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Fundamental Breach under the United Nations Convention on
Contracts for the International Sale of Goods (1980)

Roberto Martín Paiva [*]
June 2004

  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

  • HOMA emancipigo. Ciu lingvo liberigas kaj malliberigas siajn anojn, donante al ili la povon komuniki inter si, barante la komunikadon kun aliaj. Planita kiel universala komunikilo, Esperanto estas unu el la grandaj funkciantaj projektoj de la homa emancipigo a projekto por ebligi al iu homo partopreni kiel individuo en la homara komunumo, kun firmaj radikoj ce sia loka kultura kaj lingva identeco, sed ne limigite de ili. Ni asertas ke la ekskluziva uzado de naciaj lingvoj neeviteble starigas barojn al la liberecoj de sinesprimado, komunikado kaj asociigo. Ni estas movado por la homa emancipigo. Manifesto de Prago de la movado por la internacia lingvo Esperanto, 1996 [1]

    "Desde un punto de vista positivo, la interpretación internacional significa que la Convención debe interpretarse autónomamente. Ello exige que la Convención sea, en la medida de lo posible, interpretada por sí misma, para lo cual se ha redactado la Convención en una suerte de esperanto jurídico, evitando cuidadosamente la utilización de expresiones propias de un sistema jurídico determinado y sirviéndose de términos propios del lenguaje natural y no del jurídico" [2]


    CHAPTER ONE

    INTRODUCTION

    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:

    (a) The "attribution" method, which consists of ideally placing a juridical relation scattered in space into one single legal system; it is realized in the so-called conflict rules;[29]

    (b) The "direct" method, which consists of providing a just, equitable and, if possible, direct solution to a conflict; it is realized in the so-called uniform rules;[30]

    (c) The "direct application" method, which consists of drafting internal substantive rules that cannot be left aside in providing solutions to international conflicts, regardless of any other law that may be applicable. It is realized in the so-called mandatory rules, or, to use more modern and scientific terminology, rules of immediate application.[31]

    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:

    (a) In "Mayer, Alejandro v. Onda Hofferle GmbH & Co. [54]", the court held that although the CISG regulates in detail the duties of the seller with respect to the delivery of the goods and the rights of the buyer where the quantity, quality and description of the goods delivered do not conform with the terms of the contract, it does not contain any rule or general principle concerning the procedure that should be followed to determine the quality of the goods when it is contested by the buyer, and so the appropriate thing to do would be to determine the case in accordance with the domestic law applicable pursuant to the conflict rules, which was the Argentine law. Since section 476 of the Argentine Commercial Code [55] provides for arbitral expert opinions in the event that the buyer challenges the quality of the goods, the court did not admit the evidence offered by the buyer, which consisted of the analysis of the goods and a witness statement.[56]

    One legal author [57] has held that resorting to domestic law to settle a dispute involving lack of conformity of the goods would be unfortunate, as it would go against uniformity in the application of the CISG and against certainty in international contracts. Furthermore, she poses the question; Can a foreign buyer be forcefully subjected to an expert opinion as an unavoidable procedure -- a sort of legal evidence of the domestic law -- to prove lack of conformity of the goods? The argument put up in the judgment is extremely dubious, as stating that the procedure provided for in section 476 of the Argentine Commercial Code is mandatory goes against the basic principles of the CISG.

    Such a parallel application of domestic law and international substantive rules is inadmissible. There is no internal gap in the subject; should there be one, however, it must be filled in accordance with the general principles of the CISG or by analogy with another CISG rule (article 7 CISG). What is serious about the judicial decision above is that it fails to comply with the hierarchy of rules or with the exclusion of domestic law by international substantive rules. Both have different scopes and different purposes, which renders their parallel application inadmissible.

    (b) In "Diversitel Communications Incorporated Inc. v. Glacier Bay Inc.",[58] (discussed infra), where foreign case law was taken as precedent, the court, after considering the CISG applicable, analyzed fundamental breach according to the Ontario domestic law and case law. The decision confused and applied on a same level the substantive international rule and domestic law.

    (c) Domestic precedents have been applied on a same level as the CISG in many cases.[59]

    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.


    CHAPTER TWO

    INTERPRETATION AND APPRECIATION TOOLS

    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]

    (a) Substantive contractual freedom (articles 6 and 9(1) of the CISG);
    (b) International trade customs [63] (article 9(2) of the CISG);[64]
    (c) Uniform substantive law (CISG);
    (d) Choice-of-law freedom (article 7(2) of the CISG);
    (e) Applicable law according to rules of Private International Law.

    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]

    (a) Contractual freedom.
    (b) Freedom as to form of contract.
    (c) Good faith and cooperation to fulfill the contract purpose.[97]
    (d) The conduct of a reasonable person or reasonableness test.[98]
    (e) Abuse of rights prohibition.
    (f) Proportionality.
    (g) Legal certainty.[99]
    (h) The upholding of the contract [100] or favor contractus.[101]
    (i) Uniformity in the interpretation.[102]
    (j) Duty to disclose relevant information.
    (k) Duty not to contradict.
    (l) Duty to mitigate loss.[103]

    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.

    (a) In this case, the parties have changed the characterization of fundamental breach and thus, article 25 of the CISG shall not be applied; in this case, chapters three and four of this work are irrelevant. The parties have created their own rule of fundamental breach. The contract must be carefully interpreted and it is essential that the parties have excluded the application of article 25 of the CISG [116] or, otherwise, have created unequivocally their own rule [117] of fundamental breach.[118]

    (b) Without excluding the application of article 25 of the CISG, the parties may qualify a type of breach as fundamental breach.[119] In this case an unequivocal declaration of intent is necessary.[120].

    (c) It is necessary to distinguish between fundamental obligations and fundamental breach. The first term is defined in articles 30, 35 and 53 of the CISG and the second, is defined in article 25 of the CISG. The breach of a fundamental obligation does not lead, per se, to a fundamental breach. Fundamental obligations of the seller are to deliver goods (article 30 of the CISG) in conformity with the contract (article 35 of the CISG).[121] Fundamental obligations of the buyer are to pay the price and to take delivery of goods (article 53 of the CISG). Such obligations may be aggravated, reduced or excluded [122] by the substantive contractual freedom,[123] in which case, the legal consequences will be different, as discussed in the above paragraph.[124] They are completely different concepts, and the substantive contractual freedom is present by overriding and modifying different rules. However, some judicial precedents [125] and some books of authority,[126] which are criticized in the special part of this work, take both concepts as one, with an inequitable result.

    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.


    CHAPTER THREE

    THEORIES AND LEGAL CONSEQUENCES

    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]

    (a) Insignificant breach[156] (article 7(1) of the CISG);
    (b) Simple breach (defined by negation);
    (c) Fundamental breach (article 25 of the CISG).

    The legal consequences of the above statutory types are:

    (a) Insignificant breach (article 7(1) of the CISG). It does not give rise to indemnification, and none of the remedies under the CISG apply, because claiming damages is contrary to good faith [157] and lex minimis non curat,[158] except the claim for interest, as article 78 of the CISG establishes that this is independent from any claim for damages. This concept takes special importance in the commodities market [159] and had been collected in case law before the existence of the CISG [160] and in international usages.[161]

    (b) Simple breach (defined by negation). The aggrieved party may:

    (i) Claim damages under article 74 [162] of the CISG, notwithstanding the following remedies [163] (articles 45 and 61 of the CISG);
    (ii) Claim interest under article 78 of the CISG;
    (iii) Require performance of the obligations of the other party (articles 46(1) and 62 of the CISG);[164]
    (iv) Require the seller to remedy the lack of conformity by repair, when it is reasonable [165] (article 46(3) of the CISG);
    (v) Fix an additional period of time for performance (Nachfrist), under articles 47 and 63(1) of the CISG and, in the case of non-performance within the additional period of time, declare the contract avoided (articles 49(1)(b) and 64(1)(b) of the CISG);[166]
    (vi) Reduce the price in proportion to the non-performance under article 50 of the CISG;
    (vii) In the case of partial conformity, act accordingly to what was previously mentioned in respect of the part of the goods which is missing or does not conform (article 51 of the CISG);
    (viii) In the case of delivery before the date fixed or delivery of a quantity of goods greater than that provided for in the contract, he may refuse to take delivery or take delivery paying the difference in price (article 52 of the CISG)
    (ix) If there are successive and interdependent deliveries, the deliveries already made and future deliveries can be avoided, in the cases mentioned in articles 49(1)(b) and 64(1)(b) of the CISG.

    (c) Fundamental breach (article 25 of the CISG):

    (i) Exercise any remedy available in the case of simple breach;[167]
    (ii) Require the delivery of substitute goods (under article 46(2) of the CISG);[168]
    (iii) The obligation to accept the offer to repair by the seller under articles 48 and 63(2) of the CISG [169] does not apply
    (iv) Declare the contract avoided, under articles 49(1)(a) and 64(1)(a) of the CISG;[170]
    (v) Declare the contract avoided in full or in part if there is a fundamental breach in respect of a part of the goods (article 51 of the CISG);
    (vi) Declare the contract avoided prior to the date of performance of the contract if it is clear that the other party will commit a fundamental breach (article 72 of the CISG);
    (vii) In the case of a contract for delivery of goods in instalments: (1) if the failure of one party to perform any of his obligations in respect of any installment constitutes a fundamental breach of contract with respect to that installment, the other party may declare the contract avoided with respect to that installment (article 73(1) of the CISG); and (2) if one party's failure to perform of any of his obligations in respect of any installment gives the other party good grounds to conclude that a fundamental breach of contract will occur in respect of future installments, he may declare the contract avoided for the future (article 73(2) of the CISG).

    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:

    (a) The approach focused on the economical value of the contract and the loss suffered cannot be sustained by article 25 of the CISG. Preparatory works are silent about it;

    (b) The approach focused on the purpose of the goods contemplated in the contract can be sustained by article 25 of the CISG. Reference to articles 51(2) and 73(3) of the CISG confirms that this approach is useful in the case of failure to perform in part or in the case of sale on future deliveries;

    (c) The approach focused on the possibility to remedy the non-performance can be sustained by article 25 of the CISG and it is not excluded by the legislative history of the CISG; and it is deeply rooted in the system of remedies of the Convention. Considering the remedy as possible, without the need of the offer of the other party, is a valid position;

    (d) The approach focused on the consideration that it is clear that the other party will commit a breach can be sustained by article 25 of the CISG and its reference to articles 72 and 73(2);

    (e) The approach focused on the disproportionate loss suffered by the aggrieved party cannot be sustained by the text or by the history of the CISG; thus, it is inadmissible.

    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.


    CHAPTER FOUR

    HYPOTHESIS OF THIS WORK

    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:

    "... será esencial cuando cause a la otra parte un perjuicio tal que la prive sustancialmente de lo que tenía derecho a esperar en virtud del contrato".[225]

    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:

    (a) "Fundamental": it can be defined as "very necessary, important as a part of something from which everything else develops; affecting the simplest and most important parts of something".[240]
    (b) "Esencial": constituting the nature of things; important; central, notable.[241]
    (c) "Detriment": the formal state of being harmed or damaged by something.[242]
    (d) "Perjuicio": material or moral damage or loss; lawful gain that is no longer obtained; losses or costs incurred as a consequence of somebody else's act or failure to act,[243]
    (e) "Sustancialmente": "en sustancia"; "Sustancia": anything from which another thing develops and which constitutes the aliment of that thing and without which the other thing perishes; the essence and nature of things.[244]

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

    "A breach of contract committed by one of the parties is (important or central) [245] if it results in such (material damage or loss) [246] to the other party as (in a way that constitutes the aliment and without which it perishes) to deprive him of what he is entitled to expect under the contract [247] (...)"[248]

    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 the purpose of unification.

    This false friend from Common Law is not only inadequate but it is also dangerous. The CISG contains terms that do not conform with that legal tradition (e.g., "substantial detriment") and contains a sui generis, characterized autonomously.[262] It is dangerous because in its alleged original system legal scholars are still wondering about its "mystical meaning", and also because the statement that it "affects the root of the contract" is neither clear nor convincing.

    4.2.1.1.3- Conclusion

    In this section, a literal interpretation has been examined which conforms with all official texts of the Convention. From this interpretation, it can be seen that article 25 of the CISG is closely related to the party's economic interest in the performance of the contract and the economic severity that the breach represents to that interest, regardless of the kind of obligation is defaulted on.

    In addition, the interpretation based on the Common Law has been rejected on the basis that it would be contrary to the uniformity and to article 7(1) of the CISG, and that it would be dangerous since it only causes confusion. It would be unwise to transplant a uniform interpretation that is simple in its own setting to such a complex setting as international commercial relations.

    4.2.1.2- The criterion used in the Official Records of the United Nations Convention on Contracts for the Sale of Goods [263]

    4.2.1.2.1- The closest antecedent of article 25 of the CISG

    The current text of the CISG is the result of a long process of unification dating back to the early ages of the movement for the unification of international commercial law. This process started in 1930, when UNIDROIT decided to prepare a uniform legislation on the subject.[264]

    In the constant development of this idea, the ULIS was elaborated.[265] On the threshold of the drafting of the CISG, the United Nations Secretariat prepared a document containing a commentary on the project for the CISG.[266] In this document are the Secretariat's comments on article 23 of the 1978 Draft (which, with changes to its second part, would later become article 25 of the CISG).[267]

    In this commentary, the Secretariat argues as follows:

    "The basic criterion for a breach to be fundamental is that it causes a substantial detriment to the other party (the aggrieved party). The determination of whether the detriment is substantial must be made in the light of the circumstances of the case; for instance, the monetary value of the contract, the monetary detriment caused by the breach or the degree to which it hinders other activities of the aggrieved party."[268]

    From the above text, the concepts found through literal interpretation can be drawn;[269]

    (a) The need for there to be a detriment and that it is substantial;
    (b) The monetary or economic value of the contract;
    (c) The monetary or economic detriment caused by the breach.

    Reference to the "circumstances of the case" does not turn article 25 of the CISG, or article 10 of the ULIS into a meaningless and casuistic rule, as some legal authors contend.[270] In the text, the "circumstances of the case" are a way to interpret the "substantial detriment", not the converse. Besides, although preceded by the phrase "for instance", the concepts "monetary value of the contract, the monetary detriment caused by the breach" are the predicate of the "substantial detriment" and not of the "circumstances of the case". Further below the value of the circumstances of the case in interpreting the rule will be discussed, but it is not possible to draw from the text of the Secretariat an intention to reduce the rule under analysis to mere casuistry. Such a thing would be pointless. What would be the purpose of commenting on a rule with a formula that invalidates it as such and turns it into a mere suggestion for the interpreter?

    Undoubtedly, the draftsman of the ULIS intended to introduce the requirement of a substantial detriment, and the relationship between economic detriment and economic loss under article 10. Later, the draftsman of the CISG would take this text and its meanings and maintain it in the text of the new rule.

    4.2.1.2.2- The drafting of the CISG

    4.2.1.2.2.1.- In discussing the language of article 25 of the CISG (article 23 in the project),[271] the Chair of the First Committee, Mr. Loewe, Austrian delegate, opens the debate stating that the text existing at the time (i.e., the ULIS text) defined fundamental breach based on the concept of substantial detriment caused to the other party. It is worth noting that the Committee took article 10 of the ULIS as a basis for the discussions and consequently also took its interpretations, as did the Secretariat Commentary dealt with in the previous paragraph.

    Further on, upon the observation of the Egyptian delegation and a proposal by his Czechoslovakian peer, the modification of the second part of the article (i.e., concerning foreseeability) [272] was introduced in the debate, which takes up all the meeting and is finally assigned to a special committee.[273]

    The debate continued focusing on the second part of the article in the following meeting,[274] without the proposal from the committee achieving satisfactory results.

    In the following meeting [275] Mr. Inaamulah, Pakistani delegate, presents the work by the committee, which left the first part of the article unchanged and added what would then become the second part of article 25 of the CISG.[276] In that session, many representatives -- among which was the Argentine delegate -- declared themselves in favor of the first part of the article.[277] In that session, the text as it is known today was approved.[278]

    From the drafting of the project for the CISG, it can be concluded that the language of the first part of article 10 of the ULIS was kept unchanged. This leads to the conclusion that the Secretariat Commentary analyzed supra is applicable.

    4.2.1.2.2.2.- One author argues that the preparatory documents are silent in that regard,[279] and from this he infers that the criterion of considering the monetary value of the contract and the loss sustained by the aggrieved party is not valid, as the preparatory works do not support it.

    I disagree with that opinion. The alleged silence does not exist. From the text of the ULIS and the Secretariat Commentary, the criterion on which this work is grounded can be clearly inferred. In fact, as discussed above, many representatives expressly agreed on mantaining the criterion of the ULIS. The fact that a heated debate was held concerning the second part of the article, which I will analyze infra, does not imply that the first part of the rule was not discussed; on the contrary, it can be inferred that the issue was one about which there was consensus and did not require treatment; otherwise, why was the first part kept unchanged? How can the first part of article 25 of the CISG be derived from silence?

    4.2.1.2.2.- Conclusions

    From the legislative history of the CISG, it can be inferred that article 25 refers to substantial detriment, which in turn is related to the comparison between the economic interest in the contract and the detriment caused by the breach thereof. This interpretation conforms with that made in analyzing the literal meaning of the terms used in article 25 of the CISG.[280]

    4.2.1.3- The criterion according to legal authors

    As discussed supra in 3.2.4.-, many authors advocate the economic detriment criterion as a requirement of fundamental breach.[281] However, they always refer to case law as a source of interpretation of the rule and do not define clearly what economic detriment must be compared to in order for it to be "substantial" and consequently "fundamental" under article 25 of the CISG.

    In the first place, case law cannot be elevated to the category of rule because cases are antinomic. To state that the rule is that conflicts are to be decided on a case-by-case basis means that there is no rule at all and that it is left with the intepreter to determine the case to the best of his or her knowledge and conclude whether there is fundamental breach or not. This cannot be admitted since it goes against the foreseeability of judicial or arbitral decisions and because it is unreasonable to think that the drafstmen of the CISG embarked on a nearly 50-year task to create a rule that does not serve as such in determining vital questions concerning international sales.

    When legal authors -- with a certain degree of imprecision -- write about what the party was entitled to expect under the contract, no other interpetation suits better than that of the economic interest in the contract. The question at issue is international sales between merchants [282] who, by definition, seek to obtain profit from their transactions.

    The legal relationship between merchants comes down to the parties' economic interest. Some legal authors argue that the principle that "contracts are made to be observed" is -- provided that the breach can be cured -- just a juridical myth. This does not imply that the principle is true about moral obligations. Legal authors and lawyers must know that these principles are not more than myths, and must avoid believing that supreme truths underlie them. The binding character of contracts is limited to compensation or redress. Either option may turn out to be more costly than the other.[283] References to the parties' expectations necessarily come down to the economic aspect, but not only to the lower price of the goods or the impossibility to re-sell it; in fact, the interest can be broader and include, for instance, all the stages involved in the buyer's production chain.

    The same author who criticizes this analysis most fiercely [284] suggests it de lege ferenda, as he considers that it is the most appropriate one.[285]

    It could be argued that the interest of the parties can be of moral nature, but it should be borne in mind that the Convention does not apply to death or personal injury.[286] Obviously, this category includes pain and suffering, as it affects qualities inherent in human beings.

    The question arises again, what interest do the parties have other than the economic (i.e., expectation) interest? Other than the economic interest, they are left only with moral obligations and myth.

    4.2.1.4- The criterion under case law

    I have already discussed case law concerning the interpretation of the CISG,[287] which makes it possible to take this source as a basis for this work.

    Many cases deal with economic interest, but brevitatis causae and to avoid repetition, I will just look at those which I consider of higher scholarly value.

    4.2.1.4.1.- In a case involving "shoes",[288] the court interpreted that article 25 of the CISG required that economic loss be sustained by the other party, regardless of whether the parties had agreed that time should be of the essence.

    4.2.1.4.2.- In a case involving "Egyptian cotton[289]" the court held that the breach should involve serious consequences affecting the economic goals pursued by the parties. The significance of the breach is not determining, and only the consequences suffered by the aggrieved party as a result of the breach must be considered. In other words, the obligation must be breached in such a way that the economic interest inherent in the contract cannot be fulfilled and that the aggrieved party loses that expectation interest in the performance of the contract.

    4.2.1.5- Conclusions. The criterion in the systematic interpretation of the CISG

    The criterion espoused in this work can be supported through the linguistic interpretation of the different official versions of the CISG.

    1. If the terms used in article 25 of the CISG are construed in their meaning in natural language rather than technical legal language, there is no place for an ontological distinction between them. Such a view would be contrary to uniform interpretation and would render the article meaningless, which is inadmissible. The common meanings of the different versions facilitate the interpretation of the rule.

    2. The study of the legislative history of the CISG leads to the same conclusion as that resulting from literal interpretation, as evidenced by the language of article 10 of the ULIS and of article 23 of the 1978 Draft and the preparatory works. It is worth noting that the preparatory works are not silent on the issue; instead, they contain the adoption of the first part of article 25, which remained unchanged ever since it was article 10 of the ULIS.

    3. Some legal authors accept this interpretation, although they consider it somewhat imprecise. Such imprecision is dispelled if one takes into account article 5 of the CISG and that the Convention applies to transactions between merchants.[290]

    4. Case law has accepted the requirement of economic loss and that it affects the economic goals of the aggrieved party.

    5. All the foregoing implies that the basic criterion of article 25 of the CISG to define a fundamental breach is that of the economic importance of the loss sustained in relation to the economic interest that the aggrieved party had in the contract.

    6. Case law and rules are antinomic concepts. Therefore, even though case law is extremely important and should not be overlooked, it does not conform with the rule contained in article 25 of the CISG, but it can constitute an exception to the rule, as discussed and supported infra.

    7. The criterion is simple, practical and predictable, and conforms with the general principles of the CISG and the needs of international commerce; also, it is comprehensible to merchants.

    4.2.2- Basis of the measuring standard

    Provided that in order for there to be fundamental breach under the terms of article 25 of the CISG, there must be a relation between the economic detriment sustained and the economic interest that the aggrieved party had in the contract, it is necessary to establish how that relation is to be measured in case the breach is characterized as fundamental breach. In other words, a standard to measure the breach is required.

    This basis for calculation is contained in article 74 of the CISG, as shown below.

    4.2.2.1- In the systematic interpretation of articles 25 and 74 of the CISG

    Article 74 of the CISG[291] governs the sum to be paid as damages for any type of breach of contract; it is the general provision stating the principles concerning the loss sustained.[292]

    It is worth noting that the structure of this rule is identical with that in article 25 of the CISG. In their first parts, both provisions establish an objective standard and in their respective second parts a subjective limit given by foreseeability. Both rules must be interpreted jointly and harmoniously.[293]

    If article 74 of the CISG, as seems undoubted, provides a standard to calculate the sum of the compensation for any breach (major premise), ergo, it serves to determine the existence of fundamental breach (minor premise), which is a type of breach. Moreover, the similarity of the rules does not seem to be casual, as shown in the following section.

    4.2.2.2- In the antecedents of the Convention

    In the commentary on article 70 of the 1978 Draft of the CISG and article 82 of the ULIS (now article 74 of the CISG), the Secretariat [294] holds that the scope of application of the article is limited by that of articles 71 and 72 of the Draft and 85 and 84 of the ULIS (which are now articles 75 and 76 of the CISG). That is to say, the article governs the solutions to situations provided that the contract has not been avoided. Thus, it is perfectly applicable to the determination of fundamental breach, inasmuch as the breach constitutes grounds for avoidance of the contract and it is necessarily prior to avoidance.

    The wording of the rule was changed, but its meaning remained unaltered and no discussions worthy of note took place.[295] This lets one assume that the commentary of article 82 of the ULIS analyzed in the previous paragraph is applicable.

    Apart from the foregoing interpretation, there is an uncontroverted opinion by the Brazilian representative, Mr. Franchin-Netto, who argued as follows: "... article 23 [now article 25 of the CISG] is connected with article 70 [now article 74 of the CISG], which establishes a general standard to assess damages."[296]

    4 4.2.2.3- In case law

    Case law has applied article 74 to measure the significance of the breach and whether or not it is fundamental.

    It was held that article 74 of the CISG offers a comprehensive yet general standard for measuring the loss sustained.[297]

    In another case, obiter dictum, the court held that the breach of a contract where the parties had agreed upon a deadline could not be considered fundamental breach, since the existence of the loss was not substantiated, in accordance with article 74 of the CISG, the standard for characterizing the type of breach.[298]

    It was also held that, in order to calculate the difference between the expectation interest in the contract and defective performance with a view to determining the existence of a fundamental breach, an arbiter must follow a specific procedure pursuant to article 74 of the CISG.[299]

    It was also held that the avoidance of a contract on the grounds of loss of clientele in a sensitive market due to the breach by the other party was an issue that fell within the scope of article 74 of the CISG, which expressly provides for that case, as a measurement of the loss sustained.[300]

    4.2.2.4- Conclusions

    The standard for measuring the significance of the breach and determining whether it is fundamental or not under article 25 of the CISG is article 74 of the Convention.

    This article establishes a general standard for measuring the breach (major premise) and we can gather that if it covers all types of breach, it must cover fundamental breach (minor premise). The same can be concluded from the legislative history of the CISG,[301] where it was established that this article is to be applied in measuring the breach, so long as the contract has not been avoided; by definition, breach is prior to avoidance.

    This interpretation is correct inasmuch as it refers to a legal concept expressly regulated under the CISG (inexistence of legal gap), which makes it unnecessary to resort to other sources or to analogy.

    4.2.3- Grounds for the measuring standard

    I have already discussed the relationship between economic loss and the aggrieved party's expectation interest in the contract and the standard for measuring that relationship. In this section I will analyze how, depending on that relationship, the breach may or may not be considered fundamental.

    Given the analysis carried out so far, we can now set out the premise that there are three types of breach under the CISG, with their respective consequences, (a) insignificant breach, (b) simple breach, and (c) fundamental breach.

