principles can be applied directly, being the second type of analogy unnecessary, and even redundant.

In conclusion, if the question of certain matter is not expressly settled, it must be interpreted that there is an internal gap which must be filled by other provisions under the CISG (the most analogous and practical). Such process must be carried out having as its aim the general principles of the CISG. As the CISG is self-contained and an actual "Code" of law (in the Continental System of law meaning), it is quasi-impermeable and only ultima ratio and under special circumstances private international laws and domestic laws may be referred to, a fact which is totally undesirable as it is against the uniformity interpretation (article 7(1) of the CISG)

2.1.3- The substantive contractual freedom role

Article 6 of the CISG establishes a wide substantive contractual freedom of the parties.[110] Private International Law distinguishes between choice-of-law freedom and substantive contractual freedom. The former is the power of the contracting parties to choose or exclude applicable law, including its coercive rules.[111a] The latter is the exclusion, within the applicable law (by virtue of private international law or by the choice-of-law-freedom), of any of the rules of law, including the coercive ones.[112] In both cases, the only restrictions to such freedom are the rules of direct application or mandatory rules [111b] and international public policy.[113]

Under article 6 of the CISG, the parties can exclude the application of the CISG or vary the effect of any of its provisions.[114]

In order to exclude, either in whole or in part, the rules of the CISG, it is necessary that the parties state their clear intention to exclude a special rule, either by derogating it or by including a contractual clause unequivocally contrary to the CISG.[115]

In the case of fundamental breach, it is necessary to distinguish between: (a) the parties excluding the application of article 25 of the CISG; (b) the parties stating that the non-performance of a certain obligation will amount to a fundamental breach under article 25 of the CISG; and (c) the parties having agreed that a certain obligation is a fundamental obligation, excluding or varying articles 30, 35 and 53 of the CISG.

It can be concluded that substantive contractual freedom is wide, but it must be unequivocal to exclude the application of article 25 of the CISG and its consequences. If the parties follow this line, this work is applicable and the distinction between fundamental obligations and fundamental breach is not necessary. However, if the parties agree to exclude the application of article 25 of the CISG or, vary any of its terms, chapter three and four of this work shall not apply, instead, the substantive contractual freedom shall be applicable with no other limit than the international public policy and the mandatory rules. Although in international trade practices, the exclusion of the application of the CISG is common, no actual exclusion of the application of article 25 of the CISG [127] was found in the revised final judgments, This situation, even with no statistic value, may lead to think that this last type of agreement is not common in international trade, which supports the statement that the contractual freedom of the parties must be unequivocal.

2.2.- ARE THE UNIDROIT PRINCIPLES APPLICABLE TO THE INTERPRETATION OF THE CISG AS REGARDS ARTICLE 25?

2.2.1.- Since some years ago,[128] it has been suggested that UNIDROIT Principles for International Trade Contracts can be used as a tool for the interpretation of the CISG.[129] The same idea was stated for the European Principles.[130] The UNIDROIT Principles are universal, not as the European Principles. That is the reason why the European Principles should not be applied, as their application is against article 7(1) of the CISG, unless the issue arises between two European countries. In this case, under article 9 of the CISG, the European Principles are in the same condition as the UNIDROIT Principles.

Notwithstanding the following paragraphs, it is necessary to remark that the existence of instruments which compete with each other, contradicts, per se, the aim of the CISG, the uniformity of international sale of goods, and yet, more important, it creates an interpretation problem as both bodies of rules are different, and have different aims.[131]

According to prevailing legal authors' opinion at that time,[132] UNIDROIT Principles are similar to those of the CISG as regards fundamental breach, the loss suffered, the concepts "essence of the contract" and the need of actual detriment. Both have avoided the problem of the delivery of an aliud,[133] defects as to the quality of goods and the misunderstanding related to the Common Law precedents. Another author,[134] points out that the agreement as to the abuse of rights prohibition in the cases of insignificant breach and fundamental breach is justified only in breach of fundamental obligations.[135]

2.2.2.- I agree with the opinion of some authors, but there is also a coincidence related to fundamental breach in the Common Law, and in spite of this, its terminology has not been considered for the interpretation of article 25 of the CISG.[136]

The question to be answered is if the UNIDROIT Principles are international custom under article 9(2) of the CISG or if they are international usages under article 9(1).

In that connection, the preamble of the Principles before mentioned, establishes that said principles shall be applicable when the parties agree to; the same applies to the "general principles of law", the "Lex Mercatoria" and similar expressions.[137] The text in itself does not consider them to be international custom under article 9(2) of the CISG and shall only be considered as international usages under article 9(1) of the CISG. In other words, they shall only apply when the parties agreed to their application by virtue of the substantive contractual freedom.[138]

Although there are several final judgments which do apply article 25 of the CISG, they do not apply the UNIDROIT Principles,[139] therefore, it is a mere theoretical discussion.

2.3- VALUE OF FOREIGN JUDICIAL PRECEDENTS

One author [140] discusses the value of case law related to the CISG qualifying it as "global" and "policentric". In addition, he states that case law challenges the value of the CISG as a legal text, and as an empirical synthesis of legal texts or koiné law, created for the "global village". He warns about the danger of centrifugal case law instead of the centripetal characteristic of a "uniform interpretation", which should be promoted by legal authors that study the CISG and the case law related to it. Although it is a subtle observation, next, I will analyze how the centrifugal danger inherent in case law can be avoided and how case law can contribute to a uniform interpretation. For this purpose, it is necessary to analyze the binding force of foreign case law related to the CISG.