    In other words, I see each of them as a statutory type with different legal consequences. As stated above, the measuring standard is provided under article 74 of the CISG. Thus, I will begin by outlining, but not intending to exhaust, the basic elements of that rule.

    4.2.3.1- Basic elements of article 74 of the CISG

    The CISG sets out as follows:

    "Article 74. Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach."[302]

    The Spanish and French versions are not substantially different from the English version.[303] The central concepts are "sum equal to the loss", "la perte subie", and "valor de la pérdida sufrida"; and "loss of profit", "gain manqué", and "ganancia dejada de obtener". Although there is no such thing as perfect synonymy, the terms used by the different official texts are equivalent and there are no substantial differences in this regard.

    The Secretariat Commentary does not add much to the question, as the ULIS only provided for the concept of "loss of profit".[304]

    One legal author [305] argues that the text of the article in question is so broad that it could embrace by analogy expectation damages [indemnización del interés negativo], i.e., damages awarded as compensation for costs incurred in connection with the execution of the contract and lost profits due to the opportunities lost because of the contracts that the aggrieved party could have entered into; but not loss of profit because the contract was never executed.

    Another author [306] argues that the non-breaching party should be placed in the same economic position as he or she would have been had the contract been strictly performed, but not in the position he or she would have been had he or she never negotiated with the other party or placed his or her reliance in the validity and performance of the contract.

    In a negative aspect, I think that, under article 5 of the CISG, compensation does not include physical or psychological harm or pain and suffering, which does not mean that said harm is not to be compensated, but only that it must not be considered in measuring fundamental breach. There is an external gap to be filled by conflict of law rules, but under the CISG system this kind of injury must not be considered in measuring fundamental breach, since the breach is to be determined under the CISG system, and the injury in question is not provided for in the Convention.

    At this point I feel tempted to explain article 74 of the CISG according to the continental law concepts of "damnum emergens" and "lucrum cessans" and the categories of positive damage and loss of profit. But the CISG must be interpreted according to natural language and not to legal technical language.[307]

    The "injury sustained" and "lost profits" are terms from natural language which can be easily understood. In a broad interpretation, they mean any loss sustained or profits not obtained that bear a reasonable [308] relation with the contract and the other party's breach. This is very similar to the concept of "causal relationship" of the Continental System. However, no regard is to be had to preconceptions, and the interpreter must follow the general principles of the behavior of the reasonable person or reasonableness test, the prohibition of abuse of rights, proportionality and the duty to mitigate loss. These concepts will provide sufficient tools to limit the damages for the loss sustained and the lost profits to a reasonable sum.

    4.2.3.2- Insignificant breach

    In principle, under article 74 of the CISG, all breaches are answerable. However, whenever the interest lessened is insignificant, claiming for compensation would be contrary to good faith; moreover, under article 74 of the CISG, the breach would not even be answerable. Neither could it give rise to avoidance, in my opinion, even if the breaching party had been required to perform within the grace period (Nachfrist).

    In this regard, some authors [309] hold that just as contractual good faith is violated (article 7(1) of the CISG) when the buyer prevents the seller from curing the breach when this does not involve any detriment to the buyer, so is good faith violated when the non-breaching party seeks to avoid the contract on grounds of an insignificant or trivial breach.

    4.2.3.3- Simple breach

    Under article 74 of the CISG all breaches are answerable, with the exception discussed above.

    In order for a breach to be fundamental under article 25 of the CISG, it must cause such an economic detriment to the other party that, if compared with the expectation interest of the aggrieved party in the contract and measured according to the standard established in article 74 of the CISG, it is "fundamental", principal, central or substantial to the extent that said interest is affected.

    The CISG turns on two pivots concerning the breach:

    1. Strong pivot: Any deviation from the obligations undertaken which is not wholly irrelevant or insignificant amounts to breach of contract, regardless of the type of breach.[310] Since the Convention does not expressly provide for a classification of this concept, this must be defined by default. Thus, simple breach is any breach that is neither fundamental nor insignificant. The legal consequence of this statutory type is payment of damages under article 74 of the CISG and the other remedies, i.e., Nachfrist or price reduction, to the applicable extent.

      I call it "strong pivot" because it constitutes the broadest tool that the CISG provides to remedy the breach.

    2. Weak pivot: It is defined under article 25 of the CISG. The breach must affect in a "fundamental", principal, central or important way the economic interest of the aggrieved party. The legal consequence of this statutory type is the most serious sanction established by the CISG, i.e., avoidance. In this provision the legally protected interest is contained, i.e., favor contractus,[311] which the CISG directs to be interpreted ultima ratio. I call it "weak pivot" because, although its legal consequence is the most serious remedy under the CISG, its scope of application should be reduced to the least number of cases possible, in furtherance of the favor contractus principle.

    4.2.3.4- Fundamental breach

    In order to fall within the scope of article 25 of the CISG, the breach must cause an economic detriment that affects the other party's interest in a "fundamental", principal, central or substantial way, measured according to the rule contained in article 74 of the CISG.

    The question of the quantum now necessarily arises: What degree or percentage of the economic interest must be affected as a result of the breach in order for the breach to be considered "fundamental", central or substantial and fall within the statutory type established under article 25 of the CISG? It cannot be directly inferred from the legislative history of the CISG nor from its text when a breach is "fundamental". But the idea that it must be central or substantial leads us to think that it must actually affect the aggrieved party's expectation interest to the degree that the aggrieved party is deprived of what he or she was entitled to expect under the contract. But again, to what degree must the interest be affected?

    The need to compare the economic detriment with the economic interest and the application of the rule contained in article 74 of the CISG, which constitutes the basis of this work, leads us to think that the issue is of quantitative nature and the question should be: How great an economic detriment is necessary for the aggrieved party's economic interest in the contract to be deemed affected in a "fundamental", central or substantial way?

    Given the silence of the CISG, it must be borne in mind that it is an objective yet flexible standard and that it must be subjectively appreciated by the interpreter on a case-by-case basis, in accordance with the "criterion" and "standard for measuring" premises. The application of these two concepts will result in a share or percentage [312] that is to be subjectively appreciated by the interpreter.

    At this point, the reader may argue that I initially searched for objectivity but got stranded on a bank of subjectivity. However, I will not let the reader be stuck in such shallow and disconcerting waters.

    The Convention contains this type of objective and flexible rules:

    1. Article 38(1) of the CISG requires that the goods be examined "within as short a period as is practicable", the determination of the period depending on the circumstances of the case or on the usasges, provided always that the parties have not agreed otherwise, but three or four working days would be a priori a reasonable period.[313]

    2. Article 39(1) requires that the lack of conformity be notified within a "reasonable" period; however, this period is surely longer than that of article 38(1) of the CISG, and an average a priori period would be between 4 and 7 working days.[314]

    Continuing with the idea of fixing an a priori standard -- which idea is valid as explained above -- for the relationship between the economic detriment and the expectation interest lessened, and without significant hints in the text of the CISG or in hist legislative history, I will now look at case law.

    Although there is a tendency to establish this percentage with respect to price reduction in accordance with article 50 of the CISG, I think that the opinions set out in case law are applicable to the "extent" of the detriment as propounded in this work.

    Case law considered 25% to 50% [315] fundamental breach; but not 50%,[316] 40%,[317] 30%,[318] 25.5%,[319] 22% [320] or 3.4% [321] price reduction in accordance with article 50 of the CISG.[322] Mutatis mutandi the application of article 50 of the CISG to article 74 thereof, it can be concluded a priori that there is fundamental breach whenever the economic detriment affects more than half the aggrieved party's economic interest in the contract.

    The proposal that half of the aggrieved party's economic interest in the contract must be affected is an a priori indicative guideline, and it must be considered in the light of the circumstances; however, it seems a reasonable rule to apply the article 25 type, i.e., fundamental, central or substantial.

    4.2.3.5- By way of summary

    There are three different statutory types of breach, with their respective legal consequences:

    1. Any insignificant breach is characterized by the fact that claiming for compensation is contrary to good faith (article 7(1) of the CISG).

    2. Simple breach (defined by default) is that which is neither insignificant nor fundamental. It is the strong pivot of the CISG.

    3. Fundamental breach (article 25 of the CISG) is a priori defined by an economic detriment resulting in the loss of more than half of the aggrieved party's economic interest in the contract.

    4.2.4- Subjective limit

    So far this work has confirmed the rule set out in article 25 of the CISG; this section presents the grounds for the idea that the second part of said article serves as a subjective limit or as grounds for exemption from liability for breach.

    4.2.4.1- In the language of article 25 of the CISG

    Article 25 of the CISG is clearly divided in two parts separated by a comma, constituting two distinct semantic units. The first one has already been analyzed. The second part is the subjective limit, and it reads as follows:

    "(...) unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result."[323]

    The term "unless" ("salvo" or "à moins") clearly indicates that the drafstman intended to place a limit to the rule laid down in the first part of the article. This term dismisses the possibility that article 25 of the CISG provides for the breach of two conditions, namely that analyzed supra and foreseeability; otherwise, the cumulative conjunction "and"[324] would have been used and the second part of the article would have been written in the affirmative.

    The limitation is introduced with a view of subjective and objective foreseeability, that is, from the point of view of the breaching party and from that of a reasonable person. This viewpoint is not part of the rule and is not a condition for the existence of fundamental breach under article 25 of the CISG, but it is a subjective limit to the application of the first part of the article.

    4.2.4.2- In the legislative history of the CISG

    Again, we should start with the text by the UNCITRAL Secretariat. In this document the Secretariat set out a commentary on article 23 of the 1978 Draft (later, article 25 of the CISG) taken from the ULIS.[325]

    The Secretariat commented as follows:

    "Once the basic criterion is satisfied,[326] which criterion is related to the detriment suffered by the aggrieved party, the breach is fundamental if the breaching party cannot proved that he or she has had reason to foresee such a result. It is worth noting that the breaching party is not exempted from liability only by proving that he or she did not foresee the result; the breaching party must also prove that he or she did not have any reason to foresee it."[327]

    The second part of article 25 of the CISG was preceded by heated discussion. The Egyptian delegate proposed revising the issue of foreseeability,[328] which was assigned to the special commission, whose conclusions gave birth to the second part of article 25 of the CISG.[329] The debate was centered in the wording of the second part, but no reference was made to its character or its relation to the first part of the article, which was not substantially changed.

    Since the Secretariat Commentary was not argued nor is it mentioned again, it is possible to conclude that the idea of a basic standard provided under the first part of the rule and a subjective limit in the second part, i.e., foreseeability persists. From this it can be gathered that said second part does not constitute a requirement for fundamental breach under article 25 of the CISG, as it can be concluded from literal interpretation.

    4.2.4.3- Scholarly writing

    One legal author [330] holds that foreseeability of fundamental breach constitutes the basic grounds for exemption from liability and that the foreseeability test only serves to release the breaching party, and that it cannot be a condition for characterizing a breach as fundamental.

    Another author [331] concludes that the foreseeability element does not cast light on the concept of fundamental breach. In the first place, the function of foreseeability is not clear; however, in the context of article 25 of the CISG it has a similar effect as the general rule for calculating damages contained in article 74 of the CISG, inasmuch as it limits the rights of the aggrieved party to what the other party could not have or should not have foreseen. The author finally holds that the foreseeability element only serves to exempt the breaching party from liability for fundamental breach of the contract.

    One author interprets the second part of article 25 of the CISG as a condition, which he admits as true without further inquiry.[332] Other scholars follow this line of thought, but only concerning the burden of proof.[333]

    The author who has strived to support the contrary opinion to that set out in this work [334] holds that the two conditions must be present apart from that in the first part of article 25 of the CISG. He contends that the detriment must be foreseeable and that there must be a causal relationship between the breach and the loss sustained.

    4.2.4.4- Conclusions

    From the language of the rule and the legislative history, it follows that the second part of article 25 of the CISG is a subjective limit imposed on fundamental breach rather than another condition that makes the breach more serious.

    In spite of the disagreement on whether foreseeability is a subjective limit or just a question of fact, in judicial practice the treatment of the subjective limit is of paramount importance from the moment it is invoked and the discussions revolve around its proof. Therefore, I will analyze the implications of the second part of article 25 of the CISG separately.[335]

    4.2.5- Exception: special circumstances of the case

    4.2.5.1.- A great part of the authors give priority to the circumstances of the case over the interpretation of article 25 of the CISG.[336 The same follows from the Official Records.[337]

    That is logical since the limited number of rules and their interpretations derives from infinite past and possible facts. The opposite would be legislating from an ivory tower, separated from real life. Besides, the circumstances of the case must always be considered, since the law is not mere application of rules, something which a computer could perfectly do, but it is made by men and it is to be applied to men.

    However, without overlooking the facts, the "circumstances of the case" cannot be raised to the category of general rule, since, by definition, this concept is antinomic to a general rule and the interpreter is left with too broad a margin, against the principle of uniform interpretation set out in article 7 of the CISG.

    In this work I intend to find a general rule that is applicable to all cases or, at least, to the majority of them. The next chapter the proposed interpretation is contrasted with all the relevant cases found on the issue, and it can be stated that one of the conclusions is that said interpretation turned out to apply to all of them, leading to an appropriate and equitable solution.

    4.2.5.2.- Regard must be had to the fact that if the rule is not applicable it may be because the analysis of the facts of the case is not correct. The case may involve a different issue, which may or may not be regulated by a different provision in the CISG.

    For instance, in a contract for distribution where succesive sales were agreed upon, the fact at issue could be whether there was breach of the framework agreement for distribution instead of whether there was a fundamental breach of the sales agreement, which would render the CISG inapplicable.[338]

    A possible case of this could be that in which a person buys goods for his or her personal, family or household use and does not disclose this fact to the seller in accordance with article 2(a) of the CISG.[339] The Convention will still be applicable, but the interest of the buyer is not purely economic, i.e., a hobby, a gift to an acquaintance, etc. Thus the criterion proposed in this work would be dismissed and regard should be had to the circumstances of the case.

    4.2.5.3.- One author [340] holds that in these cases the principle of good faith would apply, which principle is applicable whenever extraordinary circumstances arise but not as a general rule. Although his approach is different from that of this work, article 7 of the CISG casts light on the function of the circumstances of the case in article 25, limited to exceptional cases where said principle arises.

    4.2.5.4.- Moreover, there are philosophical reasons to consider the circumstances of the case whenever the law is insufficient.

    Technical legal reasoning, the knowledge of the law and the guidelines imposed by case law play a major part in the interpreter's good judgment, outlining the limits whithin which his or her creative imagination can operate. The interpreter cannot be a poet, not even an "equitable person" (in the Aristotelian sense).[341]

    The reasonable interpreter is, above all, a spectator. He or she is directly involved in the facts he witnesses, although he or she shows interest in the participants as a concerned friend. He or she will not experience the feelings, the thoughts and the expectations concerning their security and personal happiness; he or she is disinterested and examines the facts from a distance. Of course, he or she may use any relevant information from his or her own personal history in order to analyze the facts, but said information must be examined so that it is not biased and does not favor his or her own goals and projects; not that it should mean that he or she has no feelings for other people. Among his or her most important moral faculties is the ability to clearly imagine what it is to be each of the persons whose position he or she imagines.[342]

    The criterion proposed in this work is objective and of economic character, and must be harmonized with a subjective and humanitarian view. It is in such harmonization that the circumstances of the case come into play, which circumstances may change the terms of the issue, even though they cannot be regarded as a general rule inasmuch as they are the antinomy of a rule.[343]

    4.3- THE QUESTION OF THE BURDEN OF PROOF

    As discussed above, there is no consensus as to the question of the burden of proof under article 25 of the CISG.

    The Official Records dismiss the possibility that article 25 deals with the issue. In debating the Egyptian delegate's proposal, most of the representatives demanded that the question of the burden of proof be excluded from the text of this article. Even the Egyptian delegate agreed,[344] and so the issue was excluded from the final version. It can be concluded that, according to the legislative history the question of proof is not regulated under article 25 of the CISG.

    However, one author [345] is right in holding that the burden of proof is not a question of procedure governed by lex fori but a substantive question. I agree with his view. I find it extremely dangerous to leave the question of the burden of proof with domestic procedural law, as it would affect the puspose of uniform law and break the uniform interpretation principle contained in article 7 of the CISG.

    The question of proof necessarily follows from the language of article 25 of the CISG and is contained in each of the premises of said rule. Such is the view of some legal authors,[346] who hold that if the non-breaching party can prove that his or her most important expectations have been thwarted by the breach, he or she is entitled to declare the contract avoided, unless the breaching party proves that he or she did not foresee that the breach could substantially thwart the aggrieved party's expectations. Even if the breaching party proves that he or she could not have foreseen such a result, the contract is to be avoided anyway, unless it is proved that a reasonable person of the same condition as the breaching party could not have foreseen that the breach would be fundamental.

    According to the interpretation proposed in this thesis, proof of the facts regulated under article 25 of the CISG is closely linked to the structure of the rule and cannot be left with the lex fori or forum shopping.

    In my view, article 25 of the CISG assigns the burden of proof as follows:

    1. The party intending to avoid the contract must prove: (i) the extent of the economic loss sustained and (ii) the value of the interest he or she had in the contract (the Criterion); the measurement Standard (article 74 of the CISG) will apply to the first issue to be proved and the Standard will result from the comparison between the two above items, which are not to be proved directly, but must be ascertained by the judge or arbitrator.

    2. The other party may prove either (a) that he or she is within the subjective limit, i.e., subjective-objective unforeseeability of the economic loss, or (b) that given the circumstances of the case the issue does not fall within the scope of article 25 of the CISG in all its dimentions, in order to reach an equitable solution.


    CHAPTER FIVE

    CASE LAW

    5.1- THE AIM OF THIS CHAPTER

    The aim of this chapter is to analyze case law related to the topic before mentioned. I found out that, a great part of it is not relevant to the aim of this work; however, you will be able to consult the CASE LAW ADDENDUM below, I only refer to relevant case law. The idea is to carry out an analysis from the infinite number of facts to the finite number of laws.

    It can be observed that the facts within the cases, only taking into account the essential and relevant elements to this work, are simpler than they appear, which makes the contrast made with the hypothesis in chapter four quite clear. The difficulties arise from related issues, which are solved by the application of other rules to fundamental breach, and which are not related to it.

    A priori, I considered a classification of possible categories of breach based on the facts of the cases and not on the courts' final judgments.

    One author [347] classifies the cases of fundamental breach in eight categories, based on different factors taken into account by the courts at the time of entering a judgment.[348] I consider this classification to be excessively detailed, not taking into account the fact that it has a different point of view. The classification criteria must be, above all, useful. I propose that these cases be classified in six different categories.

    Any classification, a priori, is arbitrary up to certain degree, but it is worthwhile due to its scientific and practical use. I consider that the classification I propose is more practical and it breaks the molecules of final decisions into essential atoms. The aim of this chapter is to confirm the hypothesis on case law stated in chapter four, to analyze the given solutions and see if they comply or not, with the rule. I will try to prove that other theories cannot be applied to all the cases as the hypothesis in this work can. Finally I will consider if there is a different category in the case of commodity sales and whether a different analysis is needed for such sales.

    5.2- CLASSIFICATION CRITERIA

    5.2.1- Temporal

    Now, I will analyze those cases in which time (related to breach) plays an important role in determining the existence, or non-existence of fundamental breach.

    5.2.1.1- A short delay in delivery

    There are four cases in which a short delay in delivery by seller has determined the existence of fundamental breach.[349]

    5.2.1.1.1.- In one of the cases, orange juice was to be delivered.[350] The court, following the foreseeability criterion, considered that if the buyer and the seller could not have foreseen the damage caused by late delivery, there is no fundamental breach. According to the criterion of this work, there is no fundamental breach if such delay in the delivery of goods did not cause any harm. Such criterion can be inferred from the court's decision, although it is not expressly stated. The fact that the court makes no reference to the second part of article 25 of the CISG does not seem to be appropriate as such provision is a subjective breach restriction to the fundamental breach and not the rule stated in the article.

    5.2.1.1.2.- In the case "metal concentrate",[351] it was found that a short delay, the previous and later deliveries agreed by the parties having been duly performed, is not a fundamental breach. The arbitral tribunal found that the damage caused by the breach and the possibility of avoidance must be envisaged by the breaching party according to articles 74 to 78 of the CISG. That is why article 74 explains in detail how to determine if it constitutes fundamental breach or not. The analysis of this case is within the interpretation proposed in this work and confirms the "measuring standard" for fundamental breach.

    5.2.1.1.3.- In the case "summer clothes",[352] the court concluded that, although the goods are seasonal, a one-day delay in the delivery of goods is not a fundamental breach. Even if details are not stated, it is unlikely that a one-day delay shall cause an economic detriment.

    5.2.1.1.4.- In the case "clothes",[353] it was found that a two-day delay was a minor breach.

    5.2.1.2- Delay in delivery

    The fact that a considerable delay in the delivery of goods, constitutes a fundamental breach was analyzed in three different cases.

    5.2.1.2.1.- In the first of the cases, "Egyptian cotton",[354] after stating that fundamental breach must be interpreted in a restricted way, the court found that there is fundamental breach only when the delay in delivery of goods halts the economic goal of the parties. The most important thing is not the delay in itself but its consequences. In this case, the buyer's goods were part of a production process, and as the buyer had to deliver the manufactured product, he was forced to purchase substitute goods from another supplier at disadvantageous conditions. Unfortunately, the case does not indicate the difference between the agreed price and the price paid by the buyer to the other supplier. This judgment applies the criterion followed in this work, however it is not possible to determine the degree of the breach, according to the proposed measuring standard.

    5.2.1.2.2.- In the case "packages for animal food",[355] obiter dictum, it was found that a delivery which takes twice the time that is usually accepted in international trade practice is not a fundamental breach, if it cannot be proved that the detriment suffered by the other party deprives him of what he is entitled to expect under the contract. Even if the interpretation in this final judgment is quiet literal, it considers the existence of economic detriment as a premise of the existence of fundamental breach.

    5.2.1.2.3.- In the case "shoes",[356] it was found that partial delivery after an agreed deadline does not constitute fundamental breach, according to article 25 of the CISG, if it cannot be proved that the breach of an obligation of the seller has caused an economic detriment to the buyer. This final judgment makes a distinction between fundamental obligations of the parties and fundamental breach, and it also states that the non-performance of fundamental obligations does not necessarily bring about a fundamental breach. It must be pointed out that in this case it is clear how substantive contractual freedom may override the rule under article 25 of the CISG. Alternatively, the fact that the parties can agree that an obligation is fundamental does not mean that they had exercised such freedom. As stated supra, it works at different levels: the exclusion of rules in virtue of the substantive contractual freedom and the statements made as regards fundamental obligations.

    5.2.1.3- Agreed term as a fundamental clause

    In the following five cases, fundamental obligations are directly related to fundamental breach.

    5.2.1.3.1.- In the case "knapsacks, bags, wallets",[357] the parties considered the time limit of the contract of fundamental importance. The court concluded that, a two-months delay in the delivery of goods is a good ground for the avoidance of the contract, even if the goods had already been handed over to the carrier. This case can be criticized as the court did not consider the existence of an economic detriment related to the delay.

    5.2.1.3.2.- In another very similar case, in which "knitwear"[358] was to be delivered, it was found that if the parties had agreed that the term of delivery was essential, and there was no excuse for the delay, there was, per se, a fundamental breach. In addition, the court states that an objective detriment to the essential interest of the other party is a necessary premise for the existence of a fundamental breach. The fact that the parties had qualified the term of delivery as fundamental is doubtful because, as already explained in a previously mentioned case,[359] such qualification does not bring about, per se, the existence of an economic detriment which would permit contract avoidance, and which is clearly ultima ratio, in a case where, according to article 74 of the CISG, not even damages should be granted. It is remarkable that, although obiter dictum, the need of economic loss is mentioned.

    5.2.1.3.3.- In the case "shoes",[360] obiter dictum, it was concluded that the breach of an agreed deadline cannot be considered as a fundamental breach if the reasons for such term to be fundamental were not stated and because actual detriment was not proved, under article 74 of the CISG.

    The final judgment follows the criterion sustained in this work, but it is to be noticed that the criterion of fundamental economic detriment is not an alternative to the breach of a fundamental term. This shall be taken into account in view of the before mentioned criterion. In this case it is noticeable the importance of the burden of proof discussed infra 4.3.-

    5.2.1.3.4.- In the case "vacuum panel insulation",[361] it was found that there is fundamental breach when the parties agree that a term is fundamental or such term can be regarded as fundamental from the circumstances. In this case, the goods were materials necessary for a base in the High Arctic, which should be installed during a very tight window of nice weather only available during the Arctic summer. The Canadian Government had entered into a contract with the buyer who later had to pay damages to the Canadian government for breach of contract.

    Even if the seasonal criterion applied in case law to determine if a breach is fundamental is widely spread, unquestionable and, a priori, quite adequate, in this case, the economic detriment suffered by the buyer who was not able to fulfill his previous contractual obligations with his own buyer, was caused due to that seasonal criterion and not to the fact that it was a fundamental breach.

    5.2.1.3.5.- In the case "iron molybdenum",[362] it was found that the parties, by stating the INCOTERMS "CIF",[363] agree on a delivery by a fixed date.[364] This means that such date for delivery is fundamental and that in the event of late delivery the avoidance of the contract by the buyer was foreseeable for the seller

    This case has several conceptual confusions: (a) it considers the second part of article 25 of the CISG as the sole criterion for the determination of fundamental breach; (b) not only that, but it also misleads the interpretation of the second part of the article. In a more literal interpretation, it is the detriment which is capable of been foreseen and not the avoidance of the other party.

    5.2.1.4- Delay in the delivery of samples

    In the case of manufactured "clothes"[365] the buyer had the obligation to deliver samples and seller had to deliver manufactured clothes to buyer on an expressly stated term. The buyer did not deliver samples in due time and seller was not able to manufacture the clothes by the agreed time limit. The court concluded that the delay in the delivery of samples was a fundamental breach according to article 25 of the CISG, because it deprived him of what he was entitled to expect under the contract, considering that such products were part of the spring collection and that they could not be manufactured to be sold during that season.