Only few authors and case law have devoted to this matter. Most of the final judgments analyzed in chapter five do not refer to foreign judicial precedents, but they do refer to foreign law principles. It is surprising how sometimes a court refers to the holding of a foreign final judgment, by referring to one author who had previously reproduced what was said in the judgment.

Authors [141] deny the binding force of foreign judicial precedent and law principles over the courts of a country. In this respect, they sustain that there is no rule as regards binding force at the international level in relation to foreign case law and that its sole effect on the courts is merely "persuasive", "to be regarded", "to take into account" or "of considerable weight". Even though it is an important step the long road of uniformity, I think that is not enough because, in the end, everything is led to the "policentric" judges good will, and the centrifugal effect is mitigated but this is not a final solution.

There are judicial precedents under the Common Law, from the United States of America [142] and another one from the Supreme Court of Ontario, Canada [143] and under the Civil Law, from Italy [144] which recognized the persuasive force of foreign case law, but denied its binding force. Case law and doctrine quoted do not give any fundament but the need to promote uniformity as a declaration of principles. One author [145] comments that it is remarkable that the District Court of United States takes a decision from the Supreme Court of Germany (BGB) as precedent or, at least as one authority, as it deals with the application of the uniform law (CISG) in a similar way as it does with the precedents of neighboring countries that apply the United States Common Law. This means that it would consider the precedents related to it as an international Common Law, taking into account every precedent of the countries that are parties to the CISG.

Although I am not a competent authority to talk about the Common Law, and as I belong to a country where the Continental System applies, I allow myself to point out the important difference between the value given to judicial precedents in one system than in the other. In the Common Law, to accept the application of a foreign judicial precedent means that it is, to some extent, binding. In the Continental System, except for some cases, the value given to judicial precedent is not binding, but for its persuasive power and, in the case of superior courts, the certainty that such court will keep the same criteria and, eventually they will modify the final judgment. That is why, it is remarkable that some of the first applicable judicial precedents come from the Common Law.

The issue about judicial precedent, either by accepting or denying their legal force, is related to the interpretation of the CISG (article 7 of the CISG) and more specifically, the aim of promoting its uniformity (article 7(1) of the CISG). On this basis, we cannot talk about a mere related or non-related issue to its sphere of application, (article 1 of the CISG), ergo, we are within the sphere of application of the CISG, tertium non datur. Hence, it is neither an external gap, nor the application of another source. However, it is not a specifically considered issue. Therefore, it can be considered as an internal gap (article 7(2) of the CISG) which must be filled by the general principles and the CISG by analogy. It seems that there is no other rule to be applied by analogy, ergo, the general principles [146] and the aim to promote uniformity shall be considered in first place.

The application of said principle leads us to think that if each country is encouraged and allowed to ignore foreign case law, and only considers its own, in the long term, and bearing in mind the old phrase: "the law is what judges say it is", each country will follow its own interpretation line, which will end in a different CISG for each country. In this way, 50-years' work of the legislators of the CISG has been in vain, and moreover, it would always be threatened by forum shopping. It seems to be that the decision stated in the final judgments referred to supra is in agreement with the uniformity of interpretation stated in article 7 of the CISG but, on the other hand, it will be useful or not, according to judges good will.

After recognizing the need and legal validity of foreign case law as judicial precedent, it must be determined if it is binding or not, in which cases and up to what extent. Shall the system of Common Law prevail and case law be considered binding or conversely, shall the Continental System prevail, and case law not be considered binding? For this purpose, the interpreter shall only take into account the general principle of interpretation uniformity and polycentric case law that may be centrifugal or centripetal.[147] The answer to this question is not easy, so that the author who commented on the decision of the District Court of the United States of America, does not express any opinion to this respect [148] and others expressly deny its binding force, but just as a declaration of principles, with no fundament in the interpretation of the CISG.

At this stage, the author may be tempted to say that this issue falls outside the scope of this work or, he may only put forward the issue without giving and answer to it. The truth is that it is not outside the scope of this work because it is an essential tool for the interpretation of article 25 of the CISG and in addition it completely changes the sense of chapter five of this work. I will set forth a non-definite answer to this issue, as I consider it to be wide and yet not deeply analyzed by legal authors and case law.[149]

This is not a declaration of principles. As I referred supra in 1.3.3.-, substantive rule conventions are a superior source than Domestic Law and it is allowed to apply the last one when there is an international convention of the first kind. The CISG is an international substantive rule so sister signatories case law must operate within the framework of a "global jurisconsultorium" for uniform sales law.[150]

It is my opinion that there should be a combination of soft and hard criteria. Foreign case law shall be considered and a text of authority.[151] It may not be considered binding, but it must be taken into account at the same level as domestic case law (soft criterion). It may be and must be referred as valid support in court final decisions and in order not to follow the court tendency, the court must consequently support its decision. This is a facile solution, which avoids centrifugal case law and promotes scientific uniformity. Briefly, if there is only one separate final judgment, in only one country, it does not have to (but can) be taken into account by the court,[152] but if there is a tendency that is widely spread among courts,[153] the court should follow that tendency, or otherwise, it ought to support its decision not to follow that tendency (hard criterion), similar to the case of the leading cases of the Common Law, as a New International Common Law. Otherwise the goal of uniformity (article 7 of the CISG) will always depend on the "policentric judges" good will, which is contrary to the principles of Legal Certainty and Uniformity in the Interpretation of the Convention. It is important to remark on the provisional status of this conclusion, which is the result of the aim of this work.

2.4- CONCLUSIONS

The hierarchy of sources applicable to international trade can be inferred from the CISG itself. Within this hierarchy, the CISG is a self-contained, close and consistent system. Inferior sources are secondary sources ultima ratio.

Some matters can be outside the sphere of application of the CISG, such as external gaps, references to other sources or, in most of the cases, matters governed by the CISG. This system is governed by the CISG itself. If any case is not ratified, there will be an internal gap which must be filled by the application of the general principles or by another rule by analogy.[154]

The CISG provides for a wide substantive contractual freedom, which must be certain. It is necessary to distinguish between the parties' clearly derogating or modifying article 25 of the CISG and the parties qualifying an obligation as fundamental. In the second case, its breach does not imply, per se, fundamental breach, and therefore the provisions of article 25 of the CISG shall be applicable. Such agreements are not common, which supports the idea that the expression of substantive contractual freedom must be certain.

The UNIDROIT Principles shall only be applicable by substantive contractual freedom (articles 6 and 9(1) of the CISG) as they are not international customs but international usages. In any case, it is a theoretical discussion (for the aim of this work) as no example of case law applying these principles to article 25 of the CISG has been found.

Foreign case law can and must be taken into account to support final courts' decisions in the same levels as with domestic case law and not as a source of authority not strictly binding. For the time being, final court decisions should not be considered separately, but if there is a court tendency shared by different countries, the court should consider it and find arguments to support its adverse final judgment or award.

3.1- THE BREACH AND ITS CONSEQUENCES UNDER THE CISG

According to what is sustained throughout this work, there are three kinds of breach under the CISG:[155]

The legal consequences of the above statutory types are:

As it can be seen, the legal consequences arising from simple breach and fundamental breach are extremely different; in the latter, the consequences are more serious than in the former. The practical importance of correctly characterizing fundamental breach, under article 25 of the CISG, is based on this fact.

3.2- THEORIES ON FUNDAMENTAL BREACH

In this section, I will analyze the main interpretation theories that have been propounded in respect of article 25 and fundamental breach within the scope of the CISG.

The purpose of this research is to find the strong and the weak points of these theories and to analyze whether any of them can be applied to all the situations that may arise from contracts for international trade. In addition, this will be a guide to answer whether a new interpretation of article 25 of the CISG is necessary or not. And I refer to article 25 of the CISG because its sense as a rule has been even denied and other sources have been searched in order to find the meaning of fundamental breach. This fact cannot be admitted. It is not possible to think that after almost fifty years of investigation and discussions [171] no meaning has been ascribed to article 25 of the CISG that can define fundamental breach and that the meaning of this rule must be searched somewhere else.

3.2.1- Theories that deny the sense of article 25 of the CISG

3.2.1.1.- Some authors [172] argue that article 25 of the CISG has no normative sense and that it is tautological; the breach that substantially prevents the other party from what he had a right to expect is essential.

Confronted with this alleged tautology and lack of sense of the rule, they find as the only solution to the definition of fundamental breach the facts of each case; this means they focus the problem on a mere question of fact. In addition, one of these authors argues that fundamental breach can be verified provided always that the contract has been avoided, even if it has been avoided by virtue of the additional period of time (Nachfrist) under the provisions of articles 49(1)(b) and 64(1)(b) of the CISG.[173]

It seems that one of the authors solves the alleged tautology through the historical interpretation of the CISG.[174] After minimizing the sense of the text, he suggests that through the interpretation of the precedents, economic detriment and the facts of the case must be taken into account.[175]

Apart from constituting a fallacy, this posture is contrary to the uniform interpretation of the CISG (article 7) because it gives no sense to a rule to which draftsmen expressly tried to give sense and that is the result of an elaboration process of more than fifty years.

According to this position, article 25 of the CISG would be senseless and fundamental breach would be defined by the circumstances of the case or by article 49 of the CISG. The latter is a complete fallacy of affirming the consequent and is inconsistent with the text of the CISG that expressly provides that in the case of a simple breach an additional period of time can be fixed (Nachfrist) and, if within that period the seller does not perform his obligation, the contract can be declared avoided. The rule of article 49 of the CISG does not state that non-performance after the additional period of time changes the nature of the breach and turns it into a fundamental breach. On the other hand, as discussed supra,[176] to declare the contract avoided is not the only remedy available in the case of fundamental breach.[177]

The mere reference to the circumstances of the case is the antinomy of a rule and, thus, inadmissible.[178]

3.2.1.2.- Another author [179] argues that the definition of fundamental breach of article 25 of the CISG is not useful because, all in all, in the international trade the circumstances of the case must be taken into account. Fundamental breach arises in cases of certain importance and it is difficult to know a priori if a case involves fundamental breach or not. However, he points out that many requirements must be fulfilled in order to consider a breach fundamental.