    In this case it is accurately stated that, even if the buyer's obligation was not a fundamental obligation, its breach made it impossible for the seller to fulfill his obligation.. Although there is no direct reference to the economic detriment suffered by the seller, it can be inferred that the fact that he was the manufacturer was taken into account, and that the non-performance of the other party stopped the whole production process and his possibility to make profits. In this case, it is shown how the criterion applied to put fundamental obligations in the same level as fundamental breach is not efficient to provide for an equitable solution to the problem.

    5.2.1.5- Prior delivery of goods

    In the case where "chocolate"[366] was to be sold, it was decided that prior delivery of goods, even before the buyer had granted bank guarantees for payment, was not a fundamental breach if the buyer did not receive the product; notwithstanding the right to claim for damages as a consequence of the damage that the prior performance could cause. In this case, the buyer (respondent) raised avoidance of the contract as a defense when the buyer claimed the price, arguing that prior delivery had caused him a detriment (a not specified amount) due to his subcontractors' refusal to accept previously ordered goods.

    The solution in this case cannot be criticized as it is based on common sense; however, it can be criticized due to the absence of arguments to apply the economic criterion. If the buyer had proved the existence of an economic detriment caused by the seller's conduct (which apparently did not happen), such loss could have been the cause of a fundamental breach. It is to be noticed that in the court's decision the claim is sustained by article 74 of the CISG, and that the sum contemplated and determined according to the "measuring standard" proposed in this work, may turn the breach into a fundamental breach.

    5.2.1.6- Delay in payment

    In the case "machinery for a production line of foamed boards"[367] it was concluded that delay in payment does not constitute per se a fundamental breach; however, if the lack of financial resources on the part of the buyer can be proved, such breach will become fundamental. The court considered the waiting period granted as an additional time period.[368] In the event of fundamental breach, the granting of an additional period of time under article 64(1)(b) of the CISG is at the option of the injured party. Although the court did not take this into account, it must be noticed that the certainty (proved fact) that the buyer will not be able to pay is a fundamental breach, as it implies that the seller will lose 100% of the price value which, generally, is a substantial part of the economic interest of such party. On the other hand, there is no fundamental breach after a Nachfrist, even if it can be settled by the application of article 47 of the CISG, as it is a fallacy of affirming the consequent because a possible remedy cannot change the nature of the breach. If there is a simple breach, the Nachfrist is granted and the problem is not solved. However, this is not a reason for turning a breach into fundamental as it is outside the scope of article 25 of the CISG.

    5.2.1.7- Conclusions

    The criterion followed in this work and observed in all the cases, could have settled controversies in an equitable way. In some of the cases the economic criterion has been followed in general, without the precision that would perfect the interpretation of the rule.

    In the cases in which the existence of a fundamental term was taken into account, the solutions reached were inequitable and contrary to article 25 of the CISG. Against this position, it was established that without an economic detriment the existence of a fundamental term is not essential to constitute a fundamental breach. In commodities markets the full extent of the breach cannot be ascertained while the delay continues, because of the high fluctuations of prices,[369] in a falling market the buyers will have a useless B/L (absolute loss of the economic interest) and in a rising one there will be no economic damage. Save this issue, there is no reason to consider commodities in a different way than other goods, considering delay as a source of fundamental breach.[370]

    In addition, the solutions provided in these cases, a priori, are not always correct, as the economic detriment established in article 25 of the CISG is not always taken into account.

    5.2.2- Spatial

    In this group of cases the breach results from the delivery of goods in a place other than the place agreed under the contract.

    5.2.2.1.- In a case which involved the sale of coke,[371] the seller dispatched the goods directly to the buyer's customer, and not directly to the buyer as it had been agreed. The court found that there was no fundamental breach because even if title to goods was not transferred to the buyer (fundamental obligation), the buyer retained any action against his customer for the payment of the price.

    The court does not give details as to the nature of fundamental breach; however, its arguments show that the absence of a detriment and the performance of the agreed on obligation do not lead to a fundamental breach. It is remarkable that the transfer of title is a fundamental obligation on the part of the seller [372] and the breach of such obligation is not a fundamental breach under article 25 of the CISG.

    5.2.2.2.- In a case of delivery of raw salmon,[373] according to an INCOTERMS "DDP" [374] clause, it was established that, as it was usual practice of the parties, delivery to the processing company instead of the buyer's domicile is not a fundamental breach, even if the processing company becomes insolvent and the buyer has never received the product. The court concluded that the deviated delivery address was so minimal that the buyer was not deprived of what he was entitled to expect under the contract, as the buyer himself would have delivered the goods to such processing company. A literal interpretation was made on article 25. This case does not include many details, however, two conclusions can be drawn: the buyer had to and intended to deliver the salmon to the processing company which later became insolvent and, as a result, no harm was caused; or otherwise, if this fact could not be proved, damages ought to be paid as the injured party lost 100% of the goods and the economic interest in the contract. The first situation seems to be what actually happened.

    5.2.2.3.- In a more recent case,[375] the parties agreed that delivery of goods on board a vessel previously identified was an essential clause. The seller refused to perform his obligation and, moreover, he did not deliver the goods in any other place. The court found, by carrying out a literal interpretation, that the buyer had been deprived of the performance of an agreed on obligation, which brings about a fundamental breach of the obligations under the contract.

    It is not stated in the case whether the parties had agreed that failure to delivery on the previously identified vessel was a fundamental breach under article 25 of the CISG, ergo, it is necessary to determine if delivery in a different place would have caused a serious economic harm. As stated above, a clear distinction has to be made between the cases where the parties exercise their substantive contractual freedom [376] or, where the rule under article 25 of the CISG is overridden or, where the agreed on term helps to understand or to prove the importance of the economic detriment.

    In any event, it is clear that failure to deliver (obviously, in no place) will constitute a fundamental breach, as it deprives the buyer of 100% of his economic interest in the contract.

    5.2.2.4- Conclusion

    It can be concluded that, the criterion followed in this work, could have settled controversies in an equitable way in all the cases. On the other hand, a merely literal interpretation, used in two cases, is insufficient to understand the analyzed facts.

    5.2.3- Quantity

    In the following paragraphs I will discuss those cases in which delivery of goods took place at the agreed time and in conformity with the agreed quality, but not in the agreed quantity of goods. This includes the non-delivery of goods (failure to deliver) that may or may not constitute fundamental breach.

    5.2.3.1- Failure to deliver goods

    5.2.3.1.1- Total failure to deliver

    5.2.3.1.1.1- Inexcusable failure to delivery

    In the cases "alloy of silicon and manganese",[377] "silicon metal",[378] "Spanish goods",[379] "sunflower oil",[380] "steel bars"[381] and "Russian goods",[382] the seller did not provide an excuse for failure to deliver goods. The courts did not give much details about the economic detriment,[383] but, a priori, it seems to be logical that if the buyer is deprived of the goods under the contract for the sale of goods he will suffer an economic detriment, which may constitute a fundamental breach

    5.2.3.1.1.2- Inability to deliver

    In the case "stamping machine",[384] the buyer was informed by the seller's supplier that he had put an end to the commercial relations between them, which means that even if delivery was objectively possible the seller would not be able to deliver the goods in question for subjective reasons. The court found that inability to deliver for any reason is fundamental breach.

    As in the cases discussed in the above paragraphs, this case does not deserve much analysis, except for the fact that the seller's willingness to perform is irrelevant due to the inability to deliver for a subjective reason. I will later discuss this issue in the point of lack of due diligence.

    5.2.3.1.2- Partial delivery

    5.2.3.1.2.1.- In the case "computer components",[385] out of eleven only five components were delivered. The court concluded that in order to determine if there is fundamental breach or not, it must be considered whether it was reasonable for the buyer to make a substitute purchase and claim damages. The court takes into account the economic detriment criterion and the reasonableness test to determine the importance of the detriment related to the interest in the contract. Although the criterion used as rule may be adequate, it is quite subjective and cannot be inferred from the text of the CISG, maxime when the issue is expressly mentioned (absence of internal gap).

    5.2.3.1.2.2.- In the case "Russian goods"[386] the court concluded, without giving much detail, that failure to deliver a significant part of the goods (not specified percentage) constitutes a fundamental breach.

    One interesting thing to remark is that in the last two mentioned cases, failure to deliver a significant part of the goods constitutes fundamental breach, which can be related to the proportion in which the price is reduced, according to article 50 of the CISG. This criterion has been followed in other cases.[387]

    5.2.3.2- Failure of payment for goods

    5.2.3.2.1- Inexcusable failure to pay

    In the cases "coal",[388] "Russian goods"[389] and "thermoforming line equipment for the manufacture of plastic gardening pots together with the technology and assistance to use the equipment",[390] it was found that non-performance without excuse is fundamental breach. The statement in supra 5.2.3.1.1.1. is applicable to these cases.

    5.2.3.2.2- Failure to grant guarantee

    In the cases "scrap steel"[391] and "peanut kernels",[392] the obligation to establish a letter of credit was regarded as failure to comply with the obligation of total payment. In this case, the statement made in the preceding paragraph is applicable. In the case "candies and sweets"[393] it was considered that any practice not made in good faith in international trade, in order to stop collection on a documentary letter of credit is equivalent to failure of payment of the price.

    5.2.3.3- Failure to take delivery of goods

    5.2.3.3.1- Failure to take all of the goods

    In the case "MTBE (methyl tertiary-butyl ether)",[394] the buyer refused to take delivery of all the goods which, without much detail, was declared to be a fundamental breach. The statement in 5.2.3.1.1.1. is applicable to these cases.

    5.2.3.3.2- Failure to take part of the goods

    In the case "bacon",[395] the buyer took two out of four deliveries and refused to take the rest. The court considered he had committed a fundamental breach (by applying articles 71 and 72 of the CISG). The statement mentioned in 5.2.3.1.2.2.- is applicable here. As regards the question of interdependence of deliveries, article 73(3) of the CISG does not make any distinction between breach and fundamental breach, entitling the party to declare the contract avoided by virtue of the unfitness of goods which require the rest of the deliveries in order to be fit for their purpose.

    5.2.3.3.3- Conclusions

    The criterion followed in this work could have settled controversies in an equitable way, in all the cases. It is observed that courts consider, a priori, the total non-performance of and obligation as a fundamental breach, without giving much detail. This criterion seems to be, prima facie, adequate, but it does not consider that (exceptional case not found in the analyzed case law) total failure of performance may not cause any economic detriment to the other party, i.e., if the buyer does not pay the price, the seller, due to market fluctuations, may be able to sell the same goods to a third party at twice the price that the buyer had to pay, earning twice the profits.

    Likewise, in the case of partial breach, it can be noticed that courts usually apply by analogy the rule of reduction in the price (article 50 of the CISG). Applying such rule may be an adequate criterion, however, it would be better to apply the rule under article 74 of the CISG, as it is applied in some of the cases, and it is proposed in this thesis[396]. This issue is expressly included in the CISG and therefore it is not an internal gap to be filled by analogy. It may be said that article 50 of the CISG also refers to this issue, which is partially true. While article 50 only considers a part of the possible detriment, such as the loss of the goods value, article 74 is much more specific and is the basic rule of the CISG to determine the economic detriment. How can this article be applied when the harm was suffered by the buyer in his production process [397] or, by the products bought by the buyer?[398]

    5.2.4- Qualitative

    5.2.4.1- Non-conformity with the contract

    5.2.4.1.1.- In the case "coke",[399] already discussed in 5.2.2.1.-, apart from the difference in place of delivery, the failure to comply with the agreed contractual terms was also mentioned; however, the court concluded that the difference as to what was agreed was of no objective importance and did not constitute fundamental breach. The decision of the court is correct as contract avoidance is applied ultima ratio; however, it is not clear on what basis it determines the objective importance of the breach.

    5.2.4.1.2.- In the case "tiles",[400] the court, after making a literal interpretation, considered that there is fundamental breach, in the sense of article 25 of the CISG, if the buyer is deprived from what he was entitled to expect under the contract identifying such situation with the fact that the tiles received by the buyer were different from what was agreed. The court decision can be criticized as neither the economic detriment nor the loss suffered by the buyer is contemplated. The buyer may not have received the agreed goods but he may have obtained a benefit due to the better quality of the goods of better resale price. As discussed supra, the CISG has a strong pivot that imposes damages to any deviation from what was agreed. However, it has a weak pivot: the fundamental breach, which only applies to cases in which such deviation causes a serious economic detriment.

    5.2.4.2- Inability to cure non-performance

    5.2.4.2.1.- In the case "acrylic blankets"[401] the court concluded that in considering a breach to be fundamental, account has to be taken not only of the gravity of the defect, but also of the willingness of the party in breach to cure the defect without causing unreasonable inconvenience to the other party.

    First, it must be noted that in the event of fundamental breach, the aggrieved party has the option and not the obligation to accept the offered remedy. The legal consequence stated in article 49(1) of the CISG makes reference to fundamental breach as a statutory type, included in article 25 of the CISG. Article 49(2)(b) refers to the statutory type of "any other type of breach", as stated in its text. Trying to characterize the fundamental breach in a different way than the one prescribed in article 25 is incorrect (absence of internal gap), and it is a fallacy of affirming the consequent. According to the CISG, the nature of a breach cannot be changed due to the facts occurred after such non-performance.

    5.2.4.2.2.- In the case "machinery for recycling of plastic bags",[402] upon installation, the machinery turned out to be defective and not capable of reaching the promised production level as the seller had assured. The defects could not be repaired by the seller. The court concluded that the non-conformity of the machinery, which could not be repaired, amounted to a fundamental breach. The applied criterion is inappropriate according to the precedent paragraph. In addition, the court does not take into account the economic detriment caused by the breach. Would it be reasonable to declare the contract avoided if the machinery had 99% of the agreed performance? This seems to be contrary to the fundamental principles of the CISG and dangerous for international trade.

    5.2.4.3- Unfitness of goods

    5.2.4.3.1.- In the case "film coating machine for kitchen furnishings"[403] it was found that the fact that the machine was not fit for the purpose it was bought, constitutes a fundamental breach, maxime because it is a machine aimed for the fabrication of a special product.

    Although the court decision does not give details as to the interpretation of article 25 of the CISG, it may be concluded that the economic interest of the buyer is related to the mass production of a particular product which could be affected with the machine bought by the seller. Therefore, as the machinery is not fit for the production process, it affects his economic interest.

    5.2.4.3.2.- In the case "roll aluminum and aluminum parts for manufacture of cans"[404] the roll aluminum did not conform with the requirements of the contract, in practice, it could not be used to manufacture cans in his factory. The court found that this fact constitutes a fundamental breach, under article 25 of the CISG.

    If the technical differences between the roll aluminum delivered by seller and the roll aluminum described in the contract are compared, a layman could affirm that there was no fundamental breach as the difference between them is minimal.[405] If the court had only considered this criterion, we would be talking about one of the cases analyzed in the previous section and the statements made thereof would be applicable. However, the court took into account that the goods were not fit for buyer's production process, a criterion which, a priori, seems to be reasonable. However, the actual economic detriment suffered by the buyer due to the fact that the roll aluminum could not be used in his factory should have been taken into account.[406]

    5.2.4.3.2.- In the case "wall tiles",[407] it was found that there was a fundamental breach because the wall tiles were unfit for the ordinary purpose. This criterion seems to be, a priori, reasonable; however, it is only based on case law and, in the end, it does not comply with the provision of article 25 of the CISG. On the other hand, if the goods are fit for their ordinary purpose, and there are no other specifications that may lead to think of other purposes, it could be considered that the buyer's economic detriment affects his complete interest in the contract. This case is similar to the one commented in the precedent paragraph, and the comments made thereon are hereto applicable.

    5.2.4.3.4.- In the case "shoes",[408] the court concluded that in order to comply with the requirements of the contract the goods must be fit for their ordinary purpose.

    5.2.4.3.5.- In the case "products for skin care"[409] the products lacked the necessary vitamin A content, what was considered as an "essential quality feature in the product" Such lack of vitamin A made the product unfit for its common, and agreed purpose.

    5.2.4.3.6.- In another case also entitled "shoes",[410] the manufacturing had been "varying", sometimes the shoes had been "stitched", other shoes had been "folded up", and sometimes they did not correspond to the original sample. However, the court considered that the defects were not sufficient to prove whether or not the goods could be reasonably expected to be used.

    Again, the criterion established is, a priori, reasonable, but it is not stated in article 25 of the CISG and it may be possible that the differences in the manufacturing would have caused an economic detriment to the buyer, which is not analyzed by the court.[411]

    5.2.4.4- Non-marketable goods

    5.2.4.4.1.- In the case "sport clothing",[412] it was proved that the clothes shrank one or two sizes after having washed them for the first time. As a result, the end customer would no longer wear these clothes. The customers, thus, would either complain to the buyer or would no longer purchase goods from the buyer, i.e., the clothes could no longer be sold. The court decision concluded that it is a fundamental breach; as the buyer's interest in the contract was negatively affected. Such decision is correct as the economic interest is twice affected due to the impossibility to sell goods and the possible loss of customers by the buyer. Although the court does not restrictively apply the criterion stated in this work, it is correct and in harmony with it.

    5.2.4.4.2.- In the case "wine"[413] the court concluded that the chaptalization of the wine rendered it unfit for human consumption and therefore, it constituted a fundamental breach under article 25 of the CISG.

    This solution is, a priori, reasonable. It is difficult to imagine a purpose for wine other than human consumption. If the criterion stated in this work had been applied, the solution would have been the same, because the buyer could not have resold the product, ergo, he would have lost all economic interest in the transaction.

    5.2.4.4.3.- In the case "jeans",[414] the jeans were labeled with the wrong size tag. All jeans were one size or two sizes too big or too small, and extra work was necessary to re-measure the size of each pair of jeans. Such work, made it clear that every single pair of jeans was defective and that they had the wrong size and that some parts were stained with bleach or were affected by fungus. The court bases its decision on the fact that the goods did not meet the contractually agreed quality requirements. The facts show that the goods could not be sold. This fact, and not the fact that the goods did not meet the contractually agreed quality requirements, was the real argument to determine the existence of fundamental breach. The court decision takes article 74 of the CISG as a rule to determine the extent of the detriment caused.

    What was said in the previous paragraphs is applicable to the unfitness of goods, but it must be noticed that such unfitness was determined on the base of the "measuring standard" established in article 74 of the CISG, as sustained in this work

    5.2.4.5- Delivery of an aliud

    5.2.4.5.1.- In the case "apple juice concentrate and strawberries",[415] after a preliminary analysis, the buyer mixed the "juice" of the seller with the products from other suppliers. It was then discovered that glucose syrup had been added to the "juice" of the seller. For this reason and according to the food conditioning laws of the buyer's country, the final product could not be sold as "apple juice"; otherwise, it could have been sold in the normal course of business as "a product for the production of other products".

    The court considered that, even if the product delivered was completely different from what was agreed (which was used for the production of a different product), it did not constitute a fundamental breach under article 25 of the CISG. As the CISG does not make a distinction between the delivery of defective products and the delivery of goods of a different quality, ergo, the delivery of an aliud does not constitute per se failure to deliver and fundamental breach. Finally, the court denied the argument of avoidance but admitted a price reduction of 50%, under article 50 of the CISG.

    I agree that the delivery of an aliud does not constitute per se a fundamental breach if the economic interest of the non-breaching party has not been affected, article 25 of the CISG does not allow a different interpretation. The criterion used to determine the extent of the breach according to a price reduction under article 50 of the CISG (followed in many court's decisions, see infra 5.2.4.6.-) is reasonable, but it is better to apply article 74 of the CISG. In this case, the damage was not only suffered by the goods, as the product was mixed with the products of other suppliers. Such situation should have been taken into account in determining if there was fundamental breach; obviously, the damage was more serious as it also involved other products of the buyer. In this case, article 25 of the CISG would have been applicable.

    5.2.4.5.2.- In the case "fabrics",[416] the seller delivered textiles in a color and texture not ordered by seller. The buyer resold part of the goods at a lower price to a third person and not to the seller. The court considered that, even if an aliud was delivered, this is not sufficient to constitute a fundamental breach, as the products could be sold any way.

    The decision of the court is correct as it considers that the possible usage of the product does not make it completely unfit, ergo, it does not completely affect the economic interest of the buyer. However, the final decision does not specify how the interest of the buyer can be compared to the profit obtained. I think, as already explained, that a reduction in the economic interest does not constitute fundamental breach.

    5.2.4.5.3.- In the case "cobalt sulphate",[417] the parties agreed on the delivery of goods of British origin, but then it was discovered that the certificates of origin were false and that the goods were from South Africa. The court held that this difference amounts to a delivery of an aliud. This is treated in articles 35 and 36 of the CISG as goods that do not conform in quality with the contract, but this did not eliminate the buyer's expectations in the transaction as he did not show that the goods were unfit for the ordinary development of his businesses, or that it was impossible or difficult to sell them, even at a lower price. It could not be shown that the expectations of the buyer essentially stopped existing, notwithstanding the level of disconformity of the goods. The judgment held that the criterion of impossibility of remedying the economic detriment is not applicable under article 25 of the CISG.

    The solution seems reasonable considering that the expectations in dispute are economic. It should be noted that it is not expressed to what extent the expectations of the buyer were (or would have been) affected because of the sale of the goods at a lower price. Considering that, apparently, the purpose of the sale was to resell the goods and not to use them in a production process, the price that the buyer expected to obtain from the English cobalt sulphate should have been compared with the price he actually obtained (or that he must have obtained) from the sale of the South African product.

    5.2.4.6- Non-conformity percentage compared with the purchase value

    5.2.4.6.1.- In the case "Christmas trees",[418] the court held that the trees were non-conforming with the contract by 25 to 50%, which amounts to a fundamental breach, with no other details.[419]

    5.2.4.6.2.- In the case "globes",[420] these were supposed to rotate with a motor assembled to them. Soon, it was discovered that this system had an operational life of one year, but the court argued that, according to the use informed by the buyer, they should have had an operational life of at least three years, but that the rotative system was not essential to the decorative function of the globes, and that they were fit for their purposes. The court finally decided that the price be reduced by 30% under article 50 of the CISG, and that this proportion is not enough to justify the declaration of avoidance, as it was not a fundamental breach.

    5.2.4.6.3.- In the case "scaffold fittings",[421] the goods did not entirely conform with the sample. The estimated cost of sorting out the bad fittings from the goods amounted to 30% of the purchase price. The court decided that this fact was not enough to constitute a fundamental breach.

    5.2.4.6.4.- In the case "steel bars",[422] it was proved that the 22% of the bars did not conform with the contract specifications. The court awarded the buyer a reduction of the price in the same proportion, but this was not enough to constitute a fundamental breach.

    5.2.4.6.5.- In the case "second hand portable warehouse shed",[423] some of the dismantled metal elements were defective, which represented a material damage of 3.4% of the purchase price. The court decided that the small percentage of defective elements, with respect to the price, did not constitute grounds for declaring the contract avoided as there was no fundamental breach.

    5.2.4.6.6.- In the case "frozen meat",[424] it was found that the lack of conformity represented 25.5% of the purchase price, which the court found insufficient to declare the existence of a fundamental breach. It should be noted that the court used as evidence the reduction of the price, under article 50 of the CISG, but adopted article 74 of the CISG as a standard to measure the extent of the breach. This accords with what is sustained throughout this work.

    5.2.4.6.7.- In the case "granite",[425] obiter dictum, the court stated that if 40% of the goods were defective and difficult to use or to sell, it did not justify the existence of a fundamental breach, but it justified the claim for damages.

    5.2.4.6.8.- In the cases analyzed in this section the application of the relation between the price and the percentage of defective goods as a reduction of the price prevails, under article 50 of the CISG. This could be a good start to calculate the general expectations of the non-breaching party, but it is not possible to elevate the concept to a standard to measure the extent of the breach as the text of the CISG does not allow the application by analogy of this standard. There is no internal gap as the subject is expressly set forth in article 74 of the CISG, which is closely related to article 25 of the CISG.

    Article 74 includes the loss suffered and the loss of profit. The criterion of most of the judgments analyzed in this section [426] may be identified with the first of the two concepts of article 74 of the CISG, but cannot include the second, it even runs short for the first one since not every loss necessarily arises from the loss of the goods involved in the contract.[427]

    Notwithstanding the foregoing, the reduction of the value of the goods is a very important element in calculating the detriment to the expectations of the party, and it may even be the only element to be taken into account.[428]

    5.2.4.7- Need to repair

    In the case "furniture",[429] it was decided that the delivery of a chair that had to be repaired, in a much bigger lot, was not a fundamental breach.

    The court does not base its decision on the application of an interpretation of article 25 of the CISG, but on common sense. It seems like a reasonable solution. If the criterion sustained in this work is applied, the same conclusion is reached (in spite of the lack of information): it seems that the expectations that represent a defect in a chair are just an insignificant part of the general expectations of the buyer.

    5.2.4.8- Defects in technical assistance

    In the case "thermoforming line equipment for the manufacture of plastic gardening pots together with the technology and assistance to use the equipment",[430] analyzed supra in 5.2.3.2.1.-, it was decided that the minor defects in the technical assistance, when the equipment works and the buyer can keep his business running, are not a fundamental breach. The non-existence of detriment is a necessary element in the statutory type of article 25 of the CISG.

    5.2.4.9- Conclusions

    It can be observed that in all the cases the criterion sustained in this work could have given a fair solution to the conflicts.

    1. It can be observed that the mere non-conformity with the contract is not a valid criterion to detect the existence of a fundamental breach; the damage could be insignificant, or even profitable for the buyer.