I do not agree with this author. It is true that the facts of the case must always be considered; otherwise, decisions will be taken based on nothing but abstractions and not on a real legal conflict, but the antinomy of the rule cannot be elevated to the category of a rule. The affirmation of this author is tautological: the facts of the case must be taken into account to analyze the facts of the case.

I do agree that is not easy to know a priori if a breach is fundamental, but article 25 of the CISG must be applied to concrete cases, and at that point is when the theoretical standard becomes practical and useful. It is true that many requirements must be fulfilled and the application of the legal consequences of article 25 of the CISG must always be made ultima ratio.

3.2.1.3.- Another author [180] argues that no approach can be applied to all of the cases:

Except in the case of the first approach analyzed, I agree with the author in that the aforementioned approaches do not apply to all cases; however, I do not see how article 25 of the CISG can sustain so many and so different interpretations, such as the possibility to remedy the non-performance and the foreseeability of a future non-performance. It can be seen that the author's interpretation, without being strictly a fallacy of affirming the consequent, has a strong tendency to case law and the remedies of the CISG, and minimizes the importance of article 25 of the CISG. This article is the premise to the application of certain remedies, and this application cannot change the nature of the breach; it does not matter if the result is the same.

With respect to the criticism of the economic approach, I think it is not justified, as I am trying to show throughout this work.[181]

3.2.1.4.- Another author [182] argues that the existence of a fundamental breach depends mainly on what was agreed by the parties, since they are free to determine under what circumstances an expectation that arises from a contract is fundamental.

Firstly, it is necessary to make a distinction between fundamental obligations and fundamental breach. The former are defined in articles 30, 35 and 53 of the CISG and fundamental breach is defined in article 25 of the CISG. The fundamental obligations of the seller are the delivery of the goods (article 30 of the CISG) and they must be in conformity with the contract (article 35 of the CISG).[183] The main obligations of the buyer are to pay the price and to take delivery of the goods (article 53 of the CISG). They can be aggravated, reduced or excluded by the substantive contractual freedom,[184] but it must be distinguished from the modification of the legal consequences of fundamental breach under article 25 of the CIS.[185]

The fact that the substantive contractual freedom of the parties is essential to define when a breach is fundamental is unanswerable under article 6 of the CISG. It is necessary to distinguish when, by virtue of contractual freedom, article 25 of the CISG is excluded, and when the parties simply agree on their obligations and they give them certain importance or not. If the contract cannot be interpreted in such a way that it is understood that article 25 of the CISG is excluded, this article will apply to what was agreed by the parties. On the contrary, if it is concluded that article 25 of the CISG has been excluded, what was stated in chapters three and four of this work does not apply to the case, as the parties made their own agreement and interpretation must only be made if it is breached.[186] The substantive contractual freedom and article 25 of the CISG work at different levels, they can never be found on the same level.

3.2.1.5.- Conclusion

The approaches analyzed are not constructive. They interpret the rules falling into the tautology that the facts must be interpreted according to the facts, or they are based on a fallacy of affirming the consequent, minimizing the importance of article 25 of the CISG in which, precisely, the draftsmen wanted to define fundamental breach. In addition, reference to case law or to the contract carries the risk that the judgments or awards become merely intuitive and interpreters end up making their decisions ex aequo et bono and not according to law.

3.2.2- Mere literal theories

In this section I will analyze different views of legal authors based merely on the text of article 25 of the CISG.

3.2.2.1.- Some authors [187] argue that to interpret the meaning of article 25, the ontological difference of meaning between "esencial" of the Spanish version and "fundamental" of the English version must be taken into account. They say that these terms are not synonyms, the first one meaning "a part of something", and the second "the fundamentals of something". In this way, different solutions can be reached. This is a partial view; both terms have a common meaning in natural language: "important or central",[188] which eliminates the interpretation of the authors and is consistent with the uniform interpretation of the CISG (article 7). On the other hand, this interpretation is simplistic.

3.2.2.2.- Another author,[189] who was part of the process of drafting article 25 of the CISG has said that this article could be improved and that the intention of the parties must be the essential approach;[190] in his work, he just paraphrases the article saying that in order for the contract to be declared avoided, the breach must deprive a person of what he is entitled to expect under the contract.

3.2.2.3.- One author,[191] after dismissing the application of the precedents of Common Law, argues that it is necessary that the aggrieved party has been substantially deprived from what he was entitled to expect under the contract and, in second place, to pass the subjective foreseeability test. She also explains that it must be taken into account if the goods are still fit or if they can be substituted.

3.2.2.4.- In the case "raw salmon",[192] the court considered that the deviation did not deprive the buyer of what he was entitled to expect under the contract as he could have sent the goods to the processing plant. As can be noticed, the court just fits part of the facts into part of the article.

3.2.2.5.- Conclusion

These approaches do not add much material to understand a text so difficult to understand as article 25 of the CISG. Furthermore, creating a linguistic disagreement that cannot be solved between two valid official texts is not a constructive contribution. Let us suppose the conflict really exists: How can this problem be solved? Which of the two texts should the interpreter take into account? It seems that the interpreter is taken to a dead-end street.