    2. The impossibility of remedying the goods does not only arise from the text of the CISG and is a fallacy of affirming the consequent, but it is also inadequate. What would happen if what is irremediable is a defect that causes only a 1% reduction of the production capacity of equipment bought? (see supra 5.2.4.2.2.-)

    3. The criterion of unfitness of the goods for the production process to which they should be incorporated or for the use that is normally given to those goods, is a criterion that, a priori, seems reasonable and constitutes an element to take into account in calculating the detriment to the expectations of the aggrieved party. However, it is too much based on case law to be elevated to a general rule and does not relate to the text or the spirit of article 25 of the CISG.

    4. In the event that the goods cannot be sold, it can be said that, a priori, the expectations of the buyer are totally affected. Again, this is an element to take into account, but it is impossible to elevate it to a general rule as not in all cases the destination of the goods is the purchase, as the case of the equipment to be installed in the buyer's factory and, thus, integrated in the production process.[431]

    5. In the case of the delivery of an aliud, the judgments analyzed show that, in practice, the criterion of the possibility of remedying the breach and the non-conformity with the contract cannot be applied within the scope of the CISG. In addition, the delivery of an aliud is not, per se, a fundamental breach as article 25 of the CISG does not make a distinction between the delivery of defective goods and delivery of goods of different quality or in different quantity. Furthermore, the delivery of an aliud does not even imply, per se, the presence of a detriment in the sense of article 74 of the CISG.[432]

    6. In the cases in which the defective percentage is compared with the purchase price, applying article 50 of the CISG, different criteria can be seen: it was considered fundamental breach from 25 to 50%,[433] and it was considered that it did not exist in 50%,[434] 40%,[435] 30%,[436] 25.5%,[437] 22% [438] and 3.4% [439] reductions of the price. These precedents are very important, although they only refer, mostly, to the reduction of price and that they apply article 50 of the CISG to establish an approximate idea of what a fundamental breach is under article 25 of the CISG, measured in accordance with the standard of article 74 thereof.

    7. As a guidance and a priori, it could be stated that when more than half of the expectations of the aggrieved party is affected, measured under the standard of article 74 of the CISG, a fundamental breach is being dealt with because there is such an economic detriment that it deprives the party of what he was entitled to expect under the contract, under article 25 of the CISG.

    5.2.5- Issues related to international sales

    In this section, I analyze judgments that relate the breach to legal rules or to contractual clauses not related to the purchase or the delivery of goods, and that may, because of factual issues, give rise to a fundamental breach under article 25 of the CISG.

    5.2.5.1- Violation of exclusivity clause

    5.2.5.1.1.- In the case "shoes"[440] there was a duty of preserving exclusivity to commercialize shoes bearing as a trademark an "M" and manufactured by the seller in the buyer's country. The seller violated that obligation showing those goods as if they were his own in a fair in the buyer's country. The buyer declared the contract avoided. The court held that this fact endangered the purpose of the contract to such a degree that the buyer had no more expectations in the contract, and it constituted a fundamental breach under article 25 of the CISG, although a subsidiary duty was violated.

    This judgment can be criticized since no proof was given that the seller's action caused an economic detriment to the buyer. The violation of the exclusivity clause does not imply, per se, that the economic expectations of the buyer were affected because it refers to the distribution contract. No proof was given, for example, of the loss of clientele, or that any shoe was sold at the fair. Article 25 of the CISG mentions "a detriment that deprives"; this means the existence of an actual detriment. Is not probable that the rule extends to probable non-performance.

    5.2.5.1.2.- In another case about "shoes",[441] the parties agreed on the exclusivity of the buyer to sell the seller's product. Then, the seller sold to a third party, buyer's competitor, the same product at a lower price. The court solved the issue applying [442] the foreseeability criterion of the second part of article 25 of the CISG.

    No proof was given of the extent to which the buyer was aggrieved because of the violation of the exclusivity agreement, loss of sales, commercial image, or clientele. I think that the existence of expectations in this sense and its extent under article 74 of the CISG is the only possibility to justify a fundamental breach.

    5.2.5.1.3.- In the case "cutlery",[443] the court held that the violation of the exclusivity right of the buyer in respect of the products of the seller was a good reason to declare the contract avoided, and considered that the damages, under the standard of article 74 of the CISG, were 10% of the purchase price.

    The judgment is erroneous. The court held that the buyer's expectations were affected, but only by 10%, and this does not seem to be a good reason to justify a breach that substantially deprives the other party of what he was entitled to expect.[444]

    5.2.5.2- Violation of the administrative rules of the buyer's country

    5.2.5.2.1.- In the case "paprika pepper",[445] the goods were not fit to be sold in the market of the buyer's country because they had a high concentration of ethyl oxide. The parties expressly agreed that the pepper should be fit to be sold in the market of the buyer, according to the food safety laws of that country. The court, giving a mere literal interpretation to article 25 of the CISG, held that that was a good ground to deprive the buyer of what he substantially was entitled to expect.

    5.2.5.2.2.- In the case "dehydrated mushrooms",[446] the goods could not be delivered to the market because the product was "not fit for consumption", according to the analyses practiced by the National Department of Chemistry, which depends on the Under Secretariat of Regulation and Surveillance, Health Department, Health and Social Welfare Ministry of Argentina, since it is contrary to the provisions of the Argentine Food Code. In this case, the fact at issue was whether the mushrooms were spoiled before or after they were shipped (when the risk is transferred). The court held that the buyer could not show that the goods were already damaged before they were shipped, consequently, the complaint of the buyer was dismissed.

    In these last two cases analyzed, it was held that the lack of conformity with the food regulations of the buyer's country constituted a fundamental breach. Prima facie, this seems correct as the goods would be impossible to sell by the buyer; however, this criterion is mistaken since it is not analyzed whether the expectations of the buyer are substantially affected. This could be the case in which the goods could be reasonably sold in another country, they could even be adapted or remanufactured, or they could be given a different use other than human consumption.[447] If this was not possible, it should be verified that the 100% of the expectations of the buyer were affected and the application of article 25 of the CISG would be justified.

    5.2.5.2.3.- In the case "fashion textiles",[448] the buyer had the franchise of the seller's products and this agreement violated the German anti-trust rules (buyer's country) and the rules of the European Union. The court held that, under article 4(a) of the CISG, this Convention does not regulate the validity of contracts (external gap) and, thus, there is no fundamental breach in the sense of article 25 of the CISG, since it is not an issue expressly regulated thereby.

    I do not share the view of the court. It is true that the violation of the anti-trust rules (contract validity) is an issue expressly excluded from the scope of the Convention (external gap), but this is not an impediment to consider those circumstances as facts. In fact, it was very difficult for the buyer to sell the goods since he would have been exposed to fines and other sanctions, according to the applicable administrative rules. The court should have analyzed the amount the sanctions represented or if they directly prohibited the sale, and measured under the standard of article 74 of the CISG, in respect of the general expectations of the buyer. It seems that if the criterion sustained in this work had applied, the result would have been the same.

    5.2.5.3- Documentation related to the goods

    In the case analyzed above, "cobalt sulphate",[449] the parties had agreed upon the delivery of certificates of origin together with the goods, which certificates turned out to be false. The court considered that the non-performance of any type of obligations can be a source of fundamental breach, principal or subsidiary, concerning quality, quantity, time of delivery and any other type of performance. The court held that the expected result of the transaction was not damaged because of the delivery of false certificates of origin, since the buyer could have obtained them, with no major efforts, from the local commercial court. In practice it is not so, as the certificates must be obtained in the country of origin, and that is why they are always applied for by the seller. It was not shown that the expectations of the buyer in the performance ceased to exist.

    The solution seems adequate, if the court considers there is no loss under article 74 of the CISG, it is impossible to talk about fundamental breach under article 25 of the CISG. It does not seem to be the case, as there is a simple breach (that does not allow per se to declare the contract avoided), and not a fundamental breach.

    It has been suggested that in a commodities market there is no interest in the physical performance, save the end-buyer of the string, and that it is a documentary market;[450] the center of attention changes from physical delivery to documents. It is clear that the documentary business has its particularities, but is also clear that they can be reflected in the loss of the economic interest, in this case, the expectable profit in re-sale of the goods, but the criterion is also applicable and equitable.

    5.2.5.4- Declaration of insolvency of one of the parties

    In the case "tent hall structures",[451] the buyer informed that his company was insolvent or about to be insolvent and, as a consequence, the seller declared the contract avoided. The court considered that the insolvency rules are governed by the lex fori and that they are completely out of the scope of the CISG. However, this does not mean that the fact that the buyer could not comply with his obligation to pay the goods can be considered, which amount to a fundamental breach under article 25 of the CISG.

    From the point of view of this work, the decision is correct since the expectations of the seller were completely affected.

    5.2.5.5- Conclusions

    As it can be seen, the criterion sustained throughout this work could have given a fair solution to all the cases.

    1. In the case of violation of exclusivity clauses, the judgments analyzed do not give a correct answer; they assume there is a fundamental breach without the existence of a substantial detriment to the aggrieved party's expectations.

    2. In the case of violation of administrative rules, it seems that the judgments give a correct answer as the impossibility to sell the product in the buyer's country, prima facie, appears to be affecting all of the expectations of the buyer.

    3. In the case of the application of rules related to issues expressly excluded from the Convention, the correct solution is to take into consideration those rules to learn about the facts of the case, with respect to the fundamental breach, and to verify if there is a detriment to the aggrieved party's expectations.

    5.2.6- Lack of due diligence

    In this section, I will analyze the intention of the parties as a determining factor in the existence of a fundamental breach.

    Some legal authors [452] argue, based on articles 30, 45, 53, 61 and 79, that the liability for non-performance arises from the alleged intention of the parties. When interpreting this opinion, there should be an intentional element so that the breach falls within the scope of fundamental under article 25 of the CISG. It was even said [453] that the effects of the declaration of avoidance have been regulated taking into account the unintentional contractual breach, and the consequences are quite drastic when applied to a contract that was declared avoided without the intention of the parties.

    However, I agree with the legal author who considers it is a question of fact and that the CISG does not pay attention to the intentional or unintentional breach of the contract to determine damages or fundamental breach. It is an objective non-performance.[454]

    The Convention does not provide for "penalties" of the obligations of the seller or the buyer, but rather it provides for "remedies" available to them in the event of non-performance of the other party. Furthermore, the compensable damages cannot be aggravated in the case of intentional breach of contract as the CISG dispenses with the idea of intention, making inapplicable all provisions of domestic law (inexistence of internal or external gaps).[455] The "absence of intention" cannot be argued.[456] From no article of the CISG or its preparatory documents arises the concept of intention in the breach. This concept belongs to domestic law and does not belong to the text of the CISG. From all cases analyzed it appears that none of them has even considered this fact. In the cases analyzed below, it will be shown how the intention of the parties has been taken into account, but this does not mean that it can be inferred that the concept of unintentional breach of contract has been considered.

    5.2.6.1.- In the case "stamping machine",[457] already analyzed, the court considered that it could not declare a fundamental breach while it is objectively possible to perform and the seller has shown his intention to perform, even when it is clear for the buyer that the seller, because of his characteristics, will not be able to perform (subjective impossibility). According to the criterion proposed in this work, it is not possible to declare a contract avoided if there has been no detriment to the expectations or there is a declaration of the party that he will not perform. But the latter fact will take place only by virtue of article 49(1)(b) of the CISG or 49(2) of the CISG; this means that the existence of a fundamental breach is not necessary. To state the contrary is a fallacy of affirming the consequent. There is a fundamental breach only in the terms of article 25 of the Convention and the declared intentions of the parties are irrelevant.

    5.2.6.2- In the case "aluminium",[458] several deliveries were agreed on; after some of them took place, the seller deliberately stopped delivering the goods and declared his intention to never resume the deliveries in the future. The court held that the lack of the overdue delivery was good ground to declare the contract avoided, in the terms of article 25 of the CISG, and that the declaration of intention of the seller was irrelevant as the fundamental breach had already taken place.

    In this case, the intentional or unintentional breach of contract by the party is not mentioned, only the verification of the lack of delivery is a ground for declaring the contract avoided. This fact accords with the criterion sustained in this work as the important fact to be taken into account is the actual detriment to the expectations and not the intention declared by the parties so that a fundamental breach exists in the sense of article 25, notwithstanding that in some cases the contract could be declared avoided by application of other rules of the Convention.

    5.2.6.3- Conclusions

    The cases analyzed appear confusing when referring to the intention of the parties, a concept that does not fit with that of fundamental breach. In none of the legal cases it was verified that the unintentional breach of contract by the parties is a justification to avoid answering or to avoid a declaration of avoidance, in the terms of article 25 of the CISG, or that the intentional breach of contract is an element to be taken into account. This allows to think that case law corroborates that liability within the scope of the CISG totally dispenses with the idea of intention. As discussed in chapter two, the CISG has its own categories, and it is an inappropriate method of analysis to purport to use the categories of domestic law to describe those legal concepts.

    5.2.7- Is there a substantial difference in the sale of commodities?

    It has been suggested that the CISG technique of fundamental breach is not particularly conducive to commercial certainty and documentary sales of commodities, and that special solutions (different from article 25 of the CISG) are needed in that field.[459] I do not think so.[460]

    First of all, it is necessary to define what a commodity is, since this term is not clear or, at least, it is not clear which goods are commodities and which are not.[461] It can be defined as a generic, largely unprocessed, good that can be processed and resold.[462] Commodities cover a wide range of agricultural products and raw materials, such as grain (e.g., wheat, barley, maize and corn), feed stuffs, oilseeds, sugar, coffee, cocoa, tea, oils, metals and ores.[463] So, one can say that the commercial characteristics are more important than the nature of goods. Those characteristics are: (a) volatile markets conditions that can drastically alter the value of the goods, (b) there is a speculatory string of sales with the B/L documents and (c) if there is a breach and the post-sale market declines the damages are reduced, so the buyer must endure this decline.[464]

    Substantial importance of standard contracts and commerce usages is not an exclusive characteristic of the commodities market.[465] This is a fact to take into consideration but it does not change anything about the characterisation of fundamental breach under the CISG, it is simply the application of the contractual freedom and articles 6 and 9(1) of the CISG, even when often the standard contracts exclude the CISG.[466]

    Even though, in the recorded case law out of 114 cases involving fundamental breach, 24 where related to commodities, which is a 21.06% of the cases, only in four of them (3.5%) is the commodities issue mentioned and in none of them (0%) is it treated as a special case which deserves a special remedy. I am not trying to make a statistical analysis but, from case law treatment, it can be concluded that such a special treatment is not necessary and a different category of analysis is also redundant. I also disagree with an author who says that it is not clear how provisions of the CISG apply to commodities contracts because of the dearth of reported cases.[467] At least for fundamental breach, 21 % of the cases is representative of the subject and this author's affirmation that it is not impossible to achieve optimal equilibrium under the CISG if an elaborated interpretation is given.

    The postulates I explain in chapter four are suitable to commodity sales, in fact they sustained by some commodity cases.[468] There is no special treatment needed, and the problems explained supra are included: (a) the market fluctuations are contained in the economical interest of the parties,[469] (b) the speculatory string and documentary sales were supra treated in 5.2.5.3. so there is no need for special treatment in the application of the general rule [470] and (c) the declination of markets and its consequences in the damages reduction have its importance in the determination of the economic interest but no more than another kind of goods (i.e., seasonal goods as Christmas trees).[471] Out of this there are only issues about the proof of facts [472] which is special for every kind of goods, and for every case and cannot be contained by any general rule

    There is no practical reason to analyse the issue of commodities as a different category and solutions to this kind of goods cases are contained in the general rule proposed in chapter four and, at least concerning to fundamental breach, the rule of article 25 is applicable and equitable.

    5.3- CONCLUSIONS OF THIS CHAPTER

    1. In this chapter I have analyzed all the compiled judgments with respect to fundamental breach and I think I have proved how in all of them the theory of interpretation of article 25 of the CISG is applicable and gives coherent and fair solutions.

    2. In many of the cases the criterion of the detriment to the expectations of the aggrieved party was followed, and even article 74 of the CISG was used to measure such detriment, as I propose throughout this work.

    3. The non-conformity with the contract alone is an unacceptable criterion. It has been proved that the mere existence of a clause or essential period of time does not imply that the non-performance carries a fundamental breach under article 25 of the CISG.

    4. The mere literal interpretation of the rule is not enough to cover all the cases and shows serious deficiencies when taken to practice.

    5. The impossibility of repairing the non-conformity of the goods is not a rule that can be inferred from the text of the CISG and does not seem to be adequate to solve many of the cases analyzed. This can be clearly seen in the case of the delivery of an aliud.

    6. I have detected many a priori considerations made by courts to define the breach as fundamental, such as the total lack of performance, the unfitness of the goods, the fact that they cannot be sold, and the violation of the administrative regulations of the buyer's country. These criteria seem reasonable, but they cannot always be directly applied and do not arise from the text of article 25 of the CISG, which prevents them from being elevated to a category of general rule, although they can be used as presuntio hominis.

    7. Courts have had a tendency to measure the economic detriment caused to define the breach as fundamental or not, according to the extent of the reduction of value of the goods and article 50 of the CISG. This is reasonable, but article 74 of the CISG is the most adequate for that function.

    8. From these precedents it can be said that a 50% reduction of the price is a reasonable measure to determine the existence of a fundamental breach. Such measure could also be extrapolated from the application of article 74 of the CISG. However, it is a flexible criterion and will depend on the characteristics of the case other than the direct application of the aforementioned fact.

    9. The lack of due diligence of the parties to perform the contract is a concept out of the scope of the fundamental breach, and the CISG totally dispenses with the idea of intentional or unintentional breach of the contract.


    CHAPTER SIX

    CONCLUSIONS

    1. In the international sale of goods, to apply domestic law to an international case is completely forbidden and is dikelogically undesirable. The only way to apply it is in a subsidiary way and through the rules of the International Private Law, to the extent permitted by the CISG (ultima ratio).

    2. The hierarchy of the rules and the interpretation sources arise from the text of the CISG. Within its scope there is a consistent, close and self-contained system.

    3. Contractual freedom is widely accepted in the CISG, but it must not be mistaken if the purpose is to exclude or modify the rule of article 25 of the CISG. Only through this contractual freedom can the UNIDROIT Principles be applied.

    4. The application of foreign case law by a local court is allowed and it must be applied in a similar way as the local precedents. If it is uniform, it can be considered binding.

    5. From the critical analysis of legal authors about fundamental breach, it can be concluded that: (a) article 25 of the CISG is not tautological, (b) the solutions with a tendency to the remedies granted by the CISG constitute a fallacy of affirming the consequent, (c) the aforementioned article cannot be interpreted as mere case law; this is a tautology and purports to elevate the antinomy of a rule to the category of rule, (d) the legal consequence of the breach can never change the nature of the statutory type of breach, and (e) subjective interpretations based on the foreseeability of the detriment cannot be accepted because they do not consider the first part of article 25 of the CISG.

    6. It has been justified and proved that article 25 of the CISG has five premises: (a) CRITERION, the extent of the detriment caused by the non-performance in respect of the total value of economic goals in the contract to the non breaching party, (b) RULE, that relation must be measured in accordance to what is provided in article 74 of the CISG, (c) MEASURING STANDARD, in accordance with the result of the application of the rule, there will be a fundamental breach when the relation rule is higher that the 50% (flexible rule), (d) SUBJECTIVE LIMIT, the foreseeability of the detriment caused can be used by the breaching party to relieve himself from the consequences of the fundamental breach and (e) EXCEPTION, because of the special circumstances of the case, the four premises mentioned before can be left aside, ultima ratio, and when they are inadequate for the case, to apply a fair solution.

    7. The burden of proof of the aforementioned sections is not a question of procedure but a substantive law question. The first two premises must be invoked and proved by the non breaching party in order to obtain the approval of the court or of the arbitrator of the declaration of avoidance of the contract. In the case of the last two premises, the breaching party has the burden of proof in order to avoid the declaration of avoidance of the contract.

    8. Based on the analyzed precedents it can be concluded that the theory that sustains this work can be applied to all analyzed cases. It also provides each of them with a fair solution and protects the legal protected interest of the favor contractus. The facts proved the hypothesis based on the law.

    9. The criteria used a priori by the courts are not rigorous, but they can be used as presuntio hominis to prove the fundamental breach, such as (a) the total lack of delivery of the goods or the payment of the price, (b) the unfitness of the goods or the fact that the goods cannot be sold and (c) the violation of the administrative and criminal rules of the buyer's country.


    CASE LAW ADDENDUM

    ARGENTINA AUSTRALIAAUSTRIACANADACHINA - PEOPLE'S REPUBLIC OF CHINADENMARKFINLANDFRANCEGERMANY ICC- INTERNATIONAL COMMERCE CHAMBER - ARBITRAL -HUNGARYITALYMEXICORUSSIAN FEDERATIONSPAINSWITZERLANDUNITED KINGDOMUNITED STATES OF AMERICA

    FOOTNOTES

    * Lawyer, graduated with honors, Universidad de Buenos Aires (2001); Magister in Business Law, Universidad Austral (2004); Lecturer, Private International Law, at Universidad de Buenos Aires; Lecturer, International Business and Contracts at Universidad Austral. The present work is a revisited version of the thesis that has been submitted to the Universidad Austral, Master in Business Law, in fulfillment of the requirements of the degree Magister in Business Law and has been recognized as summun cum laude (June 2004).

    The author would like to express his gratitude to María Blanca Noodt Taquela, who was the director and mentor of this thesis and to María Susana Najurieta, Albert Kritzer and Rafael Manóvil for their valuable comments on this work. The author is also is interested in readers comments, write to <mpaiva@cvi.com.ar>.

    1. <http://uea.org/informado/pragm/pm_eo.html> (03/19/04) HUMAN EMANCIPATION. Every language both liberates and imprisons its users, giving them the ability to communicate among themselves but barring them from communication with others. Designed as a universally accessible means of communication, Esperanto is one of the great functional projects for the emancipation of humankind one which aims to let every individual citizen participate fully in the human community, securely rooted in his or her local cultural and linguistic identity yet not limited by it. We maintain that exclusive reliance on national languages inevitable puts up barriers to the freedoms of expression, communication and association. We are a movement for human emancipation. Prague, July 1996, Prague Manifesto of the movement for the international language Esperanto.

    2. From a positive point of view, international interpretation means that the Convention must be interpreted autonomously. This requires that the Convention should be interpreted, as far as possible, by itself; therefore, the Convention has been written in a kind of legal Esperanto, carefully avoiding the use of expressions that belong to a particular legal system and using terms of natural language rather than legal language. See Vázquez Lépinette, Tomás (2000) La compraventa internacional de mercaderías. Una Visión Jurisprudencial. Navarra: Editorial Aranzadi S.A., p. 44.

    3. Signed by Argentina through Law No. 22,765, ratified on 07/19/1983, and effective as from 1/1/1998, hereinafter referred to as the "CISG", acronym for "United Nations Convention on Contracts for the International Sale of Goods" of April 11, 1980, United Nations Document A/CONF. 97/18, Annex I. The official texts in Arabic, Spanish, Chinese, French, English and Russian can be found in <http://www.uncitral.org/en-index.htm> (03/19/04), and in <http://cisgw3.law.pace.edu/cisg/text/text.html> (03/19/04), where unofficial versions may be found in twelve different languages.

    4. By this I do not mean that a breaching party is immoral or a bad merchant, but I mean that the problem to be discussed does not address the question of "How should I perform?", but rather "What should I do now that the contract has been breached?"

    5. Cf. PILTZ, BURGHARD (1996) Compraventa internacional. Convención de Viena sobre Compraventa Internacional de Mercaderías de 1980, Buenos Aires: Astrea, adaptation to the law of Latin American countries of the German UN-Kaufrecht: Wegweiser für die Parxis."Internationale Wirtschaftspraxis", Band 2, p. 76.

    6. Characterization consists of classifying a legal issue within one of the categories of the legal system, the basic premise being that each legal relation can only be governed by one single rule whose category must be ascertained, where the rule cannot be simultaneously adapted to two private international law categories (Savignian axioms of single and appropriate law to regulate the legal relation). Cf. FRESNEDO DE AGUIRRE, CECILIA (2003), Aspectos generales del sector derecho aplicable, Chapter 6, "Conflicto de calificaciones", in FERNANDEZ ARROYO, DIEGO P. (Ed.), Derecho internacional privado de los estados del MERCOSUR, Buenos Aires: Zavalía, p. 277. When a question involves rules of conventional status, they must be interpreted in the light of the legal system they belong to (in this case, the CISG). Otherwise, it would contradict the unifying purpose of the Convention (article 7, CISG). Autonomous characterization has the purpose of preventing the un-unification of that which was intended to unify through domestic interpretation. Cf. FRESNEDO DE AGUIRRE, CECILIA, idem, p. 279.

    7. <http://cisgw3.law.pace.edu/cisg/text/case-annotations.html> (03-19-04).

    8. <http://www.uncitral.org/english/clout/abstract/index.htm> (03-19-04).

    9. Cf. ZIEGEL, JACOB S. (1981), Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods, University of Toronto, at <http://cisgw3.law.pace.edu/cisg/text/ziegel25.html> (03-19-04).

    10. Section 3.1 hereof contains a detailed analysis.

    11. Cf. HONNOLD, JOHN O. (1987), Uniform law for international sales. Denventer: Kluwer Law and Taxation Publishers. Spanish translation by SANCHEZ CALERO, FERNANDO Y OLIVENCIA RUIZ, MANUEL Derecho uniforme sobre compraventas internacionales (Convención de las Naciones Unidas de 1980), first edition. Madrid: Editorial Revista de Derecho Privado, p. 186

    12. Cf. AUDIT, BERNARD, La vente internationale de merchandises. Spanish Translation by RICARDO ZAVALÍA (1994) La compraventa internacional de mercaderías. Convención de las Naciones Unidas del 11 de abril de 1980 (Ratificada por la ley 22.765), Buenos Aires: Zavalía, p. 63.

    13. For a detailed discussion of this issue, see infra 4.2.2.2.-

    14. The reader will pardon the use of this term in legal studies and research in our branch of knowledge.

    15. This issue is presented as a paramount reason for merchants to prefer English Law and to exclude CISG in commodities market. The first one is considered generally clear and that leads to predictable results in relation to breach because there is a considerable case law body and common provisions are relatively well settled. Commodities sales contracts have not changed over the last 100 years and a business man knows immediately what his right are; Cf. MULLIS, ALASTAIR C.L., Termination for Breach of Contract in C.I.F. Contracts Under the Vienna Convention and English Law; Is There a Substantial Difference?, Lomnicka / Morse ed., Contemporary Issues in Commercial Law (Essays in honour of Prof. A.G. Guest), Sweet & Maxwell: London (1997) p. 137-160. <http://cisgw3.law.pace.edu/cisg/biblio/mullis.html> (03-19-04)). I am not trying to change inertia, it is pointless, but my goal is to show that the CISG could be clear enough in order for merchants immediately know what their rights are.

    16. Cf. CALVO CARAVACA, ALFONSO LUIS and CARRASCOSA GONZÁLEZ, JAVIER (1997), Introducción al derecho internacional privado, Granada: Editorial Comares, T. I, p. 282.

    17. Cf. FERNÁNDEZ ARROYO, DIEGO P. (1998), Derecho internacional privado (Una mirada actual sobre sus elementos esenciales), Córdoba (Argentina): Advocatus, p. 104.

    18. There is no word in English for "dikelógica" and the reader will not find it in a Spanish dictionary either; the term was coined by professor Goldschmidt and it is the union of two greek words: "Dikés" (Greek goddess of justice) and "logós" (knowledge); it is part of his legal triological conception of Law. It means that the analysis is based on the premise that the Law should be equitable.

    19. Cf. CALVO CARAVACA, ALFONSO LUIS and CARRASCOSA GONZÁLEZ, JAVIER, op. cit. footnote 16, p. 15; also Cf. BOGGIANO, ANTONIO (1994), Curso de Derecho Internacional Privado, Buenos Aires: Abeledo-Perrot, p. 2; see also FERNÁNDEZ ARROYO, DIEGO P., op. cit. footnote 17, p. 25.

    20. Cf. CALVO CARAVACA, ALFONSO LUIS and CARRASCOSA GONZÁLEZ, JAVIER, idem, p.17.

    21. Cf. CALVO CARAVACA, ALFONSO LUIS and CARRASCOSA GONZÁLEZ, JAVIER, idem, p. 24.

    22. Cf. CALVO CARAVACA, ALFONSO LUIS and CARRASCOSA GONZÁLEZ, JAVIER, idem, p. 52.

    23. Cf. CALVO CARAVACA, ALFONSO LUIS and CARRASCOSA GONZÁLEZ, JAVIER, idem, p. 280.

    24. Cf. FERNÁNDEZ ARROYO, DIEGO P., op. cit. footnote 17, p. 25.

    25. Cf. FERNÁNDEZ ARROYO, DIEGO P., idem, p. 23.

    26. Cf. FERNÁNDEZ ARROYO, DIEGO P., idem, p. 124.

    27. Cf. SCOLES, EUGENE, F & HAY, PETER (1992) Conflict of Law, 2nd edition, St. Paul: Hornbook Series, West Publishing Co., p. 3.

    28. Cf. FRESNEDO DE AGUIRRE, CECILIA, op. cit. footnote 6, p. 257.

    29. Cf. FRESNEDO DE AGUIRRE, CECILIA, idem, p. 259.

    30. Cf. FRESNEDO DE AGUIRRE, CECILIA, idem, p. 301.

    31. Cf. FRESNEDO DE AGUIRRE, CECILIA, idem, p. 308.

    32. I.e. article 28 of the CISG.

    33. Cf. FRESNEDO DE AGUIRRE, CECILIA, idem, p. 303.

    34. Cf. CALVO CARAVACA, ALFONSO LUIS and CARRASCOSA GONZÁLEZ, JAVIER, op. cit. footnote 16, p. 53.

    35. Cf. FERNÁNDEZ ARROYO, DIEGO P., op. cit. footnote 17, p. 137.

    36. Cf. Restatement of the Law, 2nd, Conflicts of Law, Student Edition, adopted and promulgated by American Law Institute, Washington, U.S.A., section 6, May 23 1969, published by American Law Institute Publishers, 1971; see comment by SCOLES, EUGENE, F and HAY, PETER, op. cit. footnote 27, p. 34.

    37. Cf. RABEL, ERNST (1958), The conflict of Laws, second edition, Michigan: Michigan Legal Studies, p. 94.

    38. Cf. BRANDNER, GERT (1999), Admissibility of Analogy in Gap-filling under the CISG, University of Aberdeen, at <http://cisgw3.law.pace.edu/cisg/biblio/brandner.html> (19-03-04).

    39. Cf. CALVO CARAVACA, ALFONSO LUIS and CARRASCOSA GONZÁLEZ, JAVIER, op. cit. footnote 16, p. 54.

    40. Cf. FERNÁNDEZ ARROYO, DIEGO P., op.cit. footnote 17, pp. 128-129.

    41. Cf. FERNÁNDEZ ROZAS, JOSÉ CARLOS and SÁNCHEZ LORENZO, SIXTO (1999), Derecho internacional privado, second edition, Madrid: Civitas, 1999, p. 60.

    42. Cf. Argentine Supreme Court of Justice, "Recurso de hecho, Ekdmejián, Miguel Ángel c/ Sofovich, Gerardo y otros", 7/7/1992, published in El Derecho, Buenos Aires, Argentina, T 148, p. 338.

    43. Before 1992, the Argentine Supreme Court had not recognized the supremacy of international treaties with respect to domestic law, Cf. Argentine Supreme Court of Justice, "Martín y cía. c/ Administración General de Puertos", November 6, 1963, in El Derecho, Buenos Aires, Argentina, T. 7, p. 784.

    44. Signed by Argentina through Law No. 19,865.

    45. One version may be found at <http://www.upo.es/depa/webdpb/areas/internacional/doc/a3_1.doc>; "26. Pacta sunt servanda. Todo tratado en vigor obliga a las partes y debe ser cumplido por ellas de buena fe."; "27. El derecho interno y la observancia de los tratados.Una parte no podrá invocar las disposiciones de su derecho interno como justificación del incumplimiento de un tratado. Esta norma se entenderá sin perjuicio de lo dispuesto en el artículo 46." ["26. Pacta sunt servanda. Every treaty in force is binding upon the parties to it and must be performed by them in good faith; 27. Internal law and observance of treaties. A party may not invoke the provisions of its internal law as justification for its failure to perform a treaty. This rule is without prejudice to article 46.]

    46. Cf. FERNÁNDEZ ARROYO, DIEGO (2003) "Capítulo 2. Configuración sistemática del derecho internacional privado del MERCOSUR", in FERNANDEZ ARROYO, DIEGO P. (ed.), Derecho internacional privado de los estados del MERCOSUR, Buenos Aires: Zavalía, p. 95.

    47. Approved by Argentina through Law No. 22,921.

    48. Spanish, English and French versions may be found at <http://www.bcnbib.gov.ar/constitucion1.htm> (19-03-04); the original text reads: "Artículo 75.- Corresponde al Congreso: (...) 22. Aprobar o desechar tratados concluidos con las demás naciones y con las organizaciones internacionales y los concordatos con la Santa Sede. Los tratados y concordatos tienen jerarquía superior a las leyes." [Section 75.- Congress is empowered: (...) 22. To approve or reject treaties concluded with other nations and international organizations, and concordats with the Holy See. Treaties and concordats have a higher hierarchy than laws.]

    49. A version may be found at <http://www.congreso.es/funciones/constitucion/titulo_3_cap_3.htm>; "Artículo 95.1.La celebración de un tratado internacional que contenga estipulaciones contrarias a la Constitución exigirá la previa revisión constitucional. 2.El Gobierno o cualquiera de las Cámaras puede requerir al Tribunal Constitucional para que declare si existe o no esa contradicción." [Section 95. 1. The execution of an international treaty containing stipulations contrary to the Constitution shall require prior constitutional amendment; 2. The Government or either House may request the Constitutional Court to declare whether or not such a contradiction exists] "Artículo 96. Los tratados internacionales válidamente celebrados, una vez publicados oficialmente en España, formarán parte del ordenamiento interno. Sus disposiciones sólo podrán ser derogadas, modificadas o suspendidas en la forma prevista en los propios tratados o de acuerdo con las normas generales del Derecho internacional. [Section 96. 1. Validly executed international treaties, once officially published in Spain, shall be part of the internal legal system. Their provisions may only be repealed, amended or suspended in the manner provided for in the treaties themselves or in accordance with the general rules of international law.]

    50. Cf. The United States; U.S. Supreme Court, "Zapata Hermanos Sucesores SA v. Hearthside Baking Co. d/b/a Maurice Lenell Cooky Co., respondent", Amicus Curiae Brief, By Albert Kritzer, <http://cisg3.law.pace.edu/cisg/biblio/zamicus.html> (07-22-04).

    51. Cf. FERNÁNDEZ ROZAS, JOSÉ CARLOS and SÁNCHEZ LORENZO, SIXTO, op. cit, footnote 41, p. 63.

    52. Cf. BRANDNER, GERT, op. cit footnote 38, among many others.

    53. See infra chapter two.

    54. Argentina, Court of Appeals in Commercial matters in and for the city of Buenos Aires, Room E 4/24/2000, 24/ 4/2000 "Mayer, Alejandro c/ Onda Hofferle GMBH & Co. s/ordinario" in Revista El Derecho, Buenos Aires, 2001, t.194 pp. 495-499.

    55. Section 476 of the Argentine Commercial Code of 1862, as amended in 1889, provides as follows: "Los vicios o defectos que se atribuyen a las cosas vendidas, así como la diferencia en las calidades, serán siempre determinadas por peritos arbitradores, no mediando estipulación contraria". [Alleged vices or defects in goods sold, as well as differences in quality, shall be determined by expert arbitrators, unless otherwise provided.]

    56. Similarly, Cf. Argentina, Court of Appeals in Commercial matters, room E, July 21, 2002, "Cervecería y Maltería Paysandú S.A. c. Cervecería Argentina S.A.", published in La Ley, 18/06/03.

    57. Cf. NOODT TAQUELA, MARÍA BLANCA (2004), "Aplicación de la Convención de Viena de 1980 sobre los contratos de compraventa internacional de mercaderías en el Mercosur", unpublished, kindly provided by the author.

    58. Cf. Canada, Supreme Court of Justice, Ontario, "Diversitel Communications, Inc. v. Glacier Bay Inc.", case No. 03-CV-23776 SR; October 6 2003, at <http://www.unilex.info/case.cfm?pid=1&do=case&id=937&step=FullText> (19/03/04); goods: vacuum panel insulation.

    59. Cf. U.S. District Court, Western District of Michigan, Southern Division; "Shuttle Packaging Systems, L.L.C. v. Jacob Tsonakis, INA S.A and INA Plastics Corporation"; case No. 1:01-CV-691; December 17 2001, at <http://www.unilex.info/case.cfm?pid=1&do=case&id=732&step=FullText> (19/04/03); goods: thermoforming line equipment for the manufacture of plastic gardening pots together with the technology and assistance to use the equipment; Russian Federation, Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, case name not available, case No. 2/1995; May 11, 1995, at <http://cisgw3.law.pace.edu/cases/970511r1.html> (19/03/04); goods: not available English translation by Queen Mary Case Translation Programme.

    60. Cf. GOLDSCHMIDT, WERNER (1997), Derecho Internacional Privado. Derecho de la tolerancia, 8th edition, Buenos Aires: Depalma.

    61. Cf. MOENS, G.A., COHN, L., PEACOCK, D., en BONELL, M. J. (Editor), A New Approach to international Commercial Contracts, The UNIDROIT Principles of International Commercial Contracts, Académie Internationale de droit comparé, XVth International Congress of comparative Law, Bristol from July 26 to August 1, 1998, Australian local office, Kluwer Law International, 1998; SCHLECHTRIEM, PETER, "Conformity of the goods and standards established by public law. Treatment of foreign court decision as precedent. Medical Marketing International, Inc. v. Internazionale Medico Scientifica, S.r.l. U.S. District. Court, Eastern District of Louisiana, 17 May 1999" <http://cisgw3.law.pace.edu/cases/990517u1.html#cco> (03-19-04). This is an English adaptation of a commentary by Prof. Schlechtriem, published in Germany in Praxis des Internationalen Privat- und Verfahrensrechts (1999) 388-390; translated (into English) by André Corterier, July 1999.

    62. Cf NOODT TAQUELA, María Blanca "Compraventa internacional". Speech given at the XII Congreso Ordinario de la Asociación Argentina de Derecho Internacional. Salta, 1993, in Enciclopedia Jurídica Omeba. Apendix VII. Buenos Aires: Omeba, 1996, pp. 161-195. In equal sense, with other method, Cf. BOGGIANO, ANTONIO (1993) Derecho internacional privado, and (1991) 2nd edition, Buenos Aires: De Palma; 3rd Edition, Buenos Aires: Abeledo-Perrot, p. 316.

    63. In this connection, there was a political item in relation to the CISG issue. The representatives for the industrialized countries were in favor of the application of "commercial usages" as a legal source. As such usages and practices are created and developed in the big trading centres of industrialized countries, the representatives for the developing countries and socialist countries were not in favor of the unlimited application of usages and trade practices, qualifying such usages as an instrument of neo-colonialism. Cf. GARRO, ALEJANDRO MIGUEL y ZUPPI, ALBERTO LUIS, (1990) Compraventa internacional de mercaderías, Buenos Aires: Ediciones La Rocca, p. 61. Although the distinction drawn between socialist and capitalist countries is demodê, developing countries do not take part in the creation of international usages and customs but as there is a great belief in custom as binding (subjective element of custom), they are obliged to accept them, fact which does not diminishes the great practical and dynamic value of this source.

    64. I believe that the distinction between international "usages" and "customs" is necessary, see infra 2.1.1.1.-

    65. Cf. VÁZQUEZ LÉPINETTE, TOMÁS, op. cit. footnote 2, p. 75.

    66. Cf. ESPLUGUES MOTA, CARLOS (1994) "Contratación internacional" in ESPLUGUES MOTA, CARLOS (ed.) II. El contrato de compraventa internacional de mercancías. Valencia: Tirant lo Blanc p. 242.

    67. The author states another category, the usages practiced by the parties for a period of time during their commercial relation. In my opinion, this third category is not necessary because this is a case of implied intent of the parties to be bound, under article 18(1) of the CISG, these are acts which indicate consent.

    68. Cf. PERALES VISCASILLAS, MARÍA DEL PILAR (2001) "Capítulo III. Disposiciones generales" El contrato de compraventa internacional de mercaderías (Convención de Viena de 1980) <http://cisgw3.law.pace.edu/cisg/biblio/perales1-09.html> (03-19-04), Universidad Carlos III de Madrid.

    69. Cf. OVIEDO ALBÁN, JORGE, "Los usos y costumbres en el derecho privado contemporáneo" <http://cisgw3.law.pace.edu/cisg/biblio/oviedoalban.html> (03-19-04).

    70. Cf. CALVO CARAVACA, ALFONSO LUIS (1998) "Comentario al artículo 9, Capítulo III, Disposiciones Generales", in DIEZ-PICAZO, LUIS and PONCE DE LEÓN La compraventa internacional de mercaderías, comentario a la Convención de Viena Madrid: Civitas p. 140.

    71. Cf. AUDIT, BERNARD, op. cit. footnote 12, p. 56.

    72. Cf. HONNOLD, JOHN O., op. cit. footnote 11, p. 120 and 121.

    73. Cf. VÁZQUEZ LÉPINETTE, TOMÁS, op. cit. footnote 2, p.101 and GARRO, ALEJANDRO MIGUEL and ZUPPI, ALBERTO LUIS, op. cit. footnote 60, p. 63.

    74. Cf. SCHLECHTRIEM, PETER, except from Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods, "Usages (Article 9)", <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem-09.html> (19-03-04), Published by Manz, Vienna: 1986.

    75. Cf. ZIEGEL, JACOB S, op. cit. footnote 9.

    76. Cf. PILTZ, BURGHARD, op. cit. footnote 5, p. 50.

    77. Cf. LLAMBÍAS, JORGE JOAQUÍN (1995) Tratado de derecho civil, parte general, Buenos Aires: Abeledo-Perrot, T. I, p. 69 and Cf. DI PIETRO, ALFREDO and LAPIEZA ELLI, ÁNGEL ENRIQUE (1999) Manual de derecho romano, fourth edition, re printed, Buenos Aires: Depalma, p. 62.

    78. See infra 2.2.-.

    79. Cf. CALVO CARAVACA, ALFONSO LUIS, op. cit. footnote 70, p. 148 and Cf. NOODT TAQUELA, MARÍA BLANCA, op. cit. footnote 62, p. 162.

    80. Cf. DI PIETRO, ALFREDO y LAPIEZA ELLI, ÁNGEL ENRIQUE, op. cit. footnote 77, p. 62.

    81. Cf. VELEZ SARFIELD, DALMACIO, in 1865 he included in the note to Section 17 of the civil code this concepts related to the Roman Law: LL, 3rd and 11, Tit. 2, book. 3, Ninth Collection. Which derogates Roman Laws, and the 4th and 6th, Tit. 2, Part. 1st.

    82. Cf. SCHLECHTRIEM, PETER, op. cit. footnote 79.

    83. Cf. AUDIT, BERNARD, op. cit. footnote 12, p. 61.

    84. In this sense, legal authors agree, see VÁZQUEZ LÉPINETTE, TOMÁS et al, op. cit. footnote 2, p. 41.

    85. Cf. BRANDNER, GERT, op. cit. footnote 38.

    86. One version can be found in <www.upo.es/depa/webdpb/areas/internacional/doc/a3_1.doc>; "31. General rules for interpretation. 1. A treaty shall be interpreted in good faith according to the usual meaning given to the terms of a treaty in context taking into account its purpose. 2. For the purposes of the interpretation of a treaty, the context shall include, apart from the text, preamble and annexes included: a) the agreements related to the treaty which has been made by the parties in contemplation of the treaty; b) the documents executed by one or more parties in contemplation of the execution of the treaty and accepted by the others as related to the treaty; 3.Together with the context, it must be taken into account; a) any subsequent agreement between the parties related to the interpretation of the treaty or the application of its provisions; b) any subsequent conduct under the treaty which shows the agreement of the parties on the interpretation of the treaty; c) any international law applicable to the relation of the parties. 4. a term shall have a special meaning only if there if poof that it was the intention of the parties."; "32. Supplementary interpretation tools. The supplementary interpretation tools may be resorted, especially the preparatory works for the treaty and the circumstances in which it was executed, in order to confirm the sense resulting from the application of article 31, or to determine its sense when the interpretation given in article 31: a) makes it sense ambiguous or obscure; or b) leads to an absurd and incoherent result."

    87. Referred to by BRANDNER, GERT, op. cit. footnote 38, MANN, F. A., "The Interpretation of Uniform Statutes", 62 Law Quarterly Review (1946) 279-291; original not available.

    88. This should not be admitted as is against article 7(1) of the CISG which provides for the uniformity in its interpretation.

    89. Cf. BRANDNER, GERT, idem. Articles 31 and 32 of the Vienna Convention, 1969 on the Law of Treaties are applicable to every treaty, included the CISG, unless the international law had its own rules of interpretation, as in the case of (article 7 of the CISG), Therefore such articles are not applicable to the provisions of chapter four of the CISG which contains public international laws and laws governing relationships between Contracting States.

    90. Cf. VÁZQUEZ LÉPINETTE, TOMÁS, op. cit. footnote 2 , p. 75.

    91. Cf. VÁZQUEZ LÉPINETTE, TOMÁS, idem, p. 42.

    92. I.e., Argentina, National Court of Appeals in Comercial matters, room C, "Bedial S.A. c/ Paul Muggenburg and Co GMBH", October 31, 1995; published in <http://www.uc3m.es/uc3m/dpto/PR/dppr03/cisg/sargen9.htm> (19/03/04), Revista La Ley, Buenos Aires, t.1996-C, pp. 156-160 and Revista El Derecho, Buenos Aires, 10/21/96 edition, commented by Carolina D. Iud "A propósito de la aplicación de la Convención de las Naciones Unidas sobre los Contratos de Compraventa Internacional de Mercaderías por la Justicia Comercial Argentina". CLOUT 191.

    93. Especially in the application of article 79 of the CISG, which is excluded and treated as a question of force majeure of the Argentine law. This extremely interesting issue, is outside the scope of this work.

    94. "Article 28. If, in accordance with the provisions of this Convention, one party is entitled to require performance of any obligation by the other party, a court is not bound to enter a judgement for specific performance unless the court would do so under its own law in respect of similar contracts of sale not governed by this Convention."

    95. Cf. GARRO, ALEJANDRO MIGUEL y ZUPPI, ALBERTO LUIS, op. cit. footnote 63, p. 56.

    96. The order in which they are listed is of no hierarchal importance. A wide criterion has been applied taken as general principles the ones stated by different authors, without excluding any of them and only pointing out when the authors make reference to the same principle with a different name.

    97. It is the same concept but another author refers to it with a different name, Cf. AUDIT, BERNARD, op. cit. footnote 12, p. 63.

    98. It is the same concept but another author refers to it differently, Cf. AUDIT, BERNARD, idem, p. 63.

    99. For the principles listed from (a) to (g) Cf. CALVO CARAVACA, ALFONSO LUIS, "Comentario al artículo 7", Capítulo II, disposiciones generales, in DIEZ-PICAZO, LUIS Y PONCE DE LEÓN (1998) La compraventa internacional de mercaderías, comentario a la Convención de Viena, Madrid: Editorial Civitas SA, p. 111.

    100. Cf. AUDIT, BERNARD, op. cit. footnote 12, p. 63.

    101. VÁZQUEZ LÉPINETTE, TOMÁS, op. cit. footnote 2, p. 117.

    102. Or better, the necessity to promote it, Cf. article 7 of the CISG.

    103. Principles enumerated in j, k and l are from AUDIT BERNARD, op. cit. footnote 12, p. 63.

    104. Cf. BRANDNER, GERT, op. cit. footnote 38.

    105. Cf. BRANDNER, GERT, idem.

    106. Gesetzesanalogie o Einzelanalogie.

    107. Rechtsanalogie o Gesamtanalogie.

    108. Gesetzesanalogie o Einzelanalogie.

    109. Rechtsanalogie o Gesamtanalogie.

    110. Cfr NOODT TAQUELA, MARÍA BLANCA, "Contratos de compraventa: Convención (ONU) sobre los contratos de compraventa internacional de mercaderías (Viena, 1980) y otros textos", "Capítulo 26. Modalidades contractuales específicas", en FERNANDEZ ARROYO, DIEGO P. (ed.), (2003) Derecho internacional privado de los estados del MERCOSUR, Buenos Aires: Zavalía, p. 1053.

    111a. Cf. BOGGIANO, ANTONIO, op. cit. footnote 19, p. 585.

    111b. See supra 1.3.1.2 (c).

    112. Cf. BOGGIANO, ANTONIO, idem, p. 590.

    113. It constitutes a reserve to the application of the recognized law by a conflict rule. The principles of the domestic law act as a "saving clause" against the legal foreign solutions (Cf. BOGGIANO, ANTONIO, idem, p. 219), functioning as a negative characteristic of the legal consequence of the conflict rule (Cf. GOLDSCHMIDT, WERNER, op. cit. footnote 60, pp. 147 and et. seq). International Public Policy is a limit for the application of foreign law and the contractual freedom. International Public Policy is not related to the international private policy, the former has a higher degree of impermeability than the latter, i.e., is more restrained. The Public International Policy is an exception and as such, it must be interpreted in a restringed way. (Cf. GOLDSCHMIDT, idem, p. 163).

    114. Except as stated in article 12 of the CISG.

    115. Cf. BOGGIANO, ANTONIO, op. cit. footnote 19, p. 590.

    116. I.e., a clause stating: "Article 25 of the CISG shall not be applicable to this contract".

    117. I.e., a clause stating: "late delivery of goods shall be considered a fundamental breach".

    118. Cf. BOGGIANO, ANTONIO, idem, p. 590.

    119. I.e., a rule providing for: "any breach other than insignificant breach shall be a fundamental breach according to article 25 of the CISG".

    120. Cf. BOGGIANO, ANTONIO, idem, p. 590; Cf. TAKAHASHI, KOJI, "Right to terminate (avoid) international sales of commodities",. Journal of Business Law, 2003 pp 102-130; the author would like to express his gratitude to KOJI TAKAHASHI because of his disinterested aid. This author thinks that even if a clause stated in a contract to be a "condition" whether it should de regarded as a matter of construction of the contract, because where the parties did not qualify the term themselves and there is no relevant statutory provision there is no express contractual freedom, so there is not qualification about the breach.

    121. Cf. DE LA IGLESIA MONJE, MARÍA ISABEL, (2002) Principio de conformidad del contrato en la compraventa internacional de mercado, essays, Madrid: Centro de Estudios Registrales, 2002, p. 397.

    122. I.e., a clause stating: "the term for delivery shall be essential".

    123. Cf. DE LA IGLESIA MONJE, MARÍA ISABEL, idem, p. 34.

    124. Cf. DE LA IGLESIA MONJE, MARÍA ISABEL, idem , p. 36.

    125. Cf. Germany, Oberlandesgericht Düsseldorf [Provincial Appellate Court]; case no. 6 U 87/96; April 24, 1997; <http://cisgw3.law.pace.edu/cases/970424g1.html> (03/19/04); goods: shoes; translation into English, Queen Mary Case Translation Programme, translated by Julian Waiblinger, CLOUT 275; Germany, Oberlandesgericht [Provincial Appellate Court] Hamburg; case n 1 U 167/95; February 28, 1997; <http://cisgw3.law.pace.edu/cases/970228g1.html> (03/19/04); goods, Iron molybdenum; abstract CLOUT 277; Russian Federation; Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry; case n 238/1998; June 7, 1999; <http://cisgw3.law.pace.edu/cases/990607r1.html> (19/03/04); goods: not available; translation into English, Queen Mary Case Translation Programme, translated by Gilyana Bovaeva, translation edited by Mykhaylo Danylko; CLOUT 473.