3.2.3- Subjective theories

3.2.3.1.- I take this classification from an author [193] who says that legal authors are divided between subjectivists and objectivists. However, it is not clear who belongs to each group. The distinction seems to be given by those who put emphasis on the first or the second part of article 25 of the CISG, but it is not clear which is the objective part and which the subjective one.

However, and against what this author has stated, I dare to say that those who are based on the first part have an objective criterion such as the existence of economic detriment, and those who take into account the second part are based on the subjective cause of foreseeability. A sum of money is more objective than the possibility to foresee of a reasonable person under the same condition as the breaching party. The latter will always need the interpretation of a subject and, by definition, it will be subjective.

This author places himself in the objective group (subjective to me) and argues that the deprivation of what a reasonable person would expect must be taken into account.

3.2.3.2.- This category becomes more confusing when one wonders if subjectivity is concerned with the foreseeability of the damage by a reasonable person in the same circumstances or with the possibility of the breaching party of repairing the damage caused. The interpretation based on the legal and factual possibility to remedy the breach is held as one of the most relevant by one author.[194]

This posture has been rejected by the courts.[195] The judgment says that "fundamental" in the sense of articles 49 and 25 of the CISG requires a substantial breach of the contract because the words and the purposes of the draftsman of the CISG are interpreted in the light of the remedies granted to the buyer. This degree may derive from the contract itself, from the facts relevant to the case or from the grounds established in article 35 of the CISG (conformity of the goods). If a breach does not fall within that scope, even when a breach can be neither subjective nor objectively repaired, it does not give the aggrieved party the right to declare the contract avoided under article 49(1)(a) of the CISG. I do not agree with all the justifications of the judgment, but I must say that the exclusion of the idea of the possibility of repairing the breach is correctly expressed as it does not arise from article 25 of the CISG and, thus, from article 49(1)(a) of the same Convention, which is just one more (though the most important) of the legal consequences of the statutory type of the first article.

3.2.3.3.- Another court,[196] following the foreseeability standard, considered that if the buyer and the seller could not foresee the existence of damage arising from late delivery, there is no fundamental breach. The judgment did not even consider if there was any detriment, nor the economic degree of it.

This is the subjective view taken to the limit, as only the subjectivity of the interpreter to evaluate the subjective foreseeability of the parties to detect a fundamental breach will be taken into account, and the first part of article 25 of the CISG is omitted.

This cannot be accepted from the text, the history or the systematic interpretation of the CISG, that do not let the foreseeability of the parties establish the consequences of the breach, but on the contrary. The Convention does not talk about the "penalty" of the obligations of the seller or the buyer. It talks about "remedies" available to them in the case of non-performance of the other party. Furthermore, repairable damage cannot be aggravated by the idea of fault.[197] The "absence of fault" cannot be claimed.[198]

Considering the facts previously mentioned, the interpretation made throughout this work which states that the second part of article 25 of the CISG is a mere subjective limit (which is not a rule) and that the general objective rule arises from the first part of the article previously mentioned is the best choice.

3.2.4- Objective theories

Within this category, I put the legal authors that take into account the objective standard of the detriment arising from the breach. There are different opinions about what must be considered as damages, with what it must be compared and which the measuring standard to ascertain it is.

The principles proposed in this work, without being identified with them, are close to the positions that will be analyzed in this section. Furthermore, many authors mention this criterion and combine it with others or do not affirm it categorically.

3.2.4.1.- One author,[199] as seen ut infra,[200] argues that the definition of article 25 of the CISG is tautological. However, he thinks that in the light of the Secretariat Commentary,[201] the article analyzed has an objective criterion, i.e., taking into account the loss the creditor suffered, valued in accordance with what was expected from the contract. First of all, he points out that the article ends up being a matter of case law, for which the possible intention of the parties must not be considered, as it is an objective breach. The Convention does not talk about "penalties"; it talks about "remedies".[202]

In addition, this author considers that article 25 of the CISG is not the only source to define a breach as fundamental, and he says that the breach, after the additional period of time given to the breaching party in the case of a simple breach (Nachfrist, article 47(1) of the CISG), is a fundamental breach.[203]

This author does not explain which must be the type of loss suffered; however, based on the above-mentioned judicial decisions, it seems that he refers to an economical loss. Neither does he say what can be expected in relation to a contract. This is consistent with his case law view. He also denies the sense of the rule. In respect of the possibility that a simple breach can become fundamental because of the non-performance of the Nachfrist, of article 47(1) of the CISG is a fallacy of affirming the consequent. Of course, the aggrieved party has the right to declare the contract avoided by virtue of article 49)(2)(b)(ii), but this is not a reason to suppose that a fundamental breach exists. It is characterized in article 25 of the CISG and it is not possible to look up in another part of the legal text something that is already express and completely defined in an article. Furthermore, regard must be had to the fact that under article 49(1)(a) fixing an additional period of time (Nachfrist) is optional in the case of fundamental breach; article 49 makes a distinction between the two grounds and it is not possible to ignore this distinction.[204]

3.2.4.2.- Other authors [205] think that the criterion of article 25 of the CISG is objective. They find necessary the existence of a detriment that substantially deprives the other party of what he is entitled to expect under the contract. This expectation must be proved by the aggrieved party, and he also must prove that the most important failed expectations because of the breach of the contract. Finally, they conclude that case law is the principal source of interpretation of article 25 of the CISG. In addition, they agree that a simple breach can become fundamental because of non-performance after the additional period of time (Nachfrist).[206]

These authors do not define the concept of "detriment", maybe because it has an economic connotation. Neither do they refer to what "expectations" are, but they do not seem to identify them with economic expectations. It is valid to wonder: What kind of expectations may a merchant [207] have in trade other than economic?