    126. Cf. GRAFFI, LEONARDO, "Case Law on the Concept of "Fundamental Breach" in the Vienna Sales Convention", <http://cisgw3.law.pace.edu/cisg/biblio/graffi.html> (19-03-04), Fellow Researcher, Verona University School of Law, 2003.

    127. See infra chapter five.

    128. And one can even say that it is the latest fashion in CISG's scholarly writings

    129. Cf. KOCH. ROBERT, "The Concept of Fundamental Breach of Contract under the United Nations Convention on Contracts for the international Sale of Goods (CISG)", 1998, work done in the McGill University Faculty of Graduate Studies and Research in partial fulfilment of the requirements of the degree Master of Laws, <http://cisgw3.law.pace.edu/cisg/biblio/koch.html> (03-19-04).

    130. Principles of European contract law, revised in 1998, a version of them can be found in <http://www.jus.uio.no/lm/eu.contract.principles.parts.1.to.3.2002/doc>.

    131. Cf. KOCH. ROBERT, idem.

    132. Cf. MOENS, G.A., COHN, L., PEACOCK, D., op. cit. footnote 61, p. 44.

    133. Alius, -a, -ud : latin term meaning another, any other, someone else, something else; Cf. <http://www.arts.cuhk.edu.hk/Lexis/Latin>.

    134. Cf. WERRO, F., BELSER, E.M., en BONELL, M. J. (Editor), A new Aproach to international Commercial Contracts, The UNIDROIT priciples of international commercial contracts, Académie Internationale de droit comparé XVth International Congress of comparative Law, Bristol from July 26, to August 1, 1998, local office in Switzerland, Kluwer Law International, 1998, p. 359.

    135. This last consideration was criticized in the preceding section and it shows the confusion that the simultaneous application of two rules can cause.

    136. See infra 4.2.1.1.2.-.

    137. I do not ignore the fifth paragraph of the preamble, but the word "can" in a text of private origin must be understood, related to a convention of public origin, as an option under the substantive contractual freedom.

    138. See infra 2.2.1.- (b) and 2.1.1.1.-.

    139. See infra Chapter Five.

    140. Cf. CHULIÁ, FRANCISCO VICENT, (2002) Prologe, Valencia, January 3, 2000, in VÁZQUEZ LÉPINETTE, TOMÁS, La compraventa internacional de mercaderías. Una Visión Jurisprudencial, Navarra: Aranzadi SA, 2000.

    141. KOCH. ROBERT, op. cit. footnote 129; FERRARI, FRANCO, International Sales Law and the Inevitability of Forum Shopping: A Comment on Tribunale di Rimini, 26 November 2002, Reproduced with permission of 23 Journal of Law and Commerce (2004) 169-192, <http://cisgw3.law.pace.edu/cisg/biblio/ferrari8.html> (07-20-04); TEILING, ANNABEL, Chicago Prime Packers v. Northam Food Trading [21 May 2004] U.S. District Court, Northern Dist. Illinois, Eastern Division, July 2004, <http://cisgw3.law.pace.edu/cisg/biblio/teiling.html> (07-20-04).

    142. Cf. United States of America; U.S. District Court, Eastern District of Louisiana; "Medical Marketing International, Inc. v. Internazionale Medico Scientifica, S.r.l."; case No. 99-0380 Division "K" (1); May 17, 1999; <http://cisgw3.law.pace.edu/cases/990517u1.html>; goods: medical equipment, mammography units. CLOUT 418.

    143. Cf. Canada, Supreme Court of Justice, Ontario, "Diversitel Communications, Inc. v. Glacier Bay Inc.", case No. 03-CV-23776 SR; October 6, 2003, <http://www.unilex.info/case.cfm?pid=1&do=case&id=937&step=FullText> (03/19/04); goods: vacuum panel insulation.

    144. Cf. Italy, Tribunale [District Court] di Rimini, "Al Palazzo S.r.l v. Bernardaud di Limoges S.A.", case n 3095, 26 November 2002, <http://cisgw3.law.pace.edu/cases/021126i3.html> (07-20-04); Italy, Tribunale [District Court] di Vigevano, "Rheinland Versicherungen v. S.r.l. Atlarex and Allianz Subalpina S.p.A..", case n 405, 12 July 2000, <http://cisgw3.law.pace.edu/cases/000712i3.html> (07-20-04)

    145. Cf. SCHLECHTRIEM, PETER, op. cit. footnote 61.

    146. See analysis supra 2.1.-.

    147. Cf. CHULIÁ, FRANCISCO VICENT, op. cit. footnote 141.

    148. Cf. SCHLECHTRIEM, PETER, op. cit. footnote 61.

    149. I want to put forward the question that this last source would state a tautology (or, better, a "cinta de Moebius") as case law is the one deciding if case law is binding or not.

    150. Cf. The United States; U.S. Supreme Court, "Zapata Hermanos Sucesores SA v. Hearthside Baking Co. d/b/a Maurice Lenell Cooky Co., respondent", Amicus Curiae Brief, by Albert Kritzer, <http://cisg3.law.pace.edu/cisg/biblio/zamicus.html> (07-22-04).

    151. Cf. SCHLECHTRIEM, PETER, op. cit. footnote 61.

    152. In that connection, its publication in the most known internet links is a parameter to be taken into account.

    153. A good criterion to be considered is that it shall be shared by countries from the Common Law System and from the Continental System of law.

    154. Gesetzesanalogie o Einzelanalogie.

    155. See infra 4.1.2.-, 4.2.3.- and 4.2.3.4.-

    156. Cf. TAKAHASHI, KOJI, op. cit. footnote 120 This author uses the word "unmeritorious" but the meaning an intention is the same that I use in this work, a breach may be considered to be "unmeritorious" if the harm deriving from it is insignificant.

    157. Cf. article 7(1) of the CISG.

    158. Cf. TAKAHASHI, KOJI, op. cit. footnote 120

    159. Id.

    160. Cf. United Kindom "Jydsk Andels Foderstofforretning v. Grands Moulins de Paris", 1931, 39 Ll.L.Rep. 223; the contract called for the delivery of 400 tons of bran with the seller's option to load 10 per cent more or less. The buyer rejected the tender of a weight certificate showing gross weight of 441.147 tons but the court held that the excess of weight was so negligible that it did not entitle the buyer to terminate the contract.

    161. Cf. Art. 39(b) UCP 500, International Chamber of Commerce (ICC), Uniform Custums and Practice for Docummentary Credits, Brochure 500.

    162. Modified according to the especial circumstances described in articles 75, 76 and 77 of the CISG.

    163. Cf. HONNOLD, JOHN O., op. cit. footnote 11, p. 278.

    164. With the limitations of the lex fori when the CISG requires specific performance under article 28 of the CISG. Cf. HONNOLD, JOHN O., p. 280.

    165. The term "reasonable" means that sometimes it is easier and more effective that the repair be made by the buyer at the seller's expense. Cf. HONNOLD, JOHN O., idem, p. 285.

    166. It must be remembered that, under articles 48 and 63(2) of the CISG, the buyer cannot refuse to accept the seller's offer to remedy any failure to perform.

    167. Fundamental breach is a statutory type, ergo, any remedy for simple breach may apply. Naturally, the one who can do the more can do the less.

    168. The delivery of substitute goods cannot be required if there is no fundamental breach, cf. AUDIT, BERNARD, op. cit .footnote 12, p. 120.

    169. In the case of fundamental breach, the repair is intrinsically impossible. Cf. HONNOLD, JOHN O., op.cit. footnote 11, p. 295 or it is not possible because the fundamental breach automatically makes the contract avoided, cf. DE LA IGLESIA MONJE, MARÍA ISABEL, op.cit footnote 121, p. 400.

    170. In the same way article 51(2) of the CISG applies, which is just a case of application of article 49(1)(a) of the CISG.

    171. Cf. Official Records, Records of the Conference and Summary Records of the Plenary Meeting and the Meetings of the Main Committees, "United Nations Convention on Contracts for the International Sale of Goods", United Nations, New York, 1981, Vienna March 10 - April 11 (Spanish version), page 4, "Commentary on the Draft Convention on Contracts for the International
    Sale of Goods" ,
    prepared by the Secretariat (Document A/CONF.97/5).

    172. Cf. AUDIT, BERNARD, op.cit. footnote 12, p. 142, and CABANILLAS SÁNCHEZ, ANTONIO (1998) "Comentario al artículo 25", Chapter one, general provisions, in DIEZ-PICAZO, LUIS and PONCE DE LEÒN "La compraventa internacional de mercaderías, comentario a la Convención de Viena", Madrid, Civitas SA , p. 25.

    173. Cf. AUDIT, BERNARD, op. cit footnote 12, p. 149 and 157.

    174. See infra 4.2.1.1.- and 4.2.1.2.-.

    175. Cf. AUDIT, BERNARD, idem, p. 142.

    176. Section 3.1 (c).

    177. I.e., require delivery of substitute goods (under article 46(2) of the CISG).

    178. See infra 4.2.5.1.-, this statement does not discard the great importance of the function of the facts of the case, as explained in 4.2.5.2.-.

    179. Cf. PILTZ, BURGHARD, op. cit. footnote 5, p. 93.

    180. Cf. KOCH. ROBERT, op. cit. footnote 129.

    181. See infra 4.2.1.1.- and 4.2.1.2.-.

    182. Cf. GRAFFI, LEONARDO, op. cit. footnote 126.

    183. Cf. DE LA IGLESIA MONJE, MARÍA ISABEL, op. cit. footnote 121, p. 397.

    184. Cf. DE LA IGLESIA MONJE, MARÍA ISABEL, idem, p. 34.

    185. Cf. DE LA IGLESIA MONJE, MARÍA ISABEL, idem, p. 36.

    186. It applies to cases in which the parties have excluded the whole CISG. If they have only excluded article 25, concepts on interpretation remain, but the hypothesis described in chapter four will no longer be useful.

    187. Cf. Alvarez, R.J., "Compraventa internacional y contrato de transporte: su conexión. Introducción", Revista de Estudios Marítimos, Instituto de Estudios del Mar, Buenos Aires, Volume 51, pp. 31-38 and ZUPPI, ALBERTO L., (1997) "La interpretación de la Convención de Viena de 1980 (CISG)", La Ley argentina, Volume 1997-F, pp. 1291-1301.

    188. See infra point 4.2.1.1.1.1.-.

    189. Cf. BOGGIANO, ANTONIO, (1995), Contratos internacionales, 2nd edition, Buenos Aires, Depalma, ed. Billingual Spanish-English, p. 105.

    190. Cf. Official Records, op. cit. footnote 171, pages 318 to 324, Summarized minutes - First commission, Session 12., 3/19/80, 1000 hs, page 323, point 72.

    191. Cf. PERALES VISCASILLAS, M DEL PILAR, (2001) El contrato de compraventa internacional de mercancias (Convención de Viena de 1980); "Capitulo VI. derechos y acciones en caso de incumplimiento del contrato" <http://cisgw3.law.pace.edu/cisg/biblio/perales1.html> (04-19-03), Universidad Carlos III de Madrid.

    192. See infra 5.2.2.2.- , cf. Germany, Oberlandesgericht [Appellate Court] Oldenburg; No. 12 U 54/98; September 22, 1998; <http://cisgw3.law.pace.edu/cases/980922g1.html> (03/19/04); goods: raw salmon; English translation, Queen Mary Case Translation Programme, translated by Ruth M. Janal and edited by Camilla Baasch Andersen.

    193. Cf. VÁZQUEZ LÉPINETTE, TOMÁS , op. cit. footnote 2, p. 162.

    194. Cf. KOCH. ROBERT, op. cit. footnote 129.

    195. Cf. Germany, Bundesgerichtshof [Federal Supreme Court]; case no. VIII ZR 51/95; April 3, 1996; <http://cisgw3.law.pace.edu/cases/960403g1.html> (03/19/04); goods: cobalt sulphate; translation into English, Queen Mary Case Translation Programme, translated by Peter Feuerstein and edited by Ruth M. Janal.

    196. Cf. France, Cour d'appel [Court of Appeal] Grenoble; "SARL Ego Fruits v. Sté La Verja Begasti"; case no. RG 98/0270 (appeal of decision RG 97008146); February 4, 1999; <http://cisgw3.law.pace.edu/cases/990204f1.html> (03/19/04); translated into English, Queen Mary Case Translation Programme, translated by Gary F. Bell, CLOUT 243.

    197. Cf. AUDIT, BERNARD, op. cit. footnote 12, p. 197.

    198. Cf. AUDIT, BERNARD, idem, p. 209.

    199. Cf. AUDIT, BERNARD, idem, p. 142.

    200. See section 3.2.1.1.

    201. See the analysis of the subject made infra 4.2.1.2.1.-.

    202. Cf. AUDIT, BERNARD, idem, pp. 149, 197 and 209.

    203. Cf. AUDIT, BERNARD, idem, pp. 157 and 185.

    204. In the same sense, but because of different reasons, see VÁZQUEZ LÉPINETTE, TOMÁS, op. cit. footnote 2, p. 156.

    205. GARRO, ALEJANDRO MIGUEL and ZUPPI, ALBERTO LUIS, op. cit. Footnote 63, p. 135.

    206. GARRO, ALEJANDRO MIGUEL and ZUPPI, ALBERTO LUIS, idem, p. 204.

    207. Not in the sense of article 1(3) of the CISG (whose only purpose is to exclude the controversies on commerciality of the acts under continental law), but in the sense of article 2(a) of the CISG.

    208. VÁZQUEZ LÉPINETTE, TOMÁS, op. cit. footnote 2, p. 162.

    209. See infra 4.2.1.2.-.

    210. Cf. ESPLUGUES MOTA, op. cit. footnote 66, p. 279.

    211. KOCH. ROBERT, op. cit. footnote 129.

    212. Remember that this author does not accept the concept of economic detriment as possible within the CISG.

    213. Cf. EL-SAGHIR, HOSSAM, "Significance of a breach being fundamental", <http://cisgw3.law.pace.edu/cisg/text/peclcomp25.html#er> (03-19-04), Menoufia University Faculty of Law, Egypt, July 2000.

    214. Cf. Official Records, op. cit. footnote 171, pages 15 to 71, "Commentary on the Draft Convention on Contracts for the International Sale of Goods", prepared by the Secretariat, Document A/CONF.97/5,
    page 28.

    215. This means those that do not flow directly and immediately from the act of the party, but only from some of the consequences or results of such act, Cf. Blacks Law Dictionary, 6Th ed., St. Paul. Minnesota, Ed. West Publishers Co., 1990, p. 392. "Consecuencias mediatas" is the equivalent, generally found in continental systems, i.e. section 521 of the Argentine Civil Code.

    216. Cf. SCHLECHTRIEM, PETER, (1986) "Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods", Vienna, Manz: <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem-25.html>.

    217. Cf. Italy, Pretura circondariale [First Instance] di Parma, sez. di Fidenza; "Foliopack AG v. Daniplast S.p.A."; case no. 77/89; November 24, 1999; http://cisgw3.law.pace.edu/cases/891124i3.html> (03/18/04); goods: knapsacks, bags and wallets; translation into English, Queen Mary Case Translation Programme, translated by Hanz G. Chiappetta and edited by Angela Maria Romito. CLOUT 90.

    218. Cf. Germany, Oberlandesgericht [Provincial Court of Appeal] Hamburg; case no. 1 U 167/95; February 28, 1997; <http://cisgw3.law.pace.edu/cases/970228g1.html> (03/19/04); goods: iron molybdenum; abstract CLOUT 277.

    219. Cost Insurance Freight, place of delivery when passing the ship's rail in the port of shipment cf. INCOTERMS 2000, International Commerce Terms, International Commerce Chamber.

    220. Germany, Oberlandesgericht [Provincial Court of Appeals] Düsseldorf; case no. 6 U 87/96; April 24, 1997; <http://cisgw3.law.pace.edu/cases/970424g1.html> (03/19/04); goods: shoes; Translation into English, Queen Mary Case Translation Programme, translated by Julian Waiblinger, CLOUT 275.

    221. Cf. AUDIT, BERNARD, op. cit. footnote 12, p. 185.

    222. It is necessary to remember that to this author the fundamental breach is established whenever the contract can be declared avoided (fallacy of affirming the consequent), which does not make the observation of this case invalid.

    223. For a list of all cases analyzed, see CASE LAW ADDENDUM.

    224. This is an approximate criterion depending on the circumstances of the case, and taken from the cases analyzed. See infra 5.2.4.9.

    225. Article 25 of the CISG.

    226. "Article 25. A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result."

    227. "Une contravention au contrat commise par l'une des parties est essentielle lorsqu'elle cause à l'autre partie un préjudice tel qu'elle la prive substantiellement de ce que celle-ci était en droit d'attendre du contrat, à moins que la partie en défaut n'ait pas prévu un tel résultat qu'une personne raisonnable de même qualité placée dans la même situation ne l'aurait pas prévu non plus."

    228. The same is true about the French version.

    229. GARRO, ALEJANDRO MIGUEL y ZUPPI, ALBERTO LUIS, idem, p. 134.

    230. Cf. VÁZQUEZ LÉPINETTE, TOMÁS, op. cit. footnote 2, p. 41.

    231. This is the criterion discussed at the beginning of this thesis, cf. VÁZQUEZ LÉPINETTE, TOMÁS, idem, p. 44.

    232. KOCH. ROBERT, op. cit. footnote 129.

    233. KOCH. ROBERT, idem.

    234. ALVAREZ, R.J., op. cit. footnote 187.

    235. Cf. Germany, Bundesgerichtshof [Federal Supreme Court]; case no. VIII ZR 51/95; April 3, 1996, at <http://cisgw3.law.pace.edu/cases/960403g1.html> (19/03/04); goods: cobalt sulphate; English translation by Queen Mary Case Translation Programme, translated by Peter Feuerstein and edited by Ruth M.Janal; analyzed infra in 5.2.4.5.3.- and 5.2.5.3.-

    236. Cf. AUDIT, BERNARD, op. cit. footnote 12, p. 142.

    237. Article 7.1. of the CISG.

    238. However, the doctrine that the article of the CISG is a tautology has solid grounds, and the wording could have been clearer.

    239. Which term does not differ much from"substantially".

    240. Longman Dictionary of contemporary English (1992) Harlow: Longman, 3rd edition.

    241. "Que constituye la naturaleza de las cosas, sustancial, principal, notable." Cf. Diccionario de la Lengua Española (Spanish), by the Real Academia Española (1992), Madrid: Espasa Calpe, 21st edition.

    242. Longman Dictionary of contemporary English, idem.

    243. "Daño o menoscabo material o moral, ganancia lícita que deja de obtenerse, o deméritos o gastos que se ocasionan por acto u omisión de otro" Cf. Diccionario de la Lengua Española (Spanish), by the Real Academia Española (1992), Madrid: Espasa Calpe, 21st edition.

    244. "en sustancia: cualquier cosa con la que otra se aumenta y nutre y sin la cual se acaba. Ser, esencia y naturaleza de las cosas." Diccionario de la Lengua Española, idem.

    245. Here the idea of importance with respect to the party's economic interest becomes evident.

    246. Note the idea of materiality, economic interest, money.

    247. What is a party entitled to expect under a contract? Qué es lo que un contratante tiene derecho a esperar de un contrato? At first, one may think that it is the performance, the subject-matter of the contract, the consideration. However, a closer look will show that it is the party's economic interest in the performance and its consequences, whether beneficial or prejudicial. The former is expected to occur naturally; the latter are expected not to happen at all.

    248. "El incumplimiento del contrato por una de las partes será [importante o principal] cuando cause a la otra parte un [daño o menoscabo material] tal que la prive [de lo que se aumenta y nutre y sin lo cual se acaba] lo que tenía derecho a esperar en virtud del contrato."

    249. Subject to the exclusion of article 1(3) of the CISG (whose sole purpose is to preclude controversies on the commercial character of acts in continental law), regard is to be had to the provision in article 2(a) of the CISG.

    250. Cf. article 74 of the CISG.

    251. Cf. CABANILLAS SÁNCHEZ, ANTONIO, op. cit. footnote172, p. 212.

    252. KOCH. ROBERT, op. cit. footnote 129

    253. See section 4.2.1.1.1.1.-

    254. Cf. CABANILLAS SÁNCHEZ, ANTONIO, op. cit. footnote 172, p. 212.

    255. One may ask how the "root of the contract" is characterized.

    256. Cf. CABANILLAS SÁNCHEZ, ANTONIO, idem, p. 213.

    257. PERALES VISCASILLAS, M DEL PILAR, op. cit. footnote 191.

    258. Cf. United Kingdom; House of Lords; "Fothergill v Monarch Airlines Ltd", [1981] AC 251; [1980] 2 All ER 696; [1980] 3 WLR 209; [1980] 2 Lloyd's Rep 295, (33 ICLQ 797); July 10 1980; at <http://www.jus.uio.no/lm/england.fothergill.v.monarch.airlines.hl.1980/doc> (19/03/04).

    259. "The language of an international convention has not been chosen by an English parlamentary draftsman. It is neither couched in the conventional English legislative idiom nor designed to be construed exclusively by English judges. It is addressed to a much wider and more varied judicial audience than is an Act of Parliament that deals with purely domestic law. It should be interpreted, as Lord Willbeforce put it in James Buchanan & Co, Ltd. V. Babco Forwarding & Shipping (UK) Ltd. [1978] AC 141, 152, "unconstrained by technical rules of English law, or by English legal precedent, but on broad principies of general acceptation" (...) to deny them this assistance would be a damaging blow to the unification of the rules which was the object of signing and then enacting the Convention. Moreover, the ability of our judges to fulfil the purpose of the enactment would be restricted, and the persuasive authority of their judgement in the jurisdictions of the other contracting states would be diminished".

    260. VÁZQUEZ LÉPINETTE, TOMÁS, op. cit. footnote 2, p.45

    261. KOCH. ROBERT, op. cit. footnote 129.

    262. As discussed supra, not even characterization through lex fori is appropriate in Common Law courts; see Lord Diplock's judgment in footnote 259.

    263. Official Records, op. cit. footnote 171.

    264. Official Records, idem, p. 4, "Historical Introduction to the draft Convention on Contracts for the International Sale of Goods, prepared by the Secretariat" (Document A/CONF.97/5).

    265. Uniform Law on the International Sale of Goods, 1964, annexed to the Hague Convention on International Sale of Goods, effective as from August 18 1972 (not signed by Argentina).

    266. Official Records, idem, pp. 15-71, "Commentaries on the draft Convention on Contracts for the International Sale of Goods, prepared by the Secretariat", Document A/CONF.97/5.

    267. Official Records, idem, pp. 15-71, "Commentaries on the draft Convention on Contracts for the International Sale of Goods, prepared by the Secretariat", Document A/CONF.97/5, p. 28.

    268. Emphasis added.

    269. 6 See supra 4.2.1.1.-.

    270. Cf. PILTZ, BURGHARD, op. cit. footnote 5, p. 91 and GRAFFI, LEONARDO, op. cit. footnote 126.

    271. Cf. Official Records, op. cit. footnote 171, pp. 318-324, Summary Records -- First Commission, 12th Meeting, 3/19/80, 10 a.m., p. 318.

    272. Cf. Official Records, idem, pp. 318-324, Summary Proceedings - First Commission, 12th Meeting, 3/19/80, 10 a.m., p. 318.

    273. Cf. Official Records, idem, pp. 318-324, Summary Proceedings - First Commission, 12th Meeting, 3/19/80, 10 a.m., p. 324.

    274. Cf. Official Records, idem, pp. 324-330, Summary Proceedings - First Commission, 13th Meeting, 3/19/80, 3 p.m.

    275. Cf. Official Records, idem, pp. 353-358, Summary Proceedings - First Commission, 18th Meeting, 3/21/80, 3 p.m.

    276. Cf. Official Records, idem, pp. 353-358, Summary Proceedings - First Commission, 18th Meeting, 3/21/80, 3 p.m., p. 353.

    277. Mr. GHESTIN, France; LEBEDEV, USSR; LI CHIH-MIN, China; BOGGIANO, Argentina, who argues that the text can be improved, but the criterion is correct.

    278. Cf. Official Records, idem, pp. 353-358, Summary Proceedings - First Commission, 18th Meeting, 21/3/80, 15:00 hs, p. 355.

    279. KOCH. ROBERT, op. cit. footnote 129.

    280. See infra 4.2.1.1.1.2.-.

    281. See supra 3.4.1.-, 3.4.2.- and 3.4.5.-.

    282. As defined in article 2(1) of the CISG.

    283. Cf. WARAT, L.A. and ENTELMAN, R., (1970) Derecho al Derecho, Buenos Aires: Abeledo-Perrot, pp. 84-85.

    284. Cf. KOCH. ROBERT, op. cit. footnote 129.

    285. See infra 3.2.1.3.-(a).

    286. Cf. article 5 of the CISG.

    287. See supra 2.3.-.

    288. Cf. Germany, Oberlandesgericht [Provincial Court of Appeal] Düsseldorf; case no. 6 U 87/96; April 24, 1997; <http://cisgw3.law.pace.edu/cases/970424g1.html> (03/19/80); goods: shoes; English translation, Queen Mary Case Translation Programme, by Julian Waiblinger, CLOUT 275.

    289. Cf. Switzerland, Bundesgericht [Supreme Court]; "FCF S.A. v. Adriafil Commerciale S.R.L."; case no. 4C.105/2000; September 15, 2000; at <http://cisgw3.law.pace.edu/cases/000915s2.html> (03/19/04); goods: Egyptian cotton; English translation, Queen Mary Case Translation Programme.

    290. As defined in article 2(a) of the CISG.

    291. The Spanish version reads, "Artículo 74. La indemnización de daños y perjuicios por el incumplimiento del contrato en que haya incurrido una de las partes comprenderá el valor de la pérdida sufrida y el de la ganancia dejada de obtener por la otra parte como consecuencia del incumplimiento. Esa indemnización no podrá exceder de la pérdida que la parte que haya incurrido en incumplimiento hubiera previsto o debiera haber previsto en el momento de la celebración del contrato, tomando en consideración los hechos de que tuvo o debió haber tenido conocimiento en ese momento, como consecuencia posible del incumplimiento del contrato."

    The English version reads, "Article 74. Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach. Such damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract, in the light of the facts and matters of which he then knew or ought to have known, as a possible consequence of the breach of contract."

    The French version reads, "Article 74. Les dommages- intérêts pour une contravention au contrat commise par une partie sont égaux à la perte subie et au gain manqué par l'autre partie par suite de la contravention. Ces dommages- intérêts ne peuvent être supérieurs à la perte subie et au gain manqué que la partie en défaut avait prévus ou aurait dû prévoir au moment de la conclusion du contrat, en considérant les faits dont elle avait connaissance ou aurait dû avoir connaissance, comme étant des conséquences possibles de la contravention au contrat."

    Although no perfect synonymy can be ascertained between the Spanish, English and French versions, the three versions have the same meaning and do not contain linguistic diferences that are worth noting.

    292. Cf. AUDIT, BERNARD, op. cit. footnote 12, p. 196.

    293. Cf. GARRO, ALEJANDRO MIGUEL and ZUPPI, ALBERTO LUIS, op. cit. footnote 63, p. 137.

    294. Cf. Official Records, op. cit. footnote 171, p. 15-71, "Commentaries on the draft Convention on Contracts for the International Sale of Goods, prepared by the Secretariat", Document A/CONF.97/5, p. 64.

    295. In the preparatory works no major debate arose in this regard. Cf. Official Records, idem. Report by the First Commission to the Plenary Meeting (A/CONF.97/11/Add.2), p. 241 and 30th Meeting, March 3, 1980, 3 p.m., p. 422.

    296. Cf. Official Records, idem, pp. 318-324, Summary Proceedings - First Committee, 12th Meeting, 3/19/80, 10 a.m., pp. 318 and 319.

    297. Cf. Arbitral award; Court of Arbitration of the International Chamber of Commerce, case no. 8574; September 1996; <http://www.unilex.info/case.cfm?pid=1&do=case&id=521&step=FullText> (19/03/04); goods: metal concentrate.

    298. Cf. Germany, Landgericht [District Court] München; case no. 10 O 5423/01; February 20, 2002; <http://cisgw3.law.pace.edu/cases/020220g1.html> (03/19/04); shoes; English translation, Queen Mary Case Translation Programme, by Julian Waiblinger.

    299. Cf. Germany, Hanseatisches Oberlandesgericht [Provincial Court of Appeals] Hamburg; case no. 1 U 31/99; November 26, 1999; <http://cisgw3.law.pace.edu/cases/991126g1.html> (03/19/04); goods: jeans; English translation Queen Mary Case Translation Programme, by Annemieke Romein and edited by Loukas Mistelis; CLOUT 348.

    300. Cf. Switzerland, Bundesgericht [Supreme Court] , 1. Zivilabteilung, "E.K., L. und A. v. F.", case no 4C.179/1998/odi; October 28, 1998; <http://cisgw3.law.pace.edu/cases/981028s1.html> (03/19/04); goods: meat; excerpt Pace University; CLOUT 248.

    301. Regard must be had to the fact that there is an express and uncontroverted opinion by the Brazilian delegate supporting the line of thought in this work.

    302. The second part of the article establishes a subjective limit, in a structure analogous to that of article 25 of the CISG; therefore, it is not relevant in establishing the general rule: "Esa indemnización no podrá exceder de la pérdida que la parte que haya incurrido en incumplimiento hubiera previsto o debiera haber previsto en el momento de la celebración del contrato, tomando en consideración los hechos de que tuvo o debió haber tenido conocimiento en ese momento, como consecuencia posible del incumplimiento del contrato."; a Spanish version may be found at <http://www.uc3m.es/cisg/textoc.htm>. The French version reads, "Ces dommages- intérêts ne peuvent être supérieurs à la perte subie et au gain manqué que la partie en défaut avait prévus ou aurait dû prévoir au moment de la conclusion du contrat, en considérant les faits dont elle avait connaissance ou aurait dû avoir connaissance, comme étant des conséquences possibles de la contravention au contrat."; at <http://cisgw3.law.pace.edu/cisg/text/salecf.html>. The English version reads, "Such damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract, in the light of the facts and matters of which he then knew or ought to have known, as a possible consequence of the breach of contract."; <http://cisgw3.law.pace.edu/cisg/text/treaty.html>.

    303. The French version reads, "Article 74. Les dommages- intérêts pour une contravention au contrat commise par une partie sont égaux à la perte subie et au gain manqué par l'autre partie par suite de la contravention."; <http://cisgw3.law.pace.edu/cisg/text/salecf.html>. The English version reads, "Article 74. Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach."

    304. Official Records, op. cit. footnote 171, pp. 15-71, "Commentaries on the draft Convention on Contracts for the International Sale of Goods, prepared by the Secretariat", Document A/CONF.97/5, p. 64.

    305. Cf. VÁZQUEZ LÉPINETTE, TOMÁS, op. cit. footnote 2, p. 148.

    306. Cf. PANTALEÓN PRIETO, FERNANDO (1998) "Comentario al artículo 74", Ch. III, Objeto y forma del resarcimiento, in DIEZ-PICAZO, LUIS Y PONCE DE LEÓN, La compraventa internacional de mercaderías, comentario a la Convención de Viena, Madrid: Editorial Civitas SA, p. 592.

    307. Cf. VÁZQUEZ LÉPINETTE, TOMÁS, op. cit. footnote 2, p. 44.

    308. Cf. jurisprudence on 7 of the CISG.

    309. Cf. GARRO, ALEJANDRO MIGUEL and ZUPPI, ALBERTO LUIS, op. cit. footnote 63, p. 200.

    310. PILTZ, BURGHARD, op. cit. footnote 5, p. 80.

    311. VÁZQUEZ LÉPINETTE, TOMÁS, op. cit. footnote 2, p. 117.

    312. In one case it was evidenced that the buyer was going to resell the goods at a price of $100, that he incurred $20 in preparing the transaction and that the loss of clientele represented $50. His economic interest is thus $170. The seller's breach consisted in delayed delivery which casued orders to be cancelled amounting to $50. Half of the costs of the transaction were considered useful costs, i.e. $10, and the loss of clientele was valued in $50. Under article 74 of the CISG, the detriment was $110. The loss of the economic interest was 11/17, or 65%. A priori, it would seem that it is a fundamental breach.

    313. I am not trying to theorize about this particular subject because it escapes the scopes of this work, so I will just follow here what is sustained by PILTZ, BURGHARD, op. cit. footnote 5, p. 83, and use his conclusions for comparative porpoises. The subject is carefully analyzed in CISG-AC Opinion no 2, Examination of the Goods and Notice of Non-Conformity: Articles 38 and 39, 7 June 2004. Rapporteur: Professor Eric E. Bergsten, Emeritus, Pace University School of Law, New York, http://cisgw3.law.pace.edu/cisg/CISG-AC-op2.html (03/19/04), where it can be found a complete perspective of the different criteria adopted in case law. PILTZ, BURGHARD, idem, analyses the different case law criteria and makes a reasonable hypothesis for a priori period of time.

    314. Cf. PILTZ, BURGHARD, idem, p. 85. Another author follows the a priori concept, but sustains that the "noble month" is an ideal guideline because it represents a compromise between acceptable time-frames in different domestic laws; cf. BAASCH ANDERSEN, CAMILLA, "Reasonable time in Article 39(1) of the CISG - Is Article 39(1) truly a uniform provision?", September 1998, http://cisgw3.law.pace.edu/cisg/biblio/andersen.html#c* (03/19/04). I rather prefer first's author theory because, as I said before, it is not acceptable an interpretation of the CISG according to domestic laws, even in a comparative way. As I said before (footnote 313) I am not trying to theorize about the convenience or not of the a priori thesis, but I find its results, despite its fundaments, useful as seen above, always taking into account the particular facts of the case. In fact, in a personal conversation with Dr. Piltz he emphasized that his so called a priori period was not more than a guide, a practical starting point, something to take into account but not a substitute for the particular circumstances of the case. That also is my intention: to find an objective starting point and it is useful to show that it is not the first time that someone appeals to this criterion. Even though, I do recognize that there is a strong opposition to the a priori criterion Cf. CISG-AC Opinion no 2, Examination of the Goods and Notice of Non-Conformity: Articles 38 and 39, 7 June 2004, , op. cit. footnote 313.

    315. Cf. Denmark, Randers Byret [County Court]; case no. BS 9700016-4; November 4, 1998; <http://cisgw3.law.pace.edu/cases/981104d1.html> (03/19/04); goods: Christmas trees; excerpt Pace University.

    316. Cf. Germany, Oberlandesgericht [Provincial Court of Appeals] Stuttgart; case no. 5 U 216/99; March 12, 2001; <http://cisgw3.law.pace.edu/cases/010312g1.html> (03/19/04); goods: apple juice concentrate and strawberries; English translation, Queen Mary Case Translation Programme, by Ruth M. Janal.

    317. Cf. Germany, Landgericht [District Court] Stendal; case no. 22 S 234/94; October 12, 2000; <http://cisgw3.law.pace.edu/cases/001012g1.html> (03/19/04); goods: granite rock; English translation, Queen Mary Case Translation Programme, by Ruth M. Janal; edited by Camilla Baasch Andersen, CLOUT 432.

    318. Cf. Germany; Landgericht [District Court] München; case no. 5 HKO 3936/00; February 27, 2002; <http://cisgw3.law.pace.edu/cases/020227g1.html> (03/19/04); goods: globes; excerpt Pace University; and Arbitral award, ICC; Court of Arbitration of the International Chamber of Commerce; case No. 7531 of 1994; 1994; <http://cisgw3.law.pace.edu/cases/947531i1.html> (03/19/04); goods: scaffold fitting; excerpt CLOUT 304.

    319. Cf. Switzerland, Bundesgericht [Supreme Court] , 1. Zivilabteilung, "E.K., L. und A. v. F.", case no. 4C.179/1998/odi; October 28, 1998; <http://cisgw3.law.pace.edu/cases/981028s1.html> (03/19/04); goods: meat; excerpt Pace University; CLOUT 248.

    320. Cf. Arbitral award, ICC; Court of Arbitration of the International Chamber of Commerce; "Maaden v. Thyssen"; Case no. 6653 of 1993; March 26, 1993; <http://cisgw3.law.pace.edu/cases/936653i1.html> (04/19//03); goods: steel bars; English translation, Queen Mary Case Translation Programme, by Kirstin Stadtländer; CLOUT 103.

    321. Cf. France; Cour d'appel [Court of Appeals] Grenoble; "M. Marques Roque Joachim v. La Sarl Holding Manin Rivière", case no. 93/4879; April 26, 1995; <http://cisgw3.law.pace.edu/cases/950426f2.html> (03/19/04); goods: secondhand portable warehouse shed; English translation, Queen Mary Case Translation Programme, by Charles Sant 'Elia; CLOUT 152.

    322. This issue will be discussed in extenso in Chapter 5.

    323. The Spanish version reads, "salvo que la parte que haya incumplido no hubiera previsto tal resultado y que una persona razonable de la misma condición no lo hubiera previsto en igual situación," and the French version reads, "à moins que la partie en défaut n'ait pas prévu un tel résultat et qu'une personne raisonnable de même qualité placée dans la même situation ne l'aurait pas prévu non plus." Although no perfect synonymy can be found between the English, Spanish and French versions, the three texts have the same meanings, and there are no linguistic differences between them that are worth noting; for a contrary opinion, see GARRO, ALEJANDRO MIGUEL and ZUPPI, ALBERTO LUIS, op. cit. footnote 63, pp. 137 and 138; these authors' line of thought, in my view, errs on the side of excessive meticulousness and is inappropriate.

    324. During the discussions leading to the approval of the CISG, the Egyptian delegate suggested using the coordinate "and"; his suggestion, however, was not included in the final version. Cf. Official Records, op. cit. footnote171, pp. 318-324, Summary Proceedings - First Commission, 12th Meeting, 3/19/80, 10 a.m., p. 321.

    325. Official Records, op. cit. footnote 171, pp. 15-71, "Commentaries on the draft Convention on Contracts for the International Sale of Goods, prepared by the Secretariat", Document A/CONF.97/5, p. 28.

    326. The Secretariat Commentary is obviously referring to the first part of article 25 of the CISG discussed above.

    327. Emphasis added.

    328. Cf. Official Records, idem, pp. 318- 324, Summary Proceedings - First Commission, 12th Meeting, 3/19/80, 10 a.m., p. 318.

    329. Cf. Official Records, idem, pp. 353-358, Summary Proceedings - First Commission, 18th Meeting, 3/21/80, 3 p.m., p. 353.

    330. Cf. GRAFFI, LEONARDO, op. cit. footnote 126.

    331. Cf. KOCH, ROBERT, op. cit. footnote 129.

    332. Cf. AUDIT, BERNARD, op. cit. footnote 12, p. 142.

    333. Cf. GARRO, ALEJANDRO MIGUEL and ZUPPI, ALBERTO LUIS, op. cit. footnote 63, p. 162.

    334. Cf. LORENZ, ALEXANDER, "Fundamental Breach under the CISG", at <http://cisgw3.law.pace.edu/cisg/biblio/lorenz.html> (03/19/04), Pace essay submission, Dinslaken, Germany/Canterbury, England, June 1998.

    335. See infra, 4.3.-.

    336. Cf. AUDIT, BERNARD, op. cit. footnote 12, p. 142; PILTZ, BURGHARD, op. cit. footnote 5, p. 20; GRAFFI, LEONARDO, op. cit. footnote126; KOCH, ROBERT, op. cit. footnote 129; SCHLECHTRIEM, PETER, op. cit. footnote 216.

    337. Cf. Official Records, op. cit. footnote 171, pp. 15-71, "Commentaries on the draft Convention on Contracts for the International Sale of Goods, prepared by the Secretariat", Document A/CONF.97/5, p. 28, among many other interventions.

    338. I.e., see infra 5.2.5.1.1.-, Cf. Germany; Oberlandesgericht [Provincial Court of Appeals] Frankfurt; case no. 5 U 164/90; September 17, 1991; <http://cisgw3.law.pace.edu/cases/910917g1.html> (03/19/04); goods: shoes; English translation Journal of Law and Commerce 261-270 (1993); CLOUT 2.

    339. Although the court did not give explicit reference, it would seem that the case is "used automobile", Cf. Germany; Oberlandesgericht [Provincial Court of Appeals] Köln; case no. 22 U 4/96; May 21, 1996; <http://cisgw3.law.pace.edu/cases/960521g1.html> (03/19/04); goods: used automobile; English translation Queen Mary Case Translation Programme, translated by Peter Feuerstein, edited by Chantal Niggemann.

    340. Cf. KOCH, ROBERT, op. cit. footnote 129.

    341. Cf. NUSSBAUM, MARTA (1997) Justicia poética. La imaginación literaria y la vida pública, Spanish translation by Carlos Gardini, Poetic Justice, Barcelona: Andrés Bello, p. 118.

    342. Cf. NUSSBAUM, MARTA, idem, p. 108.

    343. For a detailed discussion on these arguments, which exceed the scope of this work, see PAIVA, ROBERTO MARTÍN, Las bodas de Hermes y Erató. Ideas para un modelo de juez, unpublished, final report for the course "Interpretación Jurídica" (interpretation of law), for the Graduate Course in Corporate Law at the Austral University, Buenos Aires, Argentina, 10/25/2002.

    344. Cf. Official Records, op. cit. footnote 171, pp. 318-324, Summary Proceedings - First Commission, 12th meeting, 3/19/80, 10 a.m. See opinions of the representatives of Norway, Mexico, Greece (p.319), Sweden, Denmark (p.320) and France, and the Egyptian delegate's dismissal of the issue (p. 321).

    345. Cf. AUDIT, BERNARD, op. cit. footnote 12, p. 120.

    346. Cf. GARRO, ALEJANDRO MIGUEL and ZUPPI, ALBERTO LUIS, op. cit. footnote 63, p. 136; and CABANILLAS SÁNCHEZ, ANTONIO, op. cit. footnote 172, p. 218.

    347. Cf. KOCH. ROBERT, op. cit. footnote 129.

    348. (a) the contractual obligation nature, (b) the degree of the breach consequences, (c) solution aimed to cure non-performance, (d) inability of performance, (e) lack of willingness to perform the obligation, (f) lack of trust in the future performance of the other party, (g) offer to cure the breach and (h) inability to cure breach.

    349. Cf. Article 25 of the CISG.

    350. Cf. France, Cour d'appel [Court of Appeals] Grenoble; "SARL Ego Fruits v. Sté La Verja Begasti"; case no. RG 98/0270 (appeal of decision RG 97008146); February, 4, 1999; <http://cisgw3.law.pace.edu/cases/990204f1.html> (03/19/04); translated into English, Queen Mary Case Translation Programme, translated by Gary F. Bell, CLOUT 243.

    351. Cf. Arbitration; Court of Arbitration of the International Chamber of Commerce, case no. 8574; September, 1996; <http://www.unilex.info/case.cfm?pid=1&do=case&id=521&step=FullText> (03/19/04); some parts are unavailable; goods: metal concentrate.

    352. Cf. Germany; Landgericht [District Court] Oldenburg; case no. 12 O 2541/95; March 27, 1996; <http://www.cisg.law.pace.edu/cases/960327g1.html> (03/19/04); goods: clothes; abstract Pace University.

    353. Cf. Germany, Amtsgericht [Lower Court] Ludwigsburg; case no. 4 C 549/90; December 21, 1990; <http://cisgw3.law.pace.edu/cases/901221g1.html> (03/19/04); goods: clothes; abstract Pace University.

    354. Cf. Switzerland,Bundesgericht [Supreme Court]; "FCF S.A. v. Adriafil Commerciale S.r.l."; case no. 4C.105/2000; September 15, 2000; <http://cisgw3.law.pace.edu/cases/000915s2.html> (03/19/04); goods: Egyptian cotton; translated into English, Queen Mary Case Translation Programme.

    355. Cf. Finland; Appellate Court of Turku; case no. S 95/1023; February 18, 1997; <http://cisgw3.law.pace.edu/cases/970218f5.html> (03/19/04); goods: package for animal food; summarized and translated by Tuula Ämmälä.

    356. Cf. Germany, Oberlandesgericht [Provincial Court of Appeals] Düsseldorf; case no. 6 U 87/96; April 24, 1997; <http://cisgw3.law.pace.edu/cases/970424g1.html> (03/19/04); goods: shoes; translation into English, Queen Mary Case Translation Programme, translated by Julian Waiblinger, CLOUT 275.

    357. Cf. Italy, Pretura circondariale [First Instance] di Parma, sez. di Fidenza; "Foliopack AG v. Daniplast S.p.A."; case no. 77/89; November 24, 1999; <http://cisgw3.law.pace.edu/cases/891124i3.html> (03/18/04); goods: knapsacks, bags, wallets; translated into English, Queen Mary Case Translation Programme, translated by Hanz G. Chiappetta and edited by Angela Maria Romito. CLOUT 90.

    358. Cf. Italy, Corte di Appello [Appellate Court] Milano; "Italdecor s.a.s. v. Yiu's Industries (H.K.) Limited"; March 20, 1998; <http://cisgw3.law.pace.edu/cases/980320i3.html> (03/19/04); goods: "knitwear"; translated into English, Queen Mary Case Translation Programme.

    359. Cf. Germany, Oberlandesgericht [Provincial Court of Appeals] Düsseldorf; case no. 6 U 87/96; April 24, 1997; <http://cisgw3.law.pace.edu/cases/970424g1.html> (03/19/04); goods: shoes; translation into English, Queen Mary Case Translation Programme, translated by Julian Waiblinger, CLOUT 275.

    360. Cf. Germany, Landgericht [District Court] München; case no. 10 O 5423/01; February 20, 2002; <http://cisgw3.law.pace.edu/cases/020220g1.html> (03/19/04); goods: shoes; translated into English, Queen Mary Case Translation Programme, translated by Julian Waiblinger.

    361. Cf. Canadá, Supreme Court of Justice, Ontario, "Diversitel Communications, Inc. v. Glacier Bay Inc.", case no. 03-CV-23776 SR; October 6, 2003 <http://www.unilex.info/case.cfm?pid=1&do=case&id=937&step=FullText> (03/19/04); goods: vacuum panel insulation.

    362. Cf. Germany, Oberlandesgericht [Provincial Court of Appeals] Hamburg; case no. 1 U 167/95; February 28, 1997; <http://cisgw3.law.pace.edu/cases/970228g1.html> (03/19/04); goods: iron molybdenum; abstract CLOUT 277.

    363. Cost Insurance Freight, delivery on board in the port of origin, Cf. INCOTERMS 2000.

    364. It is commonly known that in every international sale by ship the parties agree on an INCOTERMS clause, It must be also considered that transport by ship involves most of the international sales and it is of major economic and political importance, Cf. ROMERO BASALDÚA, LUIS, (1985) Responsabilidad del transportador de mercaderías: por agua, Córdoba, Argentina: Marcos Lerner Editora Córdoba, p. 18.

    365. Cf. Arbitration; Court of Arbitration of the International Chamber of Commerce, case; case no. 8786; January, 1997; <http://www.unilex.info/case.cfm?pid=1&do=case&id=463&step=FullText> (03/19/04); some parts are not available; goods: clothes.

    366. Cf. Russian Federation; Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry; case No. 200/1994; April 25, 1995; <http://cisgw3.law.pace.edu/cases/950425r1.html> (03/19/04); goods: chocolate confectionery products; abstract CLOUT 141.

    367. Cf. Arbitration, Court of Arbitration of the International Chamber of Commerce, case no. 7585; 1992; <http://cisgw3.law.pace.edu/cases/927585i1.html> (03/19/04); goods: "machinery for a production line of foamed boards"; abstract CLOUT 301.

    368. Cf. article 64(1)(b) of the CISG.

    369. Cf. TAKAHASHI, KOJI, op. cit, footnote 120.

    370. Against that SCHLECHTRIEM, PETER, Uniform Sales Law (1986) p.60. thinks that in the commodities market late delivery is normally considered a fundamental breach. I do not agree with that since the market can change for better and there will be no economical damage.

    371. Cf. Germany, Oberlandesgericht [Provincial Court of Appeal] München; case no. 7 U 4419/93; March 2, 1994; <http://cisgw3.law.pace.edu/cases/940302g1.html#cx> (03/19/04); goods: coke; translated into English; Queen Mary Case Translation Programme, translated by Ruth M. Janal; CLOUT 83.

    372. Article 30 of the CISG.

    373. Cf. Germany, [Provincial Court of Appeals] Oldenburg; case no. 12 U 54/98; September 22, 1998; <http://cisgw3.law.pace.edu/cases/980922g1.html> (03/19/04); goods, raw salmon; translation into English, Queen Mary Case Translation Programme, translated by Ruth M. Janal and edited by Camilla Baasch Andersen. CLOUT 340.

    374. Delivered Duty Paid place of delivery should be made on board transportation means and dispatched in the port of origin. Cf. INCOTERMS 2000.

    375. Cf. Russian Federation; Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry; case no. 238/1998; June 7, 1999; <http://cisgw3.law.pace.edu/cases/990607r1.html> (03/19/04); goods: not available; translation into English, Queen Mary Case Translation Programme, translated by Gilyana Bovaeva, translation edited by Mykhaylo Danylko; CLOUT 473.

    376. Article 6 of the CISG.

    377. Cf. People's Republic of China; CIETAC [China International Economic & Trade Arbitration Commission]; February 1, 2000; <http://cisgw3.law.pace.edu/cases/000201c1.html> (03/19/04); goods: alloy of silicon and manganese, translation into English, Translators not available.

    378. Cf. People's Republic of China; CIETAC; February 11, 2000; <http://cisgw3.law.pace.edu/cases/000211c1.html> (03/19/04); goods: silicon metal, translation into English, translators not available.

    379. Cf. Spain, Provincial Court of Barcelona, division 14; "Comercial San Antonio, S.A. v. Grupo Blocnesa, S.L"; case no. 1307/2000; February 12, 2002; <http://www.unilex.info/case.cfm?pid=1&do=case&id=881&step=FullText> (03/19/04); goods: not available; CLOUT 488.

    380. Cf. Switzerland, Handelsgericht [Commercial Court] Zürich; case no. HG 95 0347; February 5, 1997; <http://cisgw3.law.pace.edu/cases/970205s1.html> (03/19/04); goods: sunflower oil, abstract CLOUT 214.

    381. Cf. United States of America, U.S. District Court, Northern District of Illinois, Eastern Division; "Magellan International Corporation v. Salzgitter Handel GmbH"; case no. 99 C 5153; December 7, 1999; <http://cisgw3.law.pace.edu/cases/991207u1.html> (03/19/04); goods: steel bars, CLOUT 417.

    382. Cf. Russian Federation, Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry; case no. 2/1995; May 11, 1995; <http://cisgw3.law.pace.edu/cases/970511r1.html> (03/19/04); goods: not available; translation into English Queen Mary Case Translation Programme.

    383. In most of the cases, the only element taken into account is the inexcusable failure to deliver.

    384. Cf. Germany, Oberlandesgericht [Provincial Court of Appeals] Düsseldorf; case no. 6 U 228/92; November, 1993; <http://cisgw3.law.pace.edu/cases/931118g1.html> (03/19/04); goods: stamping machine, abstract Pace University.