3.2.4.3.- Another author,[208] who defines his posture as objective, argues that the creditor must prove that his most important expectations have failed (subjective), unless the other party proves that those expectations are not of a reasonable person of the same kind (objective). He also says that the time of foreseeability must be considered when the contract is executed.

Evidently, this posture is based on the second part of article 25 of the CISG and it ignores the first part of the article, which does not seem to be admissible, maxime when the legal precedents show the opposite.[209] Once again, it may be wondered: what may be the expectations if they are not economic?

3.2.4.4.- It has been argued that the formula of article 25 of the CISG links the fundamental nature of the breach to the substantial deprivation of the interest of the aggrieved party. However, the author says that the formula loses part of its objectivity when it defines the interest as what the party is entitled to expect under the contract.[210]

3.2.4.5.- One author, after denying the interpretation based on the economic detriment as possible within the scope of the CISG,[211] de lege ferenda, argues that in the case of issues related to Private Law, many legal systems assume that merchants generally enter into contracts merely for economic reasons and they can be compensated for any damage caused by a fundamental breach or not. If this fact is accepted, in commercial relationships everything can be reduced to money; ergo, to declare the contract avoided is just because it is economically more valuable than the compensation, as there may be damages that cannot be recovered or that cannot be indemnified. In this sense, he argues that it is necessary to give a second thought to the concepts of the CISG,[212] so they can cover the economic interests of the aggrieved party.

It is remarkable the effort this author does in order to discard the interpretation based on the economic detriment de lege lata; he even says that in the legal history of the CISG there is silence about the first part of article 25 of this Convention, and then he proposes it as a solution de lege ferenda.

3.2.4.6.- The concept of this work is closer to the concept of one author [213] who argues that, according to the Secretariat Commentary,[214] it is possible to conclude that the word "detriment" is a synonym of damages or "consequential damages"[215] and that the fundamental breach must be established on a case-by-case basis. He thinks that article 25 of the CISG is clear and refers to the importance of economic interest that the contract and the individual obligations create for the one who undertakes them.

3.2.5- Theories based on the breach of fundamental obligations

3.2.5.1.- One author [216] argues that the terms of the contract must be taken into account. In his opinion, the decisive fact is the interest of the aggrieved party in the terms it has been expressed in the contract, that is, if the non-performed obligations were fundamental to the aggrieved party or not.

3.2.5.2.- In the case "knapsacks, bags and wallets",[217] the court held that the parties gave great importance to the period of time for delivery and decided that, as there was a delay of two months in delivering the goods, there was a good reason to declare the contract avoided.

3.2.5.3.- In the case "iron molybdenum",[218] it was considered that the parties, as they had agreed on a "CIF"[219] clause, had agreed the delivery on a fixed date, which means that the period of time for delivery was essential, and that the late delivery makes the seller foresee the declaration of avoidance by the buyer.

3.2.5.4.- The main criticism of the legal authors mentioned in the preceding paragraphs is that it is necessary to make a distinction between when, by contractual freedom, article 25 of the CISG is set aside, and when the parties agree on their obligations and give them certain importance. Substantive contractual freedom and article 25 of the CISG work at different stages and they can never be found on the same level. If the parties excluded article 25 of the CISG or included in it an obligation, there is nothing else to say; because of the contractual freedom there is a breach that allows the party to declare the contract avoided.

The criterion of this criticism is found in a judgment [220] that held that to apply article 25 of the CISG, there must be an unavoidable prerequisite: the existence of an economic detriment that affects the other party, irrespective of whether the parties have fixed a period of time as essential.

In addition, one author [221] argues that the breach of a "fundamental" obligation under article 71 of the CISG is different from the fundamental breach of article 25 because it does not authorize the aggrieved party to declare the contract avoided.[222]

3.2.6- Conclusions

Based on the foregoing, it can be concluded that:

1. The consequences of fundamental breach are more serious that those of the simple breach. The aggrieved party is granted remedies that arise from the simple breach, and also may require the substitution of goods (article 46(2) of the CISG); he does not have the obligation to accept the repair by the breaching party under articles 48 and 63(2) of the CISG. But above all, he can just declare the contract avoided (articles 49(1)(a) and 64(1) of the CISG), in its entirety or in part (article 51 of the CISG), prior to the date of performance (article 72 of the CISG), in respect of any delivery by installments (article 73(1) of the CISG) or with respect to future deliveries (article 73(2) of the CISG).

2. Article 25 of the CISG is difficult to understand but it is not tautological.

3. To declare the contract avoided because of non-performance once the additional period of time is due does not imply that the breach is fundamental, as that affirmation would be a fallacy of affirming the consequent. The remedies for fundamental breach previously mentioned cannot apply in this case.