    385. Cf. Germany; Landgericht [District Court] Heidelberg; case no. O 42/92 KfH I; July 3, 1992; <http://cisgw3.law.pace.edu/cases/920703g1.html> (03/19/04); goods: computer components, abstract Pace University.

    386. Cf. Russian Federation, Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry; case no. 269/1998; October 27, 1999; <http://cisgw3.law.pace.edu/cases/991027r1.html> (03/19/04) goods: not available; translated into English by Queen Mary Case Translation Programme, translated by Yelena Kalika and edited by Mykhaylo Danylko.

    387. See supra 4.2.3.4.-.

    388. Cf. Russian Federation, Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry; case no. 387/1995; April 4, 1998; <http://cisgw3.law.pace.edu/cases/980404r1.html> (03/19/04); goods: coal; translated into English, translator: not available.

    389. Cf. Russian Federation, Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry; case no. 53/1997; October 5, 1998; <http://cisgw3.law.pace.edu/cases/981005r1.html> (03/19/04); goods: not available; translated into English by Queen Mary Case Translation Programme, translated by Yelena Kalika and edited by Mykhaylo Danylko, CLOUT 468.

    390. Cf. United States of America, U.S. District Court, Western District of Michigan, Southern Division; "Shuttle Packaging Systems, L.L.C. v. Jacob Tsonakis, INA S.A and INA Plastics Corporation"; case no 1:01-CV-691; December 17, 2001; <http://www.unilex.info/case.cfm?pid=1&do=case&id=732&step=FullText> (19/04/03); goods: thermoforming line equipment for the manufacture of plastic gardening pots together with the technology and assistance to use the equipment.

    391. Cf. Australia; Supreme Court of Queensland; "Downs Investments Pty Ltd (CAN 010 729 567) (in voluntary liquidation) (formerly known as Wanless Metal Industries Pty Ltd v. Perwaja Steel SDN BHD"; case no Civil Jurisdiction No. 10680 of 1996; November 17, 2000; <http://cisgw3.law.pace.edu/cases/001117a2.html> (03/19/04); goods, scrap steel.

    392. Cf. People's Republic of China, Arbitration Tribunal (not available), June, 1999, <http://cisgw3.law.pace.edu/cases/990600c1.html> (03/19/04); goods: peanut kernels; translated into English by Queen Mary Case Translation Programme, translated by JIANG Xueyan.

    393. Cf. Mexico, Compromex, Mexican Commission for the Protection of Foreign Trade; "Dulces Luisi, S.A. de C.V. v. Seoul International Co. Ltd. y Seoulia Confectionery Co."; case no. M/115/97; November 30, 1998; <http://cisgw3.law.pace.edu/cases/981130m1.html> (03/19/04); goods: sweets and candies.

    394. Cf. Switzerland, Kantonsgericht [District Court] Schaffhausen, "R. GmbH v. O. AG", case no. A3 2001 34; December 12, 2002; <http://cisgw3.law.pace.edu/cases/021212s1.html> (03/19/04); goods, MTBE (methyl tertiary-butyl ether), translated into English Queen Mary Case Translation Programme, translated by Ruth M. Janal.

    395. Cf. Germany, Oberlandesgericht [Provincial Court of Appeals] Hamm; case no. 19 U 97/91; September 22, 1992; <http://cisgw3.law.pace.edu/cases/920922g1.html> (03/19/04); goods: bacon; abstract CLOUT 227.

    396. See infra 4.2.2.

    397. Cf. Italy, Tribunale [District Court] di Busto Arsizio; case name not available; case no. not available; December 13, 2001; <http://www.unilex.info/case.cfm?pid=1&do=case&id=927&step=Abstract> (19/04/03); goods: machinery for recycling of plastic bags; translation data not available.

    398. Cf. Germany, Oberlandesgericht [Provincial Court of Appeals] Stuttgart; case no. 5 U 216/99; March 12, 2001; <http://cisgw3.law.pace.edu/cases/010312g1.html> (03/19/04); goods: apple juice concentrate and strawberry juice; translation into English, Queen Mary Case Translation Programme, translated by Ruth M. Janal.

    399. Cf. Germany, Oberlandesgericht [Provincial Court of Appeals] München; case no. 7 U 4419/93; March 2, 1994; <http://cisgw3.law.pace.edu/cases/940302g1.html> (03/19/04); goods: coke; Translation into English; Queen Mary Case Translation Programme, translated by Ruth M. Janal; CLOUT 83.

    400. Cf. Germany; Landgericht [District Court] Saarbrücken; case no. 8 O 49/02; July 2, 2002; <http://cisgw3.law.pace.edu/cases/020702g1.html> (03/19/04); goods: tiles; abstract Pace University.

    401. Cf. Germany, Oberlandesgericht [Provincial Court of Appeals] Koblenz; case name not available; case no. 2 U 31/96; January 31, 1997; <http://cisgw3.law.pace.edu/cases/970131g1.html> (03/19/04); goods: acrylic blankets, abstract CLOUT 282.

    402. Cf. Italy, Tribunale [District Court] di Busto Arsizio; case name not available; case no. not available; December 13, 2001; <http://www.unilex.info/case.cfm?pid=1&do=case&id=927&step=Abstract> (04/19/03); goods: machinery for recycling of plastic bags; translation data not available.

    403. Cf. Germany, Landgericht [District Court] Heilbronn; case name not available; case no. 3 KfH O 653/93; September 15, 1997; <http://cisgw3.law.pace.edu/cases/970915g1.html> (03/19/04); goods: film coating machine for kitchen furnishings; translation into English, Queen Mary Case Translation Programme, translated by Felix Haug edited by Camilla Baasch Andersen; CLOUT 345.

    404. Cf. People's Republic of China; CIETAC [China International Economic and Trade Arbitration Commission], case name not available, case no. not available; October 30, 1991; <http://cisgw3.law.pace.edu/cases/911030c1.html> (03/19/04); goods: roll aluminium and aluminium parts for manufacture of cans, Translation into English by Yu Weizhong and Frank N. Fisanich.

    405. The thickness of the roll aluminium delivered was 0.0118 inch and according to the contract, the seller was to deliver roll aluminium in the thickness of 0.0125 inches.

    406. I.e., it may be possible that the resell price of roll aluminium of less thickness shall prove to be higher than the agreed on price ant that such fact did not interrupt the production process of the buyer as it is easy to obtain the roll aluminium of the necessary thickness in the market.

    407. Cf. Germany, Landgericht [District Court] Baden-Baden; case name not available, case no. 4 O 113/90; August 14, 1991; <http://cisgw3.law.pace.edu/cases/910814g1.html> (04/19/03); translated into English by Journal of Law and Commerce 277-281 (1993), CLOUT 50.

    408. Cf. Germany, Landgericht [District Court] Berlin; case name not available; case no. 52 S 247/94; September 15, 1994; <http://cisgw3.law.pace.edu/cases/940915g1.html> (03/19/04); goods: shoes; Queen Mary Case Translation Programme, translated into English by Martin Eimer and edited by Ruth M. Janal.

    409. Cf. Finland; Appellate Court in Helsinki; "EP S.A.and FP Oy"; case no. S 96/1215; June 30th ,1998; <http://cisgw3.law.pace.edu/cases/980630f5.html> (03/19/04); goods: products for skin care, abstract Pace University.

    410. Cf. Germany, Oberlandesgericht [Provincial Court of Appeals] Frankfurt; case name not available; case no. 5 U 15/93; <http://cisgw3.law.pace.edu/cases/940118g1.html (03/19/04); goods: shoes, translated into English by Journal of Law and Commerce 201-207 (1995); CLOUT 79.

    411. I.e., that the buyer was under the obligation to resell the goods and that his buyer does not accept it due to mentioned defects, and that being the domestic law applicable, the buyer would have the right to it.

    412. Cf. Germany, Landgericht [District Court] Landshut; case name not available; case no. 54 O 644/94; April 5, 1995; <http://cisgw3.law.pace.edu/cases/950405g1.html> (03/19/04); goods: sport clothing; Queen Mary Case Translation Programme.

    413. Cf. France, Cour de Cassation [Supreme Court]; "Société Sacovini/M. Marrazza v. Sté les fils de Henri Ramel/Sté Bonfils Georges/Sté Preau et compagnie"; case no. 173 P/B 93-16.542; January 23,1996; http://cisgw3.law.pace.edu/cases/960123f1.html> (03/19/04); goods, wine; translated into English, Queen Mary Case Translation Programme, translated by Charles Sant 'Elia, CLOUT 150.

    414. Cf. Germany, Hanseatisches Oberlandesgericht [Provincial Court of Appeals] Hamburg; case name not available; case no. 1 U 31/99; November 26, 1999; <http://cisgw3.law.pace.edu/cases/991126g1.html> (03/19/04); goods: jeans; Translated into English, Queen Mary Case Translation Programme, by Annemieke Romein and edited by Loukas Mistelis; CLOUT 348.

    415. Cf. Germany, Oberlandesgericht [Provincial Court of Appeals] Stuttgart; case name not available, case no. 5 U 216/99; March 12, 2001; <http://cisgw3.law.pace.edu/cases/010312g1.html> (03/19/04); goods: apple juice concentrate and strawberries; translated into English, Queen Mary Case Translation Programme, translated by Ruth M. Janal.

    416. Cf. Germany, Oberlandesgericht [Provincial Court of Appeal] Düsseldorf; case name not available; case no. 6 U 119/93; February 10, 1994; <http://cisgw3.law.pace.edu/cases/940210g2.html> (04/19/03); goods: fabric; translation into English, Queen Mary Case Translation Programme, translated by Ruth Janal and edited by Camilla Baasch Andersen; CLOUT 82.

    417. Cf. Germany, Bundesgerichtshof [Federal Supreme Court], case name not available; case no. VIII ZR 51/95; April 3, 1996; <http://cisgw3.law.pace.edu/cases/960403g1.html> (03/19/04); goods, cobalt sulphate; Translation into English, Queen Mary Case Translation Programme, translated by Peter Feuerstein and edited by Ruth M.Janal. CLOUT 171.

    418. Cf. Denmark, Randers Byret [County Court]; case name not available; case no. BS 9700016-4; November 4, 1998; <http://cisgw3.law.pace.edu/cases/981104d1.html> (03/19/04); goods, Christmas trees; abstract Pace University.

    419. Despite the case seems very interesting, there is only one abstract in English and the text of the decision in is Danish.

    420. Cf. Germany, Landgericht [District Court] München; case no. 5 HKO 3936/00; February 27, 2000; <http://cisgw3.law.pace.edu/cases/020227g1.html> (19/03/04); goods: globes, abstract Pace University.

    421. Cf. Arbitral award, ICC; Court of Arbitration of the International Chamber of Commerce; case name not available; case no. 7531 of 1994; 1994; <http://cisgw3.law.pace.edu/cases/947531i1.html> (19/03/04); goods: scaffold fittings; abstract CLOUT 304.

    422. Cf. Arbitral award, ICC; Court of Arbitration of the International Chamber of Commerce; "Maaden v. Thyssen"; case no. 6653 of 1993; March 26, 1993; <http://cisgw3.law.pace.edu/cases/936653i1.html> (04/19/03); goods: steel bars; translated into English, Queen Mary Case Translation Programme, translated by Kirstin Stadtländer; CLOUT 103.

    423. Cf. France, Cour d'appel [Court of Appeal] Grenoble; "M. Marques Roque Joachim v. La Sarl Holding Manin Rivière", case no. 93/4879; April 26, 1995; <http://cisgw3.law.pace.edu/cases/950426f2.html> (19/03/04); goods: second hand portable warehouse shed; translation into English, Queen Mary Case Translation Programme, translation by Charles Sant 'Elia; CLOUT 152.

    424. Cf. Switzerland, Bundesgericht [Supreme Court], 1. Zivilabteilung, "E.K., L. und A. v. F.", case no. 4C.179/1998/odi; October 28, 1998; <http://cisgw3.law.pace.edu/cases/981028s1.html> (03/19/04); goods: meat; abstract Pace University; CLOUT 248.

    425. Cf. Germany, Landgericht [District Court] Stendal; case name not available; case no. 22 S 234/94; October 12, 2000; <http://cisgw3.law.pace.edu/cases/001012g1.html> (03/19/04); goods: granite; translated into English, Queen Mary Case Translation Programme, translated by Ruth M. Janal and edited by Camilla Baasch Andersen, CLOUT 432.

    426. Except the one analyzed in 5.2.4.6.6.-, cf. Switzerland, Bundesgericht [Supreme Court] , 1. Zivilabteilung, "E.K., L. und A. v. F.", case no. 4C.179/1998/odi; October 28, 1998; <http://cisgw3.law.pace.edu/cases/981028s1.html> (03/19/04); goods: meat; abstract Pace University; CLOUT 248.

    427. I.e., Germany, Oberlandesgericht [Provincial Court of Appeal] Stuttgart; case name not available, case no. 5 U 216/99; March 12, 2000; <http://cisgw3.law.pace.edu/cases/010312g1.html> (03/19/04); goods: apple juice concentrate and strawberries; translation into English, Queen Mary Case Translation Programme, translation by Ruth M. Janal, where, in addition, other goods of the buyer, which had been bought to other sellers, were damaged.

    428. I.e., Switzerland, Bundesgericht [Supreme Court] , 1. Zivilabteilung, "E.K., L. und A. v. F.", case no. 4C.179/1998/odi; October 28, 1998; <http://cisgw3.law.pace.edu/cases/981028s1.html> (03/19/04); goods: meat; abstract Pace University; CLOUT 248, analyzed in 5.2.4.6.6.-. Where the goods have as the only purpose the sale and there where no compensable damage apart from the loss of value.

    429. Cf. Germany, Landgericht [District Court] München, case name not available; case no. 12 HKO 4174/99; April 6, 2000; <http://cisgw3.law.pace.edu/cases/000406g1.html> (03/16/04); goods: furniture; translation into English, Queen Mary Case Translation Programme, by Stefan Kuhm and edited by Ruth M. Janal.

    430. Cf. The United States, U.S. District Court, Western District of Michigan, Southern Division; "Shuttle Packaging Systems, L.L.C. v. Jacob Tsonakis, INA S.A and INA Plastics Corporation"; case no. 1:01-CV-691; December 17, 2001; <http://www.unilex.info/case.cfm?pid=1&do=case&id=732&step=FullText> (04/19/03); goods: thermoforming line equipment for the manufacture of plastic gardening pots together with the technology and assistance to use the equipment.

    431. See supra 5.2.4.3.1, cf. Germany; Landgericht [District Court] Heilbronn; case name not available; case no. 3 KfH O 653/93; September 15, 1997; <http://cisgw3.law.pace.edu/cases/970915g1.html> (03/19/04); goods: film coating machine for kitchen furnishings; translation into English, Queen Mary Case Translation Programme, translated by Felix Haug and edited by Camilla Baasch Andersen; CLOUT 345.

    432. Cf. Germany, Bundesgerichtshof [Federal Supreme Court], case name not available; case no. VIII ZR 51/95; April 3, 1996; <http://cisgw3.law.pace.edu/cases/960403g1.html> (03/19/04); goods, cobalt sulphate; translation into English, Queen Mary Case Translation Programme, translated by Peter Feuerstein and edited by Ruth M.Janal.

    433. Cf. Denmark, Randers Byret [County Court]; case name not available; case no. BS 9700016-4; November 4, 1998; <http://cisgw3.law.pace.edu/cases/981104d1.html> (03/19/04); goods: Christmas trees; abstract Pace University.

    434. Cf. Germany, Oberlandesgericht [Provincial Court of Appeal] Stuttgart; case name not available, case no. 5 U 216/99; March 12, 2001; <http://cisgw3.law.pace.edu/cases/010312g1.html> (19/03/04); goods: apple juice concentrate and strawberries; translation into English, Queen Mary Case Translation Programme, translated by Ruth M. Janal.

    435. Cf. Germany, Landgericht [District Court] Stendal; case name not available; case no. 22 S 234/94; October 12, 2000; <http://cisgw3.law.pace.edu/cases/001012g1.html> (03/19/04); goods: granite; translation into English, Queen Mary Case Translation Programme, translated by Ruth M. Janal and edited by Camilla Baasch Andersen, CLOUT 432.

    436. Cf. Germany, Landgericht [District Court] München; case no. 5 HKO 3936/00; February 27, 2002; <http://cisgw3.law.pace.edu/cases/020227g1.html> (03/19/04); goods: globes, abstract Pace University; cf. Arbitral award, ICC; Court of Arbitration of the International Chamber of Commerce; case name not available; case no. 7531 of 1994; 1994; <http://cisgw3.law.pace.edu/cases/947531i1.html> (03/19/04); goods: scaffold fittings ; abstract CLOUT 304.

    437. Cf. Switzerland, Bundesgericht [Supreme Court], 1. Zivilabteilung, "E.K., L. und A. v. F.", case no. 4C.179/1998/odi; October 28, 1998; <http://cisgw3.law.pace.edu/cases/981028s1.html> (03/19/04); goods: meat; abstract Pace University; CLOUT 248.

    438. Cf. Arbitral award, ICC; Court of Arbitration of the International Chamber of Commerce; "Maaden v. Thyssen"; Case No.6653; March 26, 1993; <http://cisgw3.law.pace.edu/cases/936653i1.html> (04/19/03); goods: steel bars; translation into English, Queen Mary Case Translation Programme, translated by Kirstin Stadtländer; CLOUT 103.

    439. Cf. France, Cour d'appel [Court of Appeal] Grenoble; "M. Marques Roque Joachim v. La Sarl Holding Manin Rivière", case no. 93/4879; April 26, 1995; <http://cisgw3.law.pace.edu/cases/950426f2.html> (03/19/04); goods: second hand portable warehouse shed; translation into English, Queen Mary Case Translation Programme, translated by Charles Sant 'Elia; CLOUT 152.

    440. Cf. Germany, Oberlandesgericht [Provincial Court of Appeal] Frankfurt; case name not available; case no. 5 U 164/90; September 17, 1991; <http://cisgw3.law.pace.edu/cases/910917g1.html> (19/03/04); goods: shoes; translated into English by the Journal of Law and Commerce 261-270 (1993); CLOUT 2.

    441. Cf. Germany, Landgericht [District Court] Frankfurt; case name not available; 3/11 O 3/91; September 16, 1991; <http://cisgw3.law.pace.edu/cases/910916g1.html> (03/19/04); goods: shoes; translation into English, Queen Mary Case Translation Programme, CLOUT 6.

    442. If I am allowed, in a very confusing way.

    443. Cf. Switzerland, Handelsgericht [Commercial Court] Aargau, case name not available, case no. OR.96.0-0013; September 26, 1997; <http://cisgw3.law.pace.edu/cases/970926s1.html> (03/19/04); goods: cutlery; abstract CLOUT 217.

    444. In respect of the percentages, see the approximations analyzed in supra in 5.2.4.9.- (f).

    445. Cf. Germany, Landgericht [District Court] Ellwangen; case name not available; case no. 1 KfH O 32/95; August 21, 1995; <http://cisgw3.law.pace.edu/cases/950821g2.html> (03/19/04); goods: paprika pepper; translation into English, Queen Mary Case Translation Programme, translated by Ruth M. Janal and edited by Camilla Baasch Andersen.

    446. Cf. Argentina, Appellate Court in Commercial Matters in and for the city of Buenos Aires, Room C, "Bedial S.A. c/ Paul Muggenburg and Co GMBH",October, 31, 1995; published in <http://www.uc3m.es/uc3m/dpto/PR/dppr03/cisg/sargen9.htm> (03/19/04), Revista La Ley, Buenos Aires, t.1996-C, pp. 156-160 and Revista El Derecho, Buenos Aires, journal 10/21/96, commented by Carolina D. Iud "As regards the application of the United Nations Convention on International Sales of Goods Contracts by Argentine Justice in Commercial Matters". CLOUT 191.

    447. I.e., farm animal food, in the second case.

    448. Cf. Germany, Bundesgerichtshof [Federal Supreme Court]; named as "Benetton II"; case no. VIII ZR 134/96; July 23, 1997; <http://cisgw3.law.pace.edu/cases/970723g2.html> (03/19/04); goods: fashion textiles; translated into English, Queen Mary Case Translation Programme, translated by Alexander P. Imberg and edited by Ruth M. Janal, CLOUT 236.

    449. See supra 5.2.4.5.3.-.

    450. Cf. MULLIS, ALASTAIR C.L., Termination for Breach of Contract in C.I.F. Contracts Under the Vienna Convention and English Law; Is There a Substantial Difference?, Lomnicka / Morse ed., Contemporary Issues in Commercial Law (Essays in honour of Prof. A.G. Guest), Sweet & Maxwell: London (1997) p. 137-160. http://cisgw3.law.pace.edu/cisg/biblio/mullis.html(03-19-04)).

    451. Cf. Australia, Federal Court, South Australian District, Adelaide; "Roder Zelt- und Hallenkonstruktionen GmbH v. Rosedown Park Pty Ltd et al"; case no. SG 3076 of 1993; FED No. 275/95; April 28, 1995; <http://cisgw3.law.pace.edu/cases/950428a2.html> (03/19/04); goods: tent hall structures; CLOUT 308.

    452. Cf. BOGGIANO, ANTONIO, op. cit. footnote 189, p. 115.

    453. Cf. GARRO, ALEJANDRO MIGUEL and ZUPPI, ALBERTO LUIS, op. cit. footnote 63, p. 280.

    454. Cf. AUDIT, BERNARD, op. cit. footnote 12, p. 143.

    4557. Cf. AUDIT, BERNARD, idem, p. 197.

    456. Cf. AUDIT, BERNARD, idem, p. 209.

    457. See supra 5.2.3.1.1.2.-.

    458. Cf. Switzerland; Zürich Arbitration Chamber of Commerce; case name not available; case no. ZHK 273/95; March 31, 1996; <http://cisgw3.law.pace.edu/cases/960531s1.html> (03/19/04); goods: aluminium.

    459. Cf. MULLIS, ALASTAIR C.L., Termination for Breach of Contract in C.I.F. Contracts Under the Vienna Convention and English Law; Is There a Substantial Difference?, Lomnicka / Morse ed., Contemporary Issues in Commercial Law (Essays in honour of Prof. A.G. Guest), Sweet & Maxwell: London (1997) p. 137-160. http://cisgw3.law.pace.edu/cisg/biblio/mullis.html (03-19-04)).

    460. As I am constrained to this works' goal the analysis on this issue is practical and partial. I will search for sale of commodities particularities concerning fundamental breach and find out if they justify a different category or just some consideration in the fact analysis. Other author has taken the theorical way and get to similar results, his work is wider and deeper on the commodities issue, Cf. SCHLECHTRIEM, PETER, Interpretation, gap-filling and further development of the UN Sales Convention, <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem6.html> translation of adapted text by Martin Koehler "Auslegung, Lückenfüllung und Weiterentwicklung" read at a symposium in honor of Professor Dr. Dr. h.c. Frank Vischer in Basel, May 11, 2004. For the symposium presentation, see <http://www.cisg-online.ch/cisg/Schlechtriem_Symposium_Vischer.pdf>.

    461. I.e. Are dehydrated mushrooms commodities? What aluminum rolls?

    462. Cf. Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott, in Word Reference, http://dictionary.reference.com/search?q=commodity (07-20-04).

    463. Cf. TAKAHASHI, KOJI, op.cit. footnote 120.

    464. Cf. TAKAHASHI, KOJI, op.cit. footnote 120.

    465. I.e. 85 per cent of the global trade in oils and fats is carried out under the standard contracts of FOSFA (Federation of Oils, Seeds and Fats Association), more than 80 per cent of the world trade in grain and feeds is carried out under the standard contracts of GAFTA (Grain and Feed Trade Association), Cf. TAKAHASHI, KOJI, op.cit. footnote 120.

    466. Cf. TAKAHASHI, KOJI, op.cit. footnote 120.

    467. Cf. TAKAHASHI, KOJI, op.cit. footnote 120.

    468. Cf. Germany, Landgericht [District Court] Stendal; case name not available; case no. 22 S 234/94; October 12, 2000; <http://cisgw3.law.pace.edu/cases/001012g1.html> (03/19/04); goods: granite; translated into English, Queen Mary Case Translation Programme, translated by Ruth M. Janal and edited by Camilla Baasch Andersen, CLOUT 432.

    469. Cf. Court of Arbitration of the International Chamber of Commerce, case name not available; case No. 7645; March, 1995; <http://cisgw3.law.pace.edu/cases/957645i1.html> (03/19/04); goods, crude metal; Digest of the case ICAB, Vol. 11/No. 2 (Fall 2000) 34-46, by Albert H. Kritzer.

    470. Cf. Germany, Bundesgerichtshof [Federal Supreme Court], case name not available; case no. VIII ZR 51/95; April 3, 1996; <http://cisgw3.law.pace.edu/cases/960403g1.html> (03/19/04); goods, cobalt sulphate; Translation into English, Queen Mary Case Translation Programme, translated by Peter Feuerstein and edited by Ruth M.Janal. CLOUT 171; Germany, Landgericht [District Court] Stendal; case name not available; case no. 22 S 234/94; October 12, 2000; <http://cisgw3.law.pace.edu/cases/001012g1.html> (03/19/04); goods: granite rock; English translation, Queen Mary Case Translation Programme, by Ruth M. Janal; edited by Camilla Baasch Andersen, CLOUT 432.

    471. Cf. Denmark, Randers Byret [County Court]; case name not available; case no. BS 9700016-4; November 4, 1998; <http://cisgw3.law.pace.edu/cases/981104d1.html> (03/19/04); goods: Christmas trees; excerpt Pace University.

    472. Cf. Switzerland, Cantone del Ticino, La Seconda Camera Civile del Tribunale D'appello, n 12.97.00193, 15 January 1998, <http://cisgw3.law.pace.edu/cases/980115s1.html> (03-19-04),goods Cocoa beans, English translation, Queen Mary Case Translation Programme, translated by Charles Sant 'Elia, CLOUT 253.


    Pace Law School Institute of International Commercial Law - Last updated July 12, 2005
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