4. Article 25 of the CISG is not case law. That is a tautology that affirms that the circumstances of the case are the standard to evaluate the circumstances of the case. This is the antinomy of a rule. With that criterion, there is a risk that the judge always renders a judgment ex aequo et bono.

5. The criteria that argue that regard must be had to whether the goods are fit for their purpose, the remedies for the type of breach and the good grounds to conclude that the breach will occur with respect to future deliveries, are not completely untrue, they lay emphasis on a different place that the draftsman, in the consequences of the fundamental breach and the remedies it grants. Legal consequences cannot change the statutory type.

6. The agreement of the parties and the breach of fundamental obligations are not a valid criterion. A distinction must be made between contractual freedom excluding article 25 of the CISG and the importance the parties gave to certain obligations.[205] Fundamental obligations of the parties are defined in articles 30 and 53 of the CISG and fundamental breach in article 25 of the Convention.

7. There is no conflict between the text in Spanish and the text in English; "esencial" and "fundamental" have a common meaning in the natural language and it is "important or central"; merely literal interpretations do not contribute to the interpretation of article 25 of the CISG.

8. Subjective interpretations which are based upon foreseeability must be dismissed because they render the first part of article 25 of the CISG senseless. Furthermore, they elevate a limitation of a general rule to the category of general rule.

9. Objective interpretations are the most relevant ones but, sometimes, they can be confusing and ambiguous.

After analyzing the regulatory framework in force with respect to fundamental breach under the CISG, its interpretation and the different theories propounded in that regard, I will now move on to formulate a hypothesis about what I consider is the right way to interpret and apply article 25 of the CISG. Then I will present the grounds supporting the proposed hypothesis. In the next chapter, the hypothesis will be tested against reality by analyzing and applying it to all relevant cases concerned with the subject of this work.[223]

4.1- POSTULATES

The hypothesis of this work is that the characterization of the non-performance of the obligations of the parties within the framework of the CISG is based on the general criterion of the loss of expectations of the aggrieved party.

The severity of such a breach must be assessed in accordance with article 74 of the CISG, and in order for a breach to amount to a fundamental breach in accordance with the rule contained in article 25 of the CISG, the severity must be considered comparing the loss of expectations with what the aggrieved party was entitled to expect under the contract (the party's expectations). This is an objective and flexible rule.

However, the second part of article 25 of the CISG places a subjective limit to the objective rule and an exception to the application of the foregoing criteria in very special circumstances.

4.1.1- Criterion: Severity of the loss of expectations resulting from the breach.

4.1.2- Standard: To measure the severity of the loss of expectations pursuant to article 74 of the CISG.

4.1.2- Extent: The economic loss sustained must be compared with the expectations of the party under the contract, measured according to the standard. (Diagram omitted.)

1. Insignificant breach: Only loss of economic expectations can be compensated, but if the breach is insignificant, claiming for compensation would be contrary to good faith (article 7(1) of the CISG).

2. Simple breach: It affects the economic expectations of the other party, and it must be compensated in accordance with article 74 of the CISG. Simple breach is defined by negation, i.e., it consists of any breach which does not amount to a fundamental breach under article 25 of the CISG.

3. Fundamental breach (article 25 of the CISG): A breach is fundamental which results in a substantial detriment as to deprive the other party of what he or she was entitled to expect under the contract, i.e., substantially undermines the other party's expectation interest in the contract. This is an objective and flexible rule. In an a priori approach, the detriment can be characterized as a loss representing more than half of the other party's economic interest in the contract.[224]

4.1.3- Subjective limit: It constitutes subjective grounds for exemption from liability arising out of fundamental breach (second part of article 25 of the CISG). Once the breach occurs, the breaching party may be exempted for lack of foreseeability of the loss incurred.

4.1.4- Exception: The extraordinary circumstances of the case render the rule inapplicable, as it would lead to a solution that would be contrary to the general principles of the CISG; therefore, an equitable solution based on the special facts of the case.

4.2- GROUNDS SUPPORTING THE HYPOTHESIS

4.2.1- Criterion

As discussed supra, characterization of the breach within the scope of the CISG is based on the general criterion of the loss of the aggrieved party's expectation interest; this section deals with the grounds for this statement.

4.2.1.1- The criterion in the language of article 25 of the CISG

The Spanish version of article 25 reads:

4.2.1.1.1- The criterion according to a linguistic interpretation of the different official versions of the CISG

4.2.1.1.1.1.- The official English version uses the term "fundamental" where the Spanish version uses "esencial"; the Spanish "perjuicio" has been rendered as "detriment"; and where the English version uses "substantially",[226] the Spanish version uses "sustancialmente". The French version uses the terms "essentielle", "préjudice", and "substantiellement", respectively.[227] There is no major difference between the Spanish and the French versions.

The term "incumplimiento esencial" does not belong to the Roman Law system[228] but to the Common Law system, and the term "substantial detriment" does not belong to the Common Law system.[229]

However, this is not important, as the CISG must be interpreted carefully avoiding using expressions of any one legal system, and the terms used in the Convention are to be construed according to their meaning in natural rather than legal language, regardless of the legal system.[230] From a literal interpretation it can be established that the CISG is intended not to follow any one or other system, but took elements from both systems to create something new, accessible to all, but different from both, a true "legal Esperanto". [231]

One legal author has a contrary view, and contends that the terms used in the Spanish, French and Russian versions ("perjuicio", "préjudice", "bpeg") have clear references in their respective domestic settings, and represent a legal terminology indicating injury, damage and loss.[232] This author considers that whether injury is necessary is not clear, and that the versions analyzed do not provide a clarifying criterion.[233]

Another author[234] held, in a commentary on the case "cobalt sulphate",[235] that the term "fundamental" can be construed as "serving as the basis of something" and Spanish "esencial" can be construed as forming a part of something. From this distinction he concluded that, for instance, the characteristic "for human consumption" is the essence [esencia] of something suitable for consumption, while the "fundamental" character of sulphate consists in its being sulphate and concluded that, depending on the version used, a fundamental breach may or may not take place.

As to the above scholarly opinions, regard is to be had to the fact that perfect synomyms are almost nonexistent, even within a same language, least of all between two languages from such different origins as Anglo-Saxon and Latin. This precludes the possibility of an ontological distinction, in the context of the CISG, between Spanish "sustancial" ("substantial") and English "fundamental", but poses the problem pointed out by other legal authors that the definition is tautological:[236] a breach is "fundamental" (esencial) if it "substantially" (sustancialmente) deprives.

The principle of uniform interpretation [237] precludes the possibility of thinking that different versions lead to different results; instead, it is better to think that one clarifies the other and supplements it. The rule must be interpreted in a way so that it is not deprived of sense. It is hard to conceive that all the efforts made by representatives of most nations of the world have not led to any practical solution with respect to such a fundamental provision as article 25 of the CISG. Done away with the proposed linguistic dissimilarities and the improductive tautology, a useful interpetation of the rule must be drawn.[238]

4.2.1.1.1.1.- The meaning of the French version is almost synonimous to the Spanish version. This needs investigating the meanings of the English "fundamental" and the Spanish "esencial", the English "detriment" and the Spanish "perjuicio" and "sustancialmente".[239] Now I will move on to analyze the meaning of these terms in natural language and not in the legal language of the local law of any country:

4.2.1.1.1.2.- In looking at the common meanings of the above terms, the following text can be obtained:

From the literal interpretation it can be seen that not only is there an irreparable incompatibility between the English and Spanish texts but also there is no tautology in their common meanings. In those meanings, the relevance of the material and economic aspect of the contract and of its breach can be seen. What other loss or damage that is important for the terms of the contract can deprive the other party of what he or she was entitled to expect under the contract? In terms of Private Law, between merchants,[249] what interest other than economic interest can the parties validly allege?[250]

4.2.1.1.2- The criterion from the Common Law linguistic interpretation

In order to find the literal meaning, one author examines the roots of Common Law [251] and the domestic law meaning of "fundamental breach", while another author admits insofar as it is not contrary to the uniform interpretation criterion, established under article 7(1) of the CISG.[252] As discussed supra,[253] "substantial detriment" does not belong to the English legal tradition, which renders the whole idea inadmissible; therefore, the CISG cannot be interpreted according to the legal language typical of any one country or group of countries.

The former author holds that the distinction between fundamental and non-fundamental breach is taken from the Common Law doctrine of "conditions and warranties". The Common Law system distinguishes between those two kinds of contractual provisions, so that only the former allows for cancellation of the contract. The Sales of Goods Act 1983 established in section 62 that warranties are collateral to the main purpose of the contract and only give rise to damages. The Sales of Goods Act 1979 also contains this provision.[254]

Common Law scholars posed the question of what a "fundamental breach" consisted of, and the answer was that a fundamental breach occurred when an essential or fundamental term is breached. Essential or fundamental terms are those affecting the root or essence of the contract, which are difficult to determine; they are characterized by the severity of the breach that affects the essence of the contract.[255] Even English legal authors mention the "mystical meaning" of the term.[256]

Another legal author [257] criticizes this line of thought, which she characterizes as a "false friend", and contends that the concept is sui generis and belongs to the CISG only. In English law, the concept of "fundamental breach" refers to a different problem, namely the effect of a contractual provision restricting the rights of the buyer when the goods are defective.

The fiercest criticism levelled at this line of thought originated in English case law itself. Courts have rejected the direct application of the Common Law rule.[258] According to Lord Diplock,[259] the text of the Convention was not written by an English Member of Parliament, it must not be read exclusively in English and was not designed to be construed by English judges. To assume this would imply reducing the participation of other signatory states in the Convention.[260]

The criterion discussed above is especially dangerous. It would imply that, just as there is the Sales of Goods Act 1893 and 1979, the British Parliament could change through a new Act the meaning of the CISG, or an English judge could decide a new leading case to the effect that all interpretations of the article given all around the world be repealed, and so all works written on the subject (including this one) should be made null and void. Such a consequence would be inadmissible.

The same author mentioned at the beginning of this section,[261] and who advocates the utilization of domestic interpretive methods, holds that the interpretation according to English law is inadmissible, since the purpose of the CISG varies from that of English local law and it would be arbitrary and contrary to